Establishes when a used car dealer has to refund a consumer his or her money for failing to correct a malfunction or defect as required by the warranty.

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S6872B-2011 Actions

• Jun 21, 2012: referred to codes
• Jun 21, 2012: DELIVERED TO ASSEMBLY
• Jun 21, 2012: PASSED SENATE
• Jun 18, 2012: AMENDED ON THIRD READING (T) 6872B
• May 21, 2012: AMENDED ON THIRD READING 6872A
• May 2, 2012: ADVANCED TO THIRD READING
• May 1, 2012: 2ND REPORT CAL.
• Apr 30, 2012: 1ST REPORT CAL.615
• Apr 2, 2012: REFERRED TO CONSUMER PROTECTION

S6872B-2011 Calendars

Active List: Jun 21, 2012 , Floor Calendar: Jun 19, 2012 , Floor Calendar: Jun 20, 2012 , Floor Calendar: Jun 21, 2012

S6872B-2011 Votes

S6872B-2011 Memo

BILL NUMBER:S6872B

TITLE OF BILL:
An act to amend the general business law and the executive law, in
relation to the refund to a consumer of money from a used car
dealership for failing to correct a malfunction or defect

PURPOSE OR GENERAL IDEA OF BILL:
To include within the Used Car Lemon Law a similar provision to one
that exists within the New Car Lemon Law.

SUMMARY OF SPECIFIC PROVISIONS:
This bill amends paragraph 1 and subparagraph f of paragraph 3 of
subdivision c of Section 198-b of the General Business Law to
establish a mileage credit for cars that qualify under the Used Car
Lemon Law.

JUSTIFICATION:
On December 14, 2006 the Court of Appeals issued a decision in the
combined cases of In the Matter of General Motors Corporation v. James
Warner and In the Matter of Daimler Chrysler Corporation v. Eliot
Spitzer. 7 N.Y.3d 653 that upheld the Attorney General's revised
interpretation of the New Car Lemon Law. The Attorney General's new
interpretation held that a consumer may be entitled to relief if,
within the prescribed periods, four or more unsuccessful repair
attempts were made or the vehicle was out of service for 30 days,
notwithstanding that the condition complained of was subsequently
repaired. Previously, a consumer would be eligible for a refund or
replacement vehicle only when the purchaser could demonstrate that a
defect still existed as of the date of arbitration. Similar provisions
exist under the Used Car Lemon Law, except that only three or more
repair attempts are required to qualify. A consumer has four years in
which to bring an action under the Used Car Lemon law. At the oral
arguments before the Court of Appeals, the issue was raised that a
consumer could drive the car for significant period of time before
filing an action, either because the car was repaired prior to the
commencement of the action or because the defect which caused the car
to qualify was not such that the car was unsafe or undriveable,
thereby significantly altering the value of the vehicle once returned.
The Attorney General's office indicated that the mileage credit
formula in the New Car Lemon Law that reduces the amount which the
consumer recoups upon return of the vehicle was a significant tool to
prevent any attempted fraud. Such a mileage credit does not exist in
the Used Car Lemon Law. This legislation would include in the Used Car
Lemon Law this important anti-fraud measure that is necessary given
the Court of Appeals decision.

PRIOR LEGISLATIVE HISTORY:
New Bill.

FISCAL IMPLICATIONS:
None.

EFFECTIVE DATE:
This act shall take effect on the ninetieth day with provisions.

S6872B-2011 Text

                      S T A T E   O F   N E W   Y O R K
  ________________________________________________________________________

                                   6872--B
      Cal. No. 615

                              I N  SENATE

                                April 2, 2012
                                 ___________

  Introduced  by  Sen.  ZELDIN -- 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 -- again amended and
    ordered reprinted, retaining its place in the order of third reading

  AN  ACT  to  amend  the  general  business law and the executive law, in
    relation to the refund to a consumer of money from a used car  dealer-
    ship for failing to correct a malfunction or defect

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


    Section 1. Paragraph 1 of subdivision c of section 198-b of the gener-
  al business law, as amended by chapter 444  of  the  laws  of  1989,  is
  amended and a new paragraph 5 is added to read as follows:

    1. If the dealer or his agent fails to correct a malfunction or defect
  as required by the warranty specified in this section which substantial-
  ly  impairs  the value of the used motor vehicle to the consumer after a
  reasonable period of time, the dealer shall accept return  of  the  used
  motor  vehicle  from  the  consumer  and refund to the consumer the full
  purchase price, or in the case of a lease  contract  all  payments  made
  under  the  contract,  including  sales or compensating use tax, less AN
  AMOUNT EQUAL TO A MILEAGE CREDIT ALLOWANCE AS CALCULATED PURSUANT TO THE
  METHODS SET FORTH IN PARAGRAPH FIVE OF THIS SUBDIVISION, FOR  EACH  MILE
  IN EXCESS OF THE WARRANTY MILEAGE APPLICABLE TO THE VEHICLE CONTAINED IN
  SUBDIVISION B OF THIS SECTION THAT THE VEHICLE HAS BEEN DRIVEN SINCE THE
  DATE OF DELIVERY OF SUCH VEHICLE BY THE DEALER TO THE CONSUMER, AND LESS
  a reasonable allowance for any damage not attributable to normal wear or
  usage,  and  adjustment  for  any modifications which either increase or
  decrease the market value of the vehicle or of the lease  contract,  and
  in  the  case of a lease contract, shall cancel all further payments due
  from the consumer under the lease contract. In determining the  purchase
  price  to  be refunded or in determining all payments made under a lease
  contract to be refunded, the purchase price, or all payments made  under
  a  lease  contract,  shall be deemed equal to the sum of the actual cash

   EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                        [ ] is old law to be omitted.
                                                             LBD00803-11-2

 S. 6872--B                          2

  difference paid for the used motor vehicle, or for the  lease  contract,
  plus,  if  the dealer elects to not return any vehicles traded-in by the
  consumer, the wholesale value of any such traded-in vehicles  as  listed
  in  the  National Auto Dealers Association Used Car Guide, or such other
  guide as may be specified in regulations promulgated by the commissioner
  of motor vehicles, as adjusted for mileage, improvements, and any  major
  physical  or  mechanical defects in the traded-in vehicle at the time of
  trade-in. The dealer selling or leasing the  used  motor  vehicle  shall
  deliver  to the consumer a written notice including conspicuous language
  indicating that if the consumer should be entitled to a refund  pursuant
  to  this section, the value of any vehicle traded-in by the consumer, if
  the dealer elects to not return it to  the  consumer,  for  purposes  of
  determining the amount of such refund will be determined by reference to
  the National Auto Dealers Association Used Car Guide wholesale value, or
  such  other  guide as may be approved by the commissioner of motor vehi-
  cles, as adjusted for mileage, improvements, and any major  physical  or
  mechanical  defects, rather than the value listed in the sales contract.
  Refunds shall be made to the consumer and lienholder, if any,  as  their
  interests  may appear on the records of ownership kept by the department
  of motor vehicles. If the amount to be refunded to the  lienholder  will
  be  insufficient  to  discharge  the  lien,  the dealer shall notify the
  consumer in writing by registered or certified mail  that  the  consumer
  has  thirty  days  to pay the lienholder the amount which, together with
  the amount to be refunded by the dealer, will be sufficient to discharge
  the lien. The notice to the consumer shall contain conspicuous  language
  warning  the  consumer  that failure to pay such funds to the lienholder
  within thirty days will terminate the dealer's obligation to  provide  a
  refund.  If  the consumer fails to make such payment within thirty days,
  the dealer shall have no further  responsibility  to  provide  a  refund
  under  this  section.    Alternatively, the dealer may elect to offer to
  replace the used motor vehicle with a comparably  priced  vehicle,  with
  such adjustment in price as the parties may agree to. The consumer shall
  not  be obligated to accept a replacement vehicle, but may instead elect
  to receive the refund provided under this section. It shall be an affir-
  mative defense to any claim under this section that:

    (a) The malfunction or  defect  does  not  substantially  impair  such
  value; or
    (b)  The  malfunction  or  defect  is  the result of abuse, neglect or
  unreasonable modifications or alterations of the used motor vehicle.
    5. THE MILEAGE CREDIT ALLOWANCE AUTHORIZED BY PARAGRAPH  ONE  OF  THIS
  SUBDIVISION  SHALL  BE EQUAL TO THE DEPRECIATION ADJUSTMENT FOR STANDARD
  MILEAGE RATE, AS PUBLISHED IN INTERNAL REVENUE SERVICE PUBLICATION  FOUR
  HUNDRED SIXTY-THREE, APPLICABLE FOR THE SAME TAX YEAR, OR THE YEAR PRIOR
  TO  IT,  WHICHEVER  IS LOWEST, IN WHICH THE CONSUMER PURCHASED OR LEASED
  THE VEHICLE FROM THE DEALER. IN THE EVENT THAT AN ARBITRATOR  RENDERS  A
  DECISION  OR A TRIAL COURT RENDERS A JUDGMENT THAT DIRECTS THE DEALER TO
  ACCEPT RETURN OF THE VEHICLE, THE  CONSUMER  SHALL  HAVE  THE  RIGHT  TO
  RETURN  THE VEHICLE TO THE DEALER'S PLACE OF BUSINESS ON THE FIRST BUSI-
  NESS DAY FOLLOWING SUCH DECISION UP TO AND INCLUSIVE  OF  THE  THIRTIETH
  DAY,  AND  WITHIN  NORMAL  BUSINESS  HOURS.    WHETHER OR NOT THE DEALER
  ACCEPTS THE VEHICLE, THE DEALER AND CONSUMER SHALL COMPLETE AND  SIGN  A
  MILEAGE  CREDIT  CALCULATION  FORM AS PUBLISHED BY THE ATTORNEY GENERAL,
  WHICH SHALL BE USED TO RECORD THE MILEAGE OF THE VEHICLE AT THE TIME  OF
  DELIVERY  OR  ATTEMPTED  DELIVERY. FOR THE PURPOSES OF THIS SECTION, THE
  MILEAGE CREDIT ALLOWANCE SHALL NOT BE APPLIED  TO  ANY  MILES  THAT  THE
  VEHICLE  HAS BEEN DRIVEN AFTER SUCH FORM IS SIGNED.  IN THE EVENT THAT A

 S. 6872--B                          3

  DEALER REFUSES TO SIGN SUCH FORM, THE EFFECTIVE MILEAGE CREDIT ALLOWANCE
  SHALL BE NO GREATER THAN THE SPECIFIC SUM WHICH WAS  SET  FORTH  IN  THE
  DECISION  OF  AN  ARBITRATOR OR JUDGMENT OF THE TRIAL COURT.  THE DEALER
  SHALL  PROVIDE  A  COPY  OF  THE COMPLETED FORM, WHICH SHALL CONTAIN THE
  SIGNATURE OF THE DEALER AND CONSUMER ATTESTING TO THE  ODOMETER  READING
  OF  THE  MOTOR  VEHICLE,  TO:  THE ARBITRATOR OR COURT THAT RENDERED THE
  DECISION OR JUDGMENT; AND, AT NO CHARGE, THE CONSUMER.
    S 2. The opening paragraph of paragraph 1 of subdivision f of  section
  198-b of the general business law, as separately amended by chapters 444
  and 609 of the laws of 1989, is amended to read as follows:

    If  a  dealer  has  established or participates in an informal dispute
  settlement procedure which complies in all respects with the  provisions
  of  part  seven  hundred  three  of title sixteen of the code of federal
  regulations  the  provisions  of  this  article  concerning  refunds  or
  replacement  shall  not apply to any consumer who has not first resorted
  to such procedure. Dealers utilizing informal dispute settlement  proce-
  dures pursuant to this subdivision shall insure that arbitrators partic-
  ipating in such informal dispute settlement procedures are familiar with
  the  provisions  of  this  section  and shall provide to arbitrators and
  consumers who seek arbitration a copy of the provisions of this  section
  AND  THE APPLICABLE MILEAGE CREDIT ALLOWANCE RATE AS CALCULATED PURSUANT
  TO THE METHOD SET FORTH IN PARAGRAPH  FIVE  OF  SUBDIVISION  C  OF  THIS
  SECTION,  together  with  the  following notice in conspicuous ten point
  bold face type:

    S 3.  Subparagraphs 5 and 6 of paragraph 1 of subdivision f of section
  198-b of the general business law, as separately amended by chapters 444
  and 609 of the laws of 1989, are amended to read as follows:

    5. If the  same  problem  cannot  be  repaired  after  three  or  more
  attempts,  you  are  entitled  to return the car and receive a refund of
  your purchase price or of all payments made under your  lease  contract,
  and  of  sales tax and fees, minus THE MILEAGE CREDIT ALLOWANCE FOR EACH
  MILE IN EXCESS  OF  THE  WARRANTY  MILEAGE  APPLICABLE  TO  THE  VEHICLE
  CONTAINED  IN  SUBDIVISION  B  OF THIS SECTION THAT THE VEHICLE HAS BEEN
  DRIVEN SINCE THE DATE OF DELIVERY OF SUCH VEHICLE BY THE DEALER  TO  THE
  CONSUMER,  AND  LESS a reasonable allowance for any damage not attribut-
  able to normal usage or wear, and, in the case of a  lease  contract,  a
  cancellation  of all further payments you are otherwise required to make
  under the lease contract.
    6. If your car is out of service to repair a problem for  a  total  of
  fifteen  days  or  more  during  the warranty period you are entitled to
  return the car and receive a refund of your purchase  price  or  of  all
  payments  made  under  your  lease  contract, and of sales tax and fees,
  minus THE MILEAGE CREDIT ALLOWANCE  FOR  EACH  MILE  IN  EXCESS  OF  THE
  WARRANTY MILEAGE APPLICABLE TO THE VEHICLE CONTAINED IN SUBDIVISION B OF
  THIS SECTION THAT THE VEHICLE HAS BEEN DRIVEN SINCE THE DATE OF DELIVERY
  OF  SUCH  VEHICLE  BY  THE DEALER TO THE CONSUMER, AND LESS a reasonable
  allowance for any damage not attributable to normal usage or wear,  and,
  in  the case of a lease contract, a cancellation of all further payments
  you are otherwise required to make under the lease contract.
    S 4.  Subparagraphs 7, 8, 9, 10 and 11 of paragraph 1 of subdivision f
  of section 198-b of the general business  law  are  renumbered  subpara-
  graphs  8, 9, 10, 11 and 12 and a new subparagraph 7 is added to read as
  follows:

    7. THE MILEAGE CREDIT ALLOWANCE DESCRIBED IN PARAGRAPHS FIVE  AND  SIX
  OF  THIS  SUBDIVISION  SHALL BE CALCULATED PURSUANT TO THE METHOD ESTAB-
  LISHED IN PARAGRAPH FIVE OF SUBDIVISION C OF THIS SECTION.  THE  MILEAGE

 S. 6872--B                          4

  CREDIT  ALLOWANCE  SHALL  BE  NO  GREATER  THAN (INSERT THE DEPRECIATION
  ADJUSTMENT FOR STANDARD MILEAGE RATE, AS PUBLISHED IN  INTERNAL  REVENUE
  SERVICE  PUBLICATION  FOUR  HUNDRED SIXTY-THREE, APPLICABLE FOR THE SAME
  TAX  YEAR,  OR  THE  YEAR PRIOR TO IT, WHICHEVER IS LOWEST, IN WHICH THE
  CONSUMER PURCHASED OR LEASED THE VEHICLE  FROM  THE  DEALER)  CENTS  PER
  MILE.
    S  5.  Paragraphs  4, 5 and 6 of subdivision f of section 198-b of the
  general business law are renumbered paragraphs 5, 6  and  7  and  a  new
  paragraph 4 is added to read as follows:

    4.  IN  THE EVENT THAT AN ARBITRATOR OR TRIAL COURT RENDERS A DECISION
  THAT DIRECTS THE DEALER TO ACCEPT RETURN OF THE VEHICLE, THE  ARBITRATOR
  OR  COURT  SHALL,  UPON  RENDERING  SUCH DECISION, PROVIDE THE FOLLOWING
  NOTICE TO THE CONSUMER ON A SEPARATE WRITING  AND  IN  AT  LEAST  TWELVE
  POINT BOLD FONT:

    AS  A  PREVAILING CONSUMER YOU HAVE THE RIGHT TO RETURN THE VEHICLE TO
  THE DEALER'S PLACE OF BUSINESS ON THE FIRST BUSINESS DAY FOLLOWING  THIS
  DECISION  AND  UP  TO  AND INCLUSIVE OF THE THIRTIETH DAY (WITHIN NORMAL
  BUSINESS HOURS). WHETHER OR NOT THE DEALER ACCEPTS THE VEHICLE, YOU  AND
  THE  DEALER  SHALL  COMPLETE AND SIGN A MILEAGE CREDIT CALCULATION FORM.
  YOU ARE NOT RESPONSIBLE FOR ANY MILEAGE ACCRUED WHILE YOU  ARE  LAWFULLY
  USING  THE  VEHICLE  DURING  AN APPEAL THAT A DEALER BRINGS TO VACATE OR
  MODIFY AN ARBITRATOR'S DECISION OR A TRIAL COURT JUDGMENT.
    S 6. Section 63 of the executive law is amended by adding a new subdi-
  vision 16 to read as follows:

    16. PROMULGATE REGULATIONS PROVIDING FOR THE CREATION AND  PUBLICATION
  OF A MILEAGE CREDIT CALCULATION FORM TO BE USED BY CONSUMERS AND DEALERS
  PURSUANT  TO  SECTION ONE HUNDRED NINETY-EIGHT-B OF THE GENERAL BUSINESS
  LAW. SUCH FORM SHALL BE MADE AVAILABLE TO DEALERS BY THE  DEPARTMENT  ON
  ITS WEBSITE.
    S  7.  This  act shall take effect on the ninetieth day after it shall
  have become a law; provided, however, that the provisions  of  this  act
  shall  not apply to any contract executed prior to the effective date of
  this act; provided, further, that effective immediately, the  department
  of law shall publish on its website on or before such effective date the
  mileage  credit  calculation  form,  as described in section one of this
  act, that is to be used by consumers and dealers in the manner set forth
  in such section, with such form, including instructions,  necessary  for
  the proper completion of such form by a dealer.