Bill Text: NY A06655 | 2019-2020 | General Assembly | Amended


Bill Title: Requires registration of new automotive broker businesses; enacts various provisions relating to conduct of such businesses; defines certain deceptive practices; establishes rights of action and penalties.

Spectrum: Slight Partisan Bill (Democrat 35-12)

Status: (Introduced) 2019-05-24 - print number 6655a [A06655 Detail]

Download: New_York-2019-A06655-Amended.html



                STATE OF NEW YORK
        ________________________________________________________________________

                                         6655--A

                               2019-2020 Regular Sessions

                   IN ASSEMBLY

                                     March 14, 2019
                                       ___________

        Introduced  by  M.  of  A.  CARROLL,  ABBATE,  STIRPE, REYES, DenDEKKER,
          TAYLOR,  CYMBROWITZ,  DICKENS,  M. G. MILLER,   D'URSO,   ENGLEBRIGHT,
          D. ROSENTHAL,  GALEF,  GOTTFRIED,  RAMOS,  DeSTEFANO,  MIKULIN, SMITH,
          SAYEGH, WILLIAMS, COOK, ABINANTI, McDONOUGH, QUART,  SEAWRIGHT,  LiPE-
          TRI,  REILLY,  B. MILLER,  ROZIC,  PALUMBO,  EPSTEIN, FERNANDEZ, RYAN,
          STECK, CRUZ, PHEFFER AMATO,  PICHARDO,  RAIA,  RA,  BENEDETTO,  BYRNE,
          JACOBSON,  BUCHWALD,  HYNDMAN  --  Multi-Sponsored  by  --  M.  of  A.
          DE LA ROSA, LAWRENCE, SIMON -- read once and referred to the Committee
          on Consumer Affairs  and  Protection  --  committee  discharged,  bill
          amended,  ordered reprinted as amended and recommitted to said commit-
          tee

        AN ACT to amend the vehicle and traffic law  and  the  general  business
          law, in relation to designating new automotive 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 415 of the vehicle and traffic law
     2  is amended by adding a new paragraph n to read as follows:
     3    n. "New automobile broker business" shall have the same meaning as set
     4  forth in subdivision four of section seven  hundred  thirty-six  of  the
     5  general business law.
     6    §  2.  Section  736 of the general business law is amended by adding a
     7  new subdivision 4 to read as follows:
     8    4. "New automobile broker business" means any person who, for  a  fee,
     9  commission  or  other valuable consideration, regardless of whether such
    10  fee, commission or consideration is paid directly by a consumer,  offers
    11  to provide, provides or represents that he or she will provide a service
    12  of  purchasing,  arranging,  assisting,  facilitating  or  effecting the
    13  purchase or lease of a previously unregistered automobile; through a new
    14  motor vehicle dealer, as agent, broker, or intermediary for a  consumer.
    15  "New  automobile broker business" does not include any person registered
    16  as a new vehicle dealer for the new automobile brand or brands for which

         EXPLANATION--Matter in italics (underscored) is new; matter in brackets
                              [ ] is old law to be omitted.
                                                                   LBD08916-06-9

        A. 6655--A                          2

     1  such services are provided, pursuant to article sixteen of  the  vehicle
     2  and  traffic  law nor any bona fide employee of such a registered dealer
     3  while acting for such dealer.
     4    § 3. Subdivision 3-a and paragraph b-3 of subdivision 5 of section 415
     5  of  the  vehicle and traffic law, as added by chapter 477 of the laws of
     6  2017, are amended to read as follows:
     7    3-a. Automobile  broker  business  [registration]  or  new  automobile
     8  broker  business.  No person shall engage in the automobile broker busi-
     9  ness, the new automobile broker business or represent or advertise  that
    10  he or she is engaged or intends to engage in the automobile broker busi-
    11  ness or new automobile broker business in this state, unless there shall
    12  have been issued to him or her a certificate of registration as an auto-
    13  mobile  broker  business  or new automobile broker business, as the case
    14  may be, by the commissioner under this section pursuant to  an  applica-
    15  tion  for  registration  submitted  pursuant to subdivision five of this
    16  section.  The commissioner shall not issue any certificate of  registra-
    17  tion  authorized  by  this  section  to  any  franchisor,  manufacturer,
    18  distributor, distributor branch or factory branch,  as  such  terms  are
    19  defined  in  section  four  hundred  sixty-two  of this title, or to any
    20  subsidiary, affiliate or controlled entity thereof.
    21    b-3. In the case of an application for registration as  an  automobile
    22  broker  business or new automobile broker business, the name and address
    23  of the surety company which will issue the bond required by  subdivision
    24  one  of  section seven hundred forty-a of the general business law and a
    25  statement indicating any interest in the applicant's business entity  by
    26  a person or entity described in paragraph f of subdivision seven of this
    27  section. If the bond is to be issued by an authorized agent of the sure-
    28  ty  company  licensed  by  the  state, then the name and address of that
    29  agent may be provided in lieu of the information concerning  the  surety
    30  company.
    31    §  4.  Subdivision  5 of section 415 of the vehicle and traffic law is
    32  amended by adding a new paragraph e to read as follows:
    33    e.  Before  application  for  a  new  automobile  broker  business  is
    34  approved,  the applicant must have submitted along with the application,
    35  written confirmation from the  new  motor  vehicle  manufacturer  and/or
    36  distributor  permitting the applicant to serve as an approved registered
    37  broker for the sale or lease, through a new motor vehicle dealer,  of  a
    38  new  motor  vehicle  of  the  line makes which the applicant proposes to
    39  broker from the geographic location described in  the  application.  The
    40  geographic  location included in the application shall be subject to the
    41  provisions of article seventeen-A of  this  title  regarding  franchised
    42  automobile dealers.
    43    §  5.  Subdivision  1 of section 736-a of the general business law, as
    44  added by chapter 477 of the laws of 2017, is amended and a new  subdivi-
    45  sion 3 is added to read as follows:
    46    1.  (a)  No  person  shall  engage in business as an automobile broker
    47  business or as a new automobile  broker  business,  as  such  terms  are
    48  defined  in  section  seven  hundred thirty-six of this article, without
    49  first having been issued a certificate of registration for an automobile
    50  broker business or new automobile broker business pursuant to  paragraph
    51  c  of  subdivision  seven of section four hundred fifteen of the vehicle
    52  and traffic law. A certificate of  registration  for  a  new  automobile
    53  broker business is valid for a period of two years.
    54    (b)  No  new  automobile  broker  business  shall  represent or accept
    55  payment from, either directly or indirectly, a franchisor,  manufacturer

        A. 6655--A                          3

     1  and/or  distributor,  as such terms are defined in sections four hundred
     2  fifteen and four hundred sixty-two of the vehicle and traffic law.
     3    3.  The  commissioner of motor vehicles shall make necessary rules and
     4  regulations as may be appropriate for  the  proper  enforcement  of  the
     5  provisions of this section.
     6    § 6. The general business law is amended by adding a new section 741-c
     7  to read as follows:
     8    § 741-c. Prohibitions related to private information. No person regis-
     9  tered  under  this  article shall request, handle, store or transmit the
    10  private information, as such term is defined in paragraph (b) of  subdi-
    11  vision  one  of section eight hundred ninety-nine-aa of this chapter, of
    12  any consumer.
    13    § 7. Section 737 of the general business law, as added by chapter  616
    14  of the laws of 1988, is amended to read as follows:
    15    §  737.  Advance fees prohibited. No automobile broker business or new
    16  automobile broker business shall solicit,  receive  or  collect  from  a
    17  consumer  any fee, or commission, in advance of the performance of those
    18  services specified in the contract as required by section seven  hundred
    19  thirty-eight of this article.
    20    §  8.  The  opening  paragraph  of subdivision 1 of section 738 of the
    21  general business law, as amended by chapter 28 of the laws of  2018,  is
    22  amended to read as follows:
    23    Every  contract  between a consumer and an automobile broker business,
    24  which for the purposes of this  section  shall  include  new  automobile
    25  broker  businesses,  for the purchase of an automobile shall be in writ-
    26  ing, shall be dated, shall contain the street address of the  automobile
    27  broker business and the consumer and shall be signed by the consumer and
    28  by  the automobile broker business. Every contract shall comply with the
    29  requirements set forth in this section and contain the following:
    30    § 9. Section 740 of the general business law, as added by chapter  616
    31  of the laws of 1988, is amended to read as follows:
    32    §  740.  Escrow  required  for  advance payments. All monies paid by a
    33  consumer to an automobile broker business or  a  new  automobile  broker
    34  business  in connection with a transaction covered by this article shall
    35  be trust funds in the possession of such automobile broker  business  or
    36  new  automobile broker business and shall be deposited by it within five
    37  days after receipt thereof, in an  account  in  a  banking  organization
    38  within  the  state.  The  automobile  broker  business or new automobile
    39  broker business shall thereupon notify in writing the  consumer,  giving
    40  the name and address of the banking organization and the amount deposit-
    41  ed.  The  monies  shall  be  held  on deposit until fully applied to the
    42  contract price at the time the automobile is delivered to the  consumer,
    43  unless sooner repaid in accordance with the provisions of this article.
    44    §  10.  Section 740-a of the general business law, as added by chapter
    45  579 of the laws of 2011 and subdivision 1 as amended by chapter  477  of
    46  the laws of 2017, is amended to read as follows:
    47    § 740-a. Automobile broker business and new automobile broker business
    48  surety  bond.  1. Automobile broker businesses and new automobile broker
    49  businesses shall obtain and continue in  effect  a  surety  bond  in  an
    50  amount  of  one  hundred  thousand  dollars executed by a surety company
    51  authorized to transact business in the state by the department of finan-
    52  cial services of the state or its successor. The bonds shall be approved
    53  as to form by the secretary of state and shall  be  conditioned  on  the
    54  automobile  broker  business' or new automobile broker business' payment
    55  of all valid bank drafts, including checks, drawn for  the  purchase  of
    56  motor  vehicles  and safekeeping of all customer deposits related to the

        A. 6655--A                          4

     1  sale of a motor vehicle between the time of  receipt  of  such  customer
     2  deposit and the transfer of good title to the vehicle to the customer.
     3    2.  Recovery  against  a  bond  may be made by a person, including the
     4  state, who obtains a judgment against the automobile broker business  or
     5  new  automobile broker business for an act or omission on which the bond
     6  is conditioned if the act or omission occurred during the  term  of  the
     7  bond.  The  total liability imposed on the surety under this section for
     8  all breaches of the bond condition is limited to the face amount of  the
     9  bond.  Such  liability may include, but is not limited to, the amount of
    10  the valid bank drafts, including checks, drawn by the automobile  broker
    11  business  or  new  automobile  broker business for the purchase of motor
    12  vehicles. In no event shall the surety on a bond  be  liable  for  total
    13  claims  in excess of the bond amount, regardless of the number or nature
    14  of claims made against the bond or the number of years the bond remained
    15  in force.
    16    3. Any surety issuing a bond pursuant to  this  subdivision  shall  be
    17  required  to  provide sixty days' notice to the secretary of state prior
    18  to the effective date of cancellation of the bond.
    19    § 11. Section 741 of the general business law, as added by chapter 616
    20  of the laws of 1988, is amended to read as follows:
    21    § 741. Deceptive acts prohibited. It is hereby declared to be a decep-
    22  tive trade practice and unlawful for an automobile  broker  business  or
    23  new automobile broker business to misrepresent directly or indirectly in
    24  its  advertising,  promotional  materials, sales presentation, or in any
    25  manner:
    26    1. The nature of the services to be performed and in the case of a new
    27  automobile broker that a  third  party  will  be  paying  for  any  such
    28  services;
    29    2. The time within which the services will be performed;
    30    3. The cost of the services to be performed; [and]
    31    4.  The  ability  of  the automobile broker business or new automobile
    32  broker business to perform the services; and
    33    5. That the automobile broker business or new automobile broker  busi-
    34  ness  is affiliated with any automobile manufacturer and/or distributor,
    35  provided, however, that a new automobile broker business may  state  the
    36  line  makes  for  which  it  holds  permission  pursuant to section four
    37  hundred fifteen of the vehicle and traffic law.
    38    § 12. Section 741-a of the general business law, as amended by chapter
    39  477 of the laws of 2017, is amended to read as follows:
    40    § 741-a. Advertising. Automobile broker businesses and new  automobile
    41  broker businesses shall clearly and conspicuously disclose the following
    42  in all advertisements in any medium, and in any print advertisement such
    43  disclosures  shall  not appear in any footnotes and shall be situated in
    44  the top half of any such advertisement in an easily readable typeface:
    45    (a) That the automobile broker business or new automobile broker busi-
    46  ness is not a registered new motor vehicle dealer but  is  a  registered
    47  automobile  broker business or new automobile broker business as defined
    48  in section four hundred fifteen of the vehicle and traffic law;
    49    (b) The registration number issued to the automobile  broker  business
    50  or  new  automobile  broker  business  pursuant  to section four hundred
    51  fifteen of the vehicle and traffic law;
    52    (c) Whether any fees may be imposed by the automobile broker  business
    53  or new automobile broker business for services rendered. Details of such
    54  compensation  shall be provided by the automobile broker business or new
    55  automobile broker business upon request by the consumer; and

        A. 6655--A                          5

     1    (d) That no warranty repair services will be provided by  the  automo-
     2  bile broker business or new automobile broker business.
     3    §  13. Section 415 of the vehicle and traffic law is amended by adding
     4  a new subdivision 21 to read as follows:
     5    21. Penalties and rights of action for failure to obtain a certificate
     6  of registration as a  new  automobile  broker  pursuant  to  subdivision
     7  three-a  and  paragraph  b-3 of subdivision five of this section. a. The
     8  commissioner, or any person  designated  by  him  or  her,  may  proceed
     9  against  a  party  who  has  operated as a new automobile broker without
    10  certificate of registration in accordance with the  provisions  of  this
    11  article, in any one or more proceedings and by order require the offend-
    12  ing  party  to  pay  the  people of this state a penalty in a sum not to
    13  exceed two thousand dollars  for  each  violation  found  to  have  been
    14  committed. Civil penalties assessed under this subdivision shall be paid
    15  to  the  commissioner  for  deposit  into the state treasury, and unpaid
    16  civil penalties may be recovered by the commissioner in a  civil  action
    17  in the name of the commissioner. For the purposes of this subdivision, a
    18  "violation"  shall  mean  each  vehicle sold or leased to a consumer for
    19  which the party that failed to obtain certification as a new  automobile
    20  broker has served as a new automobile broker.
    21    b.  In addition to any civil action brought by the commissioner or any
    22  person appointed by him, any persons injured by any violation of  subdi-
    23  vision  three-a  and  paragraph b-3 of subdivision five of this section,
    24  shall be entitled to sue for and  have  injunctive  relief  and  damages
    25  against, any party in violation of subdivision three-a and paragraph b-3
    26  of  subdivision  five  of  this section in any court of the state having
    27  jurisdiction over the parties.  In the case of a new motor vehicle deal-
    28  er, injury shall include the sale or lease of a new motor vehicle  to  a
    29  person residing within the relevant market area of such dealer. The term
    30  "relevant  market  area"  shall  have the same meaning as in subdivision
    31  fifteen of section four hundred sixty-two of this title.   In  any  such
    32  judicial action or proceeding, the court may award reasonable attorney's
    33  fees and costs.
    34    §  14.  Subdivision 2 of section 463 of the vehicle and traffic law is
    35  amended by adding three new paragraphs (ll), (mm) and (nn)  to  read  as
    36  follows:
    37    (ll) To issue written confirmation to a new automobile broker business
    38  permitting  such  business to serve as an approved registered broker for
    39  the sale or lease, through a new motor vehicle dealer, of such  manufac-
    40  turer's  new  motor  vehicles,  unless  the manufacturer provides notice
    41  pursuant to the terms of this paragraph. All dealers that have  a  rele-
    42  vant market area that encompasses the proposed site shall be entitled to
    43  written  notice,  via certified mail return receipt requested, informing
    44  them of the proposed approval of a new automobile broker  business.  Any
    45  new  motor  vehicle  dealer  may institute an adjudicatory proceeding or
    46  action as provided in section four hundred sixty-nine of this article to
    47  protest the issuance of such written confirmation to  a  new  automobile
    48  broker  business permitting such business to serve as an approved regis-
    49  tered broker following receipt of such notice, or following the  end  of
    50  any  appeal  procedure provided by the manufacturer. In any adjudicatory
    51  proceeding or action brought by the dealer, the manufacturer shall  have
    52  the  burden  of  proving that there exists good cause to permit such new
    53  automobile broker business to serve as an approved registered broker and
    54  that such permission will not harm the dealer within the relevant market
    55  area. Institution of an action pursuant to this paragraph shall serve to
    56  stay, without bond, the effectiveness of  the  written  confirmation  of

        A. 6655--A                          6

     1  such manufacturer until a final judgment has been rendered in a proceed-
     2  ing  or  action  as  provided in section four hundred sixty-nine of this
     3  article. A manufacturer shall not issue written confirmation  permitting
     4  a  new  automobile  broker  business  to serve as an approved registered
     5  broker to any person or entity which has been cited for any violation of
     6  article thirty-five-B of the general business law, or which has a  busi-
     7  ness  relationship  with  any  new  franchised  motor vehicle dealer not
     8  licensed to operate as a new motor vehicle dealer within the  state,  or
     9  does  not  have  a relevant market area that includes any portion of the
    10  state. For the purposes of this paragraph "business relationship"  shall
    11  mean activity that includes paying a new automobile broker business by a
    12  new  motor vehicle dealer not licensed to operate as a new motor vehicle
    13  dealer within the state, or does not have a relevant  market  area  that
    14  includes  any portion of the state in connection with the sale or leader
    15  of a new motor vehicle.
    16    (mm) To issue written confirmation to a new automobile broker business
    17  that permits such business to serve as an approved registered broker for
    18  a period exceeding two years.
    19    (nn) For incentive payments, bonuses, holdbacks  or  similar  payments
    20  related  to  the  sale  or  lease  of  a new motor vehicle that has been
    21  arranged, assisted, facilitated or effected  in  a  particular  relevant
    22  market  area,  to deny a franchised motor vehicle dealer located in such
    23  relevant market area a payment of equal value as  has  been  awarded  to
    24  another franchised motor vehicle dealer. Nothing in this paragraph shall
    25  be  construed  to  authorize  any  incentive payment, bonus, holdback or
    26  similar payment to any automobile  broker  business  or  new  automobile
    27  broker  business,  as  such  terms  are defined in section seven hundred
    28  thirty-six of the general business law.
    29    § 15. Section 465 of the vehicle and traffic law is amended by  adding
    30  a new subdivision 8 to read as follows:
    31    8.  A  new vehicle manufacturer shall require its franchisees to main-
    32  tain a record of all sales or leases arranged, assisted, facilitated  or
    33  effected by each new automobile broker business to which it has provided
    34  written  confirmation  permitting it to serve as a new automobile broker
    35  business, as such term is defined in section seven hundred thirty-six of
    36  the general business law. New vehicle manufacturers shall further  main-
    37  tain  a  record of all incentives paid to any franchisee attributable to
    38  any sale or lease that  has  been  arranged,  assisted,  facilitated  or
    39  effected  by  a  new  automobile  broker  business.  For sales or leases
    40  arranged, assisted, facilitated or effected by any new automobile broker
    41  business operating or based in a particular relevant market area, a  new
    42  vehicle  manufacturer  shall  furnish a record of incentives paid to any
    43  franchisee attributable to any such sales or leases  to  the  franchisee
    44  operating or based within any such relevant market area.
    45    §  16. This act shall take effect immediately; provided that all auto-
    46  mobile brokers registered on the effective date of this act  shall  have
    47  ninety days to come into compliance with the provisions of this act.
feedback