Lawmakers return to Sacramento with urgency fueled by pandemic

There were constant reminders of the coronavirus during a hearing of the Assembly Privacy and Consumer Protection Committee on Tuesday, and not just because of the two chairs between each legislator or the masks many of them wore.

For instance, Assemblywoman Shirley Weber, D-San Diego, introduced AB 2443 in late February, before the disease had spread through much of the nation. The bill would expand the scope of the state's Consumer Legal Remedies Act. In particular, it would clarify that debt settlement companies, sometimes known as pro-raters, are covered under the act and that they and their employees can be sued.

These companies often misrepresent themselves, for instance promising to negotiate with creditors for lower payoff amounts but never doing so, Weber said. Like several other Assembly bill authors who returned to the Capitol this week, she said the crisis had made her legislation more urgent.

"With an unprecedented number of Americans facing unemployment as a result of COVID-19, we anticipate a large increase in consumer debt, especially as many Californians already live paycheck to paycheck," Weber said. "It should be noted that banks and credit unions are not the target of this legislation. Debt settlement companies use targeted advertising to prey on Californians struggling with debt."

This was a nod to two of the main groups opposing the bill, the California Bankers Association and the California Credit Unions League. These organizations have argued the bill is too broad. They are seeking more specific language that makes it clear what activities are covered and that the new provisions don't apply to them.

AB 2443 passed on a 6-3, party-line vote, and will now head to a vote in the full Assembly.

The committee also passed AB 2811. This bill by Assemblyman Marc Berman, D-Los Altos, would place several notice requirements on companies offering online subscriptions that would make it easier for people to cancel subscriptions and avoid forgetting to cancel services. Berman said job losses related to the virus have made it more urgent for families to cut out even seemingly minor expenses.

Assemblywoman Lorena Gonzalez, D-San Diego, also said the virus put a new sense of urgency around solving an existing problem -- in this case, food delivery companies that insert themselves as middlemen between restaurants and customers without first establishing a relationship with the restaurant.

Gonzalez said these companies sometimes post out-of-date menus without permission or otherwise undermine restaurants' ability to control the consumer experience. While this was a problem before, she said it is more important now because take-out has suddenly become a much larger percentage of the industry.

"They have certain standards they want or they have their own delivery drivers that are actually employees of the restaurant," Gonzalez said. "These companies were advertising and delivering food from companies that had not given permission."

AB 2149, dubbed the Fair Food Delivery Act, would prohibit services from posting a menu or other "likeness" of a restaurant without written consent. It would require these delivery companies to share information with restaurants on which customers have been buying their food, and also define several terms in state law, such as "food delivery platform."

Assemblyman Jay Obernolte, R-Hesperia, said the delivery services have created "a new dynamic," but said the situation is not as novel as Gonzalez suggested.

"We have 100 years of case law in which the restaurant industry has disputes with distributors of products," Obernolte said. "Federal law has constrained the ability of a manufacturer or wholesaler to put restrictions on the use of their products by people further down the value chain."

He went on to say he is generally reluctant to insert state law into relationships between businesses. But Obernolte conceded Gonzalez had a point when she said restaurants have traditionally controlled the consumer experience in ways makers of other products have not.

In the end he did not support the bill. But Assemblyman James Gallagher, R-Yuba City, voted with seven Democrats to send it to the Assembly floor.