Senate committee approves rebate bill

By CMTA Staff

Capitol Update, June 29, 2007 Share this on FacebookTweet thisEmail this to a friend

The Senate Judiciary Committee approved AB 1673 (Mike Feuer, D-Los Angeles) to mandate that certain manufacturer's rebates be treated as on-the-spot cash reductions for products, rather than the traditional system which offers a consumer a price reduction in exchange for meeting some reasonable conditions offered by a manufacturer - the very premise of rebates.

Specifically, the bill requires a California retail seller that indicates the availability of a rebate for an item of merchandise by displaying or advertising the net price, to offer that price immediately at the point of purchase. Violations would result in civil penalties up to $2,500 for each occurrence.

The bill was approved on a party-line vote of 3-2 with the committee's democrats in support. Proponents argue that the bill would not result in a reduction of rebates.  They say it allows manufacturers to continue using the traditional mail-in rebate format if they stop showing the net price reduction and instead only indicate something along the lines of "mail-in rebate available."

National manufacturers and companies making nationwide rebate offers, sometimes on the Internet, could have conflicts with AB 1673 on a state-by-state basis.  It would certainly require altering national advertising campaigns. It would increase prices for consumers as companies (small and medium manufacturers in particular) seek to recoup the cost of state-by-state compliance. The end result of the legislation could encourage companies to drastically diminish offered rebates to consumers, harming competition and consumers in California.

AB 1673 is likely to move swiftly to the full Senate Floor for consideration.  The bill has not been amended on the Senate side, so it is not currently required to return to the full Assembly for a concurrence vote.  If passed by the Senate in its current form, it would go straight to the Governor.

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