Monday, 27 September 2010 18:07

CRA Calls on Gov. to Veto SB 427, Rejects Redefining ‘Aftermarket Parts’

California’s legislative session concluded last week after approving a new measure that, if signed by the governor, would increase the penalties for repair shops that fail to properly restore an airbag that has been deployed in a crash.

CLICK HERE to see the Governor's decision on SB 427 as of September 28.

Senate Bill 427 (Negrete McLeod D-Chino) would impose a fine of $5,000 or up to one year in prison, or both, for any automotive repair dealer that “prepares a written estimate for repairs that includes replacement of a deployed airbag and who fails to repair and fully restore the airbag to original operating condition.”

In addition, the bill adds exterior lighting to the definition of crash parts. This change would add lighting parts to the list of items on an estimate whose source must be disclosed as to whether they are OEM or non-OEM crash parts.

“After years of extensive lobbying efforts, the California Autobody Association (CAA) is pleased that Senator Negrete McLeod finally deleted all references that would have required auto body shops to place 12-point print disclosure on the first page of the invoice stating that charging for parts that are not installed on the vehicle or parts switching is fraud”, stated David McClune, Executive Director. “SB427 now adds exterior lighting to the crash parts definition and increases penalties for those unscrupulous shops that charge customers for air bags but do not restore or replace them.”

CRA has released the following statement in opposition to the bill:

Recently the Legislature passed Senate Bill 427 and it is now on the Governor’s desk for signature. In a recent industry news article the CAA announced how pleased it was with the outcome of this bill. [Ed—CAA has said it is neutral on the bill.]

The CRA and the California New Car Dealers Association remain opposed to the bill and are asking the Governor for a veto. The CRA is concerned that the prior article omitted aspects of the bill that should be of concern to the industry.

The bill amends definitions contained in Section 9875 of the Business and Professions Code. Prior to this bill’s changes, this Section of the Business and Professions Code only applied to insurers, not auto repair dealers. The existing terminology and definitions failed to track with requirements for estimates or invoices prepared by automotive repair dealers. However since it only pertained to insurer documents it was of no consequence to auto repair dealers. Not so now!

SB427 amended the language in 9875 of the Business and Professions Code and incorporated by reference those changes into Definitions contained in Section 9880.1 of the Business and Professions Code, that apply to Automotive Repair. They did not stop there but went on to modify Section 9884.8 B&P that deals with auto repair invoices and Section 9884.9 B&P that deals with auto repair estimates. The poorly drafted changes make the sections confusing and in fact contradictory. Specifically the proposed language creates a new definition “Aftermarket crash part” means a replacement for any crash part. This new definition conflicts with existing definitions of parts contained in Section 3303 of the California Code of Regulations and even the bills proposed changes. By this definition any crash part regardless of origin is now considered aftermarket. The bill also retained the definition of “Non-Original Equipment Manufacture aftermarket crash part” or “non-OEM aftermarket crash part,” meaning an aftermarket crash part not made for or by the manufacturer of the motor vehicle.

Additionally, in a poorly drafted fashion, the bill by reference incorporates definitions in 9875 to definitions in section 9880.1 of the B&P Code, definitions required to be used by automotive repair dealers.

An example of this is; B&P Section 9880.1(k) Crash Part” shall have the same meaning as Section 9875. They failed to specify that the reference to 9875 applies to the Business and Professions Code. The definitions added to 9875 and then incorporated into 9880.1 are already defined and required per Section 3303 C.C.R. with the exception of the new Aftermarket Crash Part definition and the inclusion of exterior lighting in the crash part definition. The newly created 9875 Section of the B&P Code contains a statement that nothing in this section shall be construed to apply to the installation of light bulbs in a motor vehicle. This exemption seems to conflict with the inclusion of lighting equipment in the crash part definition, that is incorporated by reference into 9880.1 B&P as previously noted. Does this mean that light bulbs are not crash parts and do not have to be invoiced or estimated? It seems that this exemption only applies to the 9875 B&P Section that applies to insurers. The language is so poorly drafted how can one tell? This is not the only ambiguity contained in the document. If compliance is expected the statute must be clear and concise otherwise it can be open for very wide interpretation, a process we feel is not healthy for the industry. These drafting errors are a basis for opposition to and veto of the bill.

The bill makes what might appear to be subtle changes to the invoice requirements within Section 9884.8 of the B&P Code to read as follows; (the proposed modifications are in bold and underlined)

All work done by an automotive repair dealer, including all warranty work, shall be recorded on an invoice and shall describe all service work done and parts supplied, and crash parts installed. Service work and parts shall be listed separately on the repair invoice, which shall also state separately the subtotal prices for service work and for parts, not including sales tax, and shall state separately the sales tax, if any, applicable to each.

This adds a requirement to list all crash parts installed (but possibly not light bulbs). This is redundant and unnecessary as crash parts are parts and the statute clearly requires all parts supplied to be listed. The bill however adds a reference to an undefined document a repair invoice and limits the requirements of subtotaling to this document. This requirement conflicts with current requirements and definitions and the proposed language creates confusion as to its intent. Section 3352 C.C.R. defines invoice as a document given to the customer. Is this new undefined reference to another document other than the invoice, possibly a document generated during the repair and possibly different than the defined invoice that is given to the customer. We find this language to be contradictory to existing statute and regulation and confusing at best. Another basis for opposition.

Section 9884.9 has been changed to read; “No charge shall be made for work done or parts installed in excess of the estimated price without the oral or written consent of the customer that shall be obtained at some time after it is determined that the estimated price is insufficient and before the work not estimated is done or the parts not estimated are installed. The word supplied is removed and replaced by installed. This language presumes that all parts estimated are installed on the vehicle. During the repair process there are items utilized to accomplish the repair that are not installed on the vehicle. These items include but are not limited to abrasives, chemicals, covers as well as items such as certificates of compliance. This estimating language conflicts with invoicing requirements and restricts the revision of an estimate and possibly original estimates to only items actually installed on a vehicle. It is our position that a repair facility is entitled to be compensated for all items utilized during the course of the repair as currently is allowed. This also is a change upon which we base our opposition.

The CRA informed the author and sponsor that we would support the airbag portion of this bill however the other provisions were unacceptable. This bill only serves to create confusion where clarity previously existed and create language that impairs the consumers ability to understand the manner in which their vehicle is being repaired. We support the consumer’s right to be afforded the ability to make an informed choice. The changes contained within this legislation are prohibitive to that process. We also support the concept that the repair facility is entitled to charge for all items utilized during the repair process as afforded under current statutes. For the repair industry to be encumbered by these unclear, confusing and nonessential changes is unconscionable. If enacted who knows how such poorly worded requirements will be interpreted or applied by the regulator. We find it hard to comprehend how anyone associated with the repair industry could support such a ill-drafted legislative undertaking. It would appear that the need to support the position of a benefactor outweighed the willingness to support the interest of the member industry.

It is hoped that the repair industry now will see that there is more to this bill than disclosure and headlights. We have heard these changes characterized as minor technicalities we view them otherwise. The devil is in the details and it is important to be aware of the total aspect of the issue. It would appear that the only entities to benefit from this legislation are those parties that promote the usage of aftermarket crash parts. The collision industry operates in a highly regulated environment and it is important to insure that compliance can be achieved and requirements are clear and concise. The CRA continues to stand up for the interests of the repair industry and California consumers. Contact the Governor’s Office and ask him to veto SB 427.

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