Legislature(2011 - 2012)CAPITOL 17
01/26/2012 01:00 PM House TRANSPORTATION
| Audio | Topic |
|---|---|
| Start | |
| HB255 | |
| HB235 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| *+ | HB 235 | TELECONFERENCED | |
| *+ | HB 255 | TELECONFERENCED | |
1:28:27 PM
HB 235-MOTOR VEHICLE TRANSACTIONS
CHAIR P. WILSON announced that the final order of business would
be HOUSE BILL NO. 235, "An Act relating to certain vehicles,
including trailers; and relating to motor vehicle dealer
advertising, motor vehicle dealer sales of used motor vehicles,
motor vehicle sales contracts, motor vehicle service contracts,
and motor vehicle sales financing."
1:28:59 PM
REPRESENTATIVE STEVE THOMPSON, Alaska State Legislature, thanked
members for the opportunity to present HB 235. This bill would
update statutes AS 45.25.400 - AS 45.25.900, commonly known as
the Alaska Auto Dealers Practices Act. The changes would
clarify provisions concerning the advertising of new and used
automobiles. These revisions should assist consumers in
understanding auto comparison pricing and should eliminate
ambiguities contained in the current statutes while assisting
dealers in following state law.
1:29:25 PM
REPRESENTATIVE THOMPSON reported that this bill was drafted in
conjunction with the Commercial/Fair Business Section of the
Department of Law. He said, "Additionally, this bill should
take care of the contentious issues of the "DOC" fees making the
issue mute."
1:30:10 PM
JANE PIERSON, Staff, Representative Thompson, Alaska State
Legislature, introduced herself. She turned to the sectional
analysis of HB 235.
1:30:21 PM
MS. PIERSON read a sectional analysis of HB 235, as follows:
Section 1. Clarifies the "MSRP" shown on the federal
Monroney sticker is the manufacturer's suggested
retail price, and not the dealer's advertised price.
Also clarifies what items are included by the
manufacturer in arriving at MSRP as shown on the
Monroney sticker, and allows dealers to advertise a
savings or discount from the MSRP.
Section 2. Requires that the dealer's advertised
price must include all dealer fees and costs except
fees paid to a governmental agency such as taxes and
licensing fees.
Section 3. Removes disclosure requirement regarding
use of MSRP in advertising, and removes subsection
dealing with price advertising that is covered in
Section 1 to amendment to AS 45.25.400(b).
Section 4. Requires dealers use nationally recognized
valuation publications (such as Kelly Blue Book or
N.A.D.A. Official Used Car Guide) as the retail value
when advertising comparative pricing for used cars. HB
235 requires that this pricing information be provided
to consumers upon request.
1:31:31 PM
MS. PIERSON continued the sectional analysis, by reading the
following [original punctuation provided]:
Section 5. Removes section now covered in Section 2
amendment to 45.25.440; allows dealer to make vehicle
identification information available in the
advertisement or at the dealership - this resolves the
problem of impossible to read small print on
television advertising; and renumbers sections of
45.25.460(a). (This renumbering requires the amendment
in Section 8)
Section 6. Changes the word "verified" to "signed" so
the information provided by an individual to a dealer
need not be notarized.
Section 7. Allows a dealer to have a vehicle on the
sales lot and show it to customers prior to having all
required paper work, but prohibits sale of the vehicle
until the dealer has all required paperwork in its
possession.
Section 8. Conforms AS 45.25.520 with renumbering in
Section 5.
Section 9. Clarifies that the sales contract will be
void if the dealer or the financing institution
changes terms of a separate agreement relative to
financing.
1:32:44 PM
MS. PIERSON continued the sectional analysis, by reading the
following [original punctuation provided]:
Section 10. Provides for responsibility of a buyer to
return a vehicle if financing is not approved and the
responsibility of dealer to return a trade-in
delivered to the dealer.
Section 11. Establishes responsibility of a buyer to
return a vehicle if the financing is denied as a
result of intentional misrepresentation in the credit
application, including mileage fee if over 100 miles
are put on the vehicle and responsibility for damage
to the vehicle, parking tickets, towing fees, storage
fees, impound fees, and other similar charges incurred
by the buyer while the vehicle was in possession of
buyer.
Section 12. Removes unnecessary and impractical
obligation imposed on dealers relating to service
contracts.
1:33:39 PM
MS. PIERSON continued the sectional analysis, by reading the
following [original punctuation provided]:
Section 13. Provides that changes affect contracts
entered into on or after the effective date of the act
and provides definitions for terms used in several
sections.
For Section 7 - Motor vehicle is defined in
45.25.590(3) "motor vehicle," notwithstanding the
definition of "motor vehicle" in AS 45.25.990, means a
vehicle, including a trailer, that is required to be
registered under AS 28.10, but does not include a
motorcycle.
For Section 12, Service contract is defined in
45.25.990 (18) "service contract" means an optional
agreement that is separate from a contract for the
sale of a motor vehicle and that covers certain repair
or maintenance functions beyond coverage provided by a
warranty.
For Section Sections 9, 10, 11, and 12, Motor vehicle
is defined in 45.25.990 (12) "motor vehicle" means a
motor vehicle that is required to be registered under
AS 28.10, but does not include a motor home, a
recreational vehicle, or a motorcycle; in this
paragraph,
(A) "all-terrain vehicle" has the meaning given
in AS 45.27.390;
(B) "recreational vehicle" includes an all-
terrain vehicle and a snow machine;
(C) "snow machine" has the meaning given in AS
45.27.390.
1:34:55 PM
REPRESENTATIVE FEIGE referred to page 1, lines 11-12 of HB 245
and asked for clarification as to why this language is being
deleted.
MS. PIERSON noted that Mr. Sniffen, Department of Law was on
line to answer questions.
REPRESENTATIVE GRUENBERG related he has some questions and
potential amendments he may offer, but he first wanted to hear
public testimony.
1:36:55 PM
STEVEN J. ALLWINE, President, Mendenhall Auto Group, stated he
has been an automobile dealer in Alaska for about 25 years. He
offered his strong support for the bill. He said he has been
involved with this issue from the beginning and expressed a
willingness to provide clarification on any provisions in the
bill. He explained that the industry reached the point at which
it needed to identify in statute what was functional what was
not - some provisions were simply a waste of time or tended to
make things murky. He related that years ago some changes to
statute were adopted with a specific intent, but over time these
statutes have been unintentionally interpreted in some other
way. He suggested that this bill should provide some clarity.
1:38:27 PM
REPRESENTATIVE FEIGE referred to page 1, line 12, of HB 245 to
the language being deleted, "AND MINUS ALL MANUFACTURER DISCOUNT
AND SAVINGS." He asked for clarification on the deleted
language.
MR. ALLWINE answered that this information is information
already contained on the manufacturer's sticker, which is also
known as the Monroney sticker. He referred to page 1, line 10,
of the bill. He said that the key language is the
manufacturer's suggested retail price must reference the final
price listed by the manufacturer. In certain circumstances the
manufacturer will choose to package certain options and provide
a discount. He highlighted that this specific discount would be
disclosed on the Monroney sticker.
1:40:27 PM
STEVE DELBIANCO, Executive Director, NetChoice, explained
NetChoice as a trade association of e-commerce that for over a
decade NetChoice has been an advocacy organization for the
Internet, dedicated to supporting online commerce and consumer
choice. He related that NetChoice also has supported updates to
states' consumer protection laws, such as this bill, in order to
give consumers greater confidence and trust in the information
and for on-line commerce. His organization also promotes
innovation that helps to improve the on-line industry, such as
helping on-line travel agents reduce costs and to give consumers
more choices. NetChoice helps provide ticket markets to serve
sports and concert fans. He stated that NetChoice supports HB
235 since the bill will empower consumers to have pricing
information that is comparable across competitors and will
eliminate any surprises with respect to the final vehicle price.
He pointed out the change related to what dealers must include
in manufacturer's suggested retail price (MSRP) or list price
will help consumers identify the final MSRP across the board.
He related that this provision is in line with many other
states. This bill carries standardization further so that
consumers can identify the final price - the MSRP - as the basis
for savings vis-a-vis advertised price comparisons. He
emphasized support for proposed Section 5, since it will make it
harder for any dealer to "bait and switch" by drawing buyers
into a showroom to see a car that's not really there. He
concluded by comparing this bill to [a federal bill] that
recently passed with respect to airline tickets. Travel agents
must now disclose a complete and comparable price on any airline
tickets, including that all government required fees and tax
requirements must be included, as well as baggage fees. These
new federal rules are similar to the ones in this bill, which
are designed to give consumers more complete and clear
information to allow them to compare prices and know what is
included in the final ticket price. He thanked members of the
committee and offered NetChoice's support for the bill.
1:43:22 PM
REPRESENTATIVE PRUITT related his understanding that out of
state dealers also advertise in Alaska. He asked how this
compares to other states' laws and whether dealers in the Lower
48 would have an advantage. He offered his belief that Alaska's
rules have obscured and limited our dealers from being as clear
to the customers as he would like.
1:44:25 PM
MR. DELBIANCO related his understanding that Alaska's
regulations, which require comparable and clear pricing, would
also apply to any motor vehicle dealer who advertises vehicles
for sale in Alaska. He reiterated that all dealers are subject
to these statutes no matter where the dealer is located. He
said he certainly hoped that was the case since Alaska consumers
should not be subject to differences standards of comparability
and clarity, just because they happened to use a newspaper,
magazine, or website from out of state.
1:45:10 PM
MR. ALLWINE, in response to a question by Representative
Gruenberg, answered that a Juneau resident buying a car is
subject to a sales tax.
MR. DELBIANCO, in response to a question by Representative
Gruenberg, answered that the sales tax on motor vehicles is not
assessed on the place of purchase, but depends on the place
where the title for the vehicle is obtained. He offered his
belief that sales tax is handled differently for motor vehicles
than it is for other tangible property due to the requirement to
obtain a title for motor vehicles.
1:46:46 PM
MR. ALLWINE agreed that is normally the case, except in the City
and Borough of Juneau. He explained that a mechanism does not
exist within Alaska to allow the CBJ to collect sales tax on a
vehicle purchased from another state or location, including
Anchorage. He mentioned that Anchorage dealers are not subject
to sales tax. He related that people may purchase their vehicle
in Anchorage, but the Division of Motor Vehicles (DMV) would not
collect sales tax on behalf of the CBJ if these vehicles are
registered in Juneau. He agreed with Mr. Delbianco with the
process he described as being accurate and true in the State of
Washington.
1:48:05 PM
REPRESENTATIVE GRUENBERG asked him to estimate the percentage of
advantage out of state dealers would receive when selling
vehicles to Juneau residents.
MR. ALLWINE answered that sales tax on motor vehicles is capped
at $375. In further response to Representative Gruenberg, he
explained that sales tax rate for motor vehicles valued at up to
$7,500 would be assessed at 5 percent, with a $375 maximum sales
tax on vehicles valued at over $7,500.
1:48:45 PM
CHAIR P. WILSON asked him to estimate the value of the sales tax
if the legislature were to attempt to provide a remedy for sales
tax collection on. She related her understanding that one
obstacle is the DMV would need to collect sales tax it does not
currently collect on behalf of communities.
MR. ALLWINE identified this as an issue does not pertain to the
bill; however, he is very excited to contemplate it. He
predicted that the potential income for cities and boroughs in
Alaska would be significant. He did not recall that anyone has
studied the matter. He has observed, from his experience as an
auto dealer in Juneau, that a significant number of vehicles are
registered but are not operated in Juneau. He surmised that a
large number of these vehicles are exported, but the motor
vehicle must be titled to do so legally. He suggested that if
one were to ask DMV's representatives what their observations
were on this matter, they would indicate that a significant
number of titles, registrations, and plates are sent to a
trailer park in town, but the vehicles are not physically
located in Juneau. He characterized this issue as being similar
to counterfeiting and exporting vehicles illegally so addressing
the sales tax issue would stop these practices.
1:50:59 PM
REPRESENTATIVE GRUENBERG pointed out that NetChoice is an
Internet business might be able to clarify pricing differences
and the effect of Internet purchases on local brick and mortar
businesses.
MR. DELBIANCO responded that NetChoice is a trade association,
and not an Internet seller organization, although many of their
members are Internet sellers. He recalled earlier testimony
that the DMV would be responsible for assessing the applicable
local sale tax at the time a motor vehicle is titled. He
referred catalog sales for merchandise other than motor vehicles
and when a customer purchases a product, such as a new coat from
an on-line vendor, the vendor is not required to collect and
remit any sales tax. He acknowledged that the vendor would pay
a use tax, which is applicable in most states; however, the
business would pay the use tax since individual consumers rarely
pay use taxes on merchandise. Some may claim this creates an
unfair advantage since it would be six percent less for a local
resident to buy a snow shovel from an on-line merchant than from
a local one; however, the downside to consumers is that they
must wait several days to receive the on-line item plus pay
shipping charges, which is more costly to Alaskans than sales
tax. Therefore, there is rarely a price difference significant
enough for sales tax to swap shipping costs on an item.
Additionally, the Internet has also given brick and mortar
businesses in Alaska the means to survive and compete with large
box chain stores by allowing them to sell specialty items around
the world. He reiterated that small Main Street businesses all
around the country have turned to the Internet and e-commerce to
reach customers with somewhat unique products, which has become
Main Street's way of competing with catalog and Internet stores.
1:54:56 PM
REPRESENTATIVE GRUENBERG agreed that the Internet could
technically allow the local person to compete, yet it would
still bring about competitive disadvantages to local customers.
He pointed out transportation costs for a large truck would be
expensive, but would be minimal for a diamond ring. He
concluded that high value small volume goods would have a
disparate effect, depending on the industry.
MR. DELBIANCO agreed in some instances the sales tax for
consumers in Alaska would exceed the extra shipping cost they
pay. However, Virginians who purchased whale bone jewelry from
Alaskan artists would not pay any sales tax. He concluded that
the Internet ends up being the means for availability of
specialty items to people from all over the country. An Alaskan
merchant also would not have to figure out the sales tax regimes
nationwide.
1:57:06 PM
CLYDE (ED) SNIFFEN, JR., Senior Assistant Attorney General,
Commercial/Fair Business Section, Civil Division (Anchorage),
Department of Law (DOL), provided a brief history with his
involvement with the development of HB 235. He said he worked
with dealers on most of the changes incorporated into HB 235.
He reported that this statute was first enacted in 1992, amended
in 2004, and dealers and the department have now had significant
experience with this type of activity. The changes incorporated
in HB 235 help to clarify the intent of the enabling
legislation. This bill makes it much easier for consumers and
auto dealers, in that it helps to streamline the process and
make transactions clear to the public. He described some
substantive provisions in HB 235, including a provision which
allows motor vehicle dealers to make price comparison
advertisements for used vehicles, not currently allowable in
statute. He offered that by requiring price comparisons be made
only to a nationally recognized pricing source, such as the
Kelley blue book, helps avoid consumer deception or harm by
giving consumers a standard on which to base their decisions.
One provision allows motor vehicle dealers to advertise free
merchandise with the sale of a motor vehicle. He pointed out
similar advertising for goods such as furniture, spas, or
produce that advertise free goods with sales. He concluded that
the statutory restrictions seemed to single out auto dealers,
which is one reason to remove the restriction.
2:00:30 PM
REPRESENTATIVE GRUENBERG referred to page 1, lines 9-10, of HB
235, which would delete "advertised" and add "manufacturer's
suggested retail price or list." He expressed concern that a
manufacturer's suggested retail price (MSRP), as listed on the
Monroney sticker, identifies a specific price for the vehicle,
yet the vehicle might be advertised at a lower price. He asked
whether a dealer is required to stick to the advertised price,
and if so, if that may mislead people who may think they are
getting a better deal on a vehicle than they actually will get.
MR. SNIFFEN answered that the specific changes on page 1, lines
9-13, removes the advertised price and inserts the MSRP, which
flows with the language on page 1, lines 6-8, in subsection (b).
This subsection identifies when a dealer may use the MSRP term.
He explained that Section 1 attempts to describe what the MSRP
must include. He understood the concern that by removing the
word "advertised" a situation may occur where a dealer has a
Monroney sticker on car, but might argue that the Monroney
sticker price is not the advertised price. He understood the
concern, but he was unsure any real consumer harm would occur,
except that the dealer might be able to add a dealer preparation
fee to the price if the Monroney sticker price is not the same
as the advertised price.
REPRESENTATIVE GRUENBERG said he was now a little more confused.
2:03:06 PM
REPRESENTATIVE PRUITT offered to clarify. He explained that an
auto dealer who advertises on television or in a newspaper would
still need to hold the vehicle stocking number for the
individual item advertised. He referred to page 3, 15-19 of HB
245 and read, "unless the vehicle identification number, vehicle
stocking number, or license number is disclosed in the
advertisement or made available by the dealer on request of a
retail buyer." He emphasized that the dealer would have to
provide documentation to identify the specific vehicle being
advertised, even if the advertised price is not on actual
Monroney sticker.
2:04:17 PM
The committee took a brief at-ease.
2:04:33 PM
REPRESENTATIVE GRUENBERG agreed, conceptually, with
Representative Pruitt's explanation; however, he expressed
concern that a dealer may disclose a truck's serial number in a
television advertisement; however, consumers may not be able to
clearly capture the detailed serial number as it is rattled off.
Since it's possible the consumer may not be able to identify the
specific vehicle, it would seem better to have the advertised
price listed on the vehicle itself. He reiterated that
otherwise consumers may not know for certain which vehicle is
the advertised vehicle.
2:05:56 PM
REPRESENTATIVE PRUITT related his understanding that a dealer
might show a specific 2012 Ford Explorer in a television ad, but
consumers may think all of the 2012 Ford Explorers in stock are
for sale at the specific price. He agreed the dealer would
still need to be able to identify the specific vehicle to
consumers advertised to prevent a "bait and switch" from
happening.
REPRESENTATIVE GRUENBERG and Representative Pruitt asked Mr.
Sniffen to respond.
2:07:36 PM
MR. SNIFFEN agreed with Representative Pruitt's example. He did
not think the provision on page 1 would address the instance on
whether a consumer could link and identify a specific vehicle to
an advertisement. He offered his belief that those issues are
covered in other parts of the bill. He agreed that the dealer
must be able to provide satisfactory documentation for consumers
for a specific vehicle advertised at a specific price. He
assured members if it came to his attention that a dealer
consistently advertised vehicles at one price, but told
prospective buyers the sale vehicle had already been sold and
directed the prospective buyer to a more expensive one - a "bait
and switch" tactic - that he would require the dealer to
document the advertised vehicle. Thus, a dealer would need to
provide proof that he/she sold the specific vehicle, during the
advertisement period, at the specified price. He offered that
he has not seen this type of issues arise during his 12 years
working in consumer protection; however, he suggested that HB
235 would address this type of issue.
2:09:15 PM
GARY SLEEPER, Attorney, Jermain, Dunnagan, & Owens, PC, related
he is speaking on behalf of the Automobile Dealers Association.
He related he has also worked with Mr. Sniffen, DOL, on this
issue. In response to earlier question as to the reason to
delete manufacturer's discounts, he explained the MSRP or the
Monroney sticker is prepared by the manufacturers and placed on
the vehicle at the time of manufacture. He reported that some
manufacturers' discounts and savings, such as rebates or cash
backs, can be offered after the MSRP is produced. He referred
to earlier discussion, with respect to the deleted language in
Section 1. He related his understanding that this language
change would more correctly describe the MSRP. He recalled an
earlier discussion related to comparison advertising on used
cars. He pointed out that dealers have sought for years to have
the ability to advertise discounts on used cars, which is not
allowed under current law. He related a scenario in which a
dealer has a convertible advertised for $20,000, but the dealer
is prohibited by law to advertise the vehicle at $15,000 in the
event the car didn't sell during the summer. He related an
actual event in which a large franchised dealer had an inventory
of used cars. The dealer wanted to liquidate his used car
inventory to obtain cash and also advertise his price as exactly
the price he paid for the vehicles. Even though this would have
resulted in substantial savings for the buyer, after consulting
with the DOL, Mr. Sniffen could not find a way for the dealer to
advertise the discount under the existing statute. While this
bill would not change that situation, the proposed change will
help consumers. The dealer could indicate the asking price and
consumers can compare the vehicle's price to the Blue Book price
for comparison. He concluded that this provision will be
beneficial to dealers and consumers.
2:12:38 PM
MR. SLEEPER turned to the issue of advertising free merchandise.
He explained that current law prohibits the dealer from
adjusting a vehicle's price to cover the cost of free
merchandise. Thus, a dealer could not adjust a vehicle's price
to cover the cost of the trip offered, such as when a dealer
offers an airline ticket to Seattle with purchase of a vehicle.
He also explained the reason for the proposed deletion of
advertised price in Section 1, that the language was changed in
order to differentiate between the dealer's advertised price and
the MSRP. He offered his belief that change would make the rest
of the statutes consistent. He then summarized proposed Section
2, noting that a motor vehicle dealer's advertised price must
include all fees including dock fees, which are not fees that
are included in the MSRP. He recapped that deleting the word
"advertised" has the effect of making the statute clearer and
helps to distinguish a dealer's price from the MSRP. He
characterized this as the only intent of that provision.
2:14:04 PM
REPRESENTATIVE GRUENBERG expressed concern that auto dealers
cannot advertise discounts on used cars, such as the
aforementioned scenario. He related in such an instance a
dealer wanted to offer discounts on a large number of cars that
had not been sold during the summer months. The dealer simply
wanted to let potential consumers know of that the cars were on
sale, but the law did not allow him to do so. He asked for
clarification as to the reason for the restriction in
advertising used vehicles and how the law should be changed to
allow this type of advertising. He said it appeared that
letting consumers know a special sales price would be beneficial
to consumers.
MR. SLEEPER responded that the reason a used car dealer cannot
advertise a price reduction is because the statutes do not allow
comparison advertising at all. He said, "It's absolutely
prohibited." He provided an example, that under current law a
sticker that reads, $19,999, cannot be adjusted to show a
reduced price of $15,999. One solution would be to allow
comparison advertising. He pointed out the concern that
consumers and Mr. Sniffen would have is the concern that dealers
may advertise false savings. He related a scenario in which in
which a dealer places a car on the lot and advertise it for at
$2,999, and three days later reduces it to $1,999, and announces
the savings of $1,000 to consumers. He reiterated that the goal
is to prevent advertising false savings. He offered that this
type of conduct is already prohibited under the Alaska Unfair
Trade Practices statute. He stated that the current statute
addresses this by providing a blanket prohibition against any
type of comparison advertising. He said it's conceivable that
the legislature could change current law to allow dealers to
show comparison advertising and rely on consumer protection
contained in the Unfair Trade Practices Act. He concluded that
the approach this bill takes is to provide a compromise by
giving consumers a reference price to easily access to eliminate
the issue of false savings.
REPRESENTATIVE GRUENBERG offered to work on this issue
separately to solve a problem yet not permit deceptive
practices. He inquired as to whether language Mr. Sniffen
thought language could be developed to do so.
2:17:59 PM
MR. SNIFFEN commented. He related that for the past ten years
he has worked to seek a remedy in statute, but the matter is a
complicated one. He acknowledged that fictitious pricing is
difficult to enforce. He described the situation he has
observed in furniture stores where furniture is continually on
sale. He related that furniture sales' regulations require
furniture must be listed at a certain price for at least six
months. He explained that furniture stores can reduce prices
after the store attempts to sell the furniture in good faith for
at least a six month period. The store could then show the
price was originally $8,000, but the price has been reduced to
$6,000. He described cases in which furniture dealers would
receive a large shipment of furniture, list it with high prices,
store it in a corner and six months later would move the
furniture to the front of the store. The store would show the
original price, plus the reduced price, which is essentially the
price that the furniture should initially have been set. He
explained the problems associated with used auto prices. The
department has considered requiring the dealer to advertise a
vehicle - clearly and conspicuously - for a certain period of
times, such as 60 days, after which time the dealer could reduce
the price. However, with a small enforcement staff, it is
difficult for the DOL to enforce whether the dealer followed the
timeline and if a car was listed for 60 days or only for 5 days.
He characterized this as a tricky scenario. Thus, the
compromise in the bill allows used car dealers to at least
reference a nationally available pricing with some legitimacy.
He reiterated that consumers could compare pricing on a new car
to the MSRP, which is consistent nationwide. The bill would
allow used auto dealers to use the Kelley Blue Book for
consumers to identify comparison prices. He expressed a
willingness to consider another way for fair price comparison.
2:20:52 PM
REPRESENTATIVE FEIGE referred to page 1, line 11, of HB 235 to
the Monroney sticker. He asked what information is on the
sticker, and whether options, including accessories, are listed.
MR. SLEEPER identified the Monroney sticker as a sticker
required by federal law, which is required to shows all
accessories and options added to the vehicle by the
manufacturer. It does not show anything added by the dealer.
He agreed that the language [on page 1, lines 9-13], the
Monroney sticker, includes accessories and options; however the
said he did not think the language needed further clarification.
2:22:50 PM
REPRESENTATIVE GRUENBERG referred to Section 3 of HB 235. He
asked why the bill would remove language that requires dealers
to clearly disclose the MSRP and the language in paragraph 5,
since these provisions include important protections to the
consumer.
MR. SNIFFEN asked for clarification on the question.
REPRESENTATIVE GRUENBERG restated his question.
2:24:17 PM
MR. SNIFFEN offered his belief that Section 3 is deleted since
it essentially prohibits the motor vehicle dealer from making
the price comparison. In doing so, this would allow price
comparisons for a new vehicle. He referred to page 2, to lines
22-25 of HB 235, which would not allow a price comparison for
vehicles unless that price is fully disclosed on the MSRP. He
admitted he did not recall whether Section 3 of the bill does
this, but he recalled one section of the bill deals with price
comparisons generally and prohibits any price comparison except
for new vehicles.
2:25:14 PM
REPRESENTATIVE GRUENBERG referred to page 2, line 14, of
proposed AS 45.25.450 (b) of Section 3. He related his
understanding that this subsection would only apply to price
comparisons for new motor vehicles and not to used motor
vehicles.
MR. SNIFFEN agreed. He explained the effect of removing the
language on page 2, lines 22-29 of the bill. He said that
deleting paragraph 4, would mean that dealers would not need to
put a disclaimer in an advertisement that essentially indicates
there may not have been other vehicles sold at the MSRP price.
He suggested that this language was originally in the statutes
to avoid a situation in which consumers thought numerous Ford
Explorers were being sold at the MSRP, so when the dealer
discounted the MSRP price, the consumers were led to believe
they were saving a lot of money by not paying the MSRP. He
pointed out consumers were typically savvy about what the MSRP
represents so it did not seem reasonable to require dealers to
pay for the extra space in advertisement to state this
disclaimer. He concluded that the language did not add any
significant consumer protection.
2:27:28 PM
MR. SLEEPER asked to further comment. He explained that as Mr.
Sniffen pointed out, Section 3 of the bill would allow dealers
to advertise that they are selling below the MSRP. Under
current law, if a dealer advertises a new vehicle for $3,000
below MSRP, the dealer would be in violation of the law since
dealers cannot offer discounts. Dealers are also not allowed to
make any representation in their ads that suggest a consumer
would save money by paying less than the price listed on the
MSRP. He highlighted that dealers have been hamstrung and have
not been able to figure out how to let consumers know of real
savings. He described an instance in which the MSRP is $21,900,
but the dealer wants to reduce the price by $1,500. He said
some dealers simply advertise that the vehicle is "$1,500 off"
the MSRP. He said this situation just did not make sense and in
fact has impaired dealers' ability to show the price calculation
for the advertised price. He summarized that proposed Section 3
would eliminate the prohibition and allow dealers to advertise
with more clarity. It would allow dealers to let consumers know
when vehicles are on sale so they can take advantage of the
savings. He characterized the changes as similar to ones that
allow comparison advertising on new cars.
2:30:08 PM
MARTIN MARTENSEN, President, Alaska Auto Dealers Association;
Owner, Continental Auto Group, stated that he often feels the
need for clarification from Mr. Sniffen prior to running an ad
to be sire the advertisement is within the law. He expressed
his gratitude for the good relationship with Mr. Sniffen and the
DOL's consumer protection staff. He acknowledged that sometimes
Mr. Sniffen has deterred them from advertising in a certain way
since the advertising would fall in a "gray" area of the law.
He related that purpose of this bill is to remove the gray area
and allow dealers to operate within the law and also allow the
Department of Law to enforce the statute in a clear and
consistent manner.
2:31:51 PM
REPRESENTATIVE PETERSEN asked for clarification between the term
discount and rebate.
MR. SLEEPER answered that the terms are technical ones. He
related that the term rebate is a term used to describe cash
given back, which is only offered by manufactures and is defined
in statute. He explained that a discount would be savings
offered by the local dealer and represents a reduction from the
MSRP and is not offered by the manufacturer.
2:33:05 PM
CHAIR P. WILSON, after first determining no one else wished to
testify, closed public testimony on HB 235.
2:33:33 PM
REPRESENTATIVE GRUENBERG expressed concern about another phrase.
He asked if he could have copies of a proposed amendment
distributed, although he was uncertain he would offer any
amendment.
[The amendment was not offered.]
2:34:41 PM
The committee took an at-ease from 2:34 p.m. to 2:36 p.m.
REPRESENTATIVE THOMPSON urged members to pass HB 235. He
explained that this bill would assist help protect consumers and
would also help dealers adhere to state law. He urged members
to support the bill and advance it its next committee of
referral.
2:36:48 PM
REPRESENTATIVE GRUENBERG thanked the parties that worked on this
bill. He thanked people who testified and helped clarify the
issues.
2:37:33 PM
REPRESENTATIVE PRUITT moved to report HB 235 out of committee
with individual recommendations and the accompanying fiscal
notes. There being no objection, HB 235 was reported from the
House Transportation Standing Committee.
| Document Name | Date/Time | Subjects |
|---|---|---|
| 2 HB235Sponsor Statement.pdf |
HTRA 1/26/2012 1:00:00 PM |
HB 235 |
| 3 HB235 version A.pdf |
HTRA 1/26/2012 1:00:00 PM |
HB 235 |
| 4 HB235 Sectional 1 17 12.pdf |
HTRA 1/26/2012 1:00:00 PM |
HB 235 |
| 5 HB235 AADA Letter of Support.pdf |
HTRA 1/26/2012 1:00:00 PM |
HB 235 |
| HB 255 Sponsor Statement.pdf |
HJUD 2/8/2012 1:00:00 PM HTRA 1/26/2012 1:00:00 PM |
HB 255 |
| HB 255 version I.pdf |
HJUD 2/8/2012 1:00:00 PM HTRA 1/26/2012 1:00:00 PM |
HB 255 |
| NCSL Legisbrief Addressing Distracted Driving.pdf |
HTRA 1/26/2012 1:00:00 PM |
HB 255 |
| NCSL Texting Law by State.pdf |
HJUD 2/8/2012 1:00:00 PM HTRA 1/26/2012 1:00:00 PM |
HB 255 |
| HB235-DOA-DMV-1-23-12.pdf |
HTRA 1/26/2012 1:00:00 PM |
HB 235 |
| HB235-LAW-CIV-01-20-12.pdf |
HTRA 1/26/2012 1:00:00 PM |
HB 235 |
| HB255-DOA-OPA-1-20-12.pdf |
HJUD 2/8/2012 1:00:00 PM HTRA 1/26/2012 1:00:00 PM |
HB 255 |
| HB255-DOA-PDA-1-23-12 (2).pdf |
HTRA 1/26/2012 1:00:00 PM |
HB 255 |
| HB255-DOC-OC-01-20-12.pdf |
HTRA 1/26/2012 1:00:00 PM |
HB 255 |