S5477A-2011 Actions

• Sep 23, 2011: SIGNED CHAP.579
• Sep 12, 2011: DELIVERED TO GOVERNOR
• Jun 16, 2011: returned to senate
• Jun 16, 2011: passed assembly
• Jun 16, 2011: ordered to third reading rules cal.340
• Jun 16, 2011: substituted for a7767a
• Jun 16, 2011: referred to consumer affairs and protection
• Jun 16, 2011: DELIVERED TO ASSEMBLY
• Jun 16, 2011: PASSED SENATE
• Jun 13, 2011: AMENDED ON THIRD READING 5477A
• Jun 6, 2011: ADVANCED TO THIRD READING
• Jun 2, 2011: 2ND REPORT CAL.
• Jun 1, 2011: 1ST REPORT CAL.921
• May 25, 2011: REFERRED TO CONSUMER PROTECTION

S5477A-2011 Calendars

S5477A-2011 Votes

S5477A-2011 Memo

BILL NUMBER:S5477A

TITLE OF BILL:
An act
to amend the general business law, in relation to increasing disclosures
by automobile broker businesses

PURPOSE OR GENERAL IDEA OF BILL:
To regulate the practices of
automobile broker businesses in New York.

SUMMARY OF SPECIFIC PROVISIONS:
Section 1 amends �738 of the General
Business Law to require an automobile broker business ("broker") to
include a disclosure in all contracts regarding the automobile dealer
("dealer") from which the automobile was purchased, as well as any
consideration paid by a dealer to a broker for its services.

Section 2 adds a new �740-b of the General Business Law to require all
brokers to obtain a surety bond in the amount of $75,000.

Section 3 adds a new �741-a of the General Business Law to require
brokers to clearly and conspicuously disclose certain information in
advertisements, namely that the broker is not a dealer, any fees
imposed on a consumer for services rendered, and that no vehicle
warranty repair services will be provided by the broker.

Section 4 sets forth the effective date.

JUSTIFICATION:
The practices of brokers are not as strictly regulated
as those of dealers. Dealers are required to comply with a variety of
regulations pertaining to advertising, consumer disclosure and
management of items containing personally identifiable information.
However, brokers are held to lesser standards resulting in the
proliferation of anti-consumer and anti-business practices.
Consequently, broker practices should be more strictly regulated to
ensure that the public is properly informed and safeguarded against
the actions of unscrupulous brokers.

Currently brokers are not required to obtain a surety bond to operate
in New York. Furthermore, unlike dealers, brokers are not required to
make a significant investment to sell cars. Dealers are subject to
franchise agreements which typically contain a myriad of expensive
mandates and are also required to purchase all of the vehicles from
the manufacturer that they offer for sale. In contrast, brokers have
a limited personal stake in the business, and, therefore, limited
incentive to ensure consumers' interests are protected. Therefore,
brokers should be required to obtain a surety bond to protect
consumers against a broker's failure to meet its obligations.

Brokers are also not required to comply with the same advertising
guidelines as a dealer. Many broker advertisements are misleading and
do not
clearly indicate that a potential buyer would be doing business with a
broker and not a dealer. Brokers should be held to the same


advertising standards as dealers to protect against deceptive trade
practices and be required to disclose the nature of their services to
ensure consumers are accurately informed.

In addition, brokers should be required to disclose the method by
which its fee is determined. Some brokers claim to provide, their
services "free to the consumer". However, such brokers are often
compensated by a dealer which is typically commission-based.
Consequently, the broker is incentivized to negotiate a better price
for the dealer than the consumer.
Disclosing the fee structure will enable a consumer to determine the
validity of a broker's claims.

PRIOR LEGISLATIVE HISTORY:
New Bill.

FISCAL IMPLICATIONS:
None.

EFFECTIVE DATE:
Ninety days after enactment.

S5477A-2011 Text

 S T A T E   O F   N E W   Y O R K
 
 5477--A
 Cal. No. 921
 2011-2012 Regular Sessions
 I N  SENATE
 May 25, 2011
 
 Introduced  by Sens. ZELDIN, CARLUCCI -- read twice and ordered printed,
 and when  printed  to  be  committed  to  the  Committee  on  Consumer
 Protection -- reported favorably from said committee, ordered to first
 and  second  report,  ordered  to a third reading, amended and ordered
 reprinted, retaining its place in the order of third reading
 

AN ACT to amend the general business  law,  in  relation  to  increasing
 disclosures by automobile broker businesses
 

THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM
 BLY, DO ENACT AS FOLLOWS:

 

Section 1. Paragraph (e) of subdivision 1 of section 738 of the gener
 al business law, as added by chapter 616 of the laws of 1988, is amended
 to read as follows:

 (e) A description of any other services  and  an  itemization  of  the
 charges for each. SUCH DESCRIPTION SHALL INCLUDE DISCLOSURE OF THE AUTO
 MOBILE  DEALER  FROM  WHICH THE AUTOMOBILE WAS PURCHASED, AS WELL AS ALL
 FEES, COMMISSIONS OR OTHER VALUABLE CONSIDERATIONS PAID BY AN AUTOMOBILE
 DEALER TO THE AUTOMOBILE BROKER BUSINESS FOR SELLING, ARRANGING, ASSIST
 ING OR EFFECTING THE SALE OF AN AUTOMOBILE AS AGENT, BROKER, OR INTERME
 DIARY BETWEEN THE CONSUMER AND THE AUTOMOBILE DEALER.
 

S 2. The general business law is amended by adding a new section 740-a
 to read as follows:

 

S 740-A.  AUTOMOBILE BROKER BUSINESS SURETY BOND. 1. AUTOMOBILE BROKER
 BUSINESSES SHALL OBTAIN AND CONTINUE IN  EFFECT  A  SURETY  BOND  IN  AN
 AMOUNT  OF  SEVENTY-FIVE  THOUSAND  DOLLARS EXECUTED BY A SURETY COMPANY
 AUTHORIZED TO TRANSACT BUSINESS IN THE STATE BY THE INSURANCE DEPARTMENT
 OF THE STATE OR ITS SUCCESSOR.  THE BONDS SHALL BE APPROVED AS  TO  FORM
 BY  THE  SECRETARY  OF  STATE AND SHALL BE CONDITIONED ON THE AUTOMOBILE
 BROKER BUSINESS' PAYMENT OF ALL VALID  BANK  DRAFTS,  INCLUDING  CHECKS,
 DRAWN FOR THE PURCHASE OF MOTOR VEHICLES AND SAFEKEEPING OF ALL CUSTOMER
 DEPOSITS  RELATED  TO  THE  SALE  OF A MOTOR VEHICLE BETWEEN THE TIME OF
 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
 [ ] is old law to be omitted.
 LBD11150-08-1
 
       S. 5477--A                          2
 RECEIPT OF SUCH CUSTOMER DEPOSIT AND THE TRANSFER OF GOOD TITLE  TO  THE
 VEHICLE TO THE CUSTOMER.
 2.  RECOVERY  AGAINST  A  BOND  MAY BE MADE BY A PERSON, INCLUDING THE
 STATE, WHO OBTAINS A JUDGMENT AGAINST THE AUTOMOBILE BROKER BUSINESS FOR
 

AN ACT OR OMISSION ON WHICH THE BOND IS CONDITIONED IF THE ACT OR  OMIS
 SION  OCCURRED  DURING THE TERM OF THE BOND. THE TOTAL LIABILITY IMPOSED
 ON THE SURETY UNDER THIS SECTION FOR ALL BREACHES OF THE BOND  CONDITION
 IS  LIMITED  TO THE FACE AMOUNT OF THE BOND. SUCH LIABILITY MAY INCLUDE,
 BUT IS NOT LIMITED TO, THE AMOUNT OF THE VALID  BANK  DRAFTS,  INCLUDING
 CHECKS,  DRAWN  BY  THE  AUTOMOBILE  BROKER BUSINESS FOR THE PURCHASE OF
 MOTOR VEHICLES. IN NO EVENT SHALL THE SURETY ON A  BOND  BE  LIABLE  FOR
 TOTAL  CLAIMS  IN EXCESS OF THE BOND AMOUNT, REGARDLESS OF THE NUMBER OR
 NATURE OF CLAIMS MADE AGAINST THE BOND OR THE NUMBER OF YEARS  THE  BOND
 REMAINED IN FORCE.
 3.  ANY  SURETY  ISSUING  A BOND PURSUANT TO THIS SUBDIVISION SHALL BE
 REQUIRED TO PROVIDE SIXTY DAYS' NOTICE TO THE SECRETARY OF  STATE  PRIOR
 TO THE EFFECTIVE DATE OF CANCELLATION OF THE BOND.
 

S 3. The general business law is amended by adding a new section 741-a
 to read as follows:

 

S  741-A. ADVERTISING.  AUTOMOBILE BROKER BUSINESSES SHALL CLEARLY AND
 CONSPICUOUSLY DISCLOSE THE FOLLOWING IN ALL ADVERTISEMENTS IN ANY  MEDI
 UM,  AND IN ANY PRINT ADVERTISEMENT SUCH DISCLOSURES SHALL NOT APPEAR IN
 ANY FOOTNOTES AND SHALL BE SITUATED IN THE TOP HALF OF ANY  SUCH  ADVER
 TISEMENT IN AN EASILY READABLE TYPEFACE:

 (A)  THAT  THE  AUTOMOBILE BROKER BUSINESS IS NOT A LICENSED NEW MOTOR
 VEHICLE DEALER AS DEFINED IN SECTION FOUR HUNDRED FIFTEEN OF THE VEHICLE
 AND TRAFFIC LAW;
 (B) WHETHER ANY FEES MAY BE IMPOSED BY THE AUTOMOBILE BROKER  BUSINESS
 FOR SERVICES RENDERED. DETAILS OF SUCH COMPENSATION SHALL BE PROVIDED BY
 THE AUTOMOBILE BROKER BUSINESS UPON REQUEST BY THE CONSUMER; AND
 (C)  THAT  NO WARRANTY REPAIR SERVICES WILL BE PROVIDED BY THE AUTOMO
 BILE BROKER BUSINESS.
 

S 4. This act shall take effect on the ninetieth day  after  it  shall
 have become law.

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