Legislature(2011 - 2012)BARNES 124
02/08/2012 03:15 PM House LABOR & COMMERCE
| Audio | Topic |
|---|---|
| Start | |
| HB235 | |
| HB266 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | HB 235 | TELECONFERENCED | |
| *+ | HB 266 | TELECONFERENCED | |
HB 235-MOTOR VEHICLE TRANSACTIONS
3:27:24 PM
CHAIR OLSON announced that the first 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."
3:28:32 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. This bill was drafted in
conjunction with the Commercial and 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."
3:29:48 PM
JANE PIERSON, Staff, Representative Steve Thompson, Alaska State
Legislature, presented the sectional analysis for HB 235, as
follows [original punctuation provided]:
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.
3:31:08 PM
MS. PIERSON continued the sectional analysis for HB 235 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.
3:32:19 PM
MS. PIERSON continued the sectional analysis for HB 235, 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.
3:33:09 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.
3:33:44 PM
REPRESENTATIVE SADDLER referred to page 5, line 23 of HB 235,
which relates to entering into a contract. He asked whether the
contract must be a written contract or if it could be a verbal
contract by a dealer to hold a car until the financing could be
arranged. He further asked what constitutes a contract in
section.
MS. PIERSON offered her belief that the changes in proposed
Section 7 refer to a contract to sell a motor vehicle so it
would be the actual sale.
3:34:23 PM
REPRESENTATIVE SADDLER related a scenario in which a prospective
buyer is interested in a car and asks the dealer to hold it
while he consults with his wife. In the event that another
prospective buyer expresses interest in the car, whether the
dealer is bound by contract to hold the car for the first
customer.
MS. PIERSON offered her belief that the dealer did not have an
agreement to sell a vehicle, but rather just to hold it.
3:35:06 PM
CHAIR OLSON asked whether the MSRP is a country wide pricing,
except for transportation costs. He surmised that the MSRP for
California would be differences due to its stringent pollution
requirements.
MS. PIERSON identified that the MSRP is the manufacturer's
sticker on the vehicle, and is defined by the federal Monroney
statute. She explained that the dealer can adjust prices from
the Monroney sticker, so it represents the manufacturer's price.
CHAIR OLSON offered that the MSRP would be the same as it is in
Nevada, except for transportation costs. He asked for an
explanation of how transportation costs are handled given that
Alaska's transportation costs are much higher than anywhere else
except for Hawaii.
MS. PIERSON related her understanding the prices are the same,
but the auto dealers and department are on-line and could
correct her if that is not so.
3:36:18 PM
REPRESENTATIVE HOLMES referred to Section 5, [to page 3, line
18] and wondered whether this means she does not need to listen
to the numbers rattled off in a commercial.
MS. PIERSON answered yes.
3:36:50 PM
REPRESENTATIVE HOLMES asked for clarification on Section 12, as
she was unsure if the purpose is to streamline this process.
MS. PIERSON deferred to one of the experts. She related her
understanding that this means the service contract must be in
writing and include all provisions.
3:37:52 PM
REPRESENTATIVE JOHNSON related his understanding some
settlements that require disclosure of vehicle identification
numbers (VIN) in advertising, if this bill changes that
settlement, or if is it an antiquated settlement.
3:38:42 PM
REPRESENTATIVE SADDLER referred to Section 6, page 5, line 15,
and asked if the disclosure of the vehicle's history and
condition be true and whether the change in language from verify
to signed change imply any change in the representation.
MS. PIERSON answered no. She explained that it just means it
does not have to be notarized, since the notary is merely
verifying the person is truly the person who is signing it.
3:39:25 PM
REPRESENTATIVE SADDLER related his understanding that it would
not need to be notarized, but also does not say the information
is true.
MS. PIERSON agreed with the function of a notary as limited to
verifying the identity of the person signing the document.
3:39:42 PM
REPRESENTATIVE MILLER referred to page 6, line 31, and page 7,
line 10, specifically to the word "intentional," and read, "if a
buyer's final financing is not approved and the buyer has made
an intentional representation ..." He asked who would make the
determination on the length of time it would take and how this
would be verified.
MS. PIERSON suggested it would be apparent. She related a
scenario in which she was to state that she earns $200,000
working for legislature. It would be apparent to everyone that
her statement wasn't true. Additionally, it would be a
misrepresentation on a financial document. She summarized the
gist of this is to assure people are employed and that their
income and credit ratings are reported accurately. She thought
the language was fairly clear in terms of financial agreements.
REPRESENTATIVE MILLER agreed, but offered other examples might
be somewhat subtle.
MS. PIERSON deferred to the Department of Law to better respond.
3:41:28 PM
REPRESENTATIVE JOHNSON referred to page 7, line 5 of proposed
Section 11 to the business use mileage. He asked for the
current business usage rate.
REPRESENTATIVE MILLER answered that he thought the rate was $.54
or $.59 statewide.
MS. PIERSON said she was unsure, but the figure is recognized by
the Internal Revenue Service (IRS) so the rate would be a
standard rate throughout the U.S.
3:42:15 PM
REPRESENTATIVE JOHNSON offered his belief that the business use
mileage rate and the $.45 a mile rates are in the bill as
placeholders.
MS. PIERSON answered yes.
3:42:38 PM
CLYDE (ED) SNIFFEN, JR., Senior Assistant Attorney General,
Commercial/Fair Business Section, Civil Division (Anchorage),
Department of Law (DOL), offered to answer questions raised thus
far. He explained that his duties include enforcement of this
act. He said he has worked with the auto dealers for the past
12 years on many of these issues and much of this bill is aimed
at clarifying and cleaning up some areas and makes it much
easier for consumers and auto dealers. He indicated he has no
problems with the current language in the bill and the DOL
supports the bill.
3:44:08 PM
MR. SNIFFEN referred to an earlier question with respect to
whether a contract to sell and an oral representation
constitutes an enforceable contract. He offered that it could
be; however, in this bill the intent is that the statute must be
complied with before a dealer can actually enter into a written
contract with a consumer to sell a vehicle. He suggested that
oral representations are more in the nature of offers to hold,
which is not the intent of the language in this bill.
3:44:56 PM
MR. SNIFFEN referred to an earlier question on whether the MSRP
is standard across the country. He related his understanding
that the cost is standard in the U.S. He said at one time
transportation costs were included in the MSRP. He was unsure
whether the transportation charge differential has changed with
respect to the costs for vehicles in Anchorage versus in
Detroit. He suggested that some people in the industry could
better answer the question.
MR. SNIFFEN referred to an earlier question, with respect to
settlements and whether any recent settlements required
disclosure of VINS, and if so, whether they were enforceable.
He said the settlements he has been involved with pertained to a
settlement on dock fees, which did not include disclosure of any
VIN. The rule of law still stands and document preparation fees
must be included and he was not aware of any private
settlements.
3:46:33 PM
MR. SNIFFEN brought up an earlier question on whether the
definition of "verified" versus "signed" and if that would mean
the person had signed, but the information was not verified. He
explained that this statute attempts to ensure that owners who
trade in vehicles provide the accident and repair history. He
further explained that the dealer cannot verify this information
so requiring the owner to sign and verify gives the future
purchaser a record. He reported that the DOL has not had any
issues with this. He suggested this change just makes it easier
for dealers so they would not need to provide a notary every
time a person wants to sell a vehicle.
MR. SNIFFEN recalled an earlier question with respect to
intentional misrepresentation, which he said would be a matter
that would be decided by the courts. Thus if a dispute arose in
which a person intentionally provided false information, the
courts would decide. He agreed with Ms. Pierson's description
of obviously false information. He agreed some gray areas could
arise, such as employment projections. He reiterated the courts
could decide any disputes; however, he did not think that the
amount of money involved in these types of case would warrant
this.
3:48:57 PM
REPRESENTATIVE JOHNSON referred to page 7, line 16, to Section
12 of the bill. He related that a service contract could be
buried in a stack of documents the buyer must review and sign.
He questioned whether it is conceivable for a dealer to add in a
service contract with the car purchase agreement and not clearly
mark it as a contract for a service contract.
MR. SNIFFEN agreed considerable paperwork is involved in these
transactions and although the possibility exists the statute
would require all the terms and conditions of the contract be
presented to the consumer. He highlighted that if a consumer
indicated he/she did not recall agreeing to a service contract,
that it would be the responsibility and burden of the dealer to
prove the consumer requested the service.
3:51:05 PM
REPRESENTATIVE JOHNSON read, "A motor vehicle service contract
must be in writing and contain all essential provisions
regarding the administration of the contract." He pointed out
that this subsection previously included the language, "clearly
and conspicuously marked." He asked whether retaining the
language, "clearly and conspicuously marked" would constitute a
service to the public or if it would be a hindrance to the
dealership. He further asked if this provision would provide a
safety net or if it was yet another obstacle to businesses.
MR. SNIFFEN suggested another provision in the Automobile
Dealer's Act, which he did not have before him, requires that
all disclosures must be done so in a clear and conspicuous
manner. He clarified that the way service contracts work is not
currently done through an application. He reiterated that
provisions for disclosure must be done in a clear and
conspicuous manner and to not do so would be in violation of the
law.
REPRESENTATIVE JOHNSON responded that he wanted to raise the
concern, that the response clarifies this for him.
3:53:08 PM
CHAIR OLSON expressed the same concern about the service
contract being buried in the middle of the paperwork. He
inquired as to whether any complaints of that nature have been
filed.
MR. SNIFFEN answered no. He said he did not recall any
complaints of that nature. He explained that normally those
types of complaints would be a pattern or practice by a dealer.
3:53:45 PM
REPRESENTATIVE JOHNSON reported that the committee staff has
located the specific reference to the statute, which read,
"...separate agreement clearly and conspicuously informs the
buyer...." He affirmed that his questions have been answered.
3:54:46 PM
MARTEN MARTENSEN, President, Alaska Automobile Dealers
Association (AADA), stated that he hoped members would recognize
the changes incorporated in HB 235 attempt to clean up the gray
area and the auto dealers are not asking for any advantages. He
pointed out that some of the current statutes are ambiguous and
open to interpretation. The proposed changes would make it
easier for auto dealers to operate and to work with the DOL in
terms of what is allowable. He characterized HB 235 as a bill
that would make things black and white. He said that he and his
colleagues are here to ask members for their support.
3:56:20 PM
CHAIR OLSON offered his belief that most compelling testimony
the committee has heard today is from Ed Sniffen. He emphasized
when Mr. Sniffen says he supports this bill, and he has done so
on two prior occasions, that it carries a tremendous amount of
weight. He invited anyone in opposition to the bill to come
forward.
3:57:11 PM
REPRESENTATIVE HOLMES asked for the purpose of the changes in
Section 12.
MR. MARTENSEN explained that key word in this section is
"application." He characterized dealers as the middle man and
the paperwork is not considered an application, but is a
contract.
3:58:06 PM
CHAIR OLSON, after first determining no one else wished to
testify, closed public testimony on HB 235.
3:58:43 PM
REPRESENTATIVE JOHNSON moved to report [HB 235] out of committee
with individual recommendations and the accompanying fiscal note
3:59:26 PM
REPRESENTATIVE JOHNSON restated his motion. He moved to report
HB 235 out of committee with individual recommendations and the
accompanying fiscal note. There being no objection, HB 235 was
reported from the House Labor and Commerce Standing Committee.
3:59:56 PM
The committee took an at-ease from 3:59 p.m. to 4:05 p.m.