This bill authorizes the California Department of Motor Vehicles to use contracts with private industry partners to provide electronic services related to vehicle registration, titling, sales reporting, and issuance of temporary plates. It creates a framework of partner types, onboarding rules, price controls, and oversight obligations that restructure how certain DMV transactions can be delivered outside state offices.
The statute matters because it converts discrete DMV functions into a regulated marketplace: private entities can offer convenience services but only under application, bonding, background-screening, department-set pricing limits, and an explicit monitoring and reporting regime. That combination changes vendor incentives, creates a new revenue stream for the Motor Vehicle Account, and places compliance burdens on both partners and the DMV.
At a Glance
What It Does
Defines three classes of private partners (first-line business partner, first-line service provider, second-line business partner), requires applications, background information, and bonds, and empowers the DMV director to cap what partners may charge customers. It also establishes a department transaction fee and a short-term charge to fund system improvements, plus an annual report and monitoring rules.
Who It Affects
Private companies seeking to provide online vehicle registration, titling, sales reporting, or temporary plate services; first-line service providers and downstream vendors; the DMV’s operations and IT modernization funding; and consumers who choose private channels for DMV services.
Why It Matters
The bill shifts more customer-facing DMV work into a regulated private market while preserving department control over pricing and data safeguards. Compliance officers, vendors, and DMV program managers will need new intake, oversight, and accounting processes if these contracts scale.
More articles like this one.
A weekly email with all the latest developments on this topic.
What This Bill Actually Does
The statute lays out a managed program for private companies to participate in DMV service delivery. It does not create an open marketplace without rules; instead the DMV uses regulations to define who qualifies, which of three partner roles an applicant will perform, what background checks and bonding are required, and how contracts will be structured.
The department is explicitly charged with protecting confidential records and designing oversight and monitoring procedures.
On pricing and fees, the director gets express authority to set a maximum amount private partners may charge customers for the authorized services. The DMV itself will collect a department transaction fee for each such transaction and may create a temporary surcharge to fund systemwide improvements, both of which are deposited into the Motor Vehicle Account.
The statute ties certain adjustments to the California Consumer Price Index and specifies rounding rules for fee updates.Operational controls include mandated application materials (fingerprints and personal history statements among them), posting of a bond consistent with Section 1815, periodic submission of partner-held records to the DMV, and regulations dedicating department resources to monitoring. The DMV must also produce an annual report with specific line items—partner listings, transaction volumes and revenues by type, fraud findings, program evaluation, and recommended changes—that the Legislature will receive by October 1 each year.Finally, the bill limits the markup a second-line business partner can impose relative to the department’s own charges and requires those second-line partners to display a conspicuous link to the DMV website informing consumers they can obtain services at no additional cost from the department.
The combination of price controls, disclosure requirements, and review obligations aims to protect consumers while allowing private channels to operate under a uniform statutory regime.
The Five Things You Need to Know
The bill creates three partner categories—first-line business partners (receive data and transact for their own business), first-line service providers (receive data and forward it), and second-line business partners (receive information via service providers).
The department must require applicants to submit fingerprints and personal history statements and to post a bond in an amount consistent with Vehicle Code Section 1815 before entering a partnership.
The DMV may set a maximum price private partners can charge customers and must adjust that amount annually using California CPI growth, with rounding to the nearest whole dollar and .50 rounding up.
The department charges a three-dollar transaction fee for services provided through partners; the statute also creates a separate one-dollar per-transaction fee to fund system improvements that automatically discontinues when sufficient funds are raised or on December 31, 2023.
Second-line business partners may not charge more than five percent above the DMV’s own consumer charge for the same online or field-office services and must show a clear link on their websites to the DMV site stating that consumers can obtain services at no additional cost.
Section-by-Section Breakdown
Every bill we cover gets an analysis of its key sections.
Authorized scope of private electronic programs
This opening subsection defines the program’s purpose and the services that private partners may perform: processing and payment programs for registration and titling, reporting vehicle sales, and producing temporary license plates under specified Vehicle Code sections. It signals the department’s authority to use contracting mechanisms under existing Government Code procurement rules rather than creating independent statutory procurement exceptions.
Partner types and minimum onboarding requirements
This subsection sets out the three distinct partner roles, which matters for data flows and liability: direct business partners handle data for their customers, service providers act as intermediaries, and second-line partners receive data downstream. It then mandates an application and application fee, fingerprints and personal history statements focused on character and integrity, and a bond sized per Section 1815. The DMV is tasked with writing regulations to add privacy and release safeguards—laying the groundwork for background checks, financial security, and access controls.
Director authority to cap partner pricing and CPI adjustments
The director can adopt regulations to set the maximum that private partners may charge for the authorized services. The statute requires the department to adjust that maximum annually using California CPI data and specifies a rounding rule. Practically, this makes partner pricing administrative-rule-driven rather than market-driven, and ties permitted increases to a consumer-price index rather than to vendor costs or market competition.
Transaction fee mechanics and Motor Vehicle Account deposit
The statute imposes a flat per-transaction fee the DMV collects for services provided via partners; it allows partners to pass that fee to customers but bars total customer charges from exceeding the director’s cap. All such fees are deposited to the Motor Vehicle Account, and the department must annually adjust the fee amount in line with the CPI and rounding rules. The law also authorizes the DMV to exempt certain transaction types from the fee through regulation.
Oversight, monitoring, and data-protection procedures
The DMV must adopt regulations and procedures that ensure program monitoring sufficient to protect owners from improper use of vehicle records. Required elements include periodic submission of partner records for DMV review, dedication of department resources to monitoring, and protection of confidential departmental files and databases. This subsection makes oversight an affirmative regulatory duty rather than optional guidance, which has staffing and budget implications for the agency.
Annual program reporting to the Legislature
The DMV must deliver an annual October 1 report containing granular program data: a partner list with addresses, transaction volumes by type, funds collected by partners and by the department, fraud findings, a benefits evaluation, and recommendations for statutory or administrative changes. The reporting requirement creates a built-in accountability loop and a data source for future legislative or administrative adjustments.
One-dollar system improvement surcharge and termination rule
In addition to the basic transaction fee, the department may levy a one-dollar charge per private-partner transaction to fund the partners’ proportional share of DMV-wide system improvements; proceeds go to the Motor Vehicle Account. The statute provides a self‑terminating mechanism: the surcharge ends when the director declares sufficient funds have been collected or on December 31, 2023, whichever comes first. The subsection requires public posting of the director’s declaration when early termination occurs.
Second-line partner markup cap and mandatory consumer link
This subsection sets a concrete consumer-protection rule for downstream vendors: second-line business partners may not charge more than five percent above the department’s consumer price for comparable services. It also mandates a conspicuous, working link on second-line partners’ websites that directs consumers to the DMV site with a statement that the department offers the service at no additional cost—an explicit transparency and choice mechanism built into vendor marketing.
This bill is one of many.
Codify tracks hundreds of bills on Transportation across all five countries.
Explore Transportation in Codify Search →Who Benefits and Who Bears the Cost
Every bill creates winners and losers. Here's who stands to gain and who bears the cost.
Who Benefits
- Consumers who prefer department-run pricing and transparency — they gain a statutory ceiling on private-channel fees and a required website link on second-line vendor sites to access DMV services at no extra charge.
- The Department of Motor Vehicles — gains statutory authority to outsource transactions while also securing new fee revenue (deposited into the Motor Vehicle Account) and a formal reporting structure to justify program expansion or reform.
- Private vendors that qualify — receive defined access to DMV data and customers under contract, creating new revenue opportunities for payment processing, registration facilitation, and related services within a regulated framework.
- State IT and modernization efforts — receive a defined, temporary funding mechanism (the one-dollar surcharge) to recoup partner-proportionate shares of improvements, streamlining capital financing for shared systems.
Who Bears the Cost
- Private industry partners — must pay application fees, undergo fingerprint/background checks, post bonds, comply with monitoring and record-submission rules, and operate within department-set price caps that may limit profit margins.
- The DMV — must allocate staff and resources to monitoring, regulation-writing, record review, and annual reporting; those activities increase administrative burdens and may require new budget appropriations.
- Consumers who use private channels — may still pay convenience fees (up to the director’s cap) and will see per-transaction charges passed through; price protections cap but do not eliminate these costs.
- Second-line vendors and their platforms — face a narrow pricing ceiling (5% over DMV rates) and mandatory disclosure obligations that affect marketing and site design, potentially reducing their business model flexibility.
Key Issues
The Core Tension
The bill attempts to square two conflicting goals: protect consumers and preserve access to low-cost, transparent DMV services while also encouraging private-sector participation to expand convenience and relieve DMV workloads; imposing regulatory constraints (price caps, bonding, background checks, monitoring) reduces consumer risk but raises costs and entry barriers that may shrink the vendor pool and limit the program’s efficiency gains.
The statute creates a tightly regulated vendor model that trades market pricing freedom for consumer protections; that trade produces practical tensions. Price caps and the five-percent ceiling for second-line partners constrain revenue models and may discourage participation or push vendors to minimize service levels.
Conversely, if caps are set too high they undermine the consumer-protection intent; if set too low they hinder vendor investment in compliance and security.
Oversight and enforcement are backstopped to the DMV, but the law requires the department itself to dedicate resources to monitoring and to require partner record submissions. That creates an unfunded or underfunded mandate risk: effective supervision depends on staffing and IT capabilities the department may not have without additional appropriations.
The periodic submission of partner-held records raises questions about the scope, frequency, retention, and secure transfer protocols for those records—areas the statute leaves to implementing regulations and thus to administrative design choices.
Finally, the temporary one-dollar surcharge includes a hard stop date and an early termination trigger tied to a director’s declaration, but the statute does not prescribe auditing standards for verifying 'sufficient funds' were collected or how surplus funds, if any, would be managed. The CPI-linked adjustment and rounding rules simplify administration but can produce step changes over time that may not reflect discrete vendor cost structures or service-level differentials across partner types.
Try it yourself.
Ask a question in plain English, or pick a topic below. Results in seconds.