What's happening
This bill requires automobile brokers in New York to be registered, increases bond requirements, and updates advertising and contract disclosure rules.
Why it matters
Expanding registration and oversight of automobile brokers. means more businesses (including those arranging leases, not just purchases) will need to comply with consumer protection requirements and state regulation, potentially reducing fraud or deceptive practices.
Increasing the required surety bond from $75,000 to $100,000. offers additional financial protection for customers if an automobile broker mishandles deposits or otherwise fails to meet obligations, which could lead to greater trust and recourse for consumers.
Requiring prominent disclosure of broker registration status, fees, and business relationships in advertisements and contracts. makes it harder for brokers to obscure their role or compensation, giving consumers clearer information when making financial decisions about car purchases or leases.
Aligning automobile broker rules with those for licensed dealers and strengthening contract cancellation and refund processes. provides consumers with more consistent protections and easier remedies if a broker fails to deliver on promised services.
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Who cares
Headline styles
License Auto Brokers Now
Plain English, a few words. Used as the page title.
Sponsors
1 Co-sponsor
History
- Substituted by A6884B
- Amended on third reading 5380b
- Amended on third reading (t) 5380a
- Advanced to third reading
- 2nd report cal.
- 1st report cal.1056
- Reported and committed to finance
- Referred to consumer protection
Companion bill
The same bill in the other chamber. A bill becomes law when one version passes both houses and the governor signs it, so either number can carry it.
License Car Brokers
Signed by Governor · Sponsor Peter Abbate
Full text
3 pagesUnderlined is new[Struck] is removedOfficial text on nysenate.gov ↗
STATE OF NEW YORK
5380--B Cal. No. 1056
2017-2018 Regular Sessions
IN SENATE
March 23, 2017
Introduced by Sen. GOLDEN -- read twice and ordered printed, and when printed to be committed to the Committee on Consumer Protection -reported favorably from said committee and committed to the Committee on Finance -- reported favorably from said committee, ordered to first and second report, ordered to a third reading, amended and ordered reprinted, retaining its place in the order of third reading -- again amended and ordered reprinted, retaining its place in the order of third reading
AN ACT to amend the general business law and the vehicle and traffic law, in relation to requiring automobile brokers to be licensed
The People of the State of New York, represented in Senate and Assembly, do enact as follows:
Section 1. Subdivision 1 of section 736 of the general business law, as added by chapter 616 of the laws of 1988, is amended to read as follows:
1. "Automobile broker business" means any person who, for a fee, commission or other valuable consideration, regardless of whether such fee, commission, or consideration is paid directly by a consumer, offers to provide, provides, or represents that he or she will provide a service of purchasing, arranging, assisting, facilitating or effecting the purchase or lease of an automobile as agent, broker, or intermediary for a consumer. "Automobile broker business" does not include any person registered as a dealer pursuant to article sixteen of the vehicle and traffic law, or any person who sells, offers for sale or lease or acts as agent, broker or intermediary in effecting the purchase or lease of three or [less] fewer automobiles in any calendar year, or any motor vehicle franchisor, manufacturer, or distributor registered under article sixteen of the vehicle and traffic law who sells or leases new motor vehicles to employees, immediate family members of employees, retirees, or immediate family members of retirees as authorized by paragraph (y)
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[ ] is old law to be omitted.
LBD10395-07-7
S. 5380--B 2
of subdivision two of section four hundred sixty-three of the vehicle and traffic law.
§ 2. The general business law is amended by adding a new section 736-a to read as follows:
§ 736-a. Registration required. 1. No person shall engage in business as an automobile broker business, as defined in section seven hundred thirty-six of this article, without first having been issued a certificate of registration for an automobile broker business pursuant to paragraph c of subdivision seven of section four hundred fifteen of the vehicle and traffic law.
2. A certificate of registration for an automobile broker business shall not permit the registrant to display for sale or lease any new or used motor vehicles without registration as a dealer under section four hundred fifteen of the vehicle and traffic law.
§ 3. Paragraphs (e), (f) and (g) of subdivision 1 and subdivision 3 of section 738 of the general business law, as added by chapter 616 of the laws of 1988, paragraph (e) of subdivision 1 as amended by chapter 579 of the laws of 2011, are amended to read as follows:
(e) A description of any other services and an itemization of the charges for each. Such description shall include disclosure of the automobile dealer from which the automobile was purchased or leased, as well as all fees, commissions or other valuable considerations paid by an automobile dealer to the automobile broker business for [selling,] arranging, assisting or effecting the sale or lease of an automobile as agent, broker, or intermediary between the consumer and the automobile dealer.
(f) If a consumer elects to cancel the contract pursuant to paragraph (b) or (c) of this subdivision, he or she shall notify in writing the automobile broker business at the address specified in the contract. The automobile broker business shall make a full refund to the consumer within ten business days following receipt of the request for a refund. The contract shall contain a statement, setting forth the consumer's right to cancel the contract under paragraphs (b) and (c) of this subdivision and the refund obligations of the automobile broker business.
(g) The statements required by paragraphs (a), (b), (c), and (f) of this subdivision shall be printed in at least ten point bold type.
3. An automobile broker business shall deliver to the consumer or mail to him or her at the address shown on the contract, an executed copy thereof.
§ 4. Subdivision 1 of section 740-a of the general business law, as added by chapter 579 of the laws of 2011, is amended to read as follows:
1. Automobile broker businesses shall obtain and continue in effect a surety bond in an amount of [seventy-five] one hundred thousand dollars executed by a surety company authorized to transact business in the state by the [insurance] department of financial services of the state or its successor. The bonds shall be approved as to form by the secretary of state and shall be conditioned on the automobile broker business' payment of all valid bank drafts, including checks, drawn for the purchase of motor vehicles and safekeeping of all customer deposits related to the sale of a motor vehicle between the time of receipt of such customer deposit and the transfer of good title to the vehicle to the customer.
§ 5. Section 741-a of the general business law, as added by chapter 579 of the laws of 2011, is amended to read as follows:
§ 741-a. Advertising. Automobile broker businesses shall clearly and conspicuously disclose the following in all advertisements in any medi-
S. 5380--B 3
um, and in any print advertisement such disclosures shall not appear in any footnotes and shall be situated in the top half of any such advertisement in an easily readable typeface:
(a) That the automobile broker business is not a [licensed] registered new motor vehicle dealer but is a registered automobile broker business as defined in section four hundred fifteen of the vehicle and traffic law;
(b) The registration number issued to the automobile broker business pursuant to section four hundred fifteen of the vehicle and traffic law;
(c) Whether any fees may be imposed by the automobile broker business for services rendered. Details of such compensation shall be provided by the automobile broker business upon request by the consumer; and
[(c)] (d) That no warranty repair services will be provided by the automobile broker business.
§ 6. Subdivision 1 of section 415 of the vehicle and traffic law is amended by adding a new paragraph m to read as follows:
m. "Automobile broker business" shall have the meaning set forth in subdivision one of section seven hundred thirty-six of the general business law.
§ 7. Section 415 of the vehicle and traffic law is amended by adding a new subdivision 3-a to read as follows:
3-a. Automobile broker business registration. No person shall engage in the automobile broker business or represent or advertise that he or she is engaged or intends to engage in the automobile broker business in this state, unless there shall have been issued to him or her a certificate of registration as an automobile broker business by the commissioner under this section pursuant to an application for registration submitted pursuant to subdivision five of this section.
§ 8. Subdivision 5 of section 415 of the vehicle and traffic law is amended by adding a new paragraph b-3 to read as follows:
b-3. In the case of an application for registration as an automobile broker business, the name and address of the surety company which will issue the bond required by subdivision one of section seven hundred forty-a of the general business law. If the bond is to be issued by an authorized agent of the surety company licensed by the state, then the name and address of that agent may be provided in lieu of the information concerning the surety company.
§ 9. Paragraph d of subdivision 9 of section 415 of the vehicle and traffic law, as amended by chapter 254 of the laws of 2010, is amended to read as follows:
d. Has failed to comply with any of the rules and regulations of the commissioner for the enforcement of this article or with any provision of this chapter or article thirty-five-B of the general business law applicable thereto; or
§ 10. This act shall take effect on the one hundred eightieth day after it shall have become a law; provided, however, that the commissioner of the department of motor vehicles shall take actions necessary to provide for the issuance of registration certificates pursuant to section 415 of the vehicle and traffic law, as amended by sections six, seven, eight and nine of this act, prior to such date.
Reflowed for reading: line numbers and page breaks removed. Cite the official text.
Sponsor's memo
Title of bill
An act to amend the general business law and the vehicle and traffic law, in relation to requiring automobile brokers to be licensed
Purpose or general idea of bill
To decrease the incidence of unlawful deceptive practices in the automobile broker business by requiring licensure of automobile brokers.
Summary of provisions
Section one of this bill amends subdivision 1 of section 736 of the General Business Law to include leasing in the definition of "automobile broker business". Section one also defines what is not considered an automobile broker business.
Read the full memo (730 words)
Section two of this bill adds a new 736-a section to General Business Law article 43. New section 736-a requires that any person or entity engaged in the automobile broker business shall be registered. In addition, this section specifies that a certificate of registration for an automobile broker does not permit the registrant to display for sale any new or used motor vehicles without registration as a dealer.
Section three of this bill amends paragraphs e,f, and g of subdivision one and subdivision here of section 738 of the General Business Law. Paragraph e is amended to included leased vehicles in the itemized disclosure while paragraph f and g are technical amendments.
Section four of this bill amends section 740-a of the General Business Law to provide that automobile broker businesses shall obtain and continue in effect a surety bond in an amount of one hundred twenty five thousand dollars.
Section five of this bill amends section 741-a of the General Business Law to specify what automobile broker businesses must disclose to the consumer in any advertisements for their business.
Section six of this bill adds a new subdivision 1 of section 415 of the Vehicle and Traffic Law to define an automobile broker business.
Section seven of this bill adds a new subdivision 3-a to the Vehicle and Traffic Law that requires automobile brokers to register.
Section eight of this bill amends subdivision 5 of Section 415 of the Vehicle and Traffic Law by adding a new paragraph b-2 that specifies what needs to be covered by surety bond issued to the automobile broker business.
Section nine of this bill amends paragraph d of subdivision 9 of section 415 of the Vehicle and Traffic Law to add article 35-B of the General Business Law to the enforcement by the Commissioner for violations of provisions of this chapter.
Section ten of this bill provides that this act shall take effect on the ninetieth day after it shall have become a law; provided, however, that the secretary of state shall take actions necessary to provide for the issuance of licenses pursuant to section 786-d of the general business law, as added by section two of this act, prior to such date
Difference between original and amended version (if applicable)
Industry recommended insertions and deletions.
Justification
Currently, Article 35-B of the General Business Law provides some regulation of the automobile broker business. Unfortunately, the current law does not include licensure requirements. Additionally, the current law does not include people and entities that facilitate leasing agreements by obtaining the vehicle, as well as the leasing paperwork, from a licensed automobile dealer, managing the consumer's execution of the lease agreement and paperwork, delivering the vehicle to the consumer and delivering the executed lease agreement and paperwork to the automobile dealer who provided the vehicle. This bill includes provisions addressing both of these issues. By addressing these issues, this bill reduces any consumer confusion regarding whether the automobile broker is an authorized representative of an automobile manufacturer and enhances the protection afforded to consumers. This legislation's ability to require the licensure of automobile brokers will better regulate the automobile broker industry. Furthermore allowing the Attorney General to investigate non-licensed automobile broker businesses will deter unscrupulous brokers from engaging in unlawful practices and taking advantage of New Yorkers.
Prior legislative history
2016: S. 6704-B (Golden) - Passed Senate
Fiscal implications for state and local governments
None.
Effective date
This act shall take effect on the ninetieth day after it shall have become a law; provided, however, that the secretary of state shall take actions necessary to provide for the issuance of licenses pursuant to section 736-d of the general business law, as added by section two of this act, prior to such date.
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