Amd §301, Fin Serv L; amd §302, Pers Prop L; add §§417-d & 417-e, V & T L
 
Authorizes the superintendent of financial services to oversee and regulate car dealer transactions with consumers; requires motor vehicle retail installment contracts to include an itemized listing of all costs related to the purchase of a motor vehicle and disclosure of the prohibition of conditional delivery; requires motor vehicle dealers to provide credit applicants with copies of all credit application documents; prohibits the conditional delivery of a motor vehicle.
NEW YORK STATE ASSEMBLY MEMORANDUM IN SUPPORT OF LEGISLATION submitted in accordance with Assembly Rule III, Sec 1(f)
 
BILL NUMBER: A3924
SPONSOR: Jackson
 
TITLE OF BILL:
An act to amend the financial services law, in relation to authorizing
the superintendent of financial services to oversee and regulate sales
of motor vehicles to consumers; to amend the personal property law, in
relation to the contents of motor vehicle retail installment contracts;
and to amend the vehicle and traffic law, in relation to requiring motor
vehicle dealers to provide credit applicants with a copy of all loan
application documents, and prohibiting conditional deliveries of motor
vehicles
 
PURPOSE:
This bill will make the auto loan financing process more transparent
through disclosure and documentation requirements. It will also provide
remedies for consumers who are not provided with documentation Finally,
it prevents conditional deliveries of vehicles.
 
SUMMARY OF PROVISIONS:
Section 1: Amends Section 301 of the financial services law to add a new
subsection (d) which permits the superintendent of the Department of
Financial Services to oversee and regulate the financing of new and used
motor vehicles.
Section 2: Amends Section 302 of the personal property law to add new
subdivisions 5-a and 5-b. 5-a will require a disclosure on motor vehicle
retail installment contracts to consumers that conditional deliveries
are not allowed. 5-b will require that all motor vehicle retail install-
ment contracts itemize the following: the price paid for the vehicle,
the price of each option, add-on and additional charge relating to the
sale of the motor vehicle, all fees imposed by a lender upon the dealer
or buyer which are related to the financing of the motor vehicle, and
the total price of the motor vehicle including all charges.
Section 3: Amends the vehicle and traffic law to add two new sections
417-c and 417-d which provide that dealers must review and confirm with
all credit applicants the accuracy of the information contained on any
loan application forms, and both the dealer and applicant must attest to
the truth of the information to the best of their knowledge. Failure of
the dealer to comply with these provisions shall entitle the buyer to
void the sale of the vehicle within thirty days and receive a full
refund for the vehicle and financing charges, and the fair market
private sale value of any vehicle traded in. Prevailing plaintiffs
under this section will be entitled to court costs and reasonable attor-
ney's fees. This section also explicitly prohibits conditional deliv-
eries. All sale terms must be in writing and clearly disclosed to the
consumer. Every dealer shall provide a copy of the written disclosures
and maintain them for a period of not less than seven years.
Section 4: This act shall take effect on the first of January next
succeeding the date on which it shall have become a law.
 
EXISTING LAW:
Under current law, conditional deliveries are not explicitly prohibited.
Disclosure requirements during the financing and sale of vehicles, as
well as remedies for consumers, are not as robust. The Department of
Financial Services does not currently have jurisdiction over the financ-
ing of motor vehicles.
 
JUSTIFICATION:
Abuses in the auto loan financing industry are harming many of New
York's most vulnerable consumers. Most consumers do not have the indus-
try-specific knowledge to properly negotiate with auto dealers on even
footing, and the auto loan financing process is opaque. Requirements
for disclosures and maintenance of important loan documents must be
improved.
Additionally, consumers are often not aware that with subprime auto
loans, the cost of financing can be more than double the actual value of
the purchased vehicle, due to high APRs and expensive add-ons like
warranties and service contracts. To make matters worse, dealerships
sometimes provide fraudulent loan applications to lenders without
informing consumers that the application was ever filed. Lenders some-
times turn a blind eye to this activity, even when consumers inform
lenders of it. False applications result in the approval of loans which
consumers cannot afford.
Another confusing issue for purchasers buying vehicles are conditional
deliveries, sometimes used to scam consumers into taking bad deals on
autos. Spot delivery scams area problem that could be addressed through
conditional delivery bans and transparency measures that inform consum-
ers of the ban. Conditional delivery scams are also known as "spot
delivery" scams or "yo-yo financing" scams. These scams involve putting
a buyer into a vehicle and having the buyer take it home; the dealership
then calls the buyer later to tell them the favorable terms on which
they purchased the vehicle are invalid. The buyer, enjoying their new
vehicle and fearing they have no other options, often agrees to the less
favorable terms simply for the sake of keeping the vehicle. The less
favorable terms are more profitable for the dealer.
This legislation would help consumers better understand the auto financ-
ing process with more transparent documentation, and would prevent
confusing and deceptive tactics like spot delivery scams.
 
LEGISLATIVE HISTORY:
2021-22A.5997 Referred to Consumer Affairsand Protection
2019-20A.4856 Referred to Consumer Affairs
2017-18A.4619 Referred to Consumer Affairs/S.5274Referred to Banks
2015-16A.7866 Referred to Consumer Affairs/S.5490Reported and committed
to Rules
 
FISCAL IMPLICATIONS:
None.
 
LOCAL FISCAL IMPLICATIONS:
None.
 
EFFECTIVE DATE:
This act shall take effect on the first of January next succeeding the
date on which it shall have become a law.