Southern California

May 10, 2006, 10:00 a.m.
Bureau of Automotive Repair
1180 Durfee Avenue, Suite 120
Conference/Training Room
South El Monte, CA 91733

Northern California

May 12 , 2006, 10:00 a.m.
Contractors State Licensing Board
9821 Business Park Drive
Hearing Room
Sacramento, CA 95827

Written comments, including those sent by mail, facsimile, or e-mail to the addresses listed under Contact Person in this Notice, must be received by the Bureau at its office not later than 5:00 p.m. on May 12, 2006, or must be received by the Bureau at the above referenced hearings. Comments sent to persons or addresses other than those specified under Contact Person, or received after the date and time specified above, regardless of the manner of tansmission, will not be considered or included in the record of this proposed regulatory action. The Bureau, upon its own motion or at the instance of any interested party, may thereafter formally adopt the proposals substantially as described below or may modify such proposals if such modifications are sufficiently related to the original text. With the exception of technical or grammatical changes, the full text of any modified proposal will be available for 15 days prior to its adoption from the person designated in this Notice as contact person and will be mailed to those persons who submit oral or written testimony related to this proposal or who have requested notification of any changes to the proposal.

AUTHORITY AND REFERENCE

Pursuant to the authority vested by Sections 137 and 9882 of the Business and Professions Code, and to implement, interpret or make specific Sections 9882, 9884.8, 9889.50 and 9889.52 of the Business and Professions Code and Sections 12000 and 12001 of the Vehicle Code, the Bureau is considering changes to Article 7 of Chapter 1 of Division 33 of Title 16 of the California Code of Regulations as follows:

The proposed regulatory action will clarify and reinforce the current invoice itemization requirements applicable to automotive repair dealers (ARD). This will help to ensure that all consumers will have full and complete disclosure and itemization of all charges in their dealings with ARDs. This is not only consistent with the Bureau’s principal mandate to protect the interests of the public, but is consistent with the spirit and intent of those provisions of the Automotive Repair Act that relate to open disclosure and itemization in estimates, work orders and invoices. Furthermore, the proposed action is consistent with and will recognize the current standard of practice in the industry.

BACKGROUND

The Bureau was established within the California Department of Consumer Affairs (DCA) in 1972 with the enactment of the Automotive Repair Act. The Bureau was created by Chapter 1578, Statutes 1971 (Senate Bill 51, Beilenson), which mandated a statewide automotive repair consumer protection program. In the furtherance of its mandate, the Bureau administers statewide licensing and enforcement programs.

The display of the official automotive repair dealer sign is but one way of informing the public of their basic rights in transactions with automotive repair dealers, but it is an important and effective one. In addition, it is a simple and effective means of informing the public of the Bureau’s existence and of how to contact it. Displaying the sign in the automotive repair facility, in a manner conspicuous to customers, places this information before them at a time and in a place, when the consumer is most receptive to and possibly in most need of, that information.

Through its statewide offices, the Bureau conducts consumer protection services related to the automotive repair and Smog Check programs. Bureau representatives register, license and regulate automotive repair dealers, lamp and brake stations and adjusters, and Smog Check stations and technicians. The Bureau accepts and mediates complaints from the public, investigates violations of the Automotive Repair Act, Smog Check laws, and associated regulations. When appropriate, cases are referred to the Attorney General’s office for administrative action, or to law enforcement authorities for civil or criminal prosecution. The Bureau shares the commitment of the DCA to ensure that consumers are provided information about licensees and registrants in a timely, fair and equitable manner.

For decades the Automotive Repair Act has required disclosure, authorization and documentation regarding estimates, revised estimates and invoices in order to decrease or prevent the occurrence of what was commonly called “the five o’clock surprise.” Prior to enactment of the Automotive Repair Act, it was not uncommon for a customer to arrive at the automotive repair dealer, at or near closing time, to pick up their vehicle only to learn for the first time that a $100 repair estimate had, for example, somehow increased to an $800 repair bill. In these situations the consumer is at a distinct disadvantage – the shop has the car, the consumer needs it back. Generally, the only immediate solution to this problem was to pay the bill and try to work it out later. The statutes and regulations regarding estimates, revised estimates and invoices have provided the Bureau and the automotive repair industry, with the necessary tools to prevent “the five o’clock surprise” and/or assist consumers who may be victims of it.

SPECIFIC PROPOSAL

Although it is a common practice for the repair industry to include itemized prices for both parts and labor on their invoices, from time-to-time, consumer complaints will arise when an ARD chooses to deny a customer this information. When this happens, BAR staff finds it difficult to hold the ARD to this common industry trade practice, because current regulations do not expressly state that labor actions (service work) must be individually itemized. Further, current regulations do not expressly require that individual prices for each part or service be listed on the invoice. This results in the consumer being denied important information when an unscrupulous repair dealer has something to hide. This is an issue that has been around for a long while and should be addressed and clarified to resolve any confusion.

Business and Professions Code, Section 9884.8 currently states in part: "…Service work and parts shall be listed separately on the invoice, which shall also state separately the subtotal prices for service work and for parts…" ].

By stating that the "service work and parts shall be listed separately", there is a clear intent that this listing should include both a description and a price for both labor actions and parts. By requiring that subtotal prices be also included, it is clear that itemized prices must have been used to arrive at the subtotals.

California Code of Regulations, section 3356 currently states in part "…the invoice shall describe all service work done…and shall separately identify each part in such a manner that the customer can understand what was purchased,…"

The regulation states that the parts must be separately identified on the invoice, but fails to expressly state that labor actions must be itemized, or that the price of each labor action and part must be included. An important part of knowing what was purchased must necessarily include the individual price for an item. While it is implied that individual prices must be included, it is important that this requirement be clearly and specifically stated.

Furthermore, in order to adequately identify a part “in such a manner that the customer can understand what was purchased,” one of the clearest and most descriptive methods is to include the brand name or comparable designation in the description for each part. The inclusion of this information, together with the information currently specified, should make it clear to the customer exactly what is being purchased.

The foundation of the Automotive Repair act is set on the concepts of full disclosure and informed authorization. This is the general theme that runs through most of the Bureau’s regulations. The proposed action will clarify and reinforce this concept in the requirement to provide customers with itemized invoices.

CURRENT REGULATION

Section 3356 of the California Code of Regulations, in its present form, provides that invoices shall include the registration number, business name, address and telephone number, as specified, of the ARD, and requires that all service work be described and parts used be separately identified, as specified. It requires that the customer be given a legible copy of the invoice and that the ARD shall retain a copy. It is further provided that the ARD may not make a separate charge for items listed as shop supplies or miscellaneous parts, or any part not listed on the invoice.

EFFECT OF REGULATORY ACTION

This proposal makes minor clarifying changes to existing regulation by reorganizing the current provisions of Section 3356 of Title 16 of the California Code of Regulations, and applying the word “separately” to the description of both labor (service work) and parts, as provided in Section 9884.8 of the Business and Professions Code. The proposed changes will clarify the requirement to separately describe, and to separately itemize prices for, both parts and labor. All of the current invoice requirements for business identification, distribution of copies and maintenance of records will be retained.

Fiscal Impact on Public Agencies Including Costs or Savings to State Agencies or Costs/Savings in Federal Funding to the State:

None.

Nondiscretionary Costs/Savings to Local Agencies:

None.

Local Mandate:

None.

Costs to Any Local Agency or School district for Which Government code Section 17561 Requires Reimbursement:

None.

Businesses Impact:

The Bureau has made an initial determination that the proposed regulatory action would have no significant statewide adverse economic impact directly affecting business, including the ability of California businesses to compete with businesses in other states.

The following studies/relevant data were relied upon in making the above determination:

The proposed action merely clarifies existing statutory requirements and the provisions of current regulation. In addition, the proposed action will recognize a current industry standard of practice adhered to by almost all automotive repair dealers. Therefore, the proposed action will not require the industry to do anything differently than they do now and there will be no impact from the changes to current regulation.

Impact on Jobs/New Businesses:

The Bureau has determined that this regulatory proposal will not have any impact on the creation of jobs or new businesses, the elimination of jobs or existing businesses, or the expansion of businesses in the State of California.

Cost Impact on Representative Private Person or Business :

The Bureau is not aware of any cost impacts that a representative private person or business would necessarily incur in reasonable compliance with the proposed action.

Effect on Housing Costs:

None.

Effect on Small Business:

The Bureau has determined that the proposed regulations would affect small businesses.

CONSIDERATION OF ALTERNATIVES

The Bureau must determine that no reasonable alternative to the regulation would either be more effective in carrying out the purpose for which the action is proposed or would be as effective and less burdensome to affected private persons than the proposal described in this Notice.

Any interested person may present statements or arguments orally or in writing relevant to the above determinations at the above-mentioned hearing.

INITIAL STATEMENT OF REASONS AND INFORMATION

The Bureau has prepared an initial statement of reasons for the proposed action and has available all the information upon which the proposal is based.

TEXT OF PROPOSAL

Copies of the exact language of the proposed regulations, and of the initial statement of reasons, and all of the information upon which the proposal is based, may be obtained at the hearing or prior to the hearing upon request from the Bureau at 10240 Systems Parkway, Sacramento, California 95827.

AVAILABILITY AND LOCATION OF THE RULEMAKING FILE AND THE FINAL STATEMENT OF REASONS

All the information upon which the proposed regulations are based is contained in the rulemaking file that is available for public inspection by contacting the person named below.

You may obtain a copy of the final statement of reasons once it has been prepared, by making a written request to the contact person named below or by accessing the website listed below.

CONTACT PERSON

Inquiries or comments concerning the proposed administrative action may be addressed to:

James Allen, Regulations Analyst
Bureau of Automotive Repair
10240 Systems Parkway
Sacramento, CA 95827
Telephone: (916) 255-3460
Fax No.: (916) 255-1369
E-mail: jim_allen@dca.ca.gov

The backup contact person is:

Debbie Romani, Staff Services Manager
Bureau of Automotive Repair
10240 Systems Parkway
Sacramento, CA 95827
Telephone: (916) 255-3460
Fax No.: (916) 255-1369
E-mail: debbie_romani@dca.ca.gov

WEBSITE ACCESS

Materials regarding this proposal can also be found on the Bureau’s website at www.autorepair.ca.gov.