BILL ANALYSIS THIRD READING AB 57X Archie-Hudson (D), et al 6/28/94 in Senate 21 46-25, p. 527, 6/13/94 SUBJECT: Consumer protection SOURCE: Author Restoration Contractors of California ____________________________________________________________________________ DIGEST: This bill makes it a misdemeanor for any person to sell or šattempt to sell in any area that has been declared a state or federal šdisaster area, any consumer good, as defined, at a price which exceeds the šaverage statewide price by more than 10 percent for that commodity. This bill also amends the Home Solicitation Law to allow for contracts made šfollowing a disaster to be voided under specified conditions. ANALYSIS: Existing law enumerates a number of provisions relating to šnatural, man-made or war-caused emergencies in the California Emergency šServices Act. These provisions generally address emergency powers of the šGovernor and state agencies in periods of emergency; the Office of šEmergency Services; and the coordination of public services during states šof emergency. bill generally would make the act of increasing prices for specified retail šproducts by more than 10 percent during 30 days immediately following a šstate of emergency proclamation a misdemeanor. Specifically, this bill šwould create a misdemeanor for increasing by more than 10 percent the price šcharged for consumer food items, consumer goods, goods or services used for šemergency cleanup, emergency supplies, medical supplies, home heating oil š or gasoline or other motor fuels during the 30 days after a proclamation šof a state of emergency by the Governor or the President, unless the seller šcan prove the price increase was directly attributable to (1) additional costs imposed by a supplier, or (2) additional costs for labor šor materials used to provide the services. The misdemeanor would be punishable by county jail time not exceeding one šyear and/or a fine of not more than $10,000. Under existing law the content and effect of home solicitation contracts, šas defined, is regulated. Services includes among other things, services šfurnished in connection with the repair, alteration, or improvement of šresidential premises. Under existing law it is a misdemeanor to willfully make or publish any šfalse statement,spread any false rumor, or employ any other false or šfraudulent means or device with intent to affect the market price of any škind of property. This bill revises the definition of services to also include services šfurnished in connection with the "restoration" of residential premises. This bill provides that any home solicitation contract for the repair or šrestoration of a residence signed by the home owner within seven days after šthe home is damaged by disaster is void, unless contact is first initiated šby the homeowner, his or her agent or insurance representative at the šseller's appropriate place of business. This bill provides that in addition to any other right to revoke an offer, ša buyer has the right, within a seven business days, to cancel a home šsolicitation contract or offer for the repair or restoration of residential špremises damaged by a disaster that was not otherwise void. This bill specifies that the above provision shall not apply to a contract šthat is initiated by the buyer or his or her agent, and that is executed in šconnection with the making of prescribed emergency repairs or services, šamong other conditions. The purpose of this bill is to prohibit, on a statewide basis, unscrupulous šretail pricing practices and home solicitation contracts for repair during šdeclared emergencies. Following the January 17th earthquake in Los Angeles, there were numerous šinstances of price gouging documented by the City of Los Angeles. Los šAngeles had passed a city ordinance which prohibited price gouging, šfollowing the 1992 civil unrest, however, there are no such statewide šprovisions and thus an individual's protection is dependent on whether štheir local government has passed such an ordinance. FISCAL EFFECT: Appropriation: No Fiscal Committee: Yes Local: Yes SUPPORT: (Verified 8/8/94) Restoration Contractors of California (co-source) City of Los Angeles California Grocers Association CONTINUED AB 57X Page 3 California Medical Association ASSEMBLY FLOOR VOTE: RJG:ctl 8/9/94 Senate Floor Analyses CONTINUED