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A03499 Summary:

BILL NOA03499A
 
SAME ASSAME AS S07553
 
SPONSORCarroll
 
COSPNSRStirpe, Reyes, Taylor, Dickens, DeStefano, Ramos, Mikulin, Sayegh, Smith, Williams, Cook, Seawright, Reilly, Miller, Rozic, Epstein, Cruz, Steck, Ra, Benedetto, Jacobson, Hyndman, Thiele, Lavine, Stern, Jones, Buttenschon, Braunstein, Fall, Paulin, Rosenthal L, Wallace, Dilan, Aubry, Jean-Pierre, Darling, Walker, Anderson, Jackson, Raga, Burgos
 
MLTSPNSRFitzpatrick, Hevesi, Simon
 
Amd 736, 738, 741-a, 741-b & 743, add 736-b, 741-c & 745, Gen Bus L; amd 415, V & T L
 
Requires automobile brokers to maintain a place of business; requires certain notices and recordkeeping; makes related provisions.
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A03499 Actions:

BILL NOA03499A
 
02/03/2023referred to consumer affairs and protection
05/16/2023reported referred to codes
05/23/2023reported referred to rules
06/01/2023reported
06/01/2023rules report cal.442
06/01/2023ordered to third reading rules cal.442
06/06/2023amended on third reading (t) 3499a
01/03/2024ordered to third reading cal.93
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A03499 Memo:

NEW YORK STATE ASSEMBLY
MEMORANDUM IN SUPPORT OF LEGISLATION
submitted in accordance with Assembly Rule III, Sec 1(f)
 
BILL NUMBER: A3499A
 
SPONSOR: Carroll
  TITLE OF BILL: An act to amend the general business law and the vehicle and traffic law, in relation to automobile broker businesses   PURPOSE OR GENERAL IDEA OF BILL: To provide additional disclosures to consumers seeking to purchase or lease automobiles with the assistance of an automobile broker.   SUMMARY OF SPECIFIC PROVISIONS: Section 1 amends subdivision 1 of section 736 of the General Business Law to clarify which types of automobile related businesses shall not be considered an automobile broker business. Section 2 amends section 736 of the General Business Law to add a new subdivision 4 defining "place of business." Section 3 amends the General Business Law to add a new section 736-b to clarify that automobile broker businesses must maintain a permanent location for their place of business; requires that the broker timely update a certificate of registration if the place of business changes; and that the certificate of registration will be displayed so a consumer may see it at the place of business. Section 4 amends section 738 of the General Business Law to clarify that an automobile broker must enter into a written contract with a consumer before an automobile may be purchased or leased through the broker; details what must be included in such contract, including that the broker is being paid exclusively by a dealer for their services, and that the consumer may have the option to take delivery of the acquired vehicle at the selling or leasing dealership; and ensures that the appropriate disclosures are made in twelve point font. Section 5 amends section 741-a regarding broker-advertising to clarify that the broker must state in all marketing materials that the broker is not affiliated with any manufacturer, dealer, or dealership group. Section 6 amends the General Business Law to add a new a new section 741-c to enhance consumer data protections. Section 7 amends section 415 of the Vehicle and Traffic Law to add in compliance and recordkeeping requirements for brokers and dealers; and to clarify that the only compensation that a dealer may pay a broker is that which will be disclosed to the consumer through notices or the contract. Section 8 amends the General Business Law to add a new section 745 establishing state preemption. Section 9 amends section 741-b of the General Business Law to clarify what must be included in the disclosures that brokers are obligated to make to consumers at the outset of the relationship, before the broker takes an order to search for a vehicle. These disclosures shall include either an express detailing of the fees that the broker will be taking from the dealer; or a statement that such fees are unknown at the time of the disclosure but will be disclosed as part of the sale or lease agreement. Section 10 amends the General Business Law to add a new section 741-c prohibiting certain acts by brokers. Section 11 amends section 743 of the General Business Law to clarify that the relevant provisions of the General Business law may be enforced concurrently by the attorney general and a municipal consumer affairs office. Section 12 establishes a severability clause. Section 13 is the effective date of 180 days,-but authorizes the Depart- ment of Motor Vehicles to immediately issue or amend any relevant regu- lations or forms.   JUSTIFICATION: In exchange for the right to sell, lease, and service particular new motor vehicle brands, and according to franchise agreements, dealers must maintain high levels of customer satisfaction. There has been a proliferation of broker businesses in recent years and it is important to ensure that there is full consumer confidence in the brokers' services as well.- Increased disclosure and restrictions on certain advertising practices will result in better protections for New York consumers. This bill will strengthen the broker registration process, increase disclosures, and enforcement provisions.   PRIOR LEGISLATIVE HISTORY: A1932C of 2021-22, passed Assembly   FISCAL IMPLICATIONS: None to the state.   EFFECTIVE DATE: 180 days after enactment.
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A03499 Text:



 
                STATE OF NEW YORK
        ________________________________________________________________________
 
                                         3499--A
                                                                   R. R. 442
 
                               2023-2024 Regular Sessions
 
                   IN ASSEMBLY
 
                                    February 3, 2023
                                       ___________
 
        Introduced by M. of A. CARROLL, STIRPE, REYES, TAYLOR, DICKENS, DeSTEFA-
          NO,  RAMOS, MIKULIN, SAYEGH, SMITH, WILLIAMS, COOK, SEAWRIGHT, REILLY,
          MILLER, ROZIC, EPSTEIN, CRUZ, STECK, RA, BENEDETTO, JACOBSON, HYNDMAN,
          THIELE, LAVINE, STERN, JONES, BUTTENSCHON, BRAUNSTEIN,  FALL,  PAULIN,
          L. ROSENTHAL,  WALLACE,  DILAN,  AUBRY,  JEAN-PIERRE, DARLING, WALKER,
          ANDERSON, JACKSON -- Multi-Sponsored by -- M. of A. FITZPATRICK, HEVE-
          SI, SIMON -- read once and  referred  to  the  Committee  on  Consumer
          Affairs  and  Protection  -- reported and referred to the Committee on
          Codes -- reported and referred to the Committee on Rules -- ordered to
          a third reading -- amended on the  special  order  of  third  reading,
          ordered reprinted as amended, retaining its place on the special order
          of third reading
 
        AN  ACT  to  amend  the general business law and the vehicle and traffic
          law, in relation to automobile broker businesses
 
          The People of the State of New York, represented in Senate and  Assem-
        bly, do enact as follows:
 
     1    Section  1.  Subdivision 1 of section 736 of the general business law,
     2  as amended by chapter 28 of the laws of 2018,  is  amended  to  read  as
     3  follows:
     4    1.  "Automobile  broker  business"  means  any  person who, for a fee,
     5  commission or other valuable consideration, regardless of  whether  such
     6  fee, commission, or consideration is paid directly by a consumer, offers
     7  to  provide,  provides,  or  represents  that  he  or she will provide a
     8  service of purchasing, arranging, assisting, facilitating  or  effecting
     9  the purchase or lease of an automobile as agent, broker, or intermediary
    10  for a consumer. "Automobile broker business" does not include any person
    11  registered  as  a  dealer pursuant to article sixteen of the vehicle and
    12  traffic law, only when operating in a manner pursuant to such  registra-
    13  tion  under  article  sixteen of the vehicle and traffic law, any person
    14  registered under section four hundred fifteen-a of the vehicle and traf-
    15  fic law, only when operating in  a  manner  described  in  section  four
 
         EXPLANATION--Matter in italics (underscored) is new; matter in brackets
                              [ ] is old law to be omitted.
                                                                   LBD00498-02-3

        A. 3499--A                          2
 
     1  hundred  fifteen-a of the vehicle and traffic law, an automobile auctio-
     2  neer, only when operating in the manner  described  in  section  twenty-
     3  three of this chapter, nor any bona fide employee of a registered dealer
     4  while  acting  for such dealer, or any person who sells, offers for sale
     5  or lease or acts as agent,  broker  or  intermediary  in  effecting  the
     6  purchase  or  lease  of three or fewer automobiles in any calendar year,
     7  any national service which aggregates  information  for  consumers,  but
     8  does  not  otherwise  have  contact with consumers, or any motor vehicle
     9  franchisor, manufacturer, [or] distributor, distributor branch or facto-
    10  ry branch registered under article sixteen of the  vehicle  and  traffic
    11  law.
    12    §  2.  Section  736 of the general business law is amended by adding a
    13  new subdivision 4 to read as follows:
    14    4. "Place of business" means a designated permanent location at  which
    15  the business of the automobile broker business is conducted.
    16    § 3. The general business law is amended by adding a new section 736-b
    17  to read as follows:
    18    §  736-b.  Place  of  business  required. 1. No person shall engage in
    19  business as an automobile broker business, as defined in  section  seven
    20  hundred thirty-six of this article, without maintaining a place of busi-
    21  ness.
    22    2.  The  certificate of registration for an automobile broker business
    23  pursuant to paragraph c of subdivision seven  of  section  four  hundred
    24  fifteen  of  the  vehicle and traffic law shall be amended within thirty
    25  days of a change of address of an automobile broker business to  reflect
    26  the new address of its place of business.
    27    §  4.  Subdivision  1  and  the  opening paragraph of subdivision 2 of
    28  section 738 of the general business law, subdivision 1 and  the  opening
    29  paragraph  of subdivision 2 as added by chapter 616 of the laws of 1988,
    30  the opening paragraph and paragraph (e) of subdivision 1 as  amended  by
    31  chapter  28  of the laws of 2018, and paragraphs (f) and (g) of subdivi-
    32  sion 1 as amended by chapter 477 of the laws of  2017,  are  amended  to
    33  read as follows:
    34    1.  Prior  to the purchase or lease of an automobile, the consumer and
    35  the automobile broker  business  shall  enter  into  a  contract.  Every
    36  contract  between  a  consumer and an automobile broker business for the
    37  purchase or lease of an automobile shall be in writing, shall be  dated,
    38  shall contain the street address of the place of business of the automo-
    39  bile  broker  business, the registration number issued to the automobile
    40  broker business pursuant to section four hundred fifteen of the  vehicle
    41  and  traffic  law  and the name and address of the consumer and shall be
    42  signed by the consumer and by  the  automobile  broker  business.  Every
    43  contract  shall  comply  with the requirements set forth in this section
    44  and contain the following:
    45    (a) A complete description of the automobile and each option, if  any,
    46  ordered;  a  statement  of whether the automobile is or will be manufac-
    47  tured in accordance with United States specifications and is or will  be
    48  certified  by the manufacturer as such; if the automobile is not or will
    49  not be manufactured in accordance with United States safety and environ-
    50  mental specifications, and the  consumer  has  retained  the  automobile
    51  broker  business  to  arrange  for the modification of the automobile to
    52  meet such specifications, the name and street address of  the  modifica-
    53  tion facility and a statement in immediate proximity to such information
    54  that  the automobile broker business assumes full financial responsibil-
    55  ity that the automobile will be properly modified  to  meet  all  United
    56  States safety and environmental specifications.

        A. 3499--A                          3
 
     1    (b)  The price of the automobile including any options ordered. If the
     2  price set forth is an estimated price, a statement in immediate proximi-
     3  ty to the price that the price is an estimated price only and  that  the
     4  consumer  has  the  right  to  cancel the contract and to receive a full
     5  refund  if the final price exceeds the estimated price by more than five
     6  percent.
     7    (c) The estimated delivery date of the automobile  and  the  place  of
     8  delivery  and a statement in immediate proximity to the estimated deliv-
     9  ery date that, if the automobile has not been  delivered  in  accordance
    10  with  the  contract within thirty days following such estimated delivery
    11  date, the consumer has the right to cancel the contract and to receive a
    12  full refund, unless the delay in delivery is attributable to the consum-
    13  er.
    14    (d) A statement of whether or not the manufacturer's warranty accompa-
    15  nying the automobile is the same warranty as that furnished to  purchas-
    16  ers  of  that  make  automobile from an authorized dealer located in the
    17  United States.
    18    (e) A statement that the broker will  not  accept  payment  for  their
    19  services from anyone other than the motor vehicle dealer.
    20    (f) A statement that the consumer has the option to take delivery of a
    21  motor vehicle at the selling or leasing dealership.
    22    (g)  A  description  of  any  other services and an itemization of the
    23  charges for each. Such description shall include disclosure of the auto-
    24  mobile dealer from which the automobile was purchased or leased, as well
    25  as all fees, commissions or other valuable  considerations  paid  by  an
    26  automobile dealer to the automobile broker business for selling, arrang-
    27  ing, assisting or effecting the sale or lease of an automobile as agent,
    28  broker, or intermediary between the consumer and the automobile dealer.
    29    [(f)]  (h)  If  a  consumer  elects to cancel the contract pursuant to
    30  paragraph (b) or (c) of this subdivision, he  or  she  shall  notify  in
    31  writing  the  automobile broker business at the address specified in the
    32  contract. The automobile broker business shall make a full refund to the
    33  consumer within ten business days following receipt of the request for a
    34  refund.   The contract shall contain  a  statement,  setting  forth  the
    35  consumer's  right to cancel the contract under paragraphs (b) and (c) of
    36  this subdivision and the refund obligations  of  the  automobile  broker
    37  business.
    38    [(g)]  (i)  The statements required by paragraphs (a), (b), (c), [and]
    39  (e), (f), (g) and (h) of this subdivision shall be printed in  at  least
    40  [ten] twelve point bold type.
    41    The  contract  shall  be accompanied by a completed form in duplicate,
    42  captioned "Notice of  Cancellation"  which  shall  be  attached  to  the
    43  contract  and  easily  detachable,  and  which shall contain in at least
    44  [ten] twelve point type the following:
    45    § 5. Section 741-a of the general business law, as amended by  chapter
    46  477 of the laws of 2017, is amended to read as follows:
    47    §  741-a.  Advertising.  1. Automobile broker businesses shall clearly
    48  and conspicuously disclose the following in all  advertisements  in  any
    49  medium, and in any print advertisement such disclosures shall not appear
    50  in  any  footnotes  and  shall  be  situated in the top half of any such
    51  advertisement in an easily readable typeface:
    52    (a) That the automobile broker business is not a registered new  motor
    53  vehicle dealer but is a registered automobile broker business as defined
    54  in section four hundred fifteen of the vehicle and traffic law;
    55    (b)  The  registration number issued to the automobile broker business
    56  pursuant to section four hundred fifteen of the vehicle and traffic law;

        A. 3499--A                          4

     1    (c) Whether any fees may be imposed by the automobile broker  business
     2  for services rendered. Details of such compensation shall be provided by
     3  the automobile broker business upon request by the consumer; [and]
     4    (d)  That  no warranty repair services will be provided by the automo-
     5  bile broker business; and
     6    (e) That the automobile broker business is  not  affiliated  with  any
     7  manufacturer, dealership, or dealership group.
     8    2.  The official business certificate of registration shall be clearly
     9  and conspicuously displayed at the place of business  of  an  automobile
    10  broker business.
    11    § 6. The general business law is amended by adding a new section 741-c
    12  to read as follows:
    13    § 741-c. Private information security. In addition to the requirements
    14  of subdivision twenty-one of section four hundred fifteen of the vehicle
    15  and traffic law, an automobile broker business shall:
    16    1.  keep and maintain all consumer records containing private informa-
    17  tion in a safe place that is not accessible to persons not  employed  by
    18  the  automobile  broker business, including by keeping and maintaining a
    19  clear and permanent physical barrier from other businesses that share or
    20  neighbor its place of business;
    21    2. have a separate mailbox at such place of business for  the  automo-
    22  bile broker business; and
    23    3.  have  a method of securing personal information, including but not
    24  limited to in a locking cabinet or safe.
    25    § 7. Section 415 of the vehicle and traffic law is amended  by  adding
    26  four new subdivisions 22, 23, 24 and 25 to read as follows:
    27    22.  Compliance.  All  dealers and automobile broker businesses regis-
    28  tered under subdivisions three and three-a of this section shall certify
    29  and attest to compliance with sections three hundred ninety-nine-cc,  as
    30  added  by chapter 655 of the laws of 2005, three hundred ninety-nine-dd,
    31  as added by chapter 487 of the laws of 2006, three hundred  ninety-nine-
    32  ddd,  three  hundred  ninety-nine-h, three hundred ninety-nine-oo, three
    33  hundred ninety-nine-p, three hundred ninety-nine-pp, eight hundred nine-
    34  ty-nine-bb of the general business law, and part three hundred  fourteen
    35  of title sixteen of the code of federal regulations as applicable.
    36    23.  Automobile  broker  record  requirements.  (a) For each completed
    37  transaction and within three  business  days  of  consummation  thereof,
    38  automobile  brokers  shall  maintain  a permanent paper file record that
    39  clearly evidences and records the make, model, year, color  and  vehicle
    40  identification  number of all previously unregistered motor vehicles for
    41  which such broker has  provided  a  service  of  purchasing,  arranging,
    42  assisting, facilitating or effecting the purchase or lease of such motor
    43  vehicle.  Such  records  shall be maintained for a six-year period after
    44  consummation of the transaction. Such records  shall  also  include  the
    45  name  and  address of the purchaser or lessee of such motor vehicle, the
    46  date of sale or commencement of lease with respect to such motor vehicle
    47  and the name and address of the dealer from which the motor vehicle  was
    48  purchased or leased.
    49    (b)  The  records maintained by the automobile broker businesses shall
    50  include a copy of the dealer rate  sheets  received  by  the  automobile
    51  broker  from  the dealers that were relied upon by the automobile broker
    52  in connection with such transaction.
    53    (c) Such records shall be open for inspection by the commissioner,  or
    54  his or her agent, during reasonable business hours.
    55    (d)  As an alternative to paper file records, an automobile broker may
    56  use a computer and appropriate software to maintain the records required

        A. 3499--A                          5
 
     1  to be kept by this section, provided all information required  by  para-
     2  graphs  (a) and (b) of this subdivision are duly recorded and maintained
     3  in accordance with this subdivision.
     4    24.  Maintenance  records.  For  each sale or lease of a motor vehicle
     5  that involves an automobile broker  business,  the  dealer  must  obtain
     6  evidence  of  the  automobile  broker  business'  registration  and  the
     7  broker's registration number and maintain such records in the deal jack-
     8  et for each transaction which also shall  contain  the  purchase  order,
     9  copies of the title and registration documents, the bill of sale and the
    10  retail  installment  sale  contract  required  under  article ten of the
    11  personal property law or the retail lease agreement required under arti-
    12  cle nine-A of the personal property law.
    13    25. Broker compensation. No dealer may  offer  or  pay  an  automobile
    14  broker   business  any  fee,  or  commission,  other  than  compensation
    15  disclosed pursuant  to  section  seven  hundred  thirty-eight  or  seven
    16  hundred forty-one-b of the general business law or section three hundred
    17  two or three hundred thirty-seven of the personal property law.
    18    §  8.  The general business law is amended by adding a new section 745
    19  to read as follows:
    20    § 745. Preemption. The provisions of this  article  and  section  four
    21  hundred fifteen of the vehicle and traffic law shall govern the require-
    22  ments  and  obligations  with  respect to the automobile broker business
    23  notwithstanding any other law to the contrary. No local or municipal law
    24  shall be enacted which shall impose any different or  other  obligations
    25  on  the automobile broker business including a requirement of any fee or
    26  license for the automobile broker business.
    27    § 9. Section 741-b of the general business law, as added by chapter 28
    28  of the laws of 2018, is amended to read as follows:
    29    § 741-b. Disclosure. An automobile broker  business  shall  provide  a
    30  disclosure at the time such automobile broker business takes an order to
    31  search  for  a  leased  or  purchased  vehicle  meeting  the prospective
    32  lessee's specifications. Such disclosure shall provide the amount of any
    33  fees, commissions or other valuable consideration the automobile  broker
    34  business  expects  to  receive,  if  known, from a dealer, lessor or any
    35  other person or entity for any assistance the automobile broker business
    36  provides in effecting the lease or purchase transaction. If  the  amount
    37  of  any such fees, commissions or other valuable consideration the auto-
    38  mobile broker business expects to receive is unknown at the time of  the
    39  required  disclosure, the automobile broker business shall disclose: (a)
    40  whether it has a contract with any dealer, lessor or any other person or
    41  entity for the provision of assistance in effecting a lease or  purchase
    42  transaction;  [and]  (b)  [whether]  that the automobile broker business
    43  [may] shall be compensated by the dealer, lessor or any other person  or
    44  entity  for  any assistance in effecting such lease transaction; and (c)
    45  that the amount of any such fees, commissions or other valuable  consid-
    46  eration  the  automobile  broker business receives shall be disclosed on
    47  the executed lease or purchase contract or finance agreement pursuant to
    48  section three hundred two or three hundred thirty-seven of the  personal
    49  property law.
    50    §  10.  The  general  business  law is amended by adding a new section
    51  741-c to read as follows:
    52    § 741-c. Prohibited acts. An automobile broker business is  prohibited
    53  from:
    54    1.  advertising that such automobile broker business has any new auto-
    55  mobile in stock;

        A. 3499--A                          6

     1    2. advertising any price figure in an advertisement unless such figure
     2  represents the actual price of the advertised automobile,  exclusive  of
     3  registration and titles, fees and taxes;
     4    3.  starting  or completing any financing or credit application or the
     5  lease or purchase agreement of an automobile on behalf of a consumer  or
     6  dealer; and
     7    4. accepting any payment other than that disclosed under section seven
     8  hundred  thirty-eight  or seven hundred forty-one-b of this article from
     9  anyone other than the dealer.
    10    § 11. Section 743 of the general business law, as amended  by  chapter
    11  372 of the laws of 2016, is amended to read as follows:
    12    §  743.  Enforcement  by attorney general. 1. In addition to the other
    13  remedies provided, whenever there shall be a violation of this  article,
    14  application  may  be  made  by  the  attorney general in the name of the
    15  people of the state of New York to a court or justice  having  jurisdic-
    16  tion  by a special proceeding to issue an injunction, and upon notice to
    17  the defendant of not less than five days, to  enjoin  and  restrain  the
    18  continuance  of such violations; and if it shall appear to the satisfac-
    19  tion of the court or justice that the defendant has, in  fact,  violated
    20  this  article,  an  injunction  may  be issued by such court or justice,
    21  enjoining and restraining any further violation, without requiring proof
    22  that any person has, in fact, been injured or damaged  thereby.  In  any
    23  such  proceeding,  the court may make allowances to the attorney general
    24  as provided in paragraph six of subdivision (a) of section  eighty-three
    25  hundred  three  of the civil practice law and rules, and direct restitu-
    26  tion. Whenever the court shall determine that a violation of this  arti-
    27  cle  has  occurred,  the  court shall impose a civil penalty of not less
    28  than one thousand dollars and not more than three thousand  dollars  for
    29  each  violation.  In  connection with any such proposed application, the
    30  attorney general is authorized to take proof and make a determination of
    31  the relevant facts and to issue subpoenas in accordance with  the  civil
    32  practice law and rules.
    33    2.  The  provisions  of this article may be enforced concurrently by a
    34  municipal consumer affairs office.
    35    § 12. Severability. If any clause, sentence,  paragraph,  subdivision,
    36  section  or part of this act shall be adjudged by any court of competent
    37  jurisdiction to be invalid, such judgment shall not affect,  impair,  or
    38  invalidate the remainder thereof, but shall be confined in its operation
    39  to the clause, sentence, paragraph, subdivision, section or part thereof
    40  directly  involved  in the controversy in which such judgment shall have
    41  been rendered. It is hereby declared to be the intent of the legislature
    42  that this act would have been enacted even if  such  invalid  provisions
    43  had not been included herein.
    44    §  13.  This  act  shall  take effect on the one hundred eightieth day
    45  after it shall have become a law.  Effective immediately, the  addition,
    46  amendment  and/or  repeal  of  any  rule or regulation necessary for the
    47  implementation of this act on its effective date are  authorized  to  be
    48  made and completed on or before such effective date.
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