Bill Text: CA AB480 | 2013-2014 | Regular Session | Amended

NOTE: There are more recent revisions of this legislation. Read Latest Draft

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Bill Title: Service contracts.

Spectrum: Partisan Bill (Democrat 1-0)

Status: (Passed) 2013-09-30 - Approved by the Governor. Chaptered by Secretary of State - Chapter 421, Statutes of 2013. [AB480 Detail]

Download: California-2013-AB480-Amended.html

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BILL NUMBER: AB 480	AMENDED
	BILL TEXT

	AMENDED IN ASSEMBLY  MARCH 21, 2013

INTRODUCED BY   Assembly Member Ian Calderon

                        FEBRUARY 19, 2013

   An act to amend Section 9855 of the Business and Professions Code,
relating to service contracts.


	LEGISLATIVE COUNSEL'S DIGEST


   AB 480, as amended, Ian Calderon. Service contracts.
   Existing law, the Electronic and Appliance Repair Dealer
Registration Law, regulates service contracts, as defined, relating
to maintenance or repair of, among other things, specified sets and
appliances, and makes it unlawful for any person to act as a service
contract administrator or a service contract seller without first
registering with the Bureau of Electronic and Appliance Repair, Home
Furnishings, and Thermal Insulation. A violation of these provisions
is deemed to be unlawfully transacting the business of insurance, and
therefore subject to specified criminal penalties.
   This bill would include in the definition of service contract a
written contract for the performance of services relating to the
maintenance, replacement, or repair of optical products, thereby
making administrators and sellers of those contracts subject to
registration with the bureau and other requirements of the act. By
expanding the definition of service contract, the bill would expand
the scope of a crime and, thus, would impose a state-mandated local
program.  The bill would also define optical products for
purposes of these provisions as prescription and nonprescription
eyewear and not contact lenses of any kind. 
    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.
   Vote: majority. Appropriation: no. Fiscal committee: yes.
State-mandated local program: yes.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:

  SECTION 1.  Section 9855 of the Business and Professions Code is
amended to read:
   9855.  The definitions used in this section shall govern the
construction and terms as used in this chapter:
   (a) "Service contract" means a contract in writing to perform,
over a fixed period of time or for a specified duration, services
relating to the maintenance, replacement, or repair of an electronic
set or appliance, as defined by this chapter, and their accessories
or of furniture, jewelry, lawn and garden equipment, power tools,
fitness equipment, telephone equipment, small kitchen appliances and
tools, optical products, or home health care products, and may
include provisions for incidental payment of indemnity under limited
circumstances, including, but not limited to, power surges, food
spoilage, or accidental damage from handling. "Service contract" does
not include a contract in writing to maintain structural wiring
associated with the delivery of cable, telephone, or other broadband
communications services.
   (b) "Service contract administrator" or "administrator" means a
person who performs or arranges the collection, maintenance, or
disbursement of moneys to compensate any party for claims or repairs
pursuant to a service contract, and who also performs or arranges any
of the following activities on behalf of service contract sellers:
   (1) Providing service contract sellers with service contract
forms.
   (2) Participating in the adjustment of claims arising from service
contracts.
   (3) Arranging on behalf of service contract sellers the insurance
required by Section 9855.2.
   A service contract administrator shall not be an obligor on a
service contract unless all service contracts under which the service
contract administrator is obligated to perform are insured under a
service contract reimbursement insurance policy.
   (c) (1) "Service contract seller" or "seller" means a person who
sells or offers to sell a service contract to a service
contractholder, including a person who is the obligor under a service
contract sold by the seller, manufacturer, or repairer of the
product covered by the service contract.
   (2) "Service contract seller" or "seller" also means a third
party, including an obligor, who is not the seller, manufacturer, or
repairer of the product. However, a third party shall not be an
obligor on a service contract unless the obligor obtains a service
contract reimbursement insurance policy for all service contracts
under which the third party is obligated under the terms of a service
contract.
   (3) "Service contract seller" or "seller" shall not include the
following:
   (A) A bank or bank holding company, or the subsidiary or affiliate
of either, or a financial institution, licensed under state or
federal law, selling or offering to sell a service contract unless
that entity is financially and legally obligated under the terms of a
service contract.
   (B) An electrical device manufacturer or electrical contractor who
constructs, installs, or services electrical devices, which include
any unit of an electrical system intended to carry electrical energy
as part of a building's electrical system, including raceways,
conductors, invertors, conduit, wires, switches, or other similar
devices.
   (d) "Service contractholder" means a person who purchases or
receives a service contract from a service contract seller.
   (e) "Service contractor" means a service contract administrator or
a service contract seller.
   (f) "Service contract reimbursement insurance policy" means a
policy of insurance issued by an insurer admitted to do business in
this state providing coverage for all obligations and liabilities
incurred by a service contract seller under the terms of the service
contracts sold in this state by the service contract seller to a
service contractholder. The service contract reimbursement insurance
policy shall either cover all service contracts sold or specifically
cover those contracts sold to residents of the State of California.
   (g) "Obligor" is the entity financially and legally obligated
under the terms of a service contract. 
   (h) "Optical products" means prescription and nonprescription
eyewear. "Optical products" shall not include contact lenses of any
kind.  
   (h) 
    (i)  The terms "consumer goods," "manufacturer," "retail
seller," "retailer," and "sale" shall have the same meanings
ascribed to them in Section 1791 of the Civil Code.
  SEC. 2.   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.