Legislature(2009 - 2010)BUTROVICH 205
02/23/2010 01:00 PM Senate TRANSPORTATION
| Audio | Topic |
|---|---|
| Start | |
| SB272 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| *+ | SB 272 | TELECONFERENCED | |
ALASKA STATE LEGISLATURE
SENATE TRANSPORTATION STANDING COMMITTEE
February 23, 2010
1:01 p.m.
MEMBERS PRESENT
Senator Linda Menard, Vice Chair
Senator Bettye Davis
Senator Kevin Meyer
Senator Joe Paskvan
MEMBERS ABSENT
Senator Albert Kookesh, Chair
COMMITTEE CALENDAR
SENATE BILL NO. 272
"An Act relating to charges for rented motor vehicles, including
cost recovery fees, and making a violation of the rented motor
vehicle charge provisions an unfair trade practice."
- MOVED SB 272 OUT OF COMMITTEE
PREVIOUS COMMITTEE ACTION
BILL: SB 272
SHORT TITLE: RENTAL CAR CHARGES
SPONSOR(s): SENATOR(s) HUGGINS
02/10/10 (S) READ THE FIRST TIME - REFERRALS
02/10/10 (S) TRA, L&C
WITNESS REGISTER
EDRA MORIEDGE, Staff
to Senator Huggins
Alaska State Legislature
Juneau, AK
POSITION STATEMENT: Introduced SB 272 on behalf of the sponsor.
ED SNIFFEN, Assistant Attorney General
Civil Division
Department of Law
Anchorage, AK
POSITION STATEMENT:
BILL GARDNER, Regional Vice President
Enterprise Holdings
Seattle, WA
POSITION STATEMENT: Provided industry perspective on SB 272.
SHANE SKINNER, Controller and Business Manager for AK and WA
Enterprise Holdings
Seattle, WA,
POSITION STATEMENT: Provided industry perspective on SB 272.
ACTION NARRATIVE
1:01:56 PM
VICE CHAIR LINDA MENARD called the Senate Transportation
Standing Committee meeting to order at 1:01 p.m. Senators
Paskvan, Davis, and Menard were present at the call to order.
Senator Meyer arrived soon thereafter.
SB 272-RENTAL CAR CHARGES
1:02:39 PM
VICE CHAIR MENARD announced the consideration of SB 272.
SENATOR MEYER joined the meeting.
EDRA MORIEDGE, Staff to Senator Huggins, introduced SB 272 on
behalf of the sponsor by reading the following sponsor statement
into the record:
SB 272 is a technical bill that would allow rental car
companies to do in Alaska what they already do in
thirty other states. Alaska law is currently silent on
the issue of separately-listed charges on rental car
statements for the recovery of fees. This bill would
require those fees to be listed separately and clearly
identified on the rental car agreement.
The industry standard is to turn over the rental car
fleet every twelve months and to associate the costs
of licensing the vehicles, concessions, and airport or
facility-related costs with the vehicles themselves.
In addition to government taxes and surcharges, rental
car companies assess additional "cost recovery fees"
to offset those costs. Consumers should be made aware,
and be able to see the fees they are charged, on both
the rental bill and in an outline quote. This bill
would provide full disclosure and transparency of
"cost recovery fees" included in rental car
agreements. In addition,
MS. MORIEDGE added that under this legislation it would be an
unfair labor practice to violate this provision.
1:04:20 PM
VICE CHAIR MENARD asked the impetus of the bill.
MS. MORIEDGE offered her understanding that in 2006 the
Department of Law (DOL) issued a business advisory to rental car
companies when it learned that some companies were charging cost
recovery fees. However, there is no statutory ability to dictate
what a rental car company can or cannot charge. Although this
has been an issue for DOL, it was the industry that brought the
issue to the sponsor.
1:05:55 PM
ED SNIFFEN, Assistant Attorney General, Department of Law (DOL)
said he authored the 2006 business advisory that Ms. Moriedge
mentioned. He said this has been an issue for DOL some time.
When consumers complained about vehicle licensing fee (VLF)
charges, DOL investigated and determined that recovery of those
fees might violate the Alaska Consumer Protection Act. DOL asked
industry to include those fees in the advertized price because
it looked deceptively like a mandatory government charge done on
a per transaction basis. He likes the bill because it clarifies
the law going forward and addresses that issue.
1:08:03 PM
SENATOR PASKVAN asked if DOL intends that a consumer who books
online would see a clear breakdown of these cost recovery fees.
MR. SNIFFEN said he believes that car rental companies break the
charges out but the question is when in the process consumers
become aware of those charges.
SENATOR PASKVAN asked what part of this bill would subject a
rental car company to scrutiny for an unfair trade practice.
MR. SNIFFEN replied DOL finds several parts of the bill
attractive. First, the bill adds a new Section .450 [Sec.
45.45.450] that requires rental car companies to separately
identify each cost recovery fee. This will require an
explanation of each fee somewhere in the process. Second, the
bill adds a new Section .460 [Sec. 45.45.460] that says that
rental car companies can only recover those fees that are a
good-faith estimate of the actual fees incurred to license and
title a vehicle. DOL suspects that in some instances rental car
companies were using the VLF process as a profit center. He said
that DOL would continue to work with rental car companies to
make sure that their advertising complies with the amount they
recover and that all costs are itemized such that consumers
aren't misled.
1:12:36 PM
BILL GARDNER, Regional Vice President, Enterprise Holdings (EH),
Seattle, WA, said he oversees Alaska operations. EH is the
corporate parent of Enterprise, Alamo, and National. This
family-owned company was started in 1957 and is now the largest
rental car company in the U.S. They operate four locations in
Alaska - three in Anchorage and one in Wasilla.
SHANE SKINNER, Controller and Business Manager for Alaska and
Washington, Enterprise Holdings, Seattle, WA, described SB 272
as a great bill for consumers; it provides full disclosure of
fees and taxes at booking. Similar legislation has been embraced
by a majority of states. It creates equality within the
industry, he said.
1:14:52 PM
SENATOR PASKVAN asked what information other than vehicle cost
recovery fees would be available to the online consumer.
MR. SKINNER replied the bill addresses three sets of fees and
taxes. It addresses rental car taxes including sales tax, it
addresses airport fees that are collected and remitted to
airport authorities, and it addresses the vehicle licensing fee,
which is paid to the state. The bill expressly states the fees
allowable to the car rental industry so it would protect the
consumer from fees like the energy recoupment fee. I've been
with the industry for 13 years and I don't really know what that
is, he said.
SENATOR PASKVAN asked if he's saying that if this becomes law,
then collecting fees like the energy recoupment fee would be
illegal.
MR. SKINNER said yes.
SENATOR PASKVAN asked if this would provide a competitive
advantage to one rental car business over another.
MR. SKINNER replied there are very few examples of companies
charging such unique fees, but this would level the playing
field for all car rental companies.
SENATOR PASKVAN asked if the energy recoupment fee would be
posted in the section talking about the charge for not returning
the car with a full tank of fuel.
MR. SKINNER said yes.
1:17:59 PM
VICE CHAIR MENARD asked if it is more expensive to do business
in Alaska than in other states.
MR. SKINNER said Alaska taxes the rental car industry at a
higher rate than other states so he imagines overall costs would
be higher.
MR. GARDNER said that a consolidated rental facility was
recently built at Anchorage International Airport so there are
additional fees to fund that, but overall he believes the fees
are competitive.
SENATOR PASKVAN asked if their business model includes revenue
sharing agreements with other businesses.
MR. GARDNER said he doesn't believe that they have deals with a
hotel chain or Expedia, for example.
MR. SKINNER clarified that they do pay commissions to third
party bookers, but they're a cost of doing business.
SENATOR PASKVAN asked if those costs are included in the rental
fee itself, not separately.
MR. SKINNER said yes, and this bill would limit what can be
broken out and charged as separate fees and taxes.
1:20:57 PM
SENATOR PASKVAN asked if online discounts are disclosed to a
consumer who rents at the counter.
MR. GARDNER said the rates may vary if you book ahead versus
coming to the counter with no reservation, just as it would at a
hotel.
SENATOR PASKVAN asked if it would be cheaper for someone to make
an online same day booking versus going to the counter to book
without a reservation.
MR. GARDNER said the only online discount is that it's cheaper
to book online directly with Enterprise, National, or Alamo
versus booking through a third party agent.
1:23:07 PM
SENATOR PASKVAN asked if he can assume that their discount
structure could be directly compared to a competitor's discount
structure.
MR. GARDNER said yes.
MR. SKINNER added that this bill only allows car rental
companies to recoup the actual cost of the license and title
fees. This protects consumers from excessive or manipulative
pricing.
VICE CHAIR MENARD closed public testimony and asked for comments
or questions.
SENATOR PASKVAN asked if the administration has taken a position
on the bill.
MR. SNIFFEN said DOL doesn't endorse or oppose the legislation
but the bill does provide some guidance to make the issue
enforceable. Current law is too vague to take any action on, he
said.
1:25:49 PM
VICE CHAIR MENARD asked the will of the committee.
SENATOR PASKVAN moved to report SB 272 from committee with
individual recommendations and attached fiscal note(s). There
being no objection, SB 272 moved from the Senate Transportation
Standing Committee.
1:26:33 PM
There being no further business to come before the committee,
Vice Chair Menard adjourned the Senate Transportation Standing
Committee meeting at 1:26 p.m.
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