Plan to Protect Car Buyers Advances
Democratic lawmakers brokered an agreement with car dealers Wednesday that could yield the nation’s toughest consumer protections for car buyers.
Brought together by Assembly Speaker Fabian Nunez (D-Los Angeles), car dealers and consumer advocates have agreed to back legislation designed to protect car buyers from hidden charges and defects and allow used car buyers to get a refund within three days of purchase.
“The ultimate test of how good this is is that the dealers with businesses in other states kept saying, ‘We don’t want this to spread,’ ” said Rosemary Shahan, president of Consumers for Auto Reliability and Safety. She said the legislation would include protections found in no other state.
According to the speaker’s office, the agreement would be added to an existing bill. It would make the three-day refund an option for which car buyers could be charged no more than $250 at the time of purchase. If they chose to return the car, the dealer could charge them up to an additional $250 -- but no more than a total of $500 -- to compensate for the cost of processing.
The refund option would be available only on used cars sold for less than $40,000.
The amended bill could be heard on the Assembly floor today. It also would cap the profit car dealers can charge for putting together purchase loans at no more than 2% or 2.5%, depending on the length of the loan. It would prohibit dealers from selling a car as “certified” if the vehicle has ever had a damaged frame. And the amendments would require car dealers to show consumers their credit rating to prevent dealers from inflating the interest rate they charge on loans.
As part of the deal, unions backing a “car buyer’s bill of rights” initiative will not put the measure on the anticipated special election ballot in November.
“We’re gratified that we have been able to do what the governor has not been able to do, and that is use the legislative process to get good, solid policy that we know people care deeply about,” said Gale Kaufman, a political consultant for Nunez and the Alliance for a Better California, a coalition of unions and others formed to fight Gov. Arnold Schwarzenegger’s ballot agenda.
“We have agreed to a deal on a bill,” said Brian Maas, director of government affairs for the California Motor Car Dealers Assn. “At this point, we’re pleased that the interested parties could get together and negotiate in good faith on legislation that we think is going to benefit consumers.”
The deal coalesced Wednesday afternoon as Schwarzenegger turned in signatures to the Sacramento County registrar’s office for a measure to make it easier to fire new public school teachers. The measure would extend the time required to get tenure from two years to five.
“While the governor’s turning in signatures,” Nunez said, “we’re solving problems.”
“My goal is try to narrow the scope in terms of the number of initiatives that get on the ballot,” he said. “We owe to the voters to try and work out our differences legislatively.”
Though the Republican governor has yet to call a special election, he has vowed to ask voters to change teacher tenure, take redistricting power from the self-interested Legislature and give the governor’s office more latitude to make budget cuts.
Democrats in the Legislature have argued against a special election, which is estimated to cost taxpayers $70 million.
At the Sacramento County elections office, a crowd of opponents greeted Schwarzenegger with loud jeers. Ignoring them, he helped a phalanx of young children -- all wearing red “Go for It Arnold” T-shirts -- cart the boxes of petitions inside.
Schwarzenegger insisted that a special election was not inevitable if legislators addressed his agenda. “My preference is to work with them, but if they don’t do their job, we go to the special election,” he said.
According to the secretary of state’s office, Friday is the deadline to submit petitions to qualify initiatives for an election Nov. 8. It’s considered an ideal day for a special election because some municipal voting is already scheduled.
Last year Schwarzenegger vetoed similar car-buyer protections in the form of legislation by Assemblywoman Cindy Montanez (D-Mission Hills). Though that bill did not include a cooling-off period during which buyers could reconsider a purchase and return a car, it would have limited dealers to profiting no more than 2.5% on financing charges and required them to clearly disclose the actual price and financing costs of various options, such as service contracts or paint protection.
In his veto message, Schwarzenegger criticized the Montanez bill as “vague.” He said its standards for used cars sold as certified would lead to costly litigation.
Montanez introduced another bill this year, AB 68, that would have allowed buyers to return a car for a refund within three days of purchase.
Shahan said the car dealers agreed to compromise when they saw opinion polls indicating that the union-backed consumer initiative was highly popular with voters.
“That was what really got the dealers to the table,” she said, “knowing there were 22 million California car owners out there who would love to vote for this.”
