Authorizes the department of law to enforce regulations relating to motor vehicle dealer advertising and marketing

BILL NUMBER:S5488

Title of bill

An act to amend the executive law, in relation to motor vehicle dealer advertising

Purpose

This bill enables the Department of State Consumer Protection Division, in consultation with the Department of Financial Services to promulgate regulations relating to advertising and marketing by motor vehicle dealers. This bill also gives jurisdiction to the Department of Law to enforce these regulations. It also bans advertisements that represent that Social Security Disability (SSD) and Supplemental Security Income (SSI) are adequate sources of income for auto loans.

Summary of provisions

Section 1: Amends the executive law to add a new section 94-c which provides (1) the Consumer Protection Division is authorized, in consultation with the Department of Law and the Department of Financial Services, to promulgate regulations relating to advertising and marketing by auto dealers, (2) such regulations shall prohibit any auto dealer from making representations that SSI and SSD are sole adequate sources of income for an auto loan, (3) the Department of Law shall have jurisdiction to enforce these regulations, issue injunctions, and assess civil penalties, and (4) the Consumer Protection Division is authorized to establish fines not to exceed ten thousand dollars for any violation of these regulations.

Section 2: This act shall take effect on the one hundred eightieth day after it shall have become law.

Existing law

Under current law, auto dealer advertising is not regulated by statute, and no entity is granted explicit authority to promulgate regulations regarding auto dealer advertising.

Justification

Auto dealership advertisements are sometimes dishonest, misleading, flatly fraudulent, and often times target the most vulnerable sectors of the population, such as those who have few resources, poor credit, are elderly, or rely on public benefits as a sole source of income. Dealership advertising must be better regulated to ensure that fraudulent claims, bait-and-switch tactics, and predatory advertising are eliminated.

Currently, auto dealer internet advertisements from dealerships located in New York contain particularly egregious representations. These advertisements target vulnerable populations, sometimes those whose sole sources of income are SSI and SSD, and often explicitly focus on those who have bad credit or no credit, while simultaneously making claims of guaranteed 100% credit approval regardless of the consumer's credit score. Consumers are bombarded with false promises and misleading information.

The Department of State Consumer Protection Division, Department of Law, and the Department of Financial Services possess unique knowledge of the issues that are at play in dealership advertisements. Granting these entities regulatory authority over auto dealer advertisements will allow unambiguous rules for advertisements to be properly

promulgated and enforced to protect innocent consumers who are in the market for a reliable, affordable vehicle.

Legislative history

This is a new bill.

Fiscal implications

None.

Local fiscal implications

None.

Effective date

This act shall take effect on the one hundred eightieth day after it shall have become law.