SB 95 Heavily Amended After Intense Lobbying Efforts by Dealers

Senate Bill 95 (Corbett), a proposal to enact the "California Car Buyers' Protection Act of 2009," barely squeaked out of the Senate last month, after dying the first time it was presented on the Senate Floor. As introduced, the bill would have doubled a dealer's surety bond to $100,000, expanded the surety's exposure, and would have quintupled ASF fees assessed against dealers. The author's stated purpose for the bill was to protect consumers' credit ratings from being adversely affected by dealers who fail to pay-off the balance due on trade-ins, leaving some with two car payments.

IADAC took the lead in opposing this outrageous proposal that could have put most used car dealers out of business because they would no longer qualify for the increased bond. (The new car dealers opposed portions of the bill, but did not oppose increasing the bond to $100,000.) IADAC also pointed out that the bill would unjustly punish the thousands of honest dealers who rarely, if ever, take trade-ins. Finally, we also demonstrated that it would cost DMV millions of dollars to administer the law should it pass as well as other losses to the state in the form of increased unemployment benefits and diminished income tax revenues.

Our uphill battle and intense lobbying effort continued in the State Assembly. The author recognized her bill was in trouble in the Assembly Judiciary Committee and agreed to several substantial amendments. She abandoned her efforts to increase the dealer bond, the increased surety exposure, and ASF fees. Instead of her proposal to require dealers to pay-off trade-ins within four days, they will now have 21 days to do so.

SB 95 will also increase dealers' original license application fees and renewal fees by $25, but the entire increase will be earmarked for the Division of Investigations. This increase will augment legislation sponsored by IADAC in 1990 that dedicated $15 of a dealer's renewal fee to investigation of illegal and unethical practices.

IADAC thanks President, Terry Degmetich, Legislative Committee Chair, Larry Laskowski, Chief Lobbyist, Bill Dohring and a host of other dealer members who worked so hard to turn a disaster into a major victory for dealers and consumers. The bill is expected to reach the governor's desk later this month.