NEW YORK STATE ASSEMBLY MEMORANDUM IN SUPPORT OF LEGISLATION submitted in accordance with Assembly Rule III, Sec 1(f)
BILL NUMBER: A5270C
SPONSOR: Morelle TITLE OF BILL:
An act to amend the general business law, in relation to certain rental
vehicle protections; to amend chapter 656 of the laws of 2002 amending
the general business law relating to rental vehicle protections, in
relation to making such provisions permanent; to amend a chapter of the
laws of 2018, amending chapter 656 of the laws of 2002 amending the
general business law relating to rental vehicle protections, as proposed
in legislative bills numbers S. 8317 and A. 11097, in relation to making
such provisions permanent; and providing for the repeal of certain
provisions upon expiration thereof
PURPOSE OF THE BILL:
Updates the law relating to rights and obligations of rental car compa-
nies and their customers to reflect the manner in which rental car busi-
ness has evolved since 2002; adds additional tiers of pricing for
optional vehicle protection; provides additional consumer protections;
clarifies inconsistent, confusing, and ambiguous language contained
throughout; and extends the combined provisions for 5 years.
SUMMARY OF SPECIFIC PROVISIONS:
(1) Makes changes throughout the law to clarify the use of the term
"renter" and "authorized driver." A renter is the person or entity who
entered into the contract with a rental vehicle company. An authorized
driver is the renter, the renter's spouse, and any person noted on the
contract as an additional driver. The respective rights and obligations
of each are not always the same, yet existing law does not consistently
reflect those distinctions.
(2) Amends § 396-z (1) to delete the confusing reference to "private
passenger vehicle" currently relied upon in § 396-z(1)(e) to differen-
tiate between commercial uses excluded from the provision and private
passenger uses covered by the provision; and clearly specifies those
commercial vehicles that are excluded from this statute. The section is
further amended to reflect the fact that different airport authorities
use different terminology when referring to consolidated facilities
charges and concession fees. Those various terms are all captured here.
(3) Amends § 396-z(2)(a) to reorganize the tiers for optional vehicle
protection (OVP) to reflect current marketplace conditions. For the past
15 years, the daily price of optional vehicle protection has been capped
at $9.00 if the vehicle has an MSRP of not more than $30,000 and
$12.00/day if the vehicle has an MSRP of more than $30,000.
Under the new tier schedule, OVP will be capped at: $9 if the MSRP is
not greater than $20,000; $12 if the MSRP is greater than $20,000 but
not more than $35,000; and $15 if the MSRP is greater than $35,000 but
not more than $50,000. For vehicles with an MSRP of more than $50,000,
the price of the OVP will be subject to fair market value as determined
by the rental vehicle company.
These changes are necessitated by a combination of standard inflation
over the past 15 years, changes in the manner by which rental cars are
purchased from manufacturers, and the increased costs associated with
repairing vehicles today.
Under the pre-2002 statutory scheme, rental companies could not afford
to rent cars worth more than $30,000, and most cars available in New
York were base models. Today, the new rental environment makes vehicles
available that consumers want and expect, but greatly exceed $30,000 in
value. Logically, a $12 cap is not sufficient to cover OVP losses
related to these more expensive vehicles. This is particularly true now
that most vehicles are loaded from bumper to bumper with high-tech
sensors that did not exist in 2002. Even the most minor fender-bender
can involve replacing the safety sensors and other expensive high-tech
equipment that was collectively merely a glimmer in an engineer's mind
in 2002. That being said, under the proposed amendments, approximately
80% of cars rented in New York would still fit under the, $9 or $12 cap.
The overwhelming majority of states simply allow the marketplace to set
the price of OVP. In these states, the market value of a damage waiver
is between $18 and 24 per day, even for base-model vehicles.
This bill would maintain the intent of original legislation by placing
tier caps on all but a handful of super-luxury vehicles.
(4) Amends § 396-z(2)(c) to expand the household members whose use of a
rental vehicle will not void optional vehicle protection to include a
duly licensed parent-in-law residing in the same household. Current law
only covers use by a duly-licensed parent or a child over the age of 18
who resides in the same household as the renter.
(5) Amends § 396-z(2)(d) to provide a means for a customer to terminate
optional vehicle protection after 24 hours. Currently, the law only
provides a mechanism for terminating the OVP within the first 24 hours
of purchase.
(6) Amends § 396-z (3) to specify the right and obligations of a renter
and rental vehicle company when a vehicle is "recovered" (instead of
"returned") or returned during non-business hours. The current law only
anticipates the situation where a vehicle is returned to a rental
location during normal business hours. Unfortunately, renters have been
known to park illegally resulting in the vehicles being towed, or, in
more extreme cases, the vehicle is totally abandoned by the renter. In
those cases, the rental vehicle company has to "recover" the vehicle.
(7) Amends § 396-z(4)(c) to provide that a rental vehicle company's
website must include the cost of optional vehicle protection if the
website lists rental vehicle costs. This is same consumer protection
required in a video presentation of a television or Internet advertise-
ment.
(8) Amends § 396-z(4)(e) to update the telephone disclosure requirement
regarding optional vehicle protection to include inquiries with a rental
car that involve an interaction with a representative over the internet
or by other electronic means and to further clarify the subdivision.
Current requirements have led to more confusion than clarification. This
change recognizes that there are numerous optional products available
for purchase, but provides that any discussion of OVP still contains the
information and disclosures required by the statute.
(9) Amends § 396-2(4)(f) to clearly specify, in verbatim terms, what the
rental vehicle company must disclose on signs or pamphlets regarding the
consumers rights and obligations. Current law leaves it to the individ-
ual rental companies to determine what renter rights and obligations
must be disclosed in the rental agreement and on clearly visible signs
and pamphlets. This leaves far too much to interpretation by the rental
vehicle companies. This has the dual effect of confusing consumers and
making enforcement of disclosure compliance difficult. This amendment
captures the original intent that consumers be informed through various
media of their right and obligations, but goes a step further by spell-
ing out exactly what those rights and obligations are. With this change,
no matter which company they use or where they rent in New York, they
will be provided the same information regarding their rights and obli-
gations.
(10) Amends § 396-z(4)(g) to provide that, within six months from the
effective date of the bill, the printed notices regarding the availabil-
ity of optional vehicle protection shall be in boldface type and in no
smaller print than 12-point type instead of the current 10-point type
requirement.
(11) Amends § 396-z(4)(h) to provide that, within six months from the
effective date of the bill, contract provisions regarding conditions and
exclusions from optional vehicle protection coverage shall be in bold-
face type and in no smaller print than 12-point type instead of the
current 10-point type requirement.
(12) Amends § 396-z (5) to unravel currently-confusing language relating
to the rights of a renter or other authorized driver and/or his or her
insurance company to inspect a damaged vehicle, and the time periods
controlling this process, while maintaining all the existing time peri-
ods or notice requirements of the existing provision. Currently, when a
rental vehicle company determines that there is damage to a vehicle, the
renter and/or his/her insurance company have a right to inspect the
vehicle within 7 days from the return/recovery of the vehicle. However,
notice of an intention to inspect must be made within 72 hours of return
or recovery of the vehicle. Since the vehicle may be returned during
normal business hours, after hours, or recovered by the rental vehicle
company, consumers face a moving and inconsistent target for when the
clock starts on the 72 hours, potentially depriving the renter of an
opportunity to inspect. This bill amends the section to provide that the
72 hours start when the renter has received an incident report from the
rental vehicle company by certified or registered mail with return
receipt. The subdivision is further amended to provide how renter or
other authorized driver may satisfy incident report requirements.
(13) Amends § 396-z (6) to clarify that damages related to loss of use
and administrative fees may not be assessed against a renter or author-
ized driver, but may be assessed against a negligent third party. It
also adds a working definition of "normal wear and tear" based on normal
insurance industry standards. Current law uses that term, but without a
definition, and it can lead to wildly different interpretations. Final-
ly, this provision adds clarity to, and removes redundancies from how a
damage claim is presented to the customer's insurance carrier.
(14) Amends § 396-z (7)(a)-(c) to clarify language consistent with the
original legislative intent that when there is a dispute over damages to
a rental vehicle, a rental vehicle company may present a claim for
damages to the renter or responsible insurance company, but no rental
vehicle company may collect payment against a security deposit or credit
card hold, nor shall they report a debt to any credit bureau during the
term of the rental agreement or pending resolution of any such dispute.
Recovery of any damages by the rental vehicle company may be sought only
after there is an agreement as to damages, or alternatively, damages
have been determined pursuant to law or the specific terms of the rental
agreement, provided the agreement is consistent with the provisions of §
396-z.
(15) Amends § 396-z(7)(d) to clarify that a cause for action can be
brought in any court of competent jurisdiction provided that the rental
vehicle company has first provided the customer with a demand letter.
The elements of the demand letter and the manner of its service on the
renter or other authorized driver are specified. The renter, authorized
driver, or his or her respective insurance companies may agree to submit
a claim by the rental vehicle company to arbitration or mediation but
only if an agreement to do so is executed after a claim of loss. Exist-
ing law requires that unresolved disputes must be litigated, where, in
instances where damages exceed $5,000, the renter could be compelled to
engage an attorney and incur related court costs - often in excess of
the amount in dispute. This amendment provides the consumer with a
choice.
(16) Adds a new § 8-a to prohibit a rental vehicle company from refusing
to rent a vehicle, from impeding additional charges, or from imposing
additional terms and conditions based solely on the geographical
location of the residence of a New York State resident.
(17) Adds a new § 396-z (16) to provide a methodology for addressing the
law's statutory notice provisions when a customer rents a car in a
manner that bypasses the traditional "counter," e.g., customers who rent
electronically and take the option to go directly to their vehicle.
Customers electing to receive disclosures electronically must expressly
consent to this option.
(18) Makes other technical and clarifying provisions and removes redun-
dancies throughout the statute.
(19) Makes these changes, as well as the changes enacted by Chapter 656
of the Laws of 2002 (and extended by Chapter 14 of the Laws of 2008 and
Chapter 82 of the Laws of 2013) apply until June 30, 2023, with a rever-
sion to Chapter 656 of Laws of 2002 unless extended. Clarifies that
these provisions apply in the event the provisions of A.11097/S.8317 are
signed into law prior to the effective date of this act.
JUSTIFICATION:
Chapter 656 of the Laws of 2002 represents the very core of the
relationship between rental car companies and New York consumers. For
more than 15 years, this statute has allowed the rental car industry to
grow in New York, while providing its customers with the most comprehen-
sive set of consumer protections anywhere in the country. The results
have proven beneficial for both the industry and the consumer the indus-
try has expanded into previously underserved areas, and robust competi-
tion between the various rental companies has provided consumers with a
variety of affordable options.
Moreover, sale of the damage waiver as an optional product is permitted,
but subject to significant and comprehensive disclosure and education
regarding the consumer's options. As a result, the five-year trial was
deemed a success and extended in 2008 and again in 2013.
After a decade of working within the framework of Chapter 656, some of
the requirements of the law have proven to be confusing for consumers
and difficult to execute for the rental companies. Other provisions have
become stale in light of the new delivery methods never envisioned in
2002 (such as mobile apps). This measure seeks the multiple goals of
providing certainty to the industry by making the law permanent, enhanc-
ing the nation's strongest consumer protections, and clarifying some of
law's more ambiguous and/or unworkable provisions. It also maintains the
core intent of Chapter 656 while accommodating new methods for product
delivery (e.g. mobile apps and other web-based delivery services).
PRIOR LEGISLATIVE HISTORY:
New Bill
FISCAL IMPLICATIONS:
None
EFFECTIVE DATE:
This act shall take effect immediately; provided, however, section one
of this act shall take effect on the ninetieth day after it shall have
become a law; provided, further, that section one of this act shall
expire and be deemed repealed June 30, 2023.
