BILL ANALYSIS Ó
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|SENATE RULES COMMITTEE | AB 675|
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THIRD READING
Bill No: AB 675
Author: Alejo (D)
Amended: 8/17/15 in Senate
Vote: 21
SENATE JUDICIARY COMMITTEE: 7-0, 7/14/15
AYES: Jackson, Moorlach, Anderson, Hertzberg, Leno, Monning,
Wieckowski
ASSEMBLY FLOOR: 77-1, 5/4/15 - See last page for vote
SUBJECT: Rental vehicles: advertising and quotes: charges
SOURCE: Avis Budget Group
Enterprise
Hertz
DIGEST: This bill authorizes a rental company, when quoting a
rental rate, to separately state the rental rate, additional
mandatory charges, if any, and a mileage charge, if any, that a
renter must pay to hire or lease the vehicle for the period of
time to which the rental rate applies. This bill defines
"additional mandatory charges" to mean any separately stated
charges that the rental car company requires the renter to pay
to hire or lease the vehicle for the period of time to which the
rental rate applies, which are imposed by a governmental entity
and specifically relate to the operation of a rental car
business, including, but not limited to, a customer facility
charge, airport concession fee, tourism commission assessment,
vehicle license recovery fee, or other government imposed taxes
or fees.
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ANALYSIS:
Existing law:
1)Provides that a rental company shall only advertise, quote,
and charge a rental rate that includes the entire amount
except taxes, a customer facility charge, if any, and a
mileage charge, if any, that a renter must pay to hire or
lease the vehicle for the period of time to which the rental
rate applies. (Civ. Code Sec. 1936(m).)
2)Provides that a rental company shall not charge in addition to
the rental rate, taxes, a customer facility charge, if any,
and a mileage charge, if any, any fee that is required to be
paid by the renter as a condition of hiring or leasing the
vehicle, including, but not limited to, required fuel or
airport surcharges other than customer facility charges, nor a
fee for transporting the renter to the location where the
rented vehicle will be delivered to the renter. (Civ. Code
Sec. 1936(m).)
3)States, notwithstanding the above, that when providing a
quote, or imposing charges for a rental, a rental company may
separately state an airport concession fee, if any, and a
tourism commission assessment, if any, that a renter must pay
to hire or lease the vehicle for the period of time to which
the rental rate applies. (Civ. Code Sec. 1936.01(a).)
4)States, notwithstanding the above, that when providing a
quote, or imposing charges for a rental, a rental company may
separately state an increased vehicle license recovery fee, as
defined, that a renter must pay to hire or lease the vehicle
for the period of time to which the rental rate applies.
(Civ. Code Sec. 1936.015(b).)
5)States that at the time a quote is given, a rental company
must provide the person receiving the quote with a good faith
estimate of the rental rate and all additional charges, as
well as the total charges for the entire rental. The total
charges, if provided on an Internet Web site page, must be
displayed in a typeface at least as large as any rental rate
disclosed on that page and must be provided on a page that the
person receiving the quote may reach by following links
through no more than two Internet Web site pages, including
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Page 3
the page on which the rental rate is first provided. The good
faith estimate may exclude mileage charges and charges for
optional items that cannot be determined prior to completing
the reservation based upon the information provided by the
person. (Civ. Code Secs. 1936.01(b), 1936.015(b).)
6)Provides that when a rental rate is stated in an
advertisement, quotation, or reservation in connection with a
car rental at an airport where a customer facility charge is
imposed, the rental company shall disclose clearly the
existence and amount of the customer facility charge.
Existing law provides that all rate advertisements that
include car rentals at airport destinations shall clearly and
conspicuously include a toll-free telephone number whereby a
customer can be told the specific amount of the customer
facility charge to which the customer will be obligated.
(Civ. Code Sec. 1936(m).)
7)Requires, until January 1, 2020, a rental company or its
registered agent to accept service of a summons and complaint
and any other required documents against a renter who resides
out of this country for an accident or collision resulting
from the operation of the rental vehicle in this state, if the
rental company provides liability insurance coverage as part
of, or associated with, the rental agreement. Existing law
requires any plaintiff who elects to serve the foreign renter
by delivering the summons and complaint and any other required
documents to the rental company pursuant to these provisions
to agree to limit his or her recovery against the foreign
renter and rental company to the limits of the protection of
the liability insurance. (Civ. Code Sec. 1936.)
This bill:
1)States that when providing a quote, or imposing charges for a
rental, the rental company may separately state the rental
rate, additional mandatory charges, if any, and a mileage
charge, if any, that a renter must pay to hire or lease the
vehicle for the period of time to which the rental rate
applies. A rental company shall not charge in addition to the
rental rate, additional mandatory charges, or a mileage
charge, as those may be applicable, any other fee that is
required to be paid by the renter as a condition of hiring or
leasing the vehicle.
AB 675
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2)Provides that all rate advertisements shall include the
following disclaimer, which shall be prominently displayed:
"Additional mandatory charges may be imposed, including, but
not limited to, a customer facility charge, airport concession
fee, tourism commission assessment, vehicle license recovery
fee, or other government imposed taxes or fees. For more
information, including an estimate of your total rental cost,
visit our Internet Web site at [www.____.com]."
3)Defines "additional mandatory charges" to mean any separately
stated charges that the rental car company requires the renter
to pay to hire or lease the vehicle for the period of time to
which the rental rate applies, which are imposed by a
governmental entity and specifically relate to the operation
of a rental car business, including, but not limited to, a
customer facility charge, airport concession fee, tourism
commission assessment, vehicle license recovery fee, or other
government imposed taxes or fees.
4)Defines "vehicle license fee" to mean the tax imposed pursuant
to the Vehicle License Fee Law (Part 5 (commencing with
Section 10701) of Division 2 of the Revenue and Taxation
Code).
5)Defines "vehicle license recovery fee" to mean a charge that
seeks to recover the amount of any vehicle license fee and
vehicle registration fee paid by a rental company for the
particular class of vehicle being rented.
6)Defines "vehicle registration fee" to mean any fee imposed
pursuant to any provision of Chapter 6 (commencing with
Section 9101) of Division 3 of the Vehicle Code.
7)Removes the sunset applicable to the service of a summons and
complaint against a renter who resides out of this country and
extends this provision indefinitely.
8)Makes other technical and conforming changes.
Background
Section 1936 of the Civil Code governs the rental of passenger
vehicles to the public. In general, existing law requires
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rental car companies to bundle, or include in the rental rate,
all mandatory charges imposed by a governmental entity when
advertising or providing quotes to consumers, except for those
which the Legislature has specifically authorized to be
separately stated. Under existing law, Section 1936 authorizes
rental companies to separately state taxes, customer facility
charges, if any, and mileage charges, if any, when quoting a
vehicle rental rate. In 2006, the Legislature passed AB 2592
(Leno, Chapter 790, Statutes of 2006), which authorized rental
companies to separately state airport concession fees and
tourism commission assessments in quotes provided to consumers.
After the 2009 Budget Act temporarily increased the vehicle
license fee from the rate of 0.65 percent of the value of a
vehicle to 1.15 percent, the Legislature passed SB 348 (Cogdill,
Chapter 156, Statutes of 2009), which authorized rental
companies to separately state the "increased vehicle license
fee," defined as that portion of the vehicle license fee above
0.65 percent of the value of a vehicle, prorated to the length
of the rental period. Thus, existing law authorizes rental
companies to separately state taxes, increased vehicle license
recovery fees, customer facility charges, airport concession
fees, tourism commission assessments, and mileage charges
alongside the rental rate when quoting or charging for the
rental of a passenger vehicle.
This bill removes the list of charges that may be separately
stated, and instead authorizes rental companies to separately
state "additional mandatory charges," which are charges imposed
by a governmental entity that specifically relate to the
operation of a rental car business, including, but not limited
to, a customer facility charge, airport concession fee, tourism
commission assessment, vehicle license recovery fee, and other
government imposed taxes or fees. This bill repeals sections of
the Civil Code governing the charges that may be separately
stated by a rental car company, and consolidates those
provisions in Civil Code Section 1936. This bill also requires
rental rate advertisements to conspicuously disclose that
"additional mandatory charges" may be imposed, and eliminates a
sunset on rental car service of process requirements for foreign
renters.
Comments
The author writes:
AB 675
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The purpose of the bill is to modernize the relevant code
sections regulating the rental car industry by making them
more consistent with practices in other states, and to promote
transparency in pricing for consumers. Specifically, AB 675
promotes transparency in rental car pricing by clearly
delineating private charges imposed by the rental car
business, from the many public exactions associated with this
industry, including tourism fees, airport concession fees,
airport facility fees, vehicle license fees, and other similar
charges. However, the bill preserves the requirement that the
customer be given a "quote," which must match the charges
ultimately imposed by the contract, to continue to protect
consumer expectations.
Other states do not manage the billing practices of the rental
care industry as California currently does. The basis for the
California law's extraordinary detail is no longer wholly
needed. The basic and fundamentally important consumer
protections in relevant code, relating to provision of a
"quote" upon which the customer may rely, are preserved.
Section 1936 was originally enacted 25 years ago, to combat
misleading pricing practices wherein the advertised rate could
be appreciably less than the actual amount of the charge by
the time the customer left the counter. Since 2007, rental
car companies have been authorized to separately state
specific mandatory charges (airport facility fees, concession
fees, tourism assessments, and when the vehicle license fee
was increased, a vehicle license recovery fee), provided the
customer was provided a "bundled" out-the-door quote at the
time the car was reserved. AB 675 does not change the
disclosure requirements worked out in 2007 - but does allow
companies to separately state additional mandatory,
government-imposed charges - beyond those specifically
authorized 9 years ago. This will align California disclosure
practices with other states, and provide the industry needed
protection as new government fees are imposed. As more fees
are contemplated, the law needs to be revised to promote more
accurate display of pricing so consumers know which charges
are private and which are public. The requirement to
"rebundle" or provide a reliable quote is maintained.
Related/Prior Legislation
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AB 1981 (Brown, Chapter 417, Statutes of 2014) removed the
manufacturer's suggested retail price as one of the criteria for
determining the rate of a damage waiver sold by a rental
company, and instead set the rate of damage waivers according to
the vehicle's classification using criteria set by the 2014
Association of Car Rental Industry Systems Standards for North
America. This bill increased the maximum rate of the damage
waiver to $11 per rental day for vehicles designated as an
"economy car," "compact car," or another term denoting the two
smallest categories of vehicles described by the standards.
This bill increased the maximum rate of the damage waiver to $17
per rental day for vehicles in the next three body-size
categories of vehicles designated in the standards, except as
specified.
AB 2747 (Committee on Judiciary, Chapter 913, Statutes of 2014),
the Assembly Committee on Judiciary's Omnibus Bill, extended
until January 1, 2020, a sunset provision pertaining to a
requirement for rental companies to accept service of a summons
and complaint against a renter who resides out of this country
for an accident or collision resulting from the operation of the
rental vehicle in this state, as provided.
SB 348 (Cogdill, Chapter 156, Statutes of 2009) See Background.
AB 2592 (Leno, Chapter. 790, Statutes of 2006) See Background.
FISCAL EFFECT: Appropriation: No Fiscal
Com.:NoLocal: No
SUPPORT: (Verified8/19/15)
Avis Budget Group (co-source)
Enterprise (co-source)
Hertz (co-source)
OPPOSITION: (Verified8/19/15)
None received
AB 675
Page 8
ASSEMBLY FLOOR: 77-1, 5/4/15
AYES: Achadjian, Alejo, Travis Allen, Baker, Bigelow, Bloom,
Bonilla, Bonta, Brough, Brown, Burke, Calderon, Chang, Chau,
Chávez, Chiu, Chu, Cooley, Cooper, Dababneh, Daly, Dodd,
Eggman, Frazier, Beth Gaines, Gallagher, Cristina Garcia,
Eduardo Garcia, Gatto, Gipson, Gomez, Gonzalez, Gordon, Gray,
Grove, Hadley, Harper, Roger Hernández, Holden, Irwin, Jones,
Jones-Sawyer, Kim, Lackey, Linder, Lopez, Low, Maienschein,
Mathis, Mayes, McCarty, Medina, Melendez, Mullin, Nazarian,
Obernolte, O'Donnell, Olsen, Patterson, Perea, Quirk, Rendon,
Ridley-Thomas, Rodriguez, Salas, Santiago, Steinorth, Mark
Stone, Thurmond, Ting, Wagner, Waldron, Weber, Wilk, Williams,
Wood, Atkins
NOES: Levine
NO VOTE RECORDED: Campos, Dahle
Prepared by:Tobias Halvarson / JUD. / (916) 651-4113
8/19/15 20:55:48
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