Bill Text: NY S04364 | 2019-2020 | General Assembly | Amended
NOTE: There are more recent revisions of this legislation. Read Latest Draft
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: Partisan Bill (Democrat 20-1)
Status: (Introduced - Dead) 2020-01-08 - REFERRED TO TRANSPORTATION [S04364 Detail]
Download: New_York-2019-S04364-Amended.html
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: Partisan Bill (Democrat 20-1)
Status: (Introduced - Dead) 2020-01-08 - REFERRED TO TRANSPORTATION [S04364 Detail]
Download: New_York-2019-S04364-Amended.html
STATE OF NEW YORK ________________________________________________________________________ 4364--A 2019-2020 Regular Sessions IN SENATE March 11, 2019 ___________ Introduced by Sens. THOMAS, BROOKS, COMRIE, GAUGHRAN, GOUNARDES, KAMIN- SKY, KAPLAN, LIU, MAY, MYRIE, PERSAUD, SALAZAR, SAVINO, SKOUFIS -- read twice and ordered printed, and when printed to be committed to the Committee on Transportation -- committee discharged, bill amended, ordered reprinted as amended and recommitted to said committee 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 17 such services are provided, pursuant to article sixteen of the vehicle 18 and traffic law nor any bona fide employee of such a registered dealer 19 while acting for such dealer. 20 § 3. Subdivision 3-a and paragraph b-3 of subdivision 5 of section 415 21 of the vehicle and traffic law, as added by chapter 477 of the laws of 22 2017, are amended to read as follows: EXPLANATION--Matter in italics (underscored) is new; matter in brackets [] is old law to be omitted. LBD08916-05-9S. 4364--A 2 1 3-a. Automobile broker business [registration] or new automobile 2 broker business. No person shall engage in the automobile broker busi- 3 ness, the new automobile broker business or represent or advertise that 4 he or she is engaged or intends to engage in the automobile broker busi- 5 ness or new automobile broker business in this state, unless there shall 6 have been issued to him or her a certificate of registration as an auto- 7 mobile broker business or new automobile broker business, as the case 8 may be, by the commissioner under this section pursuant to an applica- 9 tion for registration submitted pursuant to subdivision five of this 10 section. The commissioner shall not issue any certificate of registra- 11 tion authorized by this section to any franchisor, manufacturer, 12 distributor, distributor branch or factory branch, as such terms are 13 defined in section four hundred sixty-two of this title, or to any 14 subsidiary, affiliate or controlled entity thereof. 15 b-3. In the case of an application for registration as an automobile 16 broker business or new automobile broker business, the name and address 17 of the surety company which will issue the bond required by subdivision 18 one of section seven hundred forty-a of the general business law and a 19 statement indicating any interest in the applicant's business entity by 20 a person or entity described in paragraph f of subdivision seven of this 21 section. If the bond is to be issued by an authorized agent of the sure- 22 ty company licensed by the state, then the name and address of that 23 agent may be provided in lieu of the information concerning the surety 24 company. 25 § 4. Subdivision 5 of section 415 of the vehicle and traffic law is 26 amended by adding a new paragraph e to read as follows: 27 e. Before application for a new automobile broker business is 28 approved, the applicant must have submitted along with the application, 29 written confirmation from the new motor vehicle manufacturer and/or 30 distributor permitting the applicant to serve as an approved registered 31 broker for the sale or lease, through a new motor vehicle dealer, of a 32 new motor vehicle of the line makes which the applicant proposes to 33 broker from the geographic location described in the application. The 34 geographic location included in the application shall be subject to the 35 provisions of article seventeen-A of this title regarding franchised 36 automobile dealers. 37 § 5. Subdivision 1 of section 736-a of the general business law, as 38 added by chapter 477 of the laws of 2017, is amended and a new subdivi- 39 sion 3 is added to read as follows: 40 1. (a) No person shall engage in business as an automobile broker 41 business or as a new automobile broker business, as such terms are 42 defined in section seven hundred thirty-six of this article, without 43 first having been issued a certificate of registration for an automobile 44 broker business or new automobile broker business pursuant to paragraph 45 c of subdivision seven of section four hundred fifteen of the vehicle 46 and traffic law. A certificate of registration for a new automobile 47 broker business is valid for a period of two years. 48 (b) No new automobile broker business shall represent or accept 49 payment from, either directly or indirectly, a franchisor, manufacturer 50 and/or distributor, as such terms are defined in sections four hundred 51 fifteen and four hundred sixty-two of the vehicle and traffic law. 52 3. The commissioner of motor vehicles shall make necessary rules and 53 regulations as may be appropriate for the proper enforcement of the 54 provisions of this section. 55 § 6. The general business law is amended by adding a new section 741-c 56 to read as follows:S. 4364--A 3 1 § 741-c. Prohibitions related to private information. No person regis- 2 tered under this article shall request, handle, store or transmit the 3 private information, as such term is defined in paragraph (b) of subdi- 4 vision one of section eight hundred ninety-nine-aa of this chapter, of 5 any consumer. 6 § 7. Section 737 of the general business law, as added by chapter 616 7 of the laws of 1988, is amended to read as follows: 8 § 737. Advance fees prohibited. No automobile broker business or new 9 automobile broker business shall solicit, receive or collect from a 10 consumer any fee, or commission, in advance of the performance of those 11 services specified in the contract as required by section seven hundred 12 thirty-eight of this article. 13 § 8. The opening paragraph of subdivision 1 of section 738 of the 14 general business law, as amended by chapter 28 of the laws of 2018, is 15 amended to read as follows: 16 Every contract between a consumer and an automobile broker business, 17 which for the purposes of this section shall include new automobile 18 broker businesses, for the purchase of an automobile shall be in writ- 19 ing, shall be dated, shall contain the street address of the automobile 20 broker business and the consumer and shall be signed by the consumer and 21 by the automobile broker business. Every contract shall comply with the 22 requirements set forth in this section and contain the following: 23 § 9. Section 740 of the general business law, as added by chapter 616 24 of the laws of 1988, is amended to read as follows: 25 § 740. Escrow required for advance payments. All monies paid by a 26 consumer to an automobile broker business or a new automobile broker 27 business in connection with a transaction covered by this article shall 28 be trust funds in the possession of such automobile broker business or 29 new automobile broker business and shall be deposited by it within five 30 days after receipt thereof, in an account in a banking organization 31 within the state. The automobile broker business or new automobile 32 broker business shall thereupon notify in writing the consumer, giving 33 the name and address of the banking organization and the amount deposit- 34 ed. The monies shall be held on deposit until fully applied to the 35 contract price at the time the automobile is delivered to the consumer, 36 unless sooner repaid in accordance with the provisions of this article. 37 § 10. Section 740-a of the general business law, as added by chapter 38 579 of the laws of 2011 and subdivision 1 as amended by chapter 477 of 39 the laws of 2017, is amended to read as follows: 40 § 740-a. Automobile broker business and new automobile broker business 41 surety bond. 1. Automobile broker businesses and new automobile broker 42 businesses shall obtain and continue in effect a surety bond in an 43 amount of one hundred thousand dollars executed by a surety company 44 authorized to transact business in the state by the department of finan- 45 cial services of the state or its successor. The bonds shall be approved 46 as to form by the secretary of state and shall be conditioned on the 47 automobile broker business' or new automobile broker business' payment 48 of all valid bank drafts, including checks, drawn for the purchase of 49 motor vehicles and safekeeping of all customer deposits related to the 50 sale of a motor vehicle between the time of receipt of such customer 51 deposit and the transfer of good title to the vehicle to the customer. 52 2. Recovery against a bond may be made by a person, including the 53 state, who obtains a judgment against the automobile broker business or 54 new automobile broker business for an act or omission on which the bond 55 is conditioned if the act or omission occurred during the term of the 56 bond. The total liability imposed on the surety under this section forS. 4364--A 4 1 all breaches of the bond condition is limited to the face amount of the 2 bond. Such liability may include, but is not limited to, the amount of 3 the valid bank drafts, including checks, drawn by the automobile broker 4 business or new automobile broker business for the purchase of motor 5 vehicles. In no event shall the surety on a bond be liable for total 6 claims in excess of the bond amount, regardless of the number or nature 7 of claims made against the bond or the number of years the bond remained 8 in force. 9 3. Any surety issuing a bond pursuant to this subdivision shall be 10 required to provide sixty days' notice to the secretary of state prior 11 to the effective date of cancellation of the bond. 12 § 11. Section 741 of the general business law, as added by chapter 616 13 of the laws of 1988, is amended to read as follows: 14 § 741. Deceptive acts prohibited. It is hereby declared to be a decep- 15 tive trade practice and unlawful for an automobile broker business or 16 new automobile broker business to misrepresent directly or indirectly in 17 its advertising, promotional materials, sales presentation, or in any 18 manner: 19 1. The nature of the services to be performed and in the case of a new 20 automobile broker that a third party will be paying for any such 21 services; 22 2. The time within which the services will be performed; 23 3. The cost of the services to be performed; [and] 24 4. The ability of the automobile broker business or new automobile 25 broker business to perform the services; and 26 5. That the automobile broker business or new automobile broker busi- 27 ness is affiliated with any automobile manufacturer and/or distributor, 28 provided, however, that a new automobile broker business may state the 29 line makes for which it holds permission pursuant to section four 30 hundred fifteen of the vehicle and traffic law. 31 § 12. Section 741-a of the general business law, as amended by chapter 32 477 of the laws of 2017, is amended to read as follows: 33 § 741-a. Advertising. Automobile broker businesses and new automobile 34 broker businesses shall clearly and conspicuously disclose the following 35 in all advertisements in any medium, and in any print advertisement such 36 disclosures shall not appear in any footnotes and shall be situated in 37 the top half of any such advertisement in an easily readable typeface: 38 (a) That the automobile broker business or new automobile broker busi- 39 ness is not a registered new motor vehicle dealer but is a registered 40 automobile broker business or new automobile broker business as defined 41 in section four hundred fifteen of the vehicle and traffic law; 42 (b) The registration number issued to the automobile broker business 43 or new automobile broker business pursuant to section four hundred 44 fifteen of the vehicle and traffic law; 45 (c) Whether any fees may be imposed by the automobile broker business 46 or new automobile broker business for services rendered. Details of such 47 compensation shall be provided by the automobile broker business or new 48 automobile broker business upon request by the consumer; and 49 (d) That no warranty repair services will be provided by the automo- 50 bile broker business or new automobile broker business. 51 § 13. Section 415 of the vehicle and traffic law is amended by adding 52 a new subdivision 21 to read as follows: 53 21. Penalties and rights of action for failure to obtain a certificate 54 of registration as a new automobile broker pursuant to subdivision 55 three-a and paragraph b-3 of subdivision five of this section. a. The 56 commissioner, or any person designated by him or her, may proceedS. 4364--A 5 1 against a party who has operated as a new automobile broker without 2 certificate of registration in accordance with the provisions of this 3 article, in any one or more proceedings and by order require the offend- 4 ing party to pay the people of this state a penalty in a sum not to 5 exceed two thousand dollars for each violation found to have been 6 committed. Civil penalties assessed under this subdivision shall be paid 7 to the commissioner for deposit into the state treasury, and unpaid 8 civil penalties may be recovered by the commissioner in a civil action 9 in the name of the commissioner. For the purposes of this subdivision, a 10 "violation" shall mean each vehicle sold or leased to a consumer for 11 which the party that failed to obtain certification as a new automobile 12 broker has served as a new automobile broker. 13 b. In addition to any civil action brought by the commissioner or any 14 person appointed by him, any persons injured by any violation of subdi- 15 vision three-a and paragraph b-3 of subdivision five of this section, 16 shall be entitled to sue for and have injunctive relief and damages 17 against, any party in violation of subdivision three-a and paragraph b-3 18 of subdivision five of this section in any court of the state having 19 jurisdiction over the parties. In the case of a new motor vehicle deal- 20 er, injury shall include the sale or lease of a new motor vehicle to a 21 person residing within the relevant market area of such dealer. The term 22 "relevant market area" shall have the same meaning as in subdivision 23 fifteen of section four hundred sixty-two of this title. In any such 24 judicial action or proceeding, the court may award reasonable attorney's 25 fees and costs. 26 § 14. Subdivision 2 of section 463 of the vehicle and traffic law is 27 amended by adding three new paragraphs (ll), (mm) and (nn) to read as 28 follows: 29 (ll) To issue written confirmation to a new automobile broker business 30 permitting such business to serve as an approved registered broker for 31 the sale or lease, through a new motor vehicle dealer, of such manufac- 32 turer's new motor vehicles, unless the manufacturer provides notice 33 pursuant to the terms of this paragraph. All dealers that have a rele- 34 vant market area that encompasses the proposed site shall be entitled to 35 written notice, via certified mail return receipt requested, informing 36 them of the proposed approval of a new automobile broker business. Any 37 new motor vehicle dealer may institute an adjudicatory proceeding or 38 action as provided in section four hundred sixty-nine of this article to 39 protest the issuance of such written confirmation to a new automobile 40 broker business permitting such business to serve as an approved regis- 41 tered broker following receipt of such notice, or following the end of 42 any appeal procedure provided by the manufacturer. In any adjudicatory 43 proceeding or action brought by the dealer, the manufacturer shall have 44 the burden of proving that there exists good cause to permit such new 45 automobile broker business to serve as an approved registered broker and 46 that such permission will not harm the dealer within the relevant market 47 area. Institution of an action pursuant to this paragraph shall serve to 48 stay, without bond, the effectiveness of the written confirmation of 49 such manufacturer until a final judgment has been rendered in a proceed- 50 ing or action as provided in section four hundred sixty-nine of this 51 article. A manufacturer shall not issue written confirmation permitting 52 a new automobile broker business to serve as an approved registered 53 broker to any person or entity which has been cited for any violation of 54 article thirty-five-B of the general business law, or which has a busi- 55 ness relationship with any new franchised motor vehicle dealer not 56 licensed to operate as a new motor vehicle dealer within the state, orS. 4364--A 6 1 does not have a relevant market area that includes any portion of the 2 state. For the purposes of this paragraph "business relationship" shall 3 mean activity that includes paying a new automobile broker business by a 4 new motor vehicle dealer not licensed to operate as a new motor vehicle 5 dealer within the state, or does not have a relevant market area that 6 includes any portion of the state in connection with the sale or leader 7 of a new motor vehicle. 8 (mm) To issue written confirmation to a new automobile broker business 9 that permits such business to serve as an approved registered broker for 10 a period exceeding two years. 11 (nn) For incentive payments, bonuses, holdbacks or similar payments 12 related to the sale or lease of a new motor vehicle that has been 13 arranged, assisted, facilitated or effected in a particular relevant 14 market area, to deny a franchised motor vehicle dealer located in such 15 relevant market area a payment of equal value as has been awarded to 16 another franchised motor vehicle dealer. Nothing in this paragraph shall 17 be construed to authorize any incentive payment, bonus, holdback or 18 similar payment to any automobile broker business or new automobile 19 broker business, as such terms are defined in section seven hundred 20 thirty-six of the general business law. 21 § 15. Section 465 of the vehicle and traffic law is amended by adding 22 a new subdivision 8 to read as follows: 23 8. A new vehicle manufacturer shall require its franchisees to main- 24 tain a record of all sales or leases arranged, assisted, facilitated or 25 effected by each new automobile broker business to which it has provided 26 written confirmation permitting it to serve as a new automobile broker 27 business, as such term is defined in section seven hundred thirty-six of 28 the general business law. New vehicle manufacturers shall further main- 29 tain a record of all incentives paid to any franchisee attributable to 30 any sale or lease that has been arranged, assisted, facilitated or 31 effected by a new automobile broker business. For sales or leases 32 arranged, assisted, facilitated or effected by any new automobile broker 33 business operating or based in a particular relevant market area, a new 34 vehicle manufacturer shall furnish a record of incentives paid to any 35 franchisee attributable to any such sales or leases to the franchisee 36 operating or based within any such relevant market area. 37 § 16. This act shall take effect immediately; provided that all auto- 38 mobile brokers registered on the effective date of this act shall have 39 ninety days to come into compliance with the provisions of this act.
