BILL ANALYSIS Ó AB 1743 Page 1 ASSEMBLY THIRD READING AB 1743 (Dababneh) As Amended May 4, 2016 Majority vote ------------------------------------------------------------------ |Committee |Votes|Ayes |Noes | | | | | | | | | | | | | | | | |----------------+-----+----------------------+--------------------| |Privacy |11-0 |Chau, Wilk, Baker, | | | | |Calderon, Chang, | | | | |Cooper, Dababneh, | | | | |Gatto, Gordon, Low, | | | | |Olsen | | | | | | | |----------------+-----+----------------------+--------------------| |Judiciary |10-0 |Mark Stone, Wagner, | | | | |Alejo, Chau, Chiu, | | | | |Gallagher, | | | | | | | | | | | | | | |Cristina Garcia, | | | | |Holden, Maienschein, | | | | |Ting | | | | | | | | | | | | ------------------------------------------------------------------ AB 1743 Page 2 SUMMARY: Allows motor vehicle sales transactions to be conducted electronically. Specifically, this bill: 1)Removes the Automobile Sales Finance Act and California Vehicle Leasing Act from the exclusion clauses of the Uniform Electronic Transactions Act (UETA) and applies all UETA requirements to motor vehicle sales transactions. 2)In addition, requires car dealers to: a) Obtain opt-in consent from the consumer to transact business electronically and to gather that consent either on the initial application or in a separate document with the consent language bolded or otherwise made conspicuous. b) Allow consumers to opt out of using the electronic process at any time and create a process or system for the person to opt out. c) Neither charge a person who declines to opt in to an electronic transaction nor provide a discount or incentive to any person to opt in to an electronic transaction. 3)Provides that in the event of a dispute over a discrepancy between an electronic copy of the executed contract in the possession of the seller and a copy of the executed contract provided to the buyer, there shall be no presumption that either the seller's copy or the buyer's copy is the accurate or prevailing copy for purposes of determining the buyer's obligations. Any provision in a contract that purports to provide otherwise is void. 4)Clarifies that a vehicle sales transaction using electronic signatures, as permitted under this bill, must completed and AB 1743 Page 3 signed electronically at the car dealer's established place of business. FISCAL EFFECT: None. This bill is keyed non-fiscal by the Legislative Counsel. COMMENTS: 1)Purpose of this bill. This bill is intended to streamline the vehicle sales process for consumers and car dealerships by permitting consumers to choose to sign vehicle purchase and lease contracts electronically. This measure is sponsored by the California New Car Dealers Association. 2)Electronic transactions. While UETA prohibits the use of electronic contracts and signatures on automobile sales and lease contracts, federal law (E-SIGN) permits car sales to be conducted electronically. In other states, the automotive financing industry and new car dealers have begun to move to electronic contracts as a way to modernize the car buying process, improve sales record retention, and help expedite the vehicle financing process. Electronic transactions have a number of significant advantages including faster service and consumer choice. Many consumers prefer to conduct transactions small and large electronically, yet the law prohibits car purchase transactions from being completed electronically. The author contends the car buying experience would be a faster, more convenient experience for consumers if the transaction itself could be conducted using computers or tablets rather than stacks of paper. 3)Existing consumer protections, such as a right to cancel, would be left intact. UETA requires that if notice of a right AB 1743 Page 4 to cancel has to be provided or sent to a consumer, then doing so is only permissible electronically if the consumer is allowed to exercise his or her right to cancel by electronic means as well. Under current law, consumers are given certain rights to cancel car sales contracts, and this bill would not change or limit those rights. In fact, it would keep consumers on the same playing field as car dealers by allowing consumers to cancel by electronic means if the car dealer had chosen to provide them notice of their right to cancel electronically. This bill would also not change other consumer protections in current law, such as the right to a single contract document containing detailed and itemized costs for the purchase of the car an any additional products or services, and the federal law requirement to give the buyer the original Buyers Guide displayed on the vehicle or an accurate copy that contains all of the required disclosures and reflects the final warranty terms between the buyer and seller. Analysis Prepared by: Jennie Bretschneider / P. & C.P. / (916) 319-2200 FN: 0002876