Bill Text: CA AB1732 | 2013-2014 | Regular Session | Chaptered
Bill Title: Vehicles: manufacturers, distributors, and dealers.
Spectrum: Partisan Bill (Democrat 1-0)
Status: (Passed) 2014-09-30 - Chaptered by Secretary of State - Chapter 856, Statutes of 2014. [AB1732 Detail]
Download: California-2013-AB1732-Chaptered.html
BILL NUMBER: AB 1732 CHAPTERED
BILL TEXT
CHAPTER 856
FILED WITH SECRETARY OF STATE SEPTEMBER 30, 2014
APPROVED BY GOVERNOR SEPTEMBER 30, 2014
PASSED THE SENATE AUGUST 18, 2014
PASSED THE ASSEMBLY AUGUST 19, 2014
AMENDED IN SENATE JULY 1, 2014
AMENDED IN SENATE JUNE 15, 2014
AMENDED IN ASSEMBLY APRIL 10, 2014
INTRODUCED BY Assembly Member Stone
FEBRUARY 14, 2014
An act to amend Sections 11713, 11713.1, and 11713.16 of the
Vehicle Code, relating to vehicles.
LEGISLATIVE COUNSEL'S DIGEST
AB 1732, Stone. Vehicles: manufacturers, distributors, and
dealers.
Existing law generally requires a manufacturer, manufacturer
branch, remanufacturer, remanufacturer branch, distributor,
distributor branch, transporter, or dealer of vehicles to be licensed
by the Department of Motor Vehicles. Existing law prohibits these
licensees from, among other things, failing to, within 48 hours,
withdraw in writing an advertisement of a vehicle that has been sold
or withdrawn from sale and advertising or representing a vehicle as a
new vehicle if the vehicle is a used vehicle. Existing law makes it
a crime to violate these provisions.
This bill would prohibit a licensee from advertising a vehicle's
prior use or ownership history in an inaccurate manner. By expanding
the scope of a crime, the bill would impose a state-mandated local
program.
Existing law makes it a violation for the holder of a dealer's
license to, among other things, use "rebate" or similar words in
advertising the sale of a vehicle unless the rebate is expressed in a
specified dollar amount and is in fact a rebate offered by the
vehicle manufacturer or distributor. Existing law also makes it a
violation to advertise as the total sales price of a vehicle an
amount that includes a deduction from a rebate, except as specified.
This bill would additionally authorize the use of "rebate" if the
rebate meets the requirements described above and is offered by a
finance company affiliated with a vehicle manufacturer or
distributor, a regulated utility, or a governmental entity. The bill
would also prohibit a dealer from advertising a rebate reduction that
conflicts with another advertised rebate deduction. By expanding the
scope of a crime, the bill would impose a state-mandated local
program.
The California Constitution requires the state to reimburse local
agencies and school districts for certain costs mandated by the
state. Statutory provisions establish procedures for making that
reimbursement.
This bill would provide that no reimbursement is required by this
act for a specified reason.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Section 11713 of the Vehicle Code is amended to read:
11713. A holder of a license issued under this article shall not
do any of the following:
(a) Make or disseminate, or cause to be made or disseminated,
before the public in this state, in a newspaper or other publication,
or an advertising device, or by public outcry or proclamation, or in
any other manner or means whatever, a statement that is untrue or
misleading and that is known, or that by the exercise of reasonable
care should be known, to be untrue or misleading; or to so make or
disseminate, or cause to be so disseminated, a statement as part of a
plan or scheme with the intent not to sell a vehicle or service so
advertised at the price stated therein, or as so advertised.
(b) (1) (A) Advertise or offer for sale or exchange in any manner,
a vehicle not actually for sale at the premises of the dealer or
available to the dealer directly from the manufacturer or distributor
of the vehicle at the time of the advertisement or offer. However, a
dealer who has been issued an autobroker's endorsement to his or her
dealer's license may advertise his or her service of arranging or
negotiating the purchase of a new motor vehicle from a franchised new
motor vehicle dealer and may specify the line-makes and models of
those new vehicles. Autobrokering service advertisements may not
advertise the price or payment terms of a vehicle and shall disclose
that the advertiser is an autobroker or auto buying service, and
shall clearly and conspicuously state the following: "All new cars
arranged for sale are subject to price and availability from the
selling franchised new car dealer."
(B) As to printed advertisements, the disclosure statement
required by subparagraph (A) shall be printed in not less than
10-point bold type size and shall be textually segregated from the
other portions of the printed advertisement.
(2) Notwithstanding subparagraph (A), classified advertisements
for autobrokering services that measure two column inches or less are
exempt from the disclosure statement in subparagraph (A) pertaining
to price and availability.
(3) Radio advertisements of a duration of less than 11 seconds
that do not reference specific line-makes or models of motor vehicles
are exempt from the disclosure statement required in subparagraph
(A).
(c) Fail, within 48 hours, to withdraw in writing an advertisement
of a vehicle that has been sold or withdrawn from sale.
(d) Advertise or represent a vehicle as a new vehicle if the
vehicle is a used vehicle.
(e) Engage in the business for which the licensee is licensed
without having in force and effect a bond as required by this
article.
(f) Engage in the business for which the dealer is licensed
without at all times maintaining an established place of business as
required by this code.
(g) Include, as an added cost to the selling price of a vehicle,
an amount for licensing or transfer of title of the vehicle, which is
not due to the state unless, prior to the sale, that amount has been
paid by a dealer to the state in order to avoid penalties that would
have accrued because of late payment of the fees. However, a dealer
may collect from the second purchaser of a vehicle a prorated fee
based upon the number of months remaining in the registration year
for that vehicle, if the vehicle had been previously sold by the
dealer and the sale was subsequently rescinded and all the fees that
were paid, as required by this code and Chapter 2 (commencing with
Section 10751) of Part 5 of Division 2 of the Revenue and Taxation
Code, were returned to the first purchaser of the vehicle.
(h) Employ a person as a salesperson who has not been licensed
pursuant to Article 2 (commencing with Section 11800), and whose
license is not displayed on the premises of the dealer as required by
Section 11812, or willfully fail to notify the department by mail
within 10 days of the employment or termination of employment of a
salesperson.
(i) Deliver, following the sale, a vehicle for operation on
California highways, if the vehicle does not meet all of the
equipment requirements of Division 12 (commencing with Section
24000). This subdivision does not apply to the sale of a leased
vehicle to the lessee if the lessee is in possession of the vehicle
immediately prior to the time of the sale and the vehicle is
registered in this state.
(j) Use, or permit the use of, the special plates assigned to him
or her for any purpose other than as permitted by Section 11715.
(k) Advertise or otherwise represent, or knowingly allow to be
advertised or represented on behalf of, or at the place of business
of, the licenseholder that no downpayment is required in connection
with the sale of a vehicle when a downpayment is in fact required and
the buyer is advised or induced to finance the downpayment by a loan
in addition to any other loan financing the remainder of the
purchase price of the vehicle. The terms "no downpayment," "zero down
delivers," or similar terms shall not be advertised unless the
vehicle will be sold to a qualified purchaser without a prior payment
of any kind or trade-in.
( l ) Participate in the sale of a vehicle required to
be reported to the Department of Motor Vehicles under Section 5900 or
5901 without making the return and payment of the full sales tax due
and required by Section 6451 of the Revenue and Taxation Code.
(m) Permit the use of the dealer's license, supplies, or books by
any other person for the purpose of permitting that person to engage
in the purchase or sale of vehicles required to be registered under
this code, or permit the use of the dealer's license, supplies, or
books to operate a branch location to be used by any other person,
whether or not the licensee has any financial or equitable interest
or investment in the vehicles purchased or sold by, or the business
of, or branch location used by, the other person.
(n) Violate any provision of Article 10 (commencing with Section
28050) of Chapter 5 of Division 12.
(o) Sell a previously unregistered vehicle without disclosing in
writing to the purchaser the date on which a manufacturer's or
distributor's warranty commenced.
(p) Accept a purchase deposit relative to the sale of a vehicle,
unless the vehicle is present at the premises of the dealer or
available to the dealer directly from the manufacturer or distributor
of the vehicle at the time the dealer accepts the deposit. Purchase
deposits accepted by an autobroker when brokering a retail sale shall
be governed by Sections 11736 and 11737.
(q) Consign for sale to another dealer a new vehicle.
(r) Display a vehicle for sale at a location other than an
established place of business authorized by the department for that
dealer or display a new motor vehicle at the business premises of
another dealer registered as an autobroker. This subdivision does not
apply to the display of a vehicle pursuant to subdivision (b) of
Section 11709 or the demonstration of the qualities of a motor
vehicle by way of a test drive.
(s) Use a picture in connection with an advertisement of the price
of a specific vehicle or class of vehicles, unless the picture is of
the year, make, and model being offered for sale. The picture shall
not depict a vehicle with optional equipment or a design not actually
offered at the advertised price.
(t) Advertise for sale a vehicle that was used by the selling
licensee in its business as a demonstrator, executive vehicle,
service vehicle, rental, loaner, or lease vehicle, unless the
advertisement clearly and conspicuously discloses the previous use
made by that licensee of the vehicle. An advertisement shall not
describe any of those vehicles as "new."
(u) Advertise the prior use or ownership history of a vehicle in
an inaccurate manner.
SEC. 2. Section 11713.1 of the Vehicle Code is amended to read:
11713.1. It is a violation of this code for the holder of a
dealer's license issued under this article to do any of the
following:
(a) Advertise a specific vehicle for sale without identifying the
vehicle by its model, model-year, and either its license number or
that portion of the vehicle identification number that distinguishes
the vehicle from all other vehicles of the same make, model, and
model-year. Model-year is not required to be advertised for current
model-year vehicles. Year models are no longer current when ensuing
year models are available for purchase at retail in California. An
advertisement that offers for sale a class of new vehicles in a
dealer's inventory, consisting of five or more vehicles, that are all
of the same make, model, and model-year is not required to include
in the advertisement the vehicle identification numbers or license
numbers of those vehicles.
(b) Advertise the total price of a vehicle without including all
costs to the purchaser at time of sale, except taxes, vehicle
registration fees, the California tire fee, as defined in Section
42885 of the Public Resources Code, emission testing charges not
exceeding fifty dollars ($50), actual fees charged for certificates
pursuant to Section 44060 of the Health and Safety Code, finance
charges, and any dealer document processing charge or charge to
electronically register or transfer the vehicle.
(c) (1) Exclude from an advertisement of a vehicle for sale that
there will be added to the advertised total price at the time of
sale, charges for sales tax, vehicle registration fees, the
California tire fee, the fee charged by the state for the issuance of
a certificate of compliance or noncompliance pursuant to a statute,
finance charges, a charge to electronically register or transfer the
vehicle, and a dealer document processing charge.
(2) The obligations imposed by paragraph (1) are satisfied by
adding to the advertisement a statement containing no abbreviations
and that is worded in substantially the following form: "Plus
government fees and taxes, any finance charges, any dealer document
processing charge, any electronic filing charge, and any emission
testing charge."
(3) For purposes of paragraph (1), "advertisement" means an
advertisement in a newspaper, magazine, or direct mail publication
that is two or more columns in width or one column in width and more
than seven inches in length, or on a Web page of a dealer's Internet
Web site that displays the price of a vehicle offered for sale on the
Internet, as that term is defined in paragraph (6) of subdivision
(f) of Section 17538 of the Business and Professions Code.
(d) Represent the dealer document processing charge, electronic
registration or transfer charge, or emission testing charge, as a
governmental fee.
(e) Fail to sell a vehicle to a person at the advertised total
price, exclusive of taxes, vehicle registration fees, the California
tire fee, the fee charged by the state for the issuance of a
certificate of compliance or noncompliance pursuant to a statute,
finance charges, mobilehome escrow fees, the amount of a city,
county, or city and county imposed fee or tax for a mobilehome, a
dealer document processing charge, an electronic registration or
transfer charge, and a charge for emission testing not to exceed
fifty dollars ($50) plus the actual fees charged for certificates
pursuant to Section 44060 of the Health and Safety Code, while the
vehicle remains unsold, unless the advertisement states the
advertised total price is good only for a specified time and the time
has elapsed. Advertised vehicles shall be sold at or below the
advertised total price, with statutorily permitted exclusions,
regardless of whether the purchaser has knowledge of the advertised
total price.
(f) (1) Advertise for sale, sell, or purchase for resale a new
vehicle of a line-make for which the dealer does not hold a
franchise.
(2) This subdivision does not apply to a transaction involving the
following:
(A) A mobilehome.
(B) A recreational vehicle as defined in Section 18010 of the
Health and Safety Code.
(C) A commercial coach, as defined in Section 18001.8 of the
Health and Safety Code.
(D) An off-highway motor vehicle subject to identification as
defined in Section 38012.
(E) A manufactured home.
(F) A new vehicle that will be substantially altered or modified
by a converter prior to resale.
(G) A commercial vehicle with a gross vehicle weight rating of
more than 10,000 pounds.
(H) A vehicle purchased for export and exported outside the
territorial limits of the United States without being registered with
the department.
(I) A vehicle acquired in the ordinary course of business as a new
vehicle by a dealer franchised to sell that vehicle, if all of the
following apply:
(i) The manufacturer or distributor of the vehicle files a
bankruptcy petition.
(ii) The franchise agreement of the dealer is terminated,
canceled, or rejected by the manufacturer or distributor as part of
the bankruptcy proceedings and the termination, cancellation, or
rejection is not a result of the revocation by the department of the
dealer's license or the dealer's conviction of a crime.
(iii) The vehicle is held in the inventory of the dealer on the
date the bankruptcy petition is filed.
(iv) The vehicle is sold by the dealer within six months of the
date the bankruptcy petition is filed.
(3) Subparagraph (I) of paragraph (2) does not entitle a dealer
whose franchise agreement has been terminated, canceled, or rejected
to continue to perform warranty service repairs or continue to be
eligible to offer or receive consumer or dealer incentives offered by
the manufacturer or distributor.
(g) Sell a park trailer, as specified in Section 18009.3 of the
Health and Safety Code, without disclosing in writing to the
purchaser that a park trailer is required to be moved by a
transporter or a licensed manufacturer or dealer under a permit
issued by the Department of Transportation or a local authority with
respect to highways under their respective jurisdictions.
(h) Advertise free merchandise, gifts, or services provided by a
dealer contingent on the purchase of a vehicle. "Free" includes
merchandise or services offered for sale at a price less than the
seller's cost of the merchandise or services.
(i) (1) Advertise vehicles, and related goods or services, at a
specified dealer price, with the intent not to supply reasonably
expectable demand, unless the advertisement discloses the number of
vehicles in stock at the advertised price. In addition, whether or
not there are sufficient vehicles in stock to supply a reasonably
expectable demand, when phrases such as "starting at," "from,"
"beginning as low as," or words of similar import are used in
reference to an advertised price, the advertisement shall disclose
the number of vehicles available at that advertised price.
(2) For purposes of this subdivision, in a newspaper advertisement
for a vehicle that is two model-years old or newer, the actual
phrase that states the number of vehicles in stock at the advertised
price shall be printed in a type size that is at least equal to
one-quarter of the type size, and in the same style and color of
type, used for the advertised price. However, in no case shall the
phrase be printed in less than 8-point type size, and the phrase
shall be disclosed immediately above, below, or beside the advertised
price without intervening words, pictures, marks, or symbols.
(3) The disclosure required by this subdivision is in addition to
any other disclosure required by this code or any regulation
regarding identifying vehicles advertised for sale.
(j) Use "rebate" or similar words, including, but not limited to,
"cash back," in advertising the sale of a vehicle unless the rebate
is expressed in a specific dollar amount and is in fact a rebate
offered by the vehicle manufacturer or distributor, a finance company
affiliated with a vehicle manufacturer or distributor, a regulated
utility, or a governmental entity directly to the retail purchaser of
the vehicle or to the assignee of the retail purchaser.
(k) Require a person to pay a higher price for a vehicle and
related goods or services for receiving advertised credit terms than
the cash price the same person would have to pay to purchase the same
vehicle and related goods or services. For the purpose of this
subdivision, "cash price" has the same meaning as defined in
subdivision (e) of Section 2981 of the Civil Code.
(l) Advertise a guaranteed trade-in allowance.
(m) Misrepresent the authority of a salesperson, representative,
or agent to negotiate the final terms of a transaction.
(n) (1) Use "invoice," "dealer's invoice," "wholesale price," or
similar terms that refer to a dealer's cost for a vehicle in an
advertisement for the sale of a vehicle or advertise that the selling
price of a vehicle is above, below, or at either of the following:
(A) The manufacturer's or distributor's invoice price to a dealer.
(B) A dealer's cost.
(2) This subdivision does not apply to either of the following:
(A) A communication occurring during face-to-face negotiations for
the purchase of a specific vehicle if the prospective purchaser
initiates a discussion of the vehicle's invoice price or the dealer's
cost for that vehicle.
(B) A communication between a dealer and a prospective commercial
purchaser that is not disseminated to the general public. For
purposes of this subparagraph, a "commercial purchaser" means a
dealer, lessor, lessor-retailer, manufacturer, remanufacturer,
distributor, financial institution, governmental entity, or person
who purchases 10 or more vehicles during a year.
(o) Violate a law prohibiting bait and switch advertising,
including, but not limited to, the guides against bait advertising
set forth in Part 238 (commencing with Section 238) of Title 16 of
the Code of Federal Regulations, as those regulations read on January
1, 1988.
(p) Make an untrue or misleading statement indicating that a
vehicle is equipped with all the factory-installed optional equipment
the manufacturer offers, including, but not limited to, a false
statement that a vehicle is "fully factory equipped."
(q) Affix on a new vehicle a supplemental price sticker containing
a price that represents the dealer's asking price that exceeds the
manufacturer's suggested retail price unless all of the following
occur:
(1) The supplemental sticker clearly and conspicuously discloses
in the largest print appearing on the sticker, other than the print
size used for the dealer's name, that the supplemental sticker price
is the dealer's asking price, or words of similar import, and that it
is not the manufacturer's suggested retail price.
(2) The supplemental sticker clearly and conspicuously discloses
the manufacturer's suggested retail price.
(3) The supplemental sticker lists each item that is not included
in the manufacturer's suggested retail price, and discloses the
additional price of each item. If the supplemental sticker price is
greater than the sum of the manufacturer's suggested retail price and
the price of the items added by the dealer, the supplemental sticker
price shall set forth that difference and describe it as "added
mark-up."
(r) Advertise an underselling claim, including, but not limited
to, "we have the lowest prices" or "we will beat any dealer's price,"
unless the dealer has conducted a recent survey showing that the
dealer sells its vehicles at lower prices than another licensee in
its trade area and maintains records to adequately substantiate the
claims. The substantiating records shall be made available to the
department upon request.
(s) (1) Advertise an incentive offered by the manufacturer or
distributor if the dealer is required to contribute to the cost of
the incentive as a condition of participating in the incentive
program, unless the dealer discloses in a clear and conspicuous
manner that dealer participation may affect consumer cost.
(2) For purposes of this subdivision, "incentive" means anything
of value offered to induce people to purchase a vehicle, including,
but not limited to, discounts, savings claims, rebates, below-market
finance rates, and free merchandise or services.
(t) Display or offer for sale a used vehicle unless there is
affixed to the vehicle the Federal Trade Commission's Buyer's Guide
as required by Part 455 of Title 16 of the Code of Federal
Regulations.
(u) Fail to disclose in writing to the franchisor of a new motor
vehicle dealer the name of the purchaser, date of sale, and the
vehicle identification number of each new motor vehicle sold of the
line-make of that franchisor, or intentionally submit to that
franchisor a false name for the purchaser or false date for the date
of sale.
(v) Enter into a contract for the retail sale of a motor vehicle
unless the contract clearly and conspicuously discloses whether the
vehicle is being sold as a new vehicle or a used vehicle, as defined
in this code.
(w) Use a simulated check, as defined in subdivision (a) of
Section 22433 of the Business and Professions Code, in an
advertisement for the sale or lease of a vehicle.
(x) Fail to disclose, in a clear and conspicuous manner in at
least 10-point boldface type on the face of a contract for the retail
sale of a new motor vehicle that this transaction is, or is not,
subject to a fee received by an autobroker from the selling new motor
vehicle dealer, and the name of the autobroker, if applicable.
(y) Sell or lease a new motor vehicle after October 1, 2012,
unless the dealer has a contractual agreement with the department to
be a private industry partner pursuant to Section 1685. This
subdivision does not apply to the sale or lease of a motorcycle or
off-highway motor vehicle subject to identification under Section
38010 or a recreational vehicle as defined in Section 18010 of the
Health and Safety Code.
(z) As used in this section, "make" and "model" have the same
meaning as is provided in Section 565.12 of Title 49 of the Code of
Federal Regulations.
SEC. 3. Section 11713.16 of the Vehicle Code is amended to read:
11713.16. It is a violation of this code for the holder of any
dealer's license issued under this article to do any of the
following:
(a) Advertise any used vehicle of the current or prior model-year
without expressly disclosing the vehicle as "used," "previously
owned," or a similar term that indicates that the vehicle is used, as
defined in this code.
(b) Use the terms "on approved credit" or "on credit approval" in
an advertisement for the sale of a vehicle unless those terms are
clearly and conspicuously disclosed and unabbreviated.
(c) Advertise an amount described by terms such as "unpaid balance"
or "balance can be financed" unless the total sale price is clearly
and conspicuously disclosed and in close proximity to the advertised
balance.
(d) Advertise credit terms that fail to comply with the disclosure
requirements of Section 226.24 of Title 12 of the Code of Federal
Regulations. Advertisements of terms that include escalated payments,
balloon payments, or deferred downpayments shall clearly and
conspicuously identify those payments as to amounts and time due.
(e) Advertise as the total sales price of a vehicle an amount that
includes a deduction for a rebate. However, a dealer may advertise a
separate amount that includes a deduction for a rebate provided that
the advertisement clearly and conspicuously discloses, in close
proximity to the amount advertised, the price of the vehicle before
the rebate deduction and the amount of the rebate, each so
identified. A dealer may not advertise a rebate deduction that
conflicts with another advertised rebate deduction.
(f) Advertise claims such as "everyone financed," "no credit
rejected," or similar claims unless the dealer is willing to extend
credit to any person under any and all circumstances.
(g) Advertise the amount of any downpayment unless it represents
the total payment required of a purchaser prior to delivery of the
vehicle, including any payment for sales tax or license. Statements
such as "$_____ delivers," "$____ puts you in a new car" are examples
of advertised downpayments.
(h) Advertise the price of a new vehicle or class of new vehicles
unless the vehicle or vehicles have all of the equipment listed as
standard by the manufacturer or distributor or the dealer has
replaced the standard equipment with equipment of higher value.
(i) Fail to clearly and conspicuously disclose in an advertisement
for the sale of a vehicle any disclosure required by this code or
any qualifying term used in conjunction with advertised credit terms.
Unless otherwise provided by statute, the specific size of
disclosures or qualifying terms is not prescribed.
SEC. 4. No reimbursement is required by this act pursuant to
Section 6 of Article XIII B of the California Constitution because
the only costs that may be incurred by a local agency or school
district will be incurred because this act creates a new crime or
infraction, eliminates a crime or infraction, or changes the penalty
for a crime or infraction, within the meaning of Section 17556 of the
Government Code, or changes the definition of a crime within the
meaning of Section 6 of Article XIII B of the California
Constitution.
