The Collateral Recovery Act, a violation of which is punishable as a misdemeanor, provides for the licensure and regulation of repossession agencies by the Bureau of Security and Investigative Services under the supervision and control of the Director of Consumer Affairs. Existing law requires licensees to serve a debtor with a specified notice of seizure after the recovery of collateral by the licensee by regular mail addressed to the last known address of the debtor or by personal service at the option of the repossession agency.

This bill would authorize the notice to instead be given by regular mail addressed to the current address of the debtor, if known, or by personal service, or by email, if known, at the option of the repossession agency.

The Collateral Recovery Act, a violation of which is punishable as a misdemeanor, provides for the licensure and regulation of repossession agencies by the Bureau of Security and Investigative Services under the supervision and control of the Director of Consumer Affairs. Existing law requires licensees to serve a debtor with a specified notice of seizure after the recovery of collateral by the licensee by regular mail addressed to the last known address of the debtor or by personal service at the option of the repossession agency.

This bill would provide that authorize the notice may to instead be given by regular mail addressed to the current address of the debtor, if known, by personal service, or by email, if known, at the option of the repossession agency.

Existing law requires the notice to include, among other things, a disclosure of the charges payable by the debtor to the repossession agency for the storage of the collateral and personal effects from the date of repossession until release of the property from storage.

This bill would prohibit any of those disclosed charges from being determined by any entity other than the repossession agency. The bill would also provide require that any charges payable by the debtor to the repossession agency for the storage of the collateral and personal effects from the date of repossession until release of the property from storage and the disclosure of those changes are confidential, except under specified circumstances. be confidential. Because a violation of these requirements would be 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 Collateral Recovery Act, a violation of which is punishable as a misdemeanor, provides for the licensure and regulation of repossession agencies by the Bureau of Security and Investigative Services under the supervision and control of the Director of Consumer Affairs. Existing law requires licensees to serve a debtor with a specified notice of seizure after the recovery of collateral by the licensee by regular mail addressed to the last known address of the debtor or by personal service at the option of the repossession agency.

This bill would provide that the notice may instead be given by regular mail addressed to the current address of the debtor, if known, by personal service, or by email, if known, at the option of the repossession agency.

Existing law requires the notice to include, among other things, a disclosure of the charges payable by the debtor to the repossession agency for the storage of the collateral and personal effects from the date of repossession until release of the property from storage.

This bill would prohibit any of those disclosed charges from being determined by any entity other than the repossession agency. The bill would also provide that any charges payable by the debtor to the repossession agency for the storage of the collateral and personal effects from the date of repossession until release of the property from storage and the disclosure of those changes are confidential, except under specified circumstances. Because a violation of these requirements would be 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.

Date of Hearing: May 8, 2024

ASSEMBLY COMMITTEE ON APPROPRIATIONS

Buffy Wicks, Chair

ABPCA Bill Id:AB 2228

Author:(Villapudua) – As Amended Ver:April 24, 2024

Urgency: No State Mandated Local Program: No Reimbursable: No

SUMMARY:

This bill establishes that a repossession agency may send a notice of seizure to the debtor’s “current address, if known,” rather than their “last known address.”

FISCAL EFFECT:

No state costs. The Bureau of Security and Investigative Services (BSIS) anticipates no changes to its current workload.

COMMENTS:

1. Purpose. According to the author:

[This bill] will provide important efficiency and consumer protection improvements to the Collateral Recovery Act by . . . allowing the notice of repossession and storage of personal effects to be sent to the ‘current address, if known’ rather than the ‘last known address,’ we are preventing the sending of personal, sensitive information to an address that the debtor may not have been living at for many years.

1. Background. The California Collateral Recovery Act (Act) provides for the licensure and regulation of repossession agencies by BSIS, under the supervision and control of the Director of Consumer Affairs. Among its provisions, the Act establishes guidelines and procedures repossession agencies must follow when providing notice to a person whose property has been repossessed. Specifically, the repossession agency is required to provide the repossessed party with a notice, usually within 48 hours, but in all cases in no less than 96 hours after the repossession takes place. The notice must include a complete and accurate inventory of all personal effects that have been removed from the collateral. Additionally, as part of the notice of seizure sent to a debtor, a repossession agency must disclose any charges payable by the debtor in relation to the storage of collateral and any personal effects. These notifications can be serviced personally or mailed to the last known address of the debtor.

According to the California Association of Licensed Repossessors, the sponsors of this measure, there is concern that notices served to the “last known address” are not actually going to the debtor. The “last known address” is often outdated, sometimes for years. The result is that some debtors do not receive a notice that collateral has been seized nor a list of their personal items in possession of the repossession agency.

The author remedies this by modifying “last known address” to “current address, if known” in the applicable statute.

Analysis Prepared by: Jennifer Swenson / APPR. / (916) 319-2081

Date of Hearing: April 23, 2024

ASSEMBLY COMMITTEE ON JUDICIARY

Ash Kalra, Chair

ABPCA Bill Id:AB 2228

Author:(Villapudua) – As Amended Ver:April 10, 2024

PROPOSED CONSENT (As Proposed to be Amended)

SUBJECT: Collateral recovery: notice and disclosure

KEY ISSUE: in order to better effEctuate actual notice, should repossessors’ notices to debtors be sent to their “current address” rather than their “last known address”?

SYNOPSIS

When a person has violated a condition of the lease or loan agreement on their personal vehicle, such as failing to pay on time or failing to maintain required insurance, and efforts to correct the violation fail, the bank, financial lender, legal owner or their agents can contract with repossession agencies to locate and repossess the vehicle subject to the security agreement that contains the repossession clause. Under existing law, repossession agencies must inventory all personal effects that come into their possession, store the items for no less than 60 days, and notify the debtor that they are in possession of their personal effects so that the debtor may be able to recover them. Additionally, current law mandates that, as part of the notice of seizure that is sent to a debtor, a repossession agency must disclose any charges payable by the debtor in relation to the storage of collateral and any personal effects. These notifications currently can be serviced personally or mailed to the last known address of the debtor. According to the California Association of Licensed Repossessors, the sponsors of this measure, there is concern that these notices served to the “last known address” are not actually going to the debtor. The “last known address” is often outdated, sometimes for years. The result is that some debtors are not receiving a notice that collateral has been seized nor a list of their personal items in possession of the repossession agency. The sponsor explains the further potential harm, “given that the personal inventory effects list contain personal, private, and sensitive information there becomes a very real possibility that this sensitive information is being disclosed to third parties.” This bill seeks remedy this by modifying “last known address” to “current address, if known.” The author proposes amendments to remove certain provisions of the bill in print. The bill, as proposed to be amended, has no known opposition. The measure was previously unanimously approved by the Assembly Business & Professions Committee.

SUMMARY: Establishes that a repossession agency may send a notice of seizure to the debtor’s current address, if known.

EXISTING LAW:

1. Provides for the licensure and regulation of repossessors by the Bureau of Security and Investigative Services within the Department of Consumer Affairs (DCA) under the Collateral Recovery Act. (Business and Professions Code Sections 7500 et seq. All further statutory references are to the Business and Professions Code, unless otherwise provided.)
2. Defines “assignment” as any written authorization by the legal owner, lienholder, lessor, lessee, registered owner, or the agent of any of them, to repossess any collateral, including, but not limited to, collateral registered under the Vehicle Code that is subject to a security agreement that contains a repossession clause. “Assignment” also means any written authorization by an employer to recover any collateral entrusted to an employee or former employee in possession of the collateral. (Section 7500.1 (a).)
3. Defines “collateral” as any specific vehicle, trailer, boat, recreational vehicle, motor home, appliance, or other property that is subject to a security agreement. (Section 7500.1 (e).)
4. Defines “debtor” as any person obligated under a security agreement. (Section 7500.1 (i).)
5. Defines “legal owner” as a person holding a security interest in any collateral that is subject to a security agreement, a lien against any collateral, or an interest in any collateral that is subject to a lease agreement. (Section 7500.1 (n).)
6. Defines “licensee” as an individual, partnership, limited liability company, or corporation licensed under this chapter as a repossession agency. (Section 7500.1 (o).)
7. Defines “personal effects” as any property that is not the property of the legal owner and is not listed on the repossession assignment. (Section 7500.1 (r).)
8. Defines “repossession” as the locating or recovering of collateral by means of an assignment. (Section 7500.1 (w).)
9. Prohibits a licensed repossession agency or its registrants from demanding a payment in lieu of repossession, nor sell any recovered collateral. (Section 7507.4.)
10. Requires a licensed repossessor to remove and inventory personal effects from the collateral after repossession. The inventory of the personal effects must be complete and accurate, and the personal effects must be labeled and stored by the licensee for a minimum of 60 days in a secure manner, except those personal effects removed by or in the presence of the debtor or the party in possession of the collateral at the time of the repossession. (Section 7507.9.)
11. Requires that the date and time the inventory is made to be recorded, and that the permanent records of the licensee to indicate the name of the employee or registrant who performed the inventory. (Section 7507.9 (a).)
12. Allows licensees to dispose of personal effects after being held for a minimum of 60 days, so long as the inventory and other relevant information regarding disposal are filed in the permanent records of the licensee and retained for four years. (Section 7507.9 (c).)
13. Requires that the inventory is to be provided to the debtor no later than 48 hours after the recovery of the collateral, with certain exceptions to account for weekends, holidays, and additional time for certain collateral. (Section 7507.9 (e).)
14. Authorizes a debtor, with the consent of the licensee, to waive the preparation and presentation of an inventory if the debtor redeems the personal effects or other personal property not covered by a security interest within the time period for the notices required by the Act and signs a statement that the debtor has received all the property. (Section 7507.9 (h).)
15. Requires a repossession agency to obtain written authorization from the debtor before releasing personal effects or other personal property not covered by a security agreement to a person other than the debtor. (Section 7507.9 (i).)
16. Requires that the inventory must be a confidential document, and that the licensee can only disclose the contents of the inventory:
    1. In response to the order of a court having jurisdiction to issue the order.
    2. In compliance with a lawful subpoena issued by a court of competent jurisdiction.
    3. When the debtor has consented in writing to the release and the written consent is signed and dated by the debtor subsequent to the repossession and states the entity or entities to whom the contents of the inventory may be disclosed.
    4. To the debtor. (Section 7507.9 (k).)
17. Requires that a licensee serve a debtor with a notice of seizure as soon as possible after the recovery of collateral with specified information, to be served no later than 48 hours after seizure, and that the notice may be sent via mail addressed to the last known address of the debtor or by personal service. (Section 7505.10.)
18. Requires that the notice of seizure must include a disclosure of the charges payable by the debtor to the repossession agency for the storage of the collateral and personal effects from the date of repossession until release of the property from storage. (Section 7507.10 (f).)
19. Authorizes the Director of Consumer Affairs to assess fines against licensees that use recovered collateral or personal effects for their own personal benefit. (Section 7508.2 (b).)
20. Authorizes the Director of Consumer Affairs to assess fines against licensees that fail to maintain a debtor’s personal effects for at least 60 days, or that fail to provide a personal effects list or notice of seizure within the established time limits. (Section 7508.4 (h), (i).)

FISCAL EFFECT: As currently in print this bill is keyed fiscal.

COMMENTS: According to the author:

AB 2228 will provide important efficiency and consumer protection improvements to the Collateral Recovery Act by . . . allowing the notice of repossession and storage of personal effects to be sent to the ‘current address, if known’ rather than the ‘last known address,’ we are preventing the sending of personal, sensitive information to an address that the debtor may not have been living at for many years.

Background. When a person has violated a condition of the lease or loan agreement on their personal property, especially automobiles, such as failing to pay on time or failing to maintain required insurance, and efforts to correct the violation fail, the bank, financial lender, legal owner or their agents can contract with repossession agencies to locate and repossess the vehicle subject to the security agreement that contains the repossession clause. Many of the activities carried out before, during, and after the repossession are regulated by state and federal laws. The California Collateral Recovery Act establishes guidelines and procedures that must be followed as it relates to notice to the person whose property has been repossessed. Under existing law, the repossession agency is required to provide the repossessed party with a notice, usually within 48 hours, but in all cases in no less than 96 hours after the repossession takes place. That notice must include a complete and accurate inventory of all personal effects that have been removed from the collateral. The notice must also include the following information:

• The name, address, phone number of the vehicle’s legal owner.
• The name, address, phone number of the repossession agency.
• Statements and disclosures as required by law about licensure requirements for repossession agencies and their employees, timeframes in which the notice is required to be provided, damage to the vehicle during the repossession or while in the possession of the repossession agency, and if applicable, information about the handling of special license plates.
• Storage charges for personal effects.

These notifications can be serviced personally or mailed to the last known address of the debtor.

The problem. According to the California Association of Licensed Repossessors, the sponsors of this measure, there is concern that these notices served to the “last known address” are not actually going to the debtor. The “last known address” is often outdated, sometimes for years. The result is that some debtors are not receiving a notice that collateral has been seized nor a list of their personal items in possession of the repossession agency. The sponsor explains the further potential harm, “given that the personal inventory effects list contain personal, private, and sensitive information there becomes a very real possibility that this sensitive information is being disclosed to third parties.”

The bill seeks to remedy this by modifying “last known address” to “current address, if known.” While it is commendable that the sponsor is seeking a proactive approach to find the person whose property was repossessed, it is unclear how much, or whether, this language change in the statute will bring about the desired effect. A review of existing law across the California codes reveals that “last known address” and “current address” are both used. As the bill is proposed to be amended, a repossessor will have to provide the required notice by personal service if the current address is not known. The author may wish to consider providing another alternative notice option in the event a current address is not known. In addition, though payment terms are generally and preferably handled via contractual terms, the sponsors have raised concerns regarding repossessors’ compensation for performing obligations imposed by the Collateral Recovery Act. As this measure moves through the legislative process, the author may wish to consider addressing these concerns by adding a compensation floor for services performed.

Author’s amendments. The author proposes the following amendments, removing certain provisions of the bill in print:

7507.09 (g) The notice may be given by regular mail addressed to the current address of the debtor, if known, or by personal service, or by email, if known, at the option of the repossession agency.

7507.10. (a) A licensee shall serve a debtor with a notice of seizure as soon as possible after the recovery of collateral and not later than 48 hours, except that if the 48-hour period encompasses a Saturday, Sunday, or postal holiday, the notice of seizure shall be provided not later than 72 hours or, if the 48-hour period encompasses a Saturday or Sunday and a postal holiday, the notice of seizure shall be provided not later than 96 hours, after the repossession of collateral. The notice shall include all of the following:

…

(b) Any charges payable by the debtor to the repossession agency for the storage of the collateral and personal effects from the date of repossession until release of the property from storage, as disclosed under paragraph (6) of subdivision (a), shall not be determined by any entity other than the repossession agency.

(c) The notice under subdivision (a) and any disclosure of charges payable by the debtor to the repossession agency for the storage of the collateral and personal effects from the date of repossession until release of the property from storage shall be confidential.

(d) (b) The notice under subdivision (a) may be given by regular mail addressed to the current address of the debtor, if known, or by personal service, or by email, if known, at the option of the repossession agency.

ARGUMENTS IN SUPPORT: This bill is sponsored by the California Association of Licensed Repossessors, who state:

[This bill] will go far to ensure that the consumer’s personal information is not disclosed to third parties. It will also ensure that repossession agencies are not violating state and federal laws by disclosing confidential information.

Prior Related Legislation. AB 913 (Smith) Chapter 416, Statutes of 2021, clarified and updated definitions used under the Act, including “deadly weapon” as it pertains to a debtor’s personal effects.

AB 2759 (Obernolte) Chapter 354, Statutes of 2020, increased the time that an expired repossession agency license may be renewed from three years to ten years and allowed a family member of a qualified manager who has died to reinstate and retain the repossession agency license number.

AB 1859 (Gallagher) Chapter 509, Statutes of 2016, clarified and updated terminology throughout the Act, and amended the experience requirements necessary for a repossessor’s license.

AB 2503 (Hagman) Chapter 390, Statutes of 2014, revised the Act to prohibit knowing submissions of false reports, among other reforms, and exempted repossessed vehicles from certain registration requirements.

AB 791 (Hagman) Chapter 340, Statutes of 2013, prohibited a repossessor from selling repossessed collateral or accepting payment from a debtor in lieu of repossession, prohibited a repossession agency from disclosing personal employee information, and authorized a repossessor to wear certain identification.

AB 1883 (Kelley) Chapter 402, Statutes of 2002, provided that certain licensees who misrepresent or provide false information on an application for licensure are guilty of a misdemeanor and subject to discipline by the Director of Consumer Affairs.

SB 1456 (Kelley, Chapter 624, Statutes of 1996) authorized repossession agencies to request written permission to release personal property to someone other than the debtor, as well as other technical changes.

AB 1541 (Lee) Chapter 505, Statutes of 1995, made various changes to repossession law, including but not limited to renaming the Repossessors Act to the Collateral Recovery Act, and establishing laws around the handling of the personal effects of debtors.

REGISTERED SUPPORT / OPPOSITION:

Support

California Association of Licensed Repossessors (sponsor)

Opposition

None on file (as proposed to be amended)

Analysis Prepared by: Shiran Zohar / JUD. / (916) 319-2334

Date of Hearing: April 9, 2024

ASSEMBLY COMMITTEE ON BUSINESS AND PROFESSIONS

Marc Berman, Chair

ABPCA Bill Id:AB 2228

Author:(Villapudua) – As Introduced Ver:February 7, 2024

SUBJECT: Collateral recovery: notice and disclosure.

SUMMARY: This bill would clarify that a repossession agency may send a notice of seizure to the debtor’s current address or by email, and prohibits any entity other than the repossession agency from determining charges payable by the debtor for the storage of collateral and personal effects.

EXISTING LAW:

1. Provides for the licensure and regulation of repossessors by the Bureau of Security and Investigative Services (BSIS) within the Department of Consumer Affairs (DCA) under the Collateral Recovery Act (“the Act”). (Business and Professions Code (BPC) §§ 7500 et. seq)
2. Defines “assignment” as any written authorization by the legal owner, lienholder, lessor, lessee, registered owner, or the agent of any of them, to repossess any collateral, including, but not limited to, collateral registered under the Vehicle Code that is subject to a security agreement that contains a repossession clause. “Assignment” also means any written authorization by an employer to recover any collateral entrusted to an employee or former employee in possession of the collateral. (BPC § 7500.1(a))
3. Defines “collateral” as any specific vehicle, trailer, boat, recreational vehicle, motor home, appliance, or other property that is subject to a security agreement. (BPC § 7500.1(e))
4. Defines “debtor” as any person obligated under a security agreement. (BPC § 7500.1(i))
5. Defines “legal owner” as a person holding a security interest in any collateral that is subject to a security agreement, a lien against any collateral, or an interest in any collateral that is subject to a lease agreement. (BPC § 7500.1(n))
6. Defines “licensee” as an individual, partnership, limited liability company, or corporation licensed under this chapter as a repossession agency. (BPC § 7500.1(o))
7. Defines “personal effects” as any property that is not the property of the legal owner and is not listed on the repossession assignment. (BPC § 7500.1(r))
8. Defines “repossession” as the locating or recovering of collateral by means of an assignment. (BPC § 7500.1(w))
9. Prohibits a licensed repossession agency or its registrants from demanding a payment in lieu of repossession, nor sell any recovered collateral. (BPC § 7507.4)
10. Requires a licensed repossessor to remove and inventory personal effects from the collateral after repossession. The inventory of the personal effects must be complete and accurate, and the personal effects must be labeled and stored by the licensee for a minimum of 60 days in a secure manner, except those personal effects removed by or in the presence of the debtor or the party in possession of the collateral at the time of the repossession. (BPC § 7507.9)
11. Requires that the date and time the inventory is made shall be recorded, and that the permanent records of the licensee shall indicate the name of the employee or registrant who performed the inventory. (BPC § 7507.9(a))
12. Allows licensees to dispose of personal effects after being held for a minimum of 60 days, so long as the inventory and other relevant information regarding disposal are filed in the permanent records of the licensee and retained for four years. (BPC § 7507.9(c))
13. Requires that the inventory shall be provided to the debtor no later than 48 hours after the recovery of the collateral, with certain exceptions to account for weekends, holidays, and additional time for certain collateral. (BPC § 7507.9(e))
14. Authorizes a debtor, with the consent of the licensee, to waive the preparation and presentation of an inventory if the debtor redeems the personal effects or other personal property not covered by a security interest within the time period for the notices required by the Act and signs a statement that the debtor has received all the property. (BPC § 7507.9(h))
15. Requires a repossession agency to obtain written authorization from the debtor before releasing personal effects or other personal property not covered by a security agreement to a person other than the debtor. (BPC § 7507.9(i))
16. Requires that the inventory shall be a confidential document, and that the licensee shall only disclose the contents of the inventory:
    1. In response to the order of a court having jurisdiction to issue the order.
    2. In compliance with a lawful subpoena issued by a court of competent jurisdiction.
    3. When the debtor has consented in writing to the release and the written consent is signed and dated by the debtor subsequent to the repossession and states the entity or entities to whom the contents of the inventory may be disclosed.
    4. To the debtor.

(BPC § 7507.9(k))

1. Requires that a licensee shall serve a debtor with a notice of seizure as soon as possible after the recovery of collateral with specified information, to be served no later than 48 hours after seizure, and that the notice may be sent via mail addressed to the last known address of the debtor or by personal service. (BPC § 7505.10)
2. Requires that the notice of seizure must include a disclosure of the charges payable by the debtor to the repossession agency for the storage of the collateral and personal effects from the date of repossession until release of the property from storage. (BPC § 7507.10(f))
3. Authorizes the Director of Consumer Affairs to assess fines against licensees that use recovered collateral or personal effects for their own personal benefit. (BPC § 7508.2(b))
4. Authorizes the Director of Consumer Affairs to assess fines against licensees that fail to maintain a debtor’s personal effects for at least 60 days, or that fail to provide a personal effects list or notice of seizure within the established time limits. (BPC § 7508.4(h)(i))

THIS BILL:

1. Authorizes that, upon repossession of collateral, the notice of seizure may be sent to the current address of the debtor, if known, or by email, if known.
2. Requires that any charges payable by the debtor to the repossession agency for the storage of collateral and personal effects shall not be determined by any entity other than the repossession agency.
3. Requires that any charges payable by the debtor to the repossession agency for the storage of collateral and personal effects shall be confidential.
4. Restates that a licensee shall only disclose the contents of the inventory:
   1. In response to the order of a court having jurisdiction to issue the order.
   2. In compliance with a lawful subpoena issued by a court of competent jurisdiction.
   3. When the debtor has consented in writing to the release and the written consent is signed and dated by the debtor subsequent to the repossession and states the entity or entities to whom the contents of the inventory may be disclosed.
   4. To the debtor.

FISCAL EFFECT: Unknown; this bill is keyed fiscal by the Legislative Counsel.

COMMENTS:

Purpose. This bill is sponsored by the California Association of Licensed Repossessors. According to the author:

“[This bill] will provide important efficiency and consumer protection improvements to the Collateral Recovery Act by addressing two main issues. First, by allowing the notice of repossession and storage of personal effects to be sent to the ‘current address, if known’ rather than the ‘last known address,’ we are preventing the sending of personal, sensitive information to an address that the debtor may not have been living at for many years. Second, maintaining confidentiality of the charged price of storage for personal effects will prevent collections agencies from requiring a debtor to divert their funds away from receiving their valuable property back, and toward paying down their deficiency balance. These are necessary steps to take in order to provide more equitable practices and help debtors retrieve their items of value.”

Background. In California, the repossessing profession is largely regulated by the Collateral Recovery Act (formerly known as the Repossessors Act), which places the licensure, regulation, and enforcement of repossessors and repossession agencies under the DCA’s Bureau of Security and Investigative Services. Repossession agencies contract with legal owners – that is, persons with a security interest in any collateral, a lien against collateral, or interest in such that is subject to a lease agreement – to locate and recover personal property that has been sold under a security agreement. Often in this process, repossessors come into possession of a debtor’s personal effects, property that is not part of the repossession assignment but may be included in the repossessed collateral (for example, personal items contained within a repossessed vehicle).

Under existing law, repossession agencies must inventory all personal effects that come into their possession, store the items for no less than 60 days, and notify the debtor that they are in possession of their personal effects so that the debtor may be able to recover them. Additionally, current law mandates that, as part of the notice of seizure that is sent to a debtor, a repossession agency must disclose any charges payable by the debtor in relation to the storage of collateral and any personal effects. These notifications currently can be serviced personally or mailed to the last known address of the debtor.

However, according to the sponsors, there is concern that these notices are not actually going to the debtor. The “last known address” is often outdated, sometimes for years. As a result, not only are some debtors not receiving a notice that collateral has been seized nor a list of their personal items in possession of the repossession agency, but these confidential notices are potentially being obtained by parties not lawfully privy to the information.

The author and sponsors have noted that this potential for notices and inventory lists to be shared with parties beyond the debtor is especially concerning in context of recent tactics used by lending institutions and collection agencies. Some collectors have sent unlawful notices to debtors claiming that they must pay a fee prior to collecting their personal effects from a repossession agency, and others have contacted repossession agencies themselves, insisting that the agency sell the debtor’s personal items and remit the money to the lender. This has created confusion and unfair practices amongst repossession agencies.

This bill seeks to address these issues by clarifying that repossession agencies can send a seizure notice to either the current address of the debtor, if it is known, or to the email of the debtor, if it is known. In addition, this bill adds new provisions to the Collateral Recovery Act making clear that charges payable by the debtor to the repossession agency for storage are only to be determined by the repossession agency itself, and reiterates that these charges are strictly confidential.

Prior Related Legislation.

AB 913 (Smith) Chapter 416, Statutes of 2021, clarified and updated definitions used under the Act, including “deadly weapon” as it pertains to a debtor’s personal effects.

AB 2759 (Obernolte) Chapter 354, Statutes of 2020, increased the time that an expired repossession agency license may be renewed from three years to ten years and allowed a family member of a qualified manager who has died to reinstate and retain the repossession agency license number.

AB 1859 (Gallagher) Chapter 509, Statutes of 2016, clarified and updated terminology throughout the Act, and amended the experience requirements necessary for a repossessor’s license.

AB 2503 (Hagman) Chapter 390, Statutes of 2014, revised the Act to prohibit knowing submissions of false reports, among other reforms, and exempted repossessed vehicles from certain registration requirements.

AB 791 (Hagman) Chapter 340, Statutes of 2013, prohibited a repossessor from selling repossessed collateral or accepting payment from a debtor in lieu of repossession, prohibited a repossession agency from disclosing personal employee information, and authorized a repossessor to wear certain identification.

AB 1883 (Kelley) Chapter 402, Statutes of 2002, provided that certain licensees who misrepresent or provide false information on an application for licensure are guilty of a misdemeanor and subject to discipline by the Director of Consumer Affairs.

SB 1456 (Kelley, Chapter 624, Statutes of 1996) authorized repossession agencies to request written permission to release personal property to someone other than the debtor, as well as other technical changes.

AB 1541 (Lee) Chapter 505, Statutes of 1995, made various changes to repossession law, including but not limited to renaming the Repossessors Act to the Collateral Recovery Act, and establishing laws around the handling of the personal effects of debtors.

ARGUMENTS IN SUPPORT:

This bill is sponsored by the California Association of Licensed Repossessors (CALR). According to CALR: “[This bill] will go far to ensure that the consumer’s personal information is not disclosed to third parties. It will also ensure that repossession agencies are not violating state and federal laws by disclosing confidential information.”

POLICY ISSUE(S) FOR CONSIDERATION:

Unknown Destination. The author and sponsors note that, at present, repossession agencies are compelled to knowingly send seizure notices and inventory lists to an address that is no longer in use by the debtor, even when they are aware of a more current address the debtor may reside at or have the debtor’s email address. As such, the revised and expanded language in this bill allowing additional forms of contact, if known, is sensible to give repossessors more ways to notify debtors. However, it is unclear what happens when a repossession agency does not have a current address or known email on-hand, as law still mandates that this notice must be sent within 48 hours of collateral seizure. As this bill progresses, the author and sponsors may wish to consider additional language clarifying what steps a repossession agency must take if no form of contact is known for a debtor.

IMPLEMENTATION ISSUES:

Consistency across BPC subdivisions. In order to give repossessors more ways to notify debtors, this bill amends current law contained under BPC § 7507.10, which is the subdivision pertaining to notices of seizure, replacing the term “last known address” with “current address, if known”, and adding “email, if known”. However, language contained in BPC § 7507.9(g), which is the preceding subdivision pertaining to sending inventory lists to debtors, remains unchanged and still reads “last known address”.

Unnecessary and Excessive Code. In order to ensure charges disclosed to debtors related to storage of collateral and personal effects are solely determined by the repossession agency, and to ensure confidentiality of these charges, this bill establishes a new section under the Collateral Recovery Act, BPC § 7507.105. However, it is unclear why an entirely new section of code is necessary when there are existing sections under the Act already germane to these topics. Additionally, the proposed subdivision (b) of this new section copies verbatim language already contained in BPC § 7507.9.

AMENDMENTS:

In order to address implementation issues noted in the analysis, amend the bill as follows:

On page 2, before line 1:

SECTION 1.

Section 7507.09 of the Business and Professions Code, as amended by Section 3 of Chapter 416 of the Statutes of 2021, is amended to read:

(g) The notice may be given by regular mail addressed to the last known current address of the debtor, if known, or by personal service, or by email, if known, at the option of the repossession agency.

SEC. 2. Section 7507.10 of the Business and Professions Code, as amended by Section 4 of Chapter 322 of the Statutes of 2009, is amended to read: Section 7507.105 is added to the Business and Professions Code, immediately following Section 7507.10, to read:

7507.10. (a) A licensee shall serve a debtor with a notice of seizure as soon as possible after the recovery of collateral and not later than 48 hours, except that if the 48-hour period encompasses a Saturday, Sunday, or postal holiday, the notice of seizure shall be provided not later than 72 hours or, if the 48-hour period encompasses a Saturday or Sunday and a postal holiday, the notice of seizure shall be provided not later than 96 hours, after the repossession of collateral. The notice shall include all of the following:

(1)(a) The name, address, and telephone number of the legal owner to be contacted regarding the repossession.

(2)(b) The name, address, and telephone number of the repossession agency to be contacted regarding the repossession.

(3)(c) A statement printed on the notice containing the following: “Repossessors are regulated by the Bureau of Security and Investigative Services, Department of Consumer Affairs, Sacramento, CA. Repossessors are required to provide you, not later than 48 hours after the recovery of collateral, with an inventory of personal effects or other personal property recovered during repossession unless the 48-hour period encompasses a Saturday, Sunday, or a postal holiday, then the inventory shall be provided no later than 96 hours after the recovery of collateral.”

(4)(d) A disclosure that “Damage to a vehicle during or subsequent to a repossession and only while the vehicle is in possession of the repossession agency and which is caused by the repossession agency is the liability of the repossession agency. A mechanical, electrical, or tire failure, or the loss of, or any damage to, or as a result of, or caused by, any aftermarket parts and accessories not in compliance with Section 24008 of the Vehicle Code shall not be the responsibility of the repossession agency unless the failure, damage, or loss is due to the negligence of the repossession agency.”

(5)(e) If applicable, a disclosure that “Environmental, Olympic, special interest, or other license plates issued pursuant to Article 8 (commencing with Section 5000), Article 8.4 (commencing with Section 5060) or Article 8.5 (commencing with Section 5100) of Chapter 1 of Division 3 of the Vehicle Code that remain the personal effects of the debtor will be removed from the collateral and inventoried, and that if the plates are not claimed by the debtor within 60 days, they will be destroyed.”

(6)(f) A disclosure of the charges payable by the debtor to the repossession agency for the storage of the collateral and personal effects from the date of repossession until release of the property from storage.

(b) Any charges payable by the debtor to the repossession agency for the storage of the collateral and personal effects from the date of repossession until release of the property from storage, as disclosed in subdivision (a)(6), shall not be determined by any entity other than the repossession agency.

(c) The notice, and any disclosure of charges payable by the debtor to the repossession agency for the storage of the collateral and personal effects from the date of repossession until release of the property from storage, shall be confidential.

(d) The notice may be given by regular mail addressed to the last known current address of the debtor or debtor, if known, by personal service service, or by email, if known, at the option of the repossession agency.

7507.105.

 (a) Any charges payable by the debtor to the repossession agency for the storage of the collateral and personal effects from the date of repossession until release of the property from storage, as disclosed in subdivision (f) of Section 7507.10, shall not be determined by any entity other than the repossession agency.

(b) Any charges payable by the debtor to the repossession agency for the storage of the collateral and personal effects from the date of repossession until release of the property from storage, and the disclosure provided pursuant to subdivision (f) of Section 7507.10, shall be confidential. A licensee shall only disclose the contents of the inventory under the following circumstances:

(1) In response to the order of a court having jurisdiction to issue the order.

(2) In compliance with a lawful subpoena issued by a court of competent jurisdiction.

(3) When the debtor has consented in writing to the release and the written consent is signed and dated by the debtor subsequent to the repossession and states the entity or entities to whom the charges may be disclosed.

(4) To the debtor.

REGISTERED SUPPORT:

California Association of Licensed Repossessors (sponsor)

REGISTERED OPPOSITION:

None on file.

Analysis Prepared by: Edward Franco / B. & P. / (916) 319-3301