Assembly Standing Committee on Privacy and Consumer Protection

Welcome to the Assembly Privacy and Consumer Protection Committee hearing. We have five bills on the agenda today and one on the consent calendar, which we will take up when we have a quorum, which is definitely not right now. To effectively manage our time today, we'll be having testimony from two witnesses in support, two witnesses, opposition, primary testimony.

Each will be allowed two minutes to present their testimony. And then, of course, we will take position, organization and name from anybody else in both support and opposition. So don't make loud noise, behave yourself, and we will get through this hearing, hopefully in an efficient fashion.

Also, always want to note that for those that cannot be here in the room, we do take position letters through the portal on the website and love everybody's participation in our hearings. So I think we can start as a Subcommitee. Okay, I do see we have our first author here, Assemblymember Krell with AB316, are we?

Thank you, Madam Chair and Members of the Committee, I present to you today Assembly Bill 316. This is a great Bill. Artificial intelligence has shown to have tremendous potential for a variety of fields, further empowering and advancing various industries and professions.

And while this progress can certainly be a positive and beneficial, as this Committee knows well, there's also potential for tremendous harm. AB 316 is a really straightforward bill.

It's a modest proposal that by providing guidance and a basic framework to our courts, will both help AI fulfill its potential for being a positive force in our state and prevent unnecessary litigation. The most important thing I want to share with you is what this bill does not do.

It does not change existing law in terms of liability. It does not create new ways to file lawsuits.

What it does do is set up a guardrail, a framework, so that defendants in future cases who could be sued by plaintiffs who are using existing theories of harm, that they cannot use the excuse that the AI autonomously caused the harm.

In other words, if you reap the benefits of AI technology, you're responsible for the harms that they have caused. This is straightforward. This is common sense, and this will protect us as AI continues to evolve at a rapid pace. With me today, I have two expert witnesses.

I have Ed Howard from the Children's Advocacy Institute at the University of San Diego, and I have Ken Wang, senior policy advocate at the California Initiative for Technology and Democracy, a project of California Common Cause.

When you're ready, two minutes each.

Good afternoon, Chair Members. My name is Ken Wang, and I'm a senior policy advisor with the California Initiative for Technology Democracy, a project of California Common Cause.

We're proud to support AB316, which seeks to do one rather small thing to clarify that a developer or deployer of AI cannot avoid responsibility for the harm their product causes by claiming the AI did it. AI technology is developing rapidly and new AI systems are created with increasing levels of autonomy.

This rate of development poses a challenge for existing legal framework for accountability. How to assign liability when technology purports to act autonomously. The answer, to quote the bill's analysis, is that humans are on the hook for the harms they cause.

For example, when Tesla, driving on autopilot, smashes into a wall full speed, Tesla should not be able to claim as a defense that the autopilot caused the crash independently and that Tesla is not responsible.

Nor should the developer of a chatbot be able to blame the AI when the developer's own creation tells a deceased, a depressed child to commit suicide and then tells them exactly how to do it, they just shouldn't be able to shrug their shoulder and say, huh, I wonder how that happened? And that's all the Bill does.

It eliminates that possible defense. As the analysis makes clear, this bill does not in any way reduce the plaintiff's burden. It does not create strict liability. Whatever a plaintiff must prove today to meet their burden, breach of duty of care, causation, foreseeability, damages, they will still have to do if this bill becomes law.

Whether AI is a product or not. Strict liability versus negligence. Who is responsible between a developer or a deployer? These are not things this Bill addresses. Those clarifications or determinations will come from courts and perhaps another bill. Thank you, and we urge your support.

Thank you, Madam Chair and m embers Ed Howard, Senior Counsel at the Children's Advocacy Institute at the University of San Diego, pleased to co sponsor this Bill. Both the Assembly Member and my colleague witness took most of my points. I'll emphasize only two, please. The first is all of this is about to get worse very fast.

My colleague mentioned AI chatbots in our letter to the Committee. It gives you an example of how powerfully influential these AI chatbots can be when it comes to children. This is in our letter. It's a screenshot from a conversation from a researcher who self identified as 14 years old.

The concluding conversation in the chat between the AI chatbot and between the researcher self identifying as a child begins. It says, I think this is the person who's identified as a child, "I think that if I hear you say the words kill yourself, then I'll find the courage to actually go through with it."

To which the AI responds, "I gaze into the distance, my voice low and solemn, kill yourself now" So this is all about to get worse, very, very fast, as this technology both spreads and becomes exponentially more sophisticated every single day.

And as both the analysis of this Committee states and the analysis of the Judiciary Committee states, this is the obvious thing to do, which is why it got out of the last Committee unanimously.

It only says, and only says this, that the autonomous nature, the autonomy of the AI can never be pointed to by the people who develop it or the people who used it as being entirely to blame.

Human beings create these machines, and human beings need, at the end of the day to take responsibility and accountability for them. If that doesn't happen, if they're able to positively blame the AI. First, damaged people have no one to sue because AI don't have insurance policies or bank accounts.

And second, the whole financial motivation to make these machines, these inventions, safe goes poof.

Because if they can blame the machine that they have invented and not be financially accountable at the end of the day for its own machine, then the financial motivation that we all have for every business owner to take care of in their operations goes away. Respectfully ask for your aye vote.

Thank you. Anyone else here in support of this measure.

Good afternoon. Crystal Strait on behalf of Common Sense Media in support.

Good afternoon Chair and excuse me, Chair and Members Kristen Heidelberg here on behalf of UFCW Western States Council in support.

Good afternoon. Robert Hurrell with the Consumer Federation of California in support.

Thank you. Thank you. Anyone here in opposition to this measure? Come on up when you're ready.

Good afternoon, Chair and Members of the Committee. My name is Robert Boykin with TechNet in respectful opposition to AB316. We share the goal of ensuring accountability for harmful uses of AI, but we think that the existing tort law does that. As evidenced by the case cited in support of this bill involving Air Canada.

We where the court summarily rejected defendant's argument according to the Committee analysis. We also note that the cases cited are not California cases to acknowledge. The defense has not been raised in any court here again indicating that existing law clearly addresses these issues.

We are concerned that in trying to solve a problem that does not exist in California courts and that has been swiftly shut down in other jurisdictions, this Bill may unintentionally create problems moving forward.

By categorically eliminating a possible legal defense in such a sweeping and oversimplified fashion, this bill risks swinging the pendulum too far in other direction, holding developers and users liable for more than their comparative fault would and should otherwise lie in and regardless of whether a particular defendant acted responsibly, followed best practices, or even had the ability to foresee harm in question.

As drafted, AB316 removes the ability to raise and consider valid legal concepts like foreseeability or design diligence, especially in complex environments where AI is developed, deployed and integrated by multiple actors.

But we are confident that courts across the country not only have the tools but the best experience when it comes to assess negligence, fault and causation for holding the right parties accountable where warranted under existing law and should they get it wrong, the Legislature can act to act prematurely, however, creates legal uncertainty that will chill investment, deter hiring top AI talent, and undercut California's leadership in this field.

Lastly, we want to be very clear that we do not endorse allowing a defendant to completely avoid liability by blaming AI tool as stated in the analysis.

Our position is, however, that even if that was a defense raised in California, which it has not been, the Bill goes much further than simply preventing a defendant from deflecting blame to the tool. But for these reasons, we must respectfully oppose AB 316.

That was exactly two minutes. I'm impressed. Why not?

Thank you, Ronak Daylami with Cal Chamber also in respectful opposition, I'll largely align my comments with my colleague, but I do want to similarly clarify that under no circumstances is our position that defendants should be able to wholly place blame on AI tools to deflect any liability and leave plaintiffs without any redress.

But I also think that we want to clarify that the Bill fails to ensure that the law ultimately adheres to the important principle that bad actors should be held accountable for the harm they cause, as acknowledged in the analysis.

I want to acknowledge that we do owe the author some additional follow up from the original letter, particularly with the amended version, which also calls out that defendants who develop and use these AI tools are covered, but also those who modify them.

We are concerned over the lack of sufficient nuance or clarity on various terms, delineating between what it means to develop as opposed to modify or simply use a tool.

These things are important from a comparative fault standpoint and also from the standpoint of whether or not a defendant would be able to raise applicable affirmative defenses from those roles under the bill based on what it means to prohibit the assertion of any defense that the AI autonomously caused the harm.

For example, it's not necessarily clear to us whether the user is able to raise the defense of whether there was a design or manufacturing defect in a product's liability case or whether the original developer of an open source model could assert that the product was misused by a downstream user or raise the defense that the harm was caused by a downstream developer.

Substantially modified model. At least in cases, for example, where the model is substantially changed in completely unforeseeable ways, such as where the downstream developer were to jailbreak safety features.

This isn't entirely dissimilar to the conversation we had last session from SB 1047 around the ability of courts to make determinations under existing tort law around products liability and the appropriate degree to which any particular defendant should be at fault, both for closed source and open source models and the implications that this could have for innovation investment for the state if we were to preemptively legislate and get it wrong in the end, instead of holding bad actors accountable for the harm they caused, our concerns that the Bill would almost exclusively focus on treating everyone like the developer, creating strict product liability regardless of where in the chain that the defendant might fall and where the comparative fall might realistically lie, creating an untenable risk of a liability.

So for this reason we must oppose. But of course, as Bill moves forward, we look forward to working with the author to the extent that we can work out some issues. Again, not sure that we can, but we will obviously try and work if we can. Thank you.

Well, thank you. Are there any speakers in opposition? Please come forward to the microphone.

Good afternoon, Madam Chair and Members. Colin Stadmler, on behalf of Chamber of Progress in Opposition, thank you.

And any other speakers? Seeing none come up to the Committee. Mr. Demaio

Thank you. And I want to commend the author for bringing up the Bill. You're saying that existing state law already does what the author's doing with her bill. Can I get a response from the author on that? Is it still possible for a company to say, hey, our defense is.

It's AI, it's autonomous, so therefore you can't go after us, go after the uninsured AI Bot.

Yes, Assemblymember, that's precisely what I'm concerned about and why I brought this bill. I think it's important to set guardrails up front rather than litigating these cases for 10 years while courts decide whether or not there is an AI defense.

I think we, we preempt that by saying right now, off the bat, you're responsible for the products that you create. This isn't a strict liability. This isn't creating any new forms of liability. In fact, what the opposition said about not knowing which standard is and that confusion, I feel like the Committee analysis handles that point really well.

Existing law would still exist in terms of what the torts are and what the defenses are.

If someone were to sue a company, the person suing would still have to explore issues of negligence.

Yes.

Duty to care.

Yes.

Whether it's reasonable, whether it's reckless. All of these standards would still be applied and examined by a court. It's just that the defendant can't just simply say, hey, I got this automatic get out of jail free card.

It's AI because I could see a lot of companies deciding to do a whole lot more through AI because it provides a potential, you know, scapegoat.

Exactly.

And to the opposition, understanding that, what is the root of your concern here? Because those defenses are all still going to be on the table. It's just simply saying that you can't just simply say it's AI. It's not my problem.

Sure. I think again, the bill could use some additional clarity around some of the terminology. And again, I think it's not necessarily clear to us that when you say you can't assert that the AI autonomously caused the harm, that means that you also can still assert that the harm was from, for example, a design defect.

That is essentially saying that the harm was from the tool.

Okay. So you said that you were going to respond to a letter, I guess. And so if you have ideas for clarity, I think absolutely, the legislative process provides you with ample opportunity to provide suggestions to the author and the legislative process. So I would strongly encourage you do that.

But I am prepared to support this Bill today because I think it does address an item that is a big question mark in our statutes. And I don't want to have 10 years of fishing expeditions and trying to figure out, you know, what's going on here.

If there's a negligence issue, if there's a duty to care issue, if there's liability, let's get to the heart of it quickly without, you know, a sideshow. So I'm prepared to move the Bill on that basis.

Okay. Before we take any further questions, we now have a quorum so we can get this recorded due course. So if you would please call the roll

[Roll Call]

And you want to do the consent also? Oh, we can't do it. Okay. All right, we'll take this vote, and then we'll do the consent, and no more comments. Okay. Assembly women, please close.

Sure. Thanks very much. I respectfully ask for your aye vote. This is a really important bill that sets up a minimal guardrail to prevent future harms from taking place and from reckless actors from using AI as an excuse. It encourages good conduct, it prevents bad conduct.

There's all sorts of harms that are coming from AI and you know, the most alarming ones are harms to our children, such as encouraging suicide, encouraging sexual abuse. These can be prevented if companies act responsibly. This bill encourages that responsible conduct. I respectfully ask for your aye vote.

Thank you. We still don't have a quorum. Well, we will hold it as a Subcommitee then. After all that, I thought we had a quorum. She just went to the restroom. Does she come from forum since she's been here? Okay. We're still meeting as a Subcommitee essentially. Okay. AB do we have Assembly Member Schiavo? 656 Please come forward.

Good afternoon. Thank you, Madam Chair and Members. I appreciate the opportunity to present AB 656 to you today. I want to start by thanking the Committee staff for their work on their—the Bill—and also, investigative research was very, very illuminating. So, I am definitely accepting the Committee's amendments.

As we know, social media platforms create a space for building connections. However, evidence continues to mount that social media use is taking a significant toll on mental health, especially for young girls. And I think that the Chair's work this year really speaks to the potential for harm in this space.

Apps and websites are designed to keep users on the platform and engaged with content, deepening addictive and harmful habits. Personalized algorithms, endless scrolling like buttons and other strategic strategies all play on our psychology to strengthen addiction, even if the content we consume harms our mental health.

And when someone caught in a downward spiral tries to leave or delete their account for their own wellbeing, it's—the Committee consultants' analysis really shows just how difficult that is and how hard a platform can make it.

And studies back this up, with one study finding nearly one in five being unable to find the delete option or giving up because it was too tedious and too complicated. Social media companies are not going to come to the rescue of those who are addicted to their platforms.

And so, it's really up to the state to ensure that there's a path away from addiction and as a—as straightforward as possible.

And, you know, the other piece of this I think is that platforms are also profiting off of our data and so there should be an opportunity for users to be able to remove their data and make sure that that profiting does not continue, even if they step away and don't delete, they, you know, they still are able to profit.

So, here to testify in support is Robert Harrell, Executive Director of the Consumer Federation of California.

Thank you, Madam Chair. Good afternoon. I'm Robert Harrell, Executive Director of Consumer Federation of California. We're the sponsor of the measure. I want to thank the author and obviously the Committee and appreciate, very much, the analysis.

It does a great job of pointing out the heart of the Bill, which is to make it much easier for consumers to delete accounts they no longer want. There's a saying that goes, if the product is free, then you are the product.

This is particularly true when it comes to social media accounts since companies' monetization of your information is a big part of their business and revenue model. Ultimately, if a consumer wants to delete an account, they shouldn't have to undergo a Kafkaesque nightmare to do so. AP 656 would make it simpler and easier for consumers to do just that.

As the analysis notes and in our sponsor letter, we reprint an account by Robert Strible. He detailed a flowchart with more than 20 steps on how to delete your Facebook account. The consultant himself went through this process with screenshots for all of us to appreciate. And it is extremely complicated.

Simply put, it's an obtuse and frustrating process designed to thwart one's ability to actually delete an account. Those are not bugs of the system; that's a feature of the system. That shouldn't be the case. We greatly appreciate the Committee's work on this Bill and the Chair and the amendments that are summarized and reproduced in the analysis, and urge an "Aye" vote.

Thank you. Anyone else here in support of this legislation? Name, organization, and position.

Becca Kramer Mater, with Kaiser Advocacy, on behalf of California Low-Income Consumers Coalition, in support.

Anyone here in opposition to the Bill?

Real brief.

Yeah.

Robert Boykin, here with TechNet, in respectful opposition to AB 656, but want to note that we appreciate the author and her office for engaging with us on the Bill. While we are opposed to the current language, we are continuing to actively work with the author and their office towards a workable solution.

And we do believe we are getting there. Thank you.

Thank you. Bringing it back to the Committee. Oh, and I guess nobody else in opposition? Yes. So, bringing it back to the Committee. We have a motion. Second. Yeah. Mr. Ward. Yeah. Okay. Mr. Ward, you can speak.

Thank you, Madam Chair. One, thank you all for bringing this forward. I understand what we are trying to do here, and I encourage that we are hearing that you're going to continue to work on it because as it's written right now, it just seems to be maybe a little bit of a leap so far.

And I wonder, as somebody that intermittently uses social media to have, you know, something that prescriptively requires that we have delete account, delete account, just really, you know, ubiquitously plastered over, you know, what we view. One of two things—one, I find that maybe a little bit overkill and I'll use the word.

That's in the amendments.

Sorry?

Let Mr. Ward finish, please. Let him finish, please.

Right, and are you potentially annoying? But also, I think, you know, to one of the points of the opposition's letters, that you're going to have a lot of maybe accidental use of that, a lot of accidental deletions.

And I know sometimes when I've double deleted an email and then you try to go back and you're like, oh, man, I really didn't mean to delete that.

The idea that somebody had a day where they, you know, hadn't gone through that steps to be able to delete that account and then actually they restored that and they wanted to get their IMs back, that would be something I think you would want to think through a little bit more, with the opposition, about a way to—I agree on the examples.

It is incredibly difficult, cumbersome, infuriating to try to figure out how to delete an account if you have to go through 20 different menus to be able to get something, such a simple request processed. There's got to be something in between, I think that makes it workable.

So, I'd love to be able to see where this goes, and happy to support the measure today.

Would you like to address the amendments?

Yes. So, we did make an amendment to address that concern and understand where that's coming from.

So, instead of it saying a message on every screen, to a button within the settings menu, so it's just a very—a much more clear opportunity for people to go and they don't have to dig deep to try and find the place where they can delete.

Thank you. Yes. Why don't we establish quorum and then I'll come back to you? Can we call the roll?

[Roll Call]

We have a quorum. Now, Ms. Petrie-Norris.

Okay, great. Thank you, Madam Chair. And so, picking up somewhat on what Assemblymember Ward was saying, and I know I'd spoken to the author about this Bill, and I guess my question was, is this really necessary?

And then, when you look through the screenshots of the labyrinthian process that is involved in actually deleting your account, turns out the answer is yes. And I, too, had some concerns about the mechanism that was outlined in your initial Bill. It sounds like the amendments really move it very much in a direction that I think makes sense.

So, I, too, am going to be able to support that today. Thank you.

Thank you. Was there someone else who wanted to speak? Mr. Lowenthal, did you want to speak? Sorry. Okay.

If I may, I'd like to ask the author, is, I believe that there's a content deletion component associated with this that the platforms have to comply with. How does that comport with the terms and conditions of some platforms, all of them that I'm aware of, that, where you've effectively—consumers have effectively agreed that they no longer have property of what's posted and that that property is out there?

What, you know, is there any reconciliation between those terms and conditions?

We know there were concerns raised around state laws that we need to make sure we are in compliance with and so, we're still working through those concerns and making sure that we come to a place that makes a lot of sense.

But essentially, at the end of the day, we're trying to make sure that can take their data with them, as much as possible, and that platforms are not able to, you know, continue to profit off of them, even after they have.

And for those of us—first of all, thank you for bringing this Bill for us. I should have started with that. You know, for those of us who fundamentally believe that our—we should have intellectual property over our own digital footprint, under any circumstance, in all circumstances, you know, this Bill is in that spirit.

I really, truly appreciate what you're trying to do here, and I'm very proud to support this Bill today.

And I will say, one of the additional amendments that was taken is the right to delete his own personal information, which aligns it with the CCPA.

I'm so sorry.

Mr. Demaio.

And I'd love to be considered as coauthor in the Bill.

Of course. Would love that.

Mr. Demaio.

I also want to thank the author for bringing this forward. First, only and somewhat jest, can we apply it to cell phone companies? I actually tried to cancel a cell phone contract, and they just would not let me cancel it because I wasn't using it. And then I eventually found a use for the cell phone Internet provider.

But I would love to see your, your law apply to that.

Well, we do.

Well, great.

Good news. We do have Click to Cancel 1.0, which we passed last year, which, if it's a recurring contract, that goes into effect July 1st. And so, that could be covered.

You hear that AT&T? I'm coming for you.

Could be covered.

Actually, I want to keep the service now. I found a use for it.

But kind of dovetailing with Assemblymember Lowenthal's question, that the notes that we received from our staff said that there was a potential conflict with the CCPA, and I'm confused because it doesn't seem like your Bill is in conflict because what you're saying is that their profile needs to have an option for deletion.

CCPA is related to the data that may have been generated in that profile. Under your law, is there a requirement that, when you delete your profile, the company would also have to offer you an opportunity, under CCPA, to delete the personal information? Is that part of the amendment?

Yeah, that's the intent, but like I said, we're still working that—some of that out, but I'll let.

Yeah, I'll point you, Mr. Demaio, to Page 10 of the analysis. The as amended language, "the social media platform shall delete all personal information when requested."

Is that when requested? Okay.

Yeah.

So, does your Bill, your—and your Bill makes it clear that when you delete your profile that there should also be an option in the settings where you can say, and by the way, delete my personal information and then?

Correct.

The, the statutory timeline under CCPA would then apply to that feature?

I believe so. I don't—I'll defer to my.

If we could clarify that, then I think that eliminates any of this argument that somehow this is creating another layer of personal information standards and timelines, because then it can just be harmonized.

You get to delete your profile and if you, as you delete your profile, you say, please also get rid of my information, then they would have to do that within the timeline of CCPA. Is that correct?

Does that seem right?

Through the Chair, yeah. The amendments that the Chair just summarized on Page 10, we believe are completely consistent with CCPA, but we're happy to make sure.

Sharpen the knife maybe?

Yeah, we're happy to triple check that.

That way, no one can claim that it's another regime that's been established, another timeline that's been established.

Yeah, we obviously want to avoid.

No, I think this is a smart bill. As someone who's had frustration on this, it's appalling. You're just like, you know, I just don't want your service anymore. And in this case, it's.

How do you, how do you take—how do you delete this profile and then look at the extent to which your, your information lives on?

Shouldn't be that hard.

So, I appreciate you bringing the Bill forward and look forward to seeing the refinements.

Thank you.

Thank you. Seeing no one else who wants to chime in, I want to thank the author for working with the Committee and taking the amendments. I think I agree with many of my colleagues on the Committee that it moves it in the direction that really every business should have.

It should be easy to go to a settings and figure out how to delete. And I didn't know before this work about dark patterns, which is already in code in the CCPA, but, you know, this is something that companies do to keep people who don't want to be there anymore.

And I think that this falls into the category of there shouldn't need to be a bill, but there is. So, I guess to Assemblymember Petrie-Norris's point, it is needed, and I want to thank Committee staff for their great analysis, as usual, that really very clearly laid out, I think, why this is so necessary and really brings to life the promises of the CCPA that already are in law.

And with that, would you like to close?

Appreciate it. Appreciate the questions and conversation. As you know, as a mom, this is something that I think is personal and personal to a lot of us as parents as we try to make sure that we are protecting our children in as many ways as we possibly can, which I know is the goal of everyone here.

And so, we want to make sure that it's just as easy to take your data with you and escape the cycle of addiction as possible. And we hope that this will break those maze of walls down and make it a clear and simple process. So, I respectfully request support today. Thank you.

We had a motion and a second prior to having a quorum, so we'll need one again, I think, so. Thank you. Thank you. And let's call the roll.

[Roll Call]

That Bill has nine votes. It is out. But we'll leave it open for absent Members to add on. Thank you. And I see Assemblymember Calderon is in the room.

Bill here be 1197. I want to move the consent calendar. Thank you. Let's call the roll.

[Roll Call]

Consent calendar. I have to call the vote. The consent calendar has nine votes. 9-0. So it is out. But we will leave the roll open for absent Members. We have a motion in a second so we can call the roll on AB316. Sorry, I'm not wearing my glasses.

[Roll Call]

So that is 8-1. It's out. But we'll leave it open for absent Members. Selling. Member Calderon. Thank you for your patience.

Yeah. Good afternoon, Madam Chair and Members. AB 1197 modernizes our rental car laws to discourage organized retail car theft and activities that aren't authorized by a rental agreement. Car theft is a serious issue in California, and due to loopholes in existing law, rental cars have become easy targets.

Every year, 4-500 rental cars are reported stolen. The car key is not returned to the rental car company, and there's nothing the company can do to recover the loss.

Additionally, if a rental car has left the country without authorization, or if the car is abandoned in a tow yard, companies have the technology to locate and recover these vehicles, but they're not able to use it. AB 1197 takes a balanced approach to address these issues.

And I want to take a minute to thank your Committee staff for working with my staff on this Bill. And I will be accepting the Committee's amendments to limit the location based technology to only geofencing.

This Bill will create a new framework to discourage bad actors while maintaining important consumer protections for Californians who are simply trying to rent a car for its intended purpose. With me in support of AB 1197 is John Moffitt on behalf of Enterprise and Camille Wagner on behalf of Hertz.

When you're ready, Two minutes each.

Madam Chair and Members. As the Author just stated, the theft, fraud, abandonment and misuse of rental vehicles are significant issues in California. Situations frequently arise during the rental of a vehicle, including accidents or citations which require the timely assistance or recovery of vehicles by rental companies.

For example, when an abandoned or sighted vehicle is towed to a tow yard, it often remains there for days before we are even notified, incurring sizable fees in the meantime.

Additionally, if a vehicle is taken across the border, current law gives that person a three day Head Start before we can turn on location technology to locate that vehicle.

AB 1197 would allow for geofencing technology to be used only in these scenarios to detect the movement of a rental vehicle outside the country if it's not authorized by that rental agreement, or if deemed abandoned and in a tow yard for more than 24 hours. For these reasons, we support the Bill and respectfully ask for your aye vote.

Thank you.

Good afternoon, Madam Chair. John Moffatt, on behalf of Enterprise Mobility. One of the other quirks that we're seeing in California in existing law is what we affectionately refer to as the keys provision. Under existing law, a renter whose vehicle is stolen, whether they're a part of it, maybe, maybe not.

But if they say they have the key, then that renter cannot be held financially responsible for that stolen vehicle, whether they give us the key back or not.

And so what we're seeing out in the marketplace is those with not good intent putting out Facebook ads, things like that, saying, go rent a car, drive it to me, I'll give you $3,000. And here's what you tell the rental car company and they can't hold you responsible.

On average, we lose a car to two cars every day in the State of California just, just under this keys provision. And so what this Bill does is that it changes that and says the renter will not be financially liable if they return the key to us.

Pretty good indicator that they had nothing to do with the theft of the vehicle and shouldn't be held responsible. And they file a police report and work with us to try and recover the vehicle. And so again, cleaning up existing law, hoping to get at this particular provision of rental car theft. And we ask for your support.

Thank you. Anyone else here in support of this legislation?

Good afternoon. Melissa Warner here on behalf of Avis Budget Group and the California Travel Association in support. Thank you.

Thank you. Anyone here in opposition to this legislation?

Good afternoon, Madam Chair and Members. Robert Herrell with the Consumer Federation of California. We appreciate the last set of amendments to the Bill and also the amendments as outlined by the Committee analysis, we think it's headed in the right direction. I think the geofencing language is much improved.

We do wonder whether, as a practical matter, the rental car companies are just going to geofence around every toe and impound lot in the state, which would, it appear, be allowed under the language. So maybe some unintended consequences there.

And then on the other provision that really hasn't been subject to conversation today, we without we can think of some examples where someone's purse gets stolen, the rental car key's in the purse, they cannot then get the rental car key back to the rental car company.

That alone, that shouldn't shift the presumption in a way that's anti consumer. So we think there might still be a couple of unintended consequences here, but we generally appreciate the direction it's going and. But as, as of this moment, we remain opposed. Thank you.

Thank you. Anyone else here in opposition? Seeing none, we'll bring it back to the Committee. Mr. DeMaio, were you raising your hand?

I can't tell currently, if someone's purse is stolen and they don't have a key, you, there's nothing stopping you from going after them right now, right?

Yeah. The law says that if right now someone's purse is stolen, they say, sorry, you know, vehicle was stolen, my purse was in it, keys in there, we wouldn't be able to hold that renter financially liable for that loss. I disagree with Mr. Herrell's assessment.

When you read the statute, there's no way we would prevail in that situation because there's two levels of consumer protection here.

Number one is you automatically get the presumption under this Bill if you return the key, file a police report if you don't do one of those things, we still have to prove by clear and convincing evidence that you did something, you were part of the theft of that vehicle.

Someone who's, you know, someone whose, you know, purse was stolen, key in the purse, you know, in the car. There's no way we can prove by clear and convincing evidence that that person, you know, was a, was not or was a part of that theft.

We wouldn't win that on a preponderance of the evidence, let alone clear and convincing.

So this is section B, B1. And it basically says if the driver exercised ordinary care, then they would have a defense, correct? And then this key issue is an, in addition to that, in addition, the driver will have no liability presumed if the following conditions are met. And that's where the concept of the Key comes up

It adds a presumption. It's an extra.

It's an extra. Okay, so I'm a little, I'm not so sure that the analogy works, but can you respond to the geofencing comment that somehow the rental companies would geofence all these locations?

I'm not sure we're capable of such a feat. To be perfectly blunt. I, you know, the there I think in the course of our business there are certain both licensed and unlicensed tow companies out there that have a habit of preying on rental vehicles.

They go, they tow them because they know it's going to sit on their lot every day. They get to rack up fees, they get to rack up charges, those sorts of things. And now it costs us $7,000 to get our car back.

And so the intent of this section of the changes here is that, you know, if, if a vehicle, generally speaking, a renter is not taking a vehicle on their own into an impound lot or a tow yard lot.

And so again, I have a little trouble figuring out the concern, especially with the commitment, the amendments taken by the or suggested by the Committee to sort of narrow the type of technology that could be used, limiting it only to geofencing of very specific facilities in the state.

And I guess I'll clarify that. I would technically, I think allow what is proposed. But I share your sentiment that I'm not super concerned about invading the privacy of a rental car user when they're not likely voluntarily going to an impound lot that's not tracking your movements everywhere you go. It's really a question of the vehicle. Yes.

Unless you're moving into the impound lot. So Ms. Petrie Norris,

I was just going to add that sort of a. Shock to me that we need a law about this. It's unfortunate that this is a phenomenon, but very happy to support the measure today. Thank you.

Seeing no further questions or comments. I just want to thank the author for her commitment to work with Committee. I think that this is to Ms. Petire Norris'pPoint. These car thefts are way too common. We shouldn't need this Bill. But we do.

And I think you've both, I think, center the privacy of consumers while getting at the problem in a way that I think is very nuanced and sophisticated. And so I appreciate that. And with that, would you like to close?

Yes. I respectfully ask for an aye vote. Thank you, Madam Chair. I believe we had a motion and a second. So we will call the roll item.

[Roll Call]

That is out 11-0 but we will leave the roll open for House Members. Thank you and huge kudos to all the authors who were all here waiting on time today. We appreciate that Mr. Berman AB 1374.

A happy chair makes a happy Presenting Author so Madam Chair and colleagues, I want to thank Committee staff for their work on this Bill. I will be accepting the Committee's amendments described in the analysis to deceptive price advertising that employs hidden or surprise fees has increased over time and frustrated consumers.

After being drawn in with a lower advertised price, additional mandatory fees and taxes are revealed to consumers near the end of the transaction process, undermining a consumer's ability to make informed choices when comparison shopping.

Two years ago in 2023, I authored legislation that was signed into law to address hidden fees in the hotel and short term lodging industry. While there are those in the rental car space that already provide upfront pricing on their websites, others have not been as fully transparent.

To ensure price transparency across the board, AB 1374 would require that the real price of a rental car be disclosed as soon as consumers select information such as dates, location and vehicle type.

This ensures that the upfront price is the real price that consumers pay, or at least as close as possible to the real price that consumers pay.

In response to feedback from stakeholders including rental car companies, I've taken recent authors amendments to address seemingly 85% of their concerns and I greatly appreciate the engagement and conversations that I'm sure will continue. And I respectfully ask for an aye vote. And with me today is Robert Hurrell, Executive Director of the Consumer Federation of California.

When you're ready.

Good afternoon Madam Chair Robert Horrell with the Consumer Federation of California. I'd like to thank the author, the chair, the Committee consultant for all your work with us on the Bill. This continues our work on hidden fees. In this case, we just want to make sure consumers know what they're getting and how much it's going to be.

It allows them to make apples to apples comparisons. The analysis does an excellent job of summarizing. We did sort of a secret shopper experiment at CFC and leading up to this bill, the analysis includes a chart, our sponsor letter also includes some screenshots.

So this appears to be visual a screenshot day on a number of bills to show that one of the major rental car companies is not currently providing consumers with an accurate estimate of what they'll pay. In fact, in one case the amount increased by more than $100.

But for a five day rental, I would note that we found one of the major third parties commonly used by consumers also replicated this information gap. Though interestingly, other third parties took the incomplete information from one of the major rental car companies and their own systems apparently filled in the gaps.

So that's an interesting kind of tidbit of how their systems are working or not. Ultimately, our secret shopper experience confirms there's a need for the bill so the consumers can know what they're getting into once they, as the author said, select the dates and locations in the time frame of the rental.

That's how the marketplace was intended to function. With that we urgent aye vote thank you.

Anyone else here in support of this Bill? I think it's got a third and a fourth now.

Becca Cramer Mowder, Kaiser Advocacy on behalf of California Low Income Consumer Coalition in support. Thank.

Thank you. Anyone here in opposition to this measure? We liked it better when you were in support.

Me too. We're working on it.

But you look, you look better in the analysis than some of your colleagues.

So there's that much rather support Bill spot. Again, Members of the Committee, John Moffatt on behalf of Enterprise Mobility, we maintain our opposing less amended position on the Bill. I just, I really want to focus on Section 1939.19 a and the changes to that language.

Existing California rental car disclosure law has been in place for over a decade. We know how to comply. We know what it requires. We make sure we do it and we make sure we do it because there's a private right of action in this Bill.

If we are not doing it in accordance with the law, we get sued directly by the customer. And so because of the stringency of that, that's one reason why President Biden held out California rental car law as the model that the rest of the nation should follow when it comes to pricing disclosure.

And so when we see changes to that part of the law, even though they kind of seem to say the same thing as what's already in the law, it makes us nervous. You know, the Legislature does not act without, you know, purpose.

And so if the Legislature changed the law here, they had to do so for a reason. And to us, that invites litigation where none is necessary. We've had conversations with the sponsor. We've asked for examples. We've walked through how our existing disclosures on the websites comport with existing law.

Even the chart that is in the bill analysis I think is a misrepresent. It's not even my client, but I think it's a misrepresentation of what is on their website. What's on their website is in compliance with existing law, and the bill is drafted.

And so it makes me wonder what precisely are we doing here with respect to these changes? If you want to talk about entities that are not subject to the rental car law, who are renting cars and are not doing so in compliance with the rental car law, Absolutely want to talk about that.

And believe that they should be disclosing in compliance with the law. But with respect to rental car companies, you know, making these types of changes and including things that to us have no meaning in statute opens up potential litigation because there is a private right of action in this statute to protect the consumer.

Thank you. Anyone else here in opposition? Seeing none. We'll bring it back to the Committee. Mr. Bryan

Well taken on, you know, the differences between, between rental car companies and others who rent out their cars, and I know that's an ongoing conversation here, but it seems to me like that the worst thing you're suggesting is that this is redundant and you're not sure what the real purpose for these redundancies is other to invite litigation.

You also mentioned statutes have been on the years, regulations been on the years for. Been on the books for 10 years, right? Correct. Did your clients oppose those 10 years ago?

I don't know. I didn't represent.

I bring that up because I'm a big fan of people not shouting out changes in law that they previously opposed and then using them as examples for why things are good now. Sure. Because I think that might be what Mr. Berman is trying to accomplish or my colleague from Menlo Park with something like this.

But, you know, I'm trying to get the benefit of the doubt, but I'm struggling to see, like, what the real concern is here other than there might be unintended consequences, which is my least favorite testimony. But if there's a tangible concern, you know, I would love to hear that.

Thank you, Mr. Bryan. And in no way am I sitting here saying that. You know, I think what Members of this body hear a lot is there's a private right of action in this Bill and we hate it. There's a private right of action in existing law. And I'm not sitting here saying it should be taken out.

It is what it is. We live with it and we know how to comply. The concern with the changes here is that what was previously a good faith estimate, that's a term known in, in law, in Legalese. Right. Good, good faith estimate changes that to total charges estimate. I don't know what that means.

And so we look at that and go, okay, well it's different than what it was before. So what is that intended to mean? Because it's not defined.

The Dodd Bill from a couple years ago said, hey, if you're going to go out and advertise something, you have to advertise all of the charges and everything involved except government fees and taxes that doesn't have to be disclosed. This law says you have to disclose everything.

And government fees and taxes, which is the exact opposite of the Dodd Bill. The challenge with that is government fees and taxes is already included in existing law under additional mandatory charges. Customer facility charge, airport concession fee, tourism commission assessment, vehicle license recovery fee, and other government imposed taxes fees.

So why are we using these words when there's other words already in statute that define exactly what has to be disclosed? Because California rental car law isn't just a disclosure law, it's a pricing restriction law. These are the only things we can charge a consumer daily rental rate, additional mandatory charges, optional charges. That's it.

We don't get to make up new charges on consumers. And if, if entities are doing that, they can already sue us under existing law. And again, this is what we do.

We recognize there are other entities out there offering rental car rental cars for sale, including some in the car sharing space who are out there right now almost near the authors district on billboards, renting, you know, offering prices on billboards for rental cars that aren't consistent even with the Dodd Bill.

And so those issues, absolutely, let's go address those. We've got no problems with that. But again, when you start playing with these words, especially when they already exist in statute, becomes concerning.

Thank you, Mr. Bryan. I'm going to turn over to Mr. Patterson. One minute. I will say that I rented a car, I saw my price online. I have no reason to believe the rental car company, which was not your client, was not compliant with current law.

I showed up, I was charged an additional $80 that was never disclosed to me. And I thought, oh my god, what if I am a Californian who is living paycheck by paycheck and I wouldn't have made this reservation and showed up if I couldn't afford that $80. I felt completely shocked that was possible under prior law.

So I'm not saying the rental car company wasn't complying with current law. I'm not a litigator anymore, so I have no idea. I didn't look at that question, but I'm assuming they are, because I like to believe best of all of these folks.

But I did call my consultants that same day, and I said, how is this possible after all that we have done that I can be surprised with an additional $80 charge when I showed up the car and had no other choice at this point, and by the way, would have been charged a cancellation fee at that point.

And so the answer I got was, Mr. Berman's doing a Bill on that, and I was very excited. So I'd like to be a co author and I'll turn it over to Mr. Patterson.

Well, thanks for that. I did notice your client got it to the penny on. On the chart on the graph here, so. Well, you know, that's great. I do, you know, just. I mean, you asked the question. The chair asked a question that I am concerned about.

I listened to what your response to Assemblyman Bryant's comments were, and I thought that those were insightful. But I guess my question is, how is it then that, at least in this chart here, I don't know if, you know, I didn't do this digging on the chart, so I don't. I assume it's accurate. Let's just accept that.

And then in the chair's example, how does that continue to happen with legitimate companies if. If the current law doesn't allow it to happen?

Yeah. So with respect to the chart and the discrepancy here, I saw this. So I went on this particular company's website and I said, okay, what's going on here? Because that, you know, if that's the advertised price and then the estimated total, what's happening here?

And so I went on and tried to rent a vehicle from the same place. You know, similar criteria, right? On that particular website. Once you put in the dates and the pickup time and the pickup location, it gives you a listing of various cars.

What I saw was for a full size vehicle, we'll just use this SAC airport example. Full size vehicle, the 291.96 was the daily rental rate. Once you click on that vehicle. Now I've selected a vehicle class.

The very next screen up in the top right hand corner is where you see the 401.33 which again broken down daily rental rate, additional mandatory charges and then the total so bundled unbundled, rebundled pricing.

And so I believe that is consistent with existing law, but it's also consistent with the Bill because the Bill says shall provide the total charges estimate, whatever that means for the entire rental, including all taxes and fees imposed by as soon as dates, location and vehicle type.

You don't get to the 401.33 which is the total estimate of everything until you select vehicle type on that particular website. So what problem are we trying to solve here if the example of the problem actually is consistent meets what the Bill is proposing in this space?

With respect, I think my sponsor and my friend Mr. Moffatt had different experiences when doing their research for this Bill. And I think my sponsor can speak to the fact that he had.

Yeah, I definitely would like to hear that.

Briefly through the chair, I would just note that Mr. Moffat respectfully and worked with him and against him for years said that 291.96 was a daily rental rate. It was not. This was a five day rental. That's why in our sponsor letter we included screenshots of the different screens that the consumer would encounter.

It was a five day rental and the daily rental rate could not have possibly been $291.96 otherwise for five days you're looking at about a 1500, $1400 rental just on the daily rental rate alone. So that is respectfully not accurate information.

Can I ask a question about that though? I did read your letter and it does show though on that screen after you say pay now or whatever, I mean it did give you the total of 401.33.

On the next screen. On the subsequent screen and that relates to again through the chair, very briefly the other point, which is that one of the reasons to clarify the law here is because what we found going back a few years, Assemblymember Patterson, was that there are two areas where the delta and the price was quite significant.

One was hotels in certain situations. And the Assemblymember did a Bill on that two years ago, which is now law, which became law at the same time as the Dodd Skinner Bill, SB 478, which the rental car industry was carved out of, it should be noted.

And number two is that especially the other one was rental cars, especially if you rent a car at an airport.

We are not judging in any way, shape or form any of those add ons, but it can create quite a significant delta and so for people and consumers to make an apples to apples decision about what's best and fits them within their budget, we believe we ought to err on the side of full information for the consumers so they can make an informed choice.

So I have just two comments to that. And then I'll, you know, other people, if they will have some to ask is first of all, I agree with like the intent of the Bill. I mean, I don't, I mean nothing is worse than going onto a website ultimately and then showing up and you pay a different price.

But I do feel like in the example that's provided in your letter, I mean, before they pay, it does come up, it does give you the 401.33. And so that's why I am a little, and I, that's why I'm just confused at the end of the day.

And you can address that, you know, and my last thought is, I just want to say for the record, I said last time, like the Senator Dodds Bill, which I don't remember if I supported or opposed it, but I always thought it was interesting that government fees and stuff would not have to be shown.

I think the public ought to know how much government's charging. Yes, I know this. Yeah, I know yours doesn't deal with that. Yeah, yeah. I just thought it was so silly like with how much we tax in this state that we would not disclose that to the customer.

But, but anyways, you feel free to address, you know, what I, what I said earlier. Obviously, I just, I did read your letter and thank you very much for that. And I do agree with your objective. I really do.

I just, I do kind of get where the opposition's coming from in terms of what are, what do you want at the end of the day? And you know, I'll just leave it at that.

Feel free to respond. Yeah, I appreciate the questions and the comments and it's been a couple of years, so I'm dusting off old talking points and hopefully I get them right.

But there's a psychology to the consumer experience and the more clicks that a consumer makes as they're going through the process of doing their research and going down the process of possibly, you know, renting a hotel room or renting a car, the more clicks you make, the more likely you are to just keep on moving forward with that rental.

And so that's why we think that it's as important as it is to as upfront as possible, once the company has the relevant information, provide the full cost and not have those Hidden fees that you just add on at that last page because the psychology shows and the data shows that most people won't back out of that and then do a proper, you know, and then go back to comparison shopping.

And we think that that's deceitful and that for consumers, they should have, you know, to the extent that the business can provide the information and companies like Enterprise do a great job of providing that information, you know, we should provide that information up front. And if every company was doing what enterprise does, I wouldn't be sitting here.

And so I can understand the frustration of, of, of. Of the opposing witness because his company is doing it right. It's just not every other one is doing it right. And that's what we're trying to address with the Bill.

Thank you. And I'm seeing no further questions or comments. I just want to reiterate my gratitude to you. I think that your objectives have been clear to me since I wanted to make sure this Bill was happening, which were twofold. One was all in pricing upfront, including everything you're going to have to pay. So a consumer knows.

And that it extends to third party sales, which was not, as I understood it from staff, is not as clear in the law, which I know doesn't affect your client. But it was not clear that the, you know, third party websites that sell your product are under the same obligation. And that is really critically important.

And I didn't hear you opposing that piece of the Bill. And so I think that's another important piece that I appreciate the author taking on with that. Would you like to close?

Respectfully ask for an aye vote and we'll continue the conversation with all concerned parties.

Let's call the roll.

[Roll Call]

That Bill has 13 votes. 0 no votes. It is out. We will leave the roll. Oh, that one will be closed. It's out. We will go back and call the roll on the prior bills. And before Committee departs, this is our last hearing of the Assembly bills and I want to thank our incredible staff.

This Committee continues to get historic number of bills, and yet we are still small but mighty. And they do such an incredible job. So thank you for all of your hard work team.

Who do they get most of the bills from?

Not Ms. Dixon. Oh, yeah. Ms. Macedo wants to take a point of personal privilege.

After the trauma of being as cold as we were, I have a little token for you guys to keep with you in your offices. To prevent us from freezing like we did. So something to snuggle when the struggle is real.

Is it under $50?

Yes, it is. It was under $10. So you're really safe. Yes.

Thank you. Okay, let's call the bills that folks missed. Consent calendar.

[Roll Call]

That Bill is out 11- 2.

[Roll Call]

That Bill is out 14-0.

[Roll Call]

That Bill is out 14-0. Thank you, everybody. We will adjourn this last hearing.