NEW YORK STATE ASSEMBLY MEMORANDUM IN SUPPORT OF LEGISLATION submitted in accordance with Assembly Rule III, Sec 1(f)
BILL NUMBER: A3499B
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 how the broker
business shall be paid for their services, whether by either the dealer
or buyer/lessee, 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 Notice of Cancellation is printed 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 stipulate that compensation for a broker's services in a
broker/consumer contract may be provided by either the dealer or the
consumer, but not by both.
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,
and either from the dealer or consumer; 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-d
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::
A3499A of 2023 Amended on Third Reading
A1932C of 2021-22, passed Assembly
FISCAL IMPLICATIONS::
None to the state.
EFFECTIVE DATE::
180 days after enactment.
STATE OF NEW YORK
________________________________________________________________________
3499--B
Cal. No. 93
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, RAGA, BURGOS -- Multi-Sponsored by -- M. of A.
FITZPATRICK, HEVESI, 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 -- ordered to a third reading, amended
and ordered reprinted, retaining its place on the order of third read-
ing
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] such automobile
8 broker business will provide a service of purchasing, arranging, assist-
9 ing, facilitating or effecting the purchase or lease of an automobile as
10 agent, broker, or intermediary for a consumer. "Automobile broker busi-
11 ness" does not include any person registered as a dealer pursuant to
12 article sixteen of the vehicle and traffic law, only when operating in a
13 manner pursuant to such registration under article sixteen of the vehi-
14 cle and traffic law, any person registered under section four hundred
15 fifteen-a of the vehicle and traffic law, only when operating in a
16 manner described in section four hundred fifteen-a of the vehicle and
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[] is old law to be omitted.
LBD00498-03-4
A. 3499--B 2
1 traffic law, an automobile auctioneer, only when operating in the manner
2 described in section twenty-three of this chapter, nor any bona fide
3 employee of a registered dealer while acting for such dealer, or any
4 person who sells, offers for sale or lease or acts as agent, broker or
5 intermediary in effecting the purchase or lease of three or fewer auto-
6 mobiles in any calendar year, any national service which aggregates
7 information for consumers, but does not otherwise have contact with
8 consumers, or any motor vehicle franchisor, manufacturer, [or] distribu-
9 tor, distributor branch or factory branch registered under article
10 sixteen of the vehicle and traffic law.
11 § 2. Section 736 of the general business law is amended by adding a
12 new subdivision 4 to read as follows:
13 4. "Place of business" means a designated permanent location at which
14 the business of the automobile broker business is conducted.
15 § 3. The general business law is amended by adding a new section 736-b
16 to read as follows:
17 § 736-b. Place of business required. 1. No person shall engage in
18 business as an automobile broker business, as defined in section seven
19 hundred thirty-six of this article, without maintaining a place of busi-
20 ness.
21 2. The certificate of registration for an automobile broker business
22 pursuant to paragraph c of subdivision seven of section four hundred
23 fifteen of the vehicle and traffic law shall be amended within thirty
24 days of a change of address of an automobile broker business to reflect
25 the new address of its place of business.
26 § 4. Subdivision 1 and the opening paragraph of subdivision 2 of
27 section 738 of the general business law, subdivision 1 and the opening
28 paragraph of subdivision 2 as added by chapter 616 of the laws of 1988,
29 the opening paragraph and paragraph (e) of subdivision 1 as amended by
30 chapter 28 of the laws of 2018, and paragraphs (f) and (g) of subdivi-
31 sion 1 as amended by chapter 477 of the laws of 2017, are amended to
32 read as follows:
33 1. Prior to the purchase or lease of an automobile, the consumer and
34 the automobile broker business shall enter into a contract. Every
35 contract between a consumer and an automobile broker business for the
36 purchase or lease of an automobile shall be in writing, shall be dated,
37 shall contain the street address of the place of business of the automo-
38 bile broker business, the registration number issued to the automobile
39 broker business pursuant to section four hundred fifteen of the vehicle
40 and traffic law and the name and address of the consumer and shall be
41 signed by the consumer and by the automobile broker business. Every
42 contract shall comply with the requirements set forth in this section
43 and contain the following:
44 (a) A complete description of the automobile and each option, if any,
45 ordered; a statement of whether the automobile is or will be manufac-
46 tured in accordance with United States specifications and is or will be
47 certified by the manufacturer as such; if the automobile is not or will
48 not be manufactured in accordance with United States safety and environ-
49 mental specifications, and the consumer has retained the automobile
50 broker business to arrange for the modification of the automobile to
51 meet such specifications, the name and street address of the modifica-
52 tion facility and a statement in immediate proximity to such information
53 that the automobile broker business assumes full financial responsibil-
54 ity that the automobile will be properly modified to meet all United
55 States safety and environmental specifications.
A. 3499--B 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 shall only accept payment for their
19 services from either the dealer selling or leasing the automobile or the
20 buyer or lessee of the automobile, but may not accept payment from both.
21 (f) A statement that the consumer has the option to take delivery of a
22 motor vehicle at the selling or leasing dealership.
23 (g) A description of any other services and an itemization of the
24 charges for each. Such description shall include disclosure of the auto-
25 mobile dealer from which the automobile was purchased or leased, as well
26 as all fees, commissions or other valuable considerations paid by an
27 automobile dealer to the automobile broker business for selling, arrang-
28 ing, assisting or effecting the sale or lease of an automobile as agent,
29 broker, or intermediary between the consumer and the automobile dealer.
30 [(f)] (h) If a consumer elects to cancel the contract pursuant to
31 paragraph (b) or (c) of this subdivision, he or she shall notify in
32 writing the automobile broker business at the address specified in the
33 contract. The automobile broker business shall make a full refund to the
34 consumer within ten business days following receipt of the request for a
35 refund. The contract shall contain a statement, setting forth the
36 consumer's right to cancel the contract under paragraphs (b) and (c) of
37 this subdivision and the refund obligations of the automobile broker
38 business.
39 [(g)] (i) The statements required by paragraphs (a), (b), (c), [and]
40 (e), (f), (g) and (h) of this subdivision shall be printed in at least
41 [ten] twelve point bold type.
42 The contract shall be accompanied by a completed form in duplicate,
43 captioned "Notice of Cancellation" which shall be attached to the
44 contract and easily detachable, and which shall contain in at least
45 [ten] twelve point type the following:
46 § 5. Section 741-a of the general business law, as amended by chapter
47 477 of the laws of 2017, is amended to read as follows:
48 § 741-a. Advertising. 1. Automobile broker businesses shall clearly
49 and conspicuously disclose the following in all advertisements in any
50 medium, and in any print advertisement such disclosures shall not appear
51 in any footnotes and shall be situated in the top half of any such
52 advertisement in an easily readable typeface:
53 (a) That the automobile broker business is not a registered new motor
54 vehicle dealer but is a registered automobile broker business as defined
55 in section four hundred fifteen of the vehicle and traffic law;
A. 3499--B 4
1 (b) The registration number issued to the automobile broker business
2 pursuant to section four hundred fifteen of the vehicle and traffic law;
3 (c) Whether any fees may be imposed by the automobile broker business
4 for services rendered. Details of such compensation shall be provided by
5 the automobile broker business upon request by the consumer; [and]
6 (d) That no warranty repair services will be provided by the automo-
7 bile broker business; and
8 (e) That the automobile broker business is not affiliated with any
9 manufacturer, dealership, or dealership group.
10 2. The official business certificate of registration shall be clearly
11 and conspicuously displayed at the place of business of an automobile
12 broker business.
13 § 6. The general business law is amended by adding a new section 741-c
14 to read as follows:
15 § 741-c. Private information security. In addition to the requirements
16 of subdivision twenty-one of section four hundred fifteen of the vehicle
17 and traffic law, an automobile broker business shall:
18 1. keep and maintain all consumer records containing private informa-
19 tion in a safe place that is not accessible to persons not employed by
20 the automobile broker business, including by keeping and maintaining a
21 clear and permanent physical barrier from other businesses that share or
22 neighbor its place of business;
23 2. have a separate mailbox at such place of business for the automo-
24 bile broker business; and
25 3. have a method of securing personal information, including but not
26 limited to in a locking cabinet or safe.
27 § 7. Section 415 of the vehicle and traffic law is amended by adding
28 four new subdivisions 22, 23, 24 and 25 to read as follows:
29 22. Compliance. All dealers and automobile broker businesses regis-
30 tered under subdivisions three and three-a of this section shall certify
31 and attest to compliance with sections three hundred ninety-nine-cc, as
32 added by chapter 655 of the laws of 2005, three hundred ninety-nine-dd,
33 as added by chapter 487 of the laws of 2006, three hundred ninety-nine-
34 ddd, three hundred ninety-nine-h, three hundred ninety-nine-oo, three
35 hundred ninety-nine-p, three hundred ninety-nine-pp, eight hundred nine-
36 ty-nine-bb of the general business law, and part three hundred fourteen
37 of title sixteen of the code of federal regulations as applicable.
38 23. Automobile broker record requirements. (a) For each completed
39 transaction and within three business days of consummation thereof,
40 automobile brokers shall maintain a permanent paper file record that
41 clearly evidences and records the make, model, year, color and vehicle
42 identification number of all previously unregistered motor vehicles for
43 which such broker has provided a service of purchasing, arranging,
44 assisting, facilitating or effecting the purchase or lease of such motor
45 vehicle. Such records shall be maintained for a six-year period after
46 consummation of the transaction. Such records shall also include the
47 name and address of the purchaser or lessee of such motor vehicle, the
48 date of sale or commencement of lease with respect to such motor vehicle
49 and the name and address of the dealer from which the motor vehicle was
50 purchased or leased.
51 (b) The records maintained by the automobile broker businesses shall
52 include a copy of the dealer rate sheets received by the automobile
53 broker from the dealers that were relied upon by the automobile broker
54 in connection with such transaction.
55 (c) Such records shall be open for inspection by the commissioner, or
56 his or her agent, during reasonable business hours.
A. 3499--B 5
1 (d) As an alternative to paper file records, an automobile broker may
2 use a computer and appropriate software to maintain the records required
3 to be kept by this section, provided all information required by para-
4 graphs (a) and (b) of this subdivision are duly recorded and maintained
5 in accordance with this subdivision.
6 24. Maintenance records. For each sale or lease of a motor vehicle
7 that involves an automobile broker business, the dealer must obtain
8 evidence of the automobile broker business' registration and the
9 broker's registration number and maintain such records in the deal jack-
10 et for each transaction which also shall contain the purchase order,
11 copies of the title and registration documents, the bill of sale and the
12 retail installment sale contract required under article ten of the
13 personal property law or the retail lease agreement required under arti-
14 cle nine-A of the personal property law.
15 25. Broker compensation. No dealer may offer or pay an automobile
16 broker business any fee, or commission, other than compensation
17 disclosed pursuant to section seven hundred thirty-eight or seven
18 hundred forty-one-b of the general business law or section three hundred
19 two or three hundred thirty-seven of the personal property law;
20 provided, however, that the automobile broker business may not accept
21 any such fee or commission from the dealer if the broker has or will
22 accept payment from the buyer or lessee of the automobile.
23 § 8. The general business law is amended by adding a new section 745
24 to read as follows:
25 § 745. Preemption. The provisions of this article and section four
26 hundred fifteen of the vehicle and traffic law shall govern the require-
27 ments and obligations with respect to the automobile broker business
28 notwithstanding any other law to the contrary. No local or municipal law
29 shall be enacted which shall impose any different or other obligations
30 on the automobile broker business including a requirement of any fee or
31 license for the automobile broker business.
32 § 9. Section 741-b of the general business law, as added by chapter 28
33 of the laws of 2018, is amended to read as follows:
34 § 741-b. Disclosure. An automobile broker business shall provide a
35 disclosure at the time such automobile broker business takes an order to
36 search for a leased or purchased vehicle meeting the prospective
37 lessee's specifications. Such disclosure shall provide the amount of any
38 fees, commissions or other valuable consideration the automobile broker
39 business expects to receive, if known, from a dealer, lessor or any
40 other person or entity for any assistance the automobile broker business
41 provides in effecting the lease or purchase transaction. If the amount
42 of any such fees, commissions or other valuable consideration the auto-
43 mobile broker business expects to receive is unknown at the time of the
44 required disclosure, the automobile broker business shall disclose: (a)
45 whether it has a contract with any dealer, lessor or any other person or
46 entity for the provision of assistance in effecting a lease or purchase
47 transaction; [and] (b) [whether] that the automobile broker business
48 [may] shall be compensated by the dealer, lessor or any other person or
49 entity for any assistance in effecting such lease transaction; and (c)
50 that the amount of any such fees, commissions or other valuable consid-
51 eration the automobile broker business receives, whether from the dealer
52 or the buyer of the automobile, shall be disclosed on the executed lease
53 or purchase contract or finance agreement pursuant to section three
54 hundred two or three hundred thirty-seven of the personal property law.
55 § 10. The general business law is amended by adding a new section
56 741-d to read as follows:
A. 3499--B 6
1 § 741-d. Prohibited acts. An automobile broker business is prohibited
2 from:
3 1. advertising that such automobile broker business has any new auto-
4 mobile in stock;
5 2. advertising any price figure in an advertisement unless such figure
6 represents the actual price of the advertised automobile, exclusive of
7 registration and titles, fees and taxes;
8 3. starting, completing, or answering any portion of a financing or
9 credit application or the lease or purchase agreement of an automobile,
10 on behalf of a consumer or dealer, without including on or affixing to
11 such application or agreement, the name and registration number of the
12 automobile broker business; and
13 4. accepting any payment other than that disclosed under section seven
14 hundred thirty-eight or seven hundred forty-one-b of this article,
15 whether from the dealer or buyer of the automobile.
16 § 11. Section 743 of the general business law, as amended by chapter
17 372 of the laws of 2016, is amended to read as follows:
18 § 743. Enforcement by attorney general. 1. In addition to the other
19 remedies provided, whenever there shall be a violation of this article,
20 application may be made by the attorney general in the name of the
21 people of the state of New York to a court or justice having jurisdic-
22 tion by a special proceeding to issue an injunction, and upon notice to
23 the defendant of not less than five days, to enjoin and restrain the
24 continuance of such violations; and if it shall appear to the satisfac-
25 tion of the court or justice that the defendant has, in fact, violated
26 this article, an injunction may be issued by such court or justice,
27 enjoining and restraining any further violation, without requiring proof
28 that any person has, in fact, been injured or damaged thereby. In any
29 such proceeding, the court may make allowances to the attorney general
30 as provided in paragraph six of subdivision (a) of section eighty-three
31 hundred three of the civil practice law and rules, and direct restitu-
32 tion. Whenever the court shall determine that a violation of this arti-
33 cle has occurred, the court shall impose a civil penalty of not less
34 than one thousand dollars and not more than three thousand dollars for
35 each violation. In connection with any such proposed application, the
36 attorney general is authorized to take proof and make a determination of
37 the relevant facts and to issue subpoenas in accordance with the civil
38 practice law and rules.
39 2. The provisions of this article may be enforced concurrently by a
40 municipal consumer affairs office.
41 § 12. Severability. If any clause, sentence, paragraph, subdivision,
42 section or part of this act shall be adjudged by any court of competent
43 jurisdiction to be invalid, such judgment shall not affect, impair, or
44 invalidate the remainder thereof, but shall be confined in its operation
45 to the clause, sentence, paragraph, subdivision, section or part thereof
46 directly involved in the controversy in which such judgment shall have
47 been rendered. It is hereby declared to be the intent of the legislature
48 that this act would have been enacted even if such invalid provisions
49 had not been included herein.
50 § 13. This act shall take effect on the one hundred eightieth day
51 after it shall have become a law. Effective immediately, the addition,
52 amendment and/or repeal of any rule or regulation necessary for the
53 implementation of this act on its effective date are authorized to be
54 made and completed on or before such effective date.
