Legislature(2011 - 2012)BUTROVICH 205
02/02/2012 01:00 PM Senate TRANSPORTATION
| Audio | Topic |
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| Start | |
| SB125 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| = | SB 125 | ||
ALASKA STATE LEGISLATURE
SENATE TRANSPORTATION STANDING COMMITTEE
February 2, 2012
1:05 p.m.
MEMBERS PRESENT
Senator Albert Kookesh, Chair
Senator Joe Thomas, Vice Chair
Senator Dennis Egan
Senator Linda Menard
Senator Charlie Huggins
MEMBERS ABSENT
All members present
COMMITTEE CALENDAR
SENATE BILL NO. 125
"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."
- MOVED SB 125 OUT OF COMMITTEE
PREVIOUS COMMITTEE ACTION
BILL: SB 125
SHORT TITLE: MOTOR VEHICLE TRANSACTIONS
SPONSOR(s): SENATOR(s) MEYER
04/12/11 (S) READ THE FIRST TIME - REFERRALS
04/12/11 (S) TRA, L&C
02/02/12 (S) TRA AT 1:00 PM BUTROVICH 205
WITNESS REGISTER
SENATOR KEVIN MEYER
Alaska State Legislature
Juneau, AK
POSITION STATEMENT: Sponsor of SB 125
BOB PAWLOWSKI, Chief of Staff
Senator Kevin Meyer
Alaska State Legislature
Juneau, AK
POSITION STATEMENT: Provided a sectional analysis of SB 125.
MARTEN MARTENSEN, President
Alaska Auto Dealers Association
Anchorage, AK
POSITION STATEMENT: Testified in support of SB 125
GARY SLEEPER, Attorney
Alaska Auto Dealers Association
Anchorage, AK
POSITION STATEMENT: Offered to answer questions on SB 125.
ED SNIFFEN, Assistant Attorney General
Civil Division
Department of Law
Anchorage, AK
POSITION STATEMENT: Answered questions related to SB 125.
ACTION NARRATIVE
1:05:53 PM
CHAIR ALBERT KOOKESH called the Senate Transportation Standing
Committee meeting to order at 1:05 p.m. Present at the call to
order were Senators Thomas, Huggins, Menard, and Chair Kookesh.
Senator Egan arrived soon thereafter.
SB 125-MOTOR VEHICLE TRANSACTIONS
1:06:03 PM
SENATOR KOOKESH announced the consideration of SB 125.
SENATOR KEVIN MEYER, sponsor of SB 125, stated that this is a
consumer protection bill. It will help consumers understand auto
dealer comparison pricing and assist dealers in following state
laws. SB 125 will update the "Alaska Auto Dealers Practices Act"
by clarifying provisions in AS 45.25.400 - AS 45.25.990
concerning advertising new and used vehicles.
Motor vehicle dealers will be able to tell consumers when the
dealer's asking price is less than the manufacturer's suggested
retail price (MSRP), and that it reflects a savings or discount
to the consumer. Dealers will be allowed to advertise price
reductions on used cars and offer comparisons, provided the
comparison price is taken from a national valuation publication.
The intent is to help consumers better understand the true
market value of a car they may have interest in buying.
SB 125 also clarifies that the dealer's advertised price must
include all the fees the dealer will charge other than fees
charged by government agencies such as licensing fees and taxes.
Finally, the bill clarifies the responsibilities of both the
dealer and the customer with regard to vehicle title, financing,
and contracts.
The bill has a zero fiscal note; no fiscal impact is anticipated
for either the Department of Law or the [Division] of Motor
Vehicles.
1:08:59 PM
BOB PAWLOWSKI, Chief of Staff to Senator Meyer, reviewed the
sectional analysis for SB 125.
Sections 1-3 clarify the requirements for the manufacturer's
pricing and disclosures and also allows for the exclusion of
government costs such as licensing fees.
Section 4 provides national sources such as the Kelly Blue Book
for price comparisons for used cars.
Section 5 provides guidance for accurately and verifiably
identifying new and used vehicles to the consumer.
Section 6 states that the consumer must be provided the source
of information on a used car whether it is from a previous
dealer or private owner.
Sections 7-8 clarify when a vehicle can be shown and provides
that disclosures must be displayed conspicuously.
Sections 9-11 deal with financing and the responsibilities of
each party in the contract and purchase agreement.
Section 12 clarifies what constitutes a motor vehicle service
contract.
Section 13 states the applicability of the statutory changes,
and defines terms.
1:10:58 PM
SENATOR EGAN joined the committee.
SENATOR THOMAS asked for assurance that this wouldn't eliminate
any information that is currently included on the Monroney
sticker.
MR. PAWLOWSKI confirmed that the information listed today would
continue to be listed; the MSRP is shown on the federal Monroney
sticker.
SENATOR THOMAS referred to Section 12 and asked for an example
of an impractical obligation that might be imposed on dealers
relating to service contracts.
SENATOR MEYER suggested that the auto dealers might be able to
answer in more detail.
MR. PAWLOWSKI deferred to the auto dealers.
1:13:56 PM
SENATOR MENARD highlighted that the fiscal note says the dealers
will be allowed to offer "free" merchandise with the purchase of
a vehicle. She asked what that might include.
MR. PAWLOWSKI deferred the question to the auto dealers.
SENATOR MEYER highlighted that Ed Sniffen with the Department of
Law (DOL) could also add clarification.
SENATOR MENARD asked if it's a common occurrence for customers
to qualify for financing on a car only to find out after the
fact that the deal has "tanked."
MR. PAWLOWSKI replied he could follow up and get the information
but he would encourage her to pose the question to the auto
dealers today.
SENATOR MENARD noted the letter of support from the Alaska Auto
Dealers Association (AADA).
MR. PAWLOWSKI confirmed that the AADA participated in multiple
meetings with the attorney general's office, reviewed the
sectional analysis, and verified their support for the bill.
1:16:23 PM
SENATOR MEYER added that a great deal of effort went into
striking a balance between the dealers, the Department of Law,
and the consumer.
SENATOR HUGGINS pointed out that Section 7 specifically
prohibits the sale of the vehicle until the dealer has
possession of all the required paperwork.
SENATOR MENARD said that would eliminate the issue of the
consumer taking the vehicle home only to have to return it
several days later.
MR. PAWLOWSKI confirmed that the dealer may have possession and
show the vehicle but cannot sell the vehicle until the title is
in hand.
SENATOR HUGGINS commented that this does not prohibit the dealer
from allowing a consumer to drive the vehicle home; it's just
that it cannot be sold.
MR. PAWLOWSKI deferred to the Department of Law for
clarification.
CHAIR KOOKESH asked Mr. Martensen to incorporate answers to the
committee's questions in his testimony.
1:18:27 PM
MARTEN MARTENSEN, President, Alaska Auto Dealers Association
(AADA), said SB 125 is intended to clarify gray areas in current
law. Different interpretations of the law have led to litigation
and calls from Assistant Attorney General Sniffen warning dealer
that they were not operating within the law. He confirmed that
the AADA worked closely with Mr. Sniffen on this solution.
Responding to the previous questions, he explained that a dealer
cannot sell a vehicle without a title in possession. In many
instances the dealer has to pay off a lien when a customer
trades in their car and it can take weeks before that title is
reissued and sent to the dealer. Mr. Martensen said in his own
business he would never allow someone to take that car home
because he isn't technically the owner until he has the title.
He clarified that rebates or special incentives like interest
rates aren't typically listed on the MSRP or Monroney sticker
because those are subject to change at any time.
SENATOR MENARD said she also asked for an example of free
merchandise.
MR. MARTENSEN said that last November his dealership included
with the purchase of a car a set of snow tires and an auto
start. Current law does not prohibit including items at no cost
but they cannot be identified as "free." This new provision will
allow dealers to advertise that consumers are getting something
for free.
SENATOR MENARD asked if the bells and whistles could be termed
free merchandise.
MR MARTENSEN answered yes.
1:23:18 PM
SENATOR THOMAS asked for examples of the unnecessary and
impractical obligations that are sometimes imposed on dealers
relating to service contracts.
MR. MARTENSEN deferred the question to Mr. Sniffen at the
Department of Law.
1:24:05 PM
GARY SLEEPER, Attorney, Alaska Auto Dealers Association, said he
would prefer to answer questions after Mr. Sniffen had given his
testimony.
1:24:44 PM
ED SNIFFEN, Assistant Attorney General, Department of Law (DOL),
confirmed that considerable work went into crafting this bill.
It accomplishes significant consumer protections and at the same
time it helps the auto dealers by clarifying and streamlining
some procedures.
He said his understanding of Section 12 is that it removes
language about service contracts. The dealers said those
transactions work differently than set out in statute and
therefore make it complicated for dealers to comply. The
remaining language protects consumers sufficiently and requires
motor vehicle dealers to have a written service contract that
contains all the essential provisions regarding administration
of the contract.
With regard to the question about free merchandise, he said
DOL's position in the past has been very strict; there's no free
lunch and the price of the car is increased to cover the cost of
the free merchandise. But things change, and now every industry
offers free merchandise with certain purchases. It didn't make
sense to single out the auto industry so that restriction was
removed.
MR. SNIFFEN said Section 4 adds a new, substantive provision
that deals with the ability of used car dealers to price compare
with valuation publications like Kelly Blue Book. The comparison
must be to a nationally recognized publication service, and the
motor vehicle dealer must make the source for the comparison
available to the consumer on request.
1:30:14 PM
SENATOR THOMAS read the new subsection (f) and asked if this was
a requirement to have all the substantial options listed and
available for comparison.
MR. SNIFFEN replied the intent is that it will be an apples-to-
apples comparison. A car that's for sale with particular options
has to have a Kelly Blue Book comparison with the same options.
It would be a violation of the Unfair Trade Practice Act if a
comparison was made between two cars that had different options.
That would be deceptive, and DOL takes that very seriously.
1:32:38 PM
SENATOR EGAN stated that he was pleased to be a co-sponsor of SB
125.
SENATOR KOOKESH asked if there was any opposition to the bill.
SENATOR MEYER responded that there was a companion bill in the
House and he wasn't aware of any opposition to either bill.
SENATOR KOOKESH closed public testimony and stated his desire to
move the bill.
1:34:19 PM
SENATOR EGAN moved to report SB 125 from committee with
individual recommendations and attached fiscal note.
1:34:36 PM
There being no further business to come before the committee,
Chair Kookesh adjourned the Senate Transportation Standing
Committee hearing at 1:34 p.m.
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