Legislature(2021 - 2022)BARNES 124
03/03/2021 05:45 PM House LABOR & COMMERCE
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| Audio | Topic |
|---|---|
| Start | |
| HB36 | |
| HB30 | |
| Board of Pharmacy | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| *+ | HB 36 | TELECONFERENCED | |
| *+ | HB 30 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| + | TELECONFERENCED |
HB 36-MOTOR VEHICLE DEALERS: APPLIC.; INSURANCE
6:04:12 PM
CO-CHAIR SPOHNHOLZ announced that the first order of business
would be HOUSE BILL NO. 36, "An Act relating to an application
for a license to operate as a dealer in motor vehicles; and
requiring a dealer in motor vehicles to maintain liability and
property insurance."
6:05:03 PM
REPRESENTATIVE MATT CLAMAN, Alaska State Legislature, as prime
sponsor, presented HB 36. He paraphrased from the Sponsor
Statement[hard copy included in the committee packet], which
read as follows [original punctuation provided]:
The purpose of House Bill 36 is to improve consumer
protections for those purchasing motor vehicles by
strengthening the requirements for motor vehicle
dealers. Under current law, a motor vehicle dealer in
Alaska must register biennially by filling out an
application that requires an address, but not a valid
telephone number. The application must be accompanied
by a $50 registration fee and a surety bond of
$50,000. There is no current requirement that dealers
carry liability insurance even though Alaska requires
drivers to have liability insurance for their
vehiclesand dealers may allow uninsured drivers to
take dealer-owned cards for a test drive.
Alaska's current statutory requirements for motor
vehicle dealers are some of the least stringent in the
country. By way of comparison, here are the
requirements for an automobile dealership application
to be valid in other states:
Oregon Chapter 822 of Oregon State Statutes
provides for civil penalties for acting as a
vehicle dealer without a certificate (.005-.009), the
processes of applying for, and maintaining, an
automobile dealer license and related exemptions,
requirements, and privileges (.025-.042), grounds for
revocation, suspension, or cancellation of the
dealership certificate (.050), and further definition
of illegal practices and associated penalties (.055-
.080).
? Delaware Title 21, Chapter 63 of the Delaware
State Statutes provides for proof-of location
requirements and recordkeeping (? 6303), license
expiration and renewal procedures (? 6304), retainment
of bill of sale records for a period of at least five
years (?6305), in addition to grounds for revocation
of dealer licenses (? 6313);
? Texas Title 14, Subtitle A, Chapter 2301 of
the state's Occupations Code provides for public
interest information and complaint procedures
(Subchapter E), licensing requirements (Subchapter F),
license expiration and renewal (Subchapter G), dealer
operations (Subchapter H), grounds for license
revocation (Subchapter N), as well as procedures for
complaint hearings, judicial review, and penalties
(Subchapters O, P, and Q).
Comparatively speaking, Alaska Statutes Title 8,
Chapter 66 addresses the application form (.040) and
registration renewal (.050); sets the minimum bond
amount (.060), defines allowable action on bonds and
defines failure to file a bond as a class A
misdemeanor (.070, .080); and holds the dealer
responsible for maintaining a record of each motor
vehicle transaction (.320). Unlike Texas, Oregon, and
Delaware, there are no statutes explicitly providing
for a grievance process nor grounds for revocation of
the license in question.
HB 36 aims to strengthen consumer protection by
addressing two scenarios that may create problems for
both consumers and dealers:
HB 36 seeks to provide better protection when one
selling dealer sells multiple vehicles to a buying
dealer and receives payment without providing titles
(the titles are being held by the bank that provides a
credit line for purchasing vehicles). The selling
dealer plans to pay for the vehicles and get the
titles, but runs into financial difficulties and is
unable to continue making payments. When this happens,
the bank repossesses the vehicles from the buying
dealer. The buying dealer has now lost the money and
decides to seek recompense from the selling dealer's
bond. At present, the bond requirement under state law
is $50,000, which, depending on the type and quantity
of vehicles, may be only a fraction of what is owed.
Raising the bond amount will help protect the buying
dealer in the event that the bank repossesses their
new stock.
Another scenario that this bill addresses is
"curbstoning," which is the act of selling used
vehicles under the false pretense of being the car's
owner in order to evade regulations that are imposed
on state-licensed automobile dealers. When a dealer
obtains a license, they are qualified to purchase cars
at "dealer only" auctions at steep discounts. In these
scenarios, the dealer is not required to disclose the
fact that they are a licensed car dealer or that the
vehicle has a reconstructed title or has known
defects. If deemed a personal vehicle, the vehicle is
not subject to a routine safety inspection. Often, the
title is not placed in the dealer's name, the contact
information provided is not the dealer's information,
or the transaction takes place in cash, leaving little
paper trail for the consumer to follow if issues
arise. Requiring a verified working telephone number
increases the consumer's ability to locate the dealer.
HB 36 would help protect against these two scenarios
by requiring that those registering as motor vehicle
dealers include more detailed information about their
business in the application, register a bond for
$100,000 instead of $50,000, and maintain liability
insurance that covers collisions with dealer-owned
cars.
6:08:37 PM
SOPHIE JONAS, Staff, Representative Matt Claman, Alaska State
Legislature, offered the Sectional Analysis to HB 36 [hard copy
included in the committee packet] on behalf of Representative
Claman, prime sponsor. The Sectional Analysis read as follows
[original punctuation provided]:
Section 1
AS 08.66.030. Form of application.
Adds the following requirements to dealer registration
applications:
? a valid telephone number for the business;
? a statement that no person holding a five percent or
greater interest in the business has been convicted of
a felony involving fraud, embezzlement, or
misappropriation of property within five years
preceding the date of application;
? a statement acknowledging that the applicant has
reviewed the requirements for workers'
compensation insurance and will maintain workers'
compensation insurance under AS
23.30, if applicable; and
a copy of the liability insurance policy in
compliance with section 3 of this bill.
Section 2
AS 08.66.060. Bond.
Raises the amount of the bond required for dealer
registration applicants from $50,000 to $100,000.
Section 3
AS 08.66.085. Insurance requirements.
Adds a new section to AS 08.66 that requires dealers
maintain public liability and property damage
insurance of not less than $50,000 for property
damage, $100,000 for injury to a single person, and
$200,000 for injury, including death, to more than one
person.
MS. JONAS concluded by inviting questions from the committee.
6:10:24 PM
REPRESENTATIVE MCCARTY posed a question to Representative Claman
about how the bill would impact private individuals who are
selling their personal cars or have several cars that they are
selling over a period of time. He asked for clarification on
the bill's purpose.
REPRESENTATIVE CLAMAN responded that the bill would have no
impact on individuals making private sales.
REPRESENTATIVE MCCARTY directed attention to language on page 2,
line 7 of the bill, which read as follows:
(8) a statement that the applicant has reviewed the
workers' compensation insurance requirements of AS
23.31 and will maintain applicable workers'
compensation insurance as required under AS 23.30;
REPRESENTATIVE MCCARTY asked for clarification.
REPRESENTATIVE CLAMAN explained that since some people are not
aware of the requirement to provide workers' compensation, this
language would protect employees and ensure that smaller car
dealers are aware of that law [by requiring a statement signed
to that effect].
6:12:31 PM
REPRESENTATIVE SNYDER asked Representative Claman if he could
speak about the motivation behind one of the new requirements
for dealer applications [in Section 1, paragraph (7) of HB 36,
on page 2, lines 3-6], which read as follows:
(7) a statement that no person holding a five percent
or greater interest in the business has, during the
five-year period immediately preceding the date of the
application, been convicted of a felony involving
fraud, embezzlement, or misappropriation of property;
REPRESENTATIVE CLAMAN responded that the interest in this bill
came from motor vehicle dealers. The Motor Dealer Association
came to his office and expressed concerns about people that may
be in the motor dealer business who had recent convictions, and
asked how to best protect consumers. He stated that the goal in
paragraph (7) was to make that limitation as narrow as possible
and to ensure that the convictions were specifically related to
crimes relevant to the auto business, such as fraud and
financial crimes, that took place in the past five years. He
and his staff thought that five years would be a reasonable
amount of time to allow someone to get back into the business.
6:14:11 PM
REPRESENTATIVE NELSON asked about the prevalence of curb-
stoning.
REPRESENTATIVE CLAMAN shared that two of the invited testifiers
are car dealers and that these testifiers will be able to
address that question better, but that he knows that it goes on.
Some consumers buy vehicles online and do not realize that they
are purchasing from a dealer, he added.
REPRESENTATIVE NELSON asked what the current recourse is to
those people injured by curb-stoning.
REPRESENTATIVE CLAMAN said that there is no recourse if the
consumer doesn't know they are purchasing from a dealer.
REPRESENTATIVE NELSON asked if this would be addressed in the
bill.
REPRESENTATIVE CLAMAN responded that there is a larger statutory
structure that involves requirements for motor vehicle dealers
and requirements for their business, such as inspection
requirements. The bill increases transparency of dealers and
the statute applies to the dealers as well. He added that he
would be happy to meet with Representative Nelson outside of the
meeting to discuss the details of the statutes if Representative
Nelson would like more information.
6:16:43 PM
REPRESENTATIVE MCCARTY asked about felonies and whether
background checks would be mandated for all car business owners.
REPRESENTATIVE CLAMAN answered no, the bill doesn't mandate a
background check. There are a limited group of felonies that
fit the description, he said. If individuals misrepresent
themselves, there are criminal penalties that would apply.
6:17:46 PM
REPRESENTATIVE KAUFMAN mentioned the requirement for dealerships
to provide the name and make of all vehicles handled. He
commented that it might be beneficial to hear from the
testifiers on that topic.
REPRESENTATIVE CLAMAN explained that Representative Kaufman is
referring to line 13, paragraph (4) of Section 1 and deferred
his question to a testifier on the phone, Jeffrey Schmitz.
REPRESENTATIVE KAUFMAN questioned how that information is
provided in common practice and whether complying with it has
ever been a problem.
6:19:53 PM
JEFFERY SCHMITZ, Director, Division of Motor Vehicles,
Department of Administration, responded that the Division of
Motor Vehicles (DMV) does not monitor this issue.
CO-CHAIR SPOHNHOLZ asked what the practice is for listing the
name and make of all vehicles handled, and whether used vehicles
are handled. She asked how that is done specifically and
whether there is a standard practice.
MR. SCHMITZ responded that this is a required document that is
filled out at the time of application by a person applying for a
dealership license.
6:21:07 PM
REPRESENTATIVE CLAMAN shared his understanding that the
application in question is a short form that is one to two pages
long, and that it strikes him that if he were a used car
salesperson and sold every make and model of car, filling out
that application would require pages and pages of possible cars
that one might sell. He asked how it is filled in today and how
much information is required.
CO-CHAIR SPOHNHOLZ interjected and asked if Mr. Schmitz could
provide a sample of the application form, which might help
inform a future conversation.
MR. SCHMITZ responded yes.
6:22:44 PM
CO-CHAIR SPOHNHOLZ opened invited testimony.
6:22:53 PM
MARCUS WAEHLER, Alaska Automotive Dealer Association, gave some
history of his experience in the automotive industry, which
involved 12 years of purchasing vehicles through auctions,
managing inventories, seeing vehicles through inspections, and
12 subsequent years of working at the helm of a small dealership
in Anchorage, Alaska called Red White & Blue Auto Sales. He
shared that he began to notice some negative changes in the
industry about seven years ago, and brought his concerns to the
Alaska Automotive Dealer Association. He shared his opinion
that Alaska's dealer licensing requirements are the most
deficient in the country. In Alaska, he explained, an
individual can obtain a dealer's license and begin purchasing
through dealer-only auctions by paying a $50 dollar registration
fee and a $500 dollar bond. He added that some unscrupulous
dealers will sell cars in various states of disrepair from these
auctions discreetly on Craigslist without having done any
inspections or disclosure, and there is no recourse for this
activity. The unwitting consumer doesn't know they purchased
from a dealer, and the fraud is complete, he said. He shared
that he goes to these auctions frequently and sees cars that
were at an auction posted on Craigslist "before the sun sets"
that same day as private party sales. He estimated that this
happens thousands of times a year.
MR. WAEHLER concluded with a personal story about a woman who
had visited his dealership recently with a car that she wanted
to trade in. He performed an inspection and looked up the
information about the vehicle using an application ("app") on
his phone by using the vehicle identification number (VIN) and
found that the woman had purchased the vehicle on Craigslist
from a private seller for $6,500 dollars. He continued that she
had only had the vehicle for a few weeks and it had a value of
about $2,000 by the time she brought it to him. A further
inspection illuminated him to the fact that the oil pressure
light in the engine had been removed, and according to the
information he retrieved using the app on his phone, this light
had been on when the car went through auction. He shared that
this woman was 86 years old, and that this is a regular
occurrence.
6:27:29 PM
REPRESENTATIVE KAUFMAN directed attention to the statement
provided to the committee from the Alaska Automobile Dealer
Association, which mentions "no disclosure of reconstructed
title, no disclosure of known defects," and he asked about the
process of a vehicle getting a reconstructed title. If a
vehicle is wrecked, totaled, and sold, he asked if that process
puts a "salvage" indication on the title.
MR. WAEHLER responded that yes, an indication is added to the
title, however there is often a delay in the processing time.
He explained that one of the ways that this can happen is that
the status of the title hasn't been changed from clean to
reconstructed, or that the title is not readily available and
the unwitting consumer doesn't even know to check for that
information. He gave an example of a couple who came to him
with a vehicle they bought at full retail price with a clean
title, which had been financed by a bank. When the couple got
the title back, he continued, they discovered that the title and
the vehicle were both reconstructed. The couple purchased the
vehicle from a dealer and they had no contact information and no
recourse.
6:29:39 PM
CO-CHAIR SPOHNHOLZ asked what the process is for changing the
title to reflect that it is reconstructed. She asked who bears
the responsibility for ensuring that that happens.
MR. WAEHLER answered that he thinks the DMV is responsible for
that, but he is not sure of the exact process.
6:30:37 PM
CO-CHAIR SPOHNHOLZ posed the same question to Mr. Schmitz.
MR. SCHMITZ responded that the DMV is informed through a number
of means about the status of the vehicle, for example, the
insurance company could inform the DMV after an accident has
occurred, or a consumer could inform the DMV. He shared that
once a vehicle and a title are branded as "reconstructed," that
brand will remain for the remainder of the life of the vehicle.
CO-CHAIR SPOHNHOLZ asked if someone were to reconstruct a
vehicle and not make the appropriate change in the title, what
the penalty would be for that indiscretion.
MR. SCHMITZ answered that he thinks that falls into the category
of a court case. He said that the seller of the vehicle is
responsible for providing a current title that reflects the
current state of the vehicle. He does not know the legal
implications of failing to disclose that information.
6:32:45 PM
CO-CHAIR SPOHNHOLZ posed the question again to Representative
Claman.
REPRESENTATIVE CLAMAN responded that he doesn't know what the
penalty is for falsifying information. He said he thinks that
there are requirements in the statutes. He shared his
understanding that it is the dealer's responsibility to ensure
that the information on the title is accurate, but that small
dealers are not required to check the title for inaccuracies,
only large ones.
CO-CHAIR SPOHNHOLZ asked if Representative Claman could bring an
answer to that question back to the committee meeting the next
time it hears HB 36.
6:33:56 PM
MR. WAEHLER added that what usually happens when an individual
has a vehicle that has been wrecked but still has a clean title
because a new title has not been processed yet, is the
individual sells the vehicle with the old clean title and there
is no disclosure of the wreckage. When that title gets
transferred into the new owner's name, that is often when the
reconstructed status gets discovered, he said. When this
happens, there is no paper trail that shows that the vehicle has
been reconstructed.
6:35:03 PM
MARTIN MARTINSEN, Owner, Continental Auto Group, said that his
business is in Anchorage, Alaska and he noted that he is a board
member of the Alaska Auto dealer Association. He began by
answering the earlier question about the requirement to provide
the make and model of all cars sold on the dealer application,
and shared that that pertains only to new car franchise
dealers.; it does not pertain to used car dealers. He continued
by talking about how often curbstoning happens, and he agreed
that it happens quite frequently. He said that in fact, former
Alaska Attorney General Ed Sniffen said that curbstoning was one
of the largest complaints that Mr. Sniffen got.
MR. MARTINSEN gave an example of curbstoning in his personal
life in which a friend of his who was interested in buying a
Mazda-3 went to Mr. Martinsen for his opinion on that make and
model. He said that he shared with his friend that Mazda-3 cars
have a great consumer report and are "typically a very good
car." He offered to look up the VIN for his friend in order to
tell him if there were any problems with the car. When he
looked up the car, he discovered that his dealership had just
sold that exact car three day earlier at a dealer's auto
auction. Mr. Martinsen contacted his manager about the car, and
was told by the manager that the car had a bad transmission.
The dealership chose to sell the car at auction instead of
replacing the transmission because it would've been too
expensive, and he continued that both the dealership and the
auction was aware that the car would be sold "as is" and that
there was no warranty for it. An individual purchased this car
from the auction, and it was on Craigslist the next day, he
said. He reiterated that the Office of the Attorney General
receives this complaint repeatedly, and he shared his opinion
that the proposed legislation would help add more requirements
to the process to get rid of these "shady characters" getting
dealer licenses.
6:40:21 PM
REPRESENTATIVE MCCARTY asked how this bill would remedy the
situation that Mr. Martinsen described.
MR. MARTINSEN replied that it would not. He stated that there
was a lot of discussion about the extent of the requirements,
and the restrictiveness that was determined to be appropriate is
what is in the legislation. He shared that there were members
on the board that wanted the requirements to be more stringent
and there were others who felt differently, and the compromise
is what can be seen in the bill.
REPRESENTATIVE MCCARTY asked if car dealers currently have
liability insurance.
MR. MARTINSEN responded that no, they do not have to have
liability insurance. He commented that Continental Auto Group
has insurance in order to be a franchise dealer, but that would
be one of the additional requirements.
REPRESENTATIVE MCCARTY asked for clarity as to whether mandating
liability insurance would be the remedy.
MR. MARTINSEN responded yes, absolutely. He added that
curbstoning is fraud but it's very difficult to prove it has
occurred. The individuals committing this fraud are able to buy
a car from Craigslist and sign it over to a new unsuspecting
buyer without leaving a paper trail.
6:43:13 PM
STEVE ALLWINE, Owner, Mendenhall Auto, Member of Alaska
Automobile Association, Board member of the Alaska Auto Dealer
Association, commented that the object of the legislation is not
to preclude people from the auto dealer industry, it is to make
the requirements more stringent to discourage the individuals
committing fraud from being able to enter the industry. He
opined that HB 36 is a positive step in the right direction, but
it would not fix everything.
[HB 36 was held over.]
| Document Name | Date/Time | Subjects |
|---|---|---|
| Tammy Lindemuth Board Application.pdf |
HL&C 3/3/2021 5:45:00 PM |
HL&C Confirmations 2021 |
| James Henderson Board Application.pdf |
HL&C 3/3/2021 5:45:00 PM |
HL&C Confirmations 2021 |
| Catherine Hample resume.pdf |
HL&C 3/3/2021 5:45:00 PM |
HL&C CONFIRMATIONS 2021 |
| Julie Endle Board Application.pdf |
HL&C 3/3/2021 5:45:00 PM |
HL&C CONFIRMATIONS 2021 |
| Kelly Lucas Board Application.pdf |
HL&C 3/3/2021 5:45:00 PM |
HL&C CONFIRMATIONS 2021 |
| HB 36 Sectional Analysis v. A 2.23.2021.pdf |
HL&C 3/3/2021 5:45:00 PM HL&C 3/12/2021 3:15:00 PM |
HB 36 |
| HB 36 Sponsor Statement 2.23.2021.pdf |
HL&C 3/3/2021 5:45:00 PM HL&C 3/12/2021 3:15:00 PM |
HB 36 |
| HB 36 3.2.21.PDF |
HL&C 3/3/2021 5:45:00 PM HL&C 3/12/2021 3:15:00 PM |
HB 36 |
| HB 36 Fiscal Note DOA-DMV 2.26.21.pdf |
HL&C 3/3/2021 5:45:00 PM HL&C 3/12/2021 3:15:00 PM |
HB 36 |
| HB 36 Testimony - Received as of 2.23.2021.pdf |
HL&C 3/3/2021 5:45:00 PM HL&C 3/12/2021 3:15:00 PM |
HB 36 |
| HB 30 Presentation Labor and Commerce 2.23.21.pdf |
HL&C 3/3/2021 5:45:00 PM |
HB 30 |
| HB30 version A.PDF |
HL&C 3/3/2021 5:45:00 PM |
HB 30 |
| HB30 Sectional Analysis 2.23.21.pdf |
HL&C 3/3/2021 5:45:00 PM |
HB 30 |
| HB 30 Fiscal Notes DOLWD-WC 1.21.21.pdf |
HL&C 3/3/2021 5:45:00 PM |
HB 30 |
| HB30 Fiscal Note DOA-DRM 2.26.21.pdf |
HL&C 3/3/2021 5:45:00 PM |
HB 30 |
| HB 30 Supporting Document- ProPublica Graphic- How Much is a Limb Worth 2.23.21.pdf |
HL&C 3/3/2021 5:45:00 PM |
HB 30 |
| HB 30 Supporting Document- ProPublica Graphic- Alaska v National Average 2.23.21.pdf |
HL&C 3/3/2021 5:45:00 PM |
HB 30 |
| HB 30 WCRI Death Benefits By State 2.23.21.pdf |
HL&C 3/3/2021 5:45:00 PM |
HB 30 |
| HB030 Supporting Document - PPI by State 02.23.21.pdf |
HL&C 3/3/2021 5:45:00 PM |
HB 30 |
| Letter of Opposition - AMLJIA, 3.3.21.pdf |
HL&C 3/3/2021 5:45:00 PM |
HB 30 |
| HB 30 Letter of Support - AFL-CIO 3.3.21.pdf |
HL&C 3/3/2021 5:45:00 PM |
HB 30 |
| HB30 Sponsor Statement 3.3.21.pdf |
HL&C 3/3/2021 5:45:00 PM |
HB 30 |