Protect Renters of Rental Cars

(2) Amends § 396-z (1) to delete the confusing reference to "private passenger vehicle" currently relied upon in § 396-z(1)(e) to differen- tiate between commercial uses excluded from the provision and private passenger uses covered by the provision; and clearly specifies those commercial vehicles that are excluded from this statute. The section is further amended to reflect the fact that different airport authorities use different terminology when referring to consolidated facilities charges and concession fees. Those various terms are all captured here.

(3) Amends § 396-z(2)(a) to reorganize the tiers for optional vehicle protection (OVP) to reflect current marketplace conditions. For the past 15 years, the daily price of optional vehicle protection has been capped at $9.00 if the vehicle has an MSRP of not more than $30,000 and $12.00/day if the vehicle has an MSRP of more than $30,000.

Under the new tier schedule, OVP will be capped at: $9 if the MSRP is not greater than $20,000; $12 if the MSRP is greater than $20,000 but not more than $35,000; and $15 if the MSRP is greater than $35,000 but not more than $50,000. For vehicles with an MSRP of more than $50,000, the price of the OVP will be subject to fair market value as determined by the rental vehicle company.

These changes are necessitated by a combination of standard inflation over the past 15 years, changes in the manner by which rental cars are

purchased from manufacturers, and the increased costs associated with repairing vehicles today.

Under the pre-2002 statutory scheme, rental companies could not afford to rent cars worth more than $30,000, and most cars available in New York were base models. Today, the new rental environment makes vehicles available that consumers want and expect, but greatly exceed $30,000 in value. Logically, a $12 cap is not sufficient to cover OVP losses related to these more expensive vehicles. This is particularly true now that most vehicles are loaded from bumper to bumper with high-tech sensors that did not exist in 2002. Even the most minor fender-bender can involve replacing the safety sensors and other expensive high-tech equipment that was collectively merely a glimmer in an engineer's mind in 2002. That being said, under the proposed amendments, approximately 80% of cars rented in New York would still fit under the $9 or $12 cap.

The overwhelming majority of states simply allow the marketplace to set the price of OVP. In these states, the market value of a damage waiver is between $18 and 24 per day, even for base-model vehicles.

This bill would maintain the intent of original legislation by placing tier caps on all but a handful of super-luxury vehicles.

(4) Amends § 396-z(2)(c) to expand the household members whose use of a rental vehicle will not void optional vehicle protection to include a duly licensed parent-in-law residing in the same household. Current law only covers use by a duly-licensed parent or a child over the age of 18 who resides in the same household as the renter.

(5) Amends § 396-z(2)(d) to provide a means for a customer to terminate optional vehicle protection after 24 hours. Currently, the law only provides a mechanism for terminating the OVP within the first 24 hours of purchase.

(6) Amends § 396-z (3) to specify the right and obligations of a renter and rental vehicle company when a vehicle is "recovered" (instead of "returned") or returned during non-business hours. The current law only anticipates the situation where a vehicle is returned to a rental location during normal business hours. Unfortunately, renters have been known to park illegally resulting in the vehicles being towed, or, in more extreme cases, the vehicle is totally abandoned by the renter. In those cases, the rental vehicle company has to "recover" the vehicle.

(7) Amends § 396-z(4)(c) to provide that a rental vehicle company's website must include the cost of optional vehicle protection if the website lists rental vehicle costs. This is same consumer protection required in a video presentation of a television or Internet advertise- ment.

(8) Amends § 396-z(4)(e) to update the telephone disclosure requirement regarding optional vehicle protection to include inquiries with a rental car that involve an interaction with a representative over the internet or by other electronic means and to further clarify the subdivision. Current requirements have led to more confusion than clarification. This change recognizes that there are numerous optional products available for purchase, but provides that any discussion of OVP still contains the information and disclosures required by the statute.

(9) Amends § 396-z(4)(f) to clearly specify, in verbatim terms, what the rental vehicle company must disclose on signs or pamphlets regarding the consumers rights and obligations. Current law leaves it to the individ- ual rental companies to determine what renter rights and obligations must be disclosed in the rental agreement and on clearly visible signs and pamphlets. This leaves far too much to interpretation by the rental vehicle companies. This has the dual effect of confusing consumers and making enforcement of disclosure compliance difficult. This amendment captures the original intent that consumers be informed through various media of their right and obligations, but goes a step further by spell- ing out exactly what those rights and obligations are. With this change, no matter which company they use or where they rent in New York, they will be provided the same information regarding their rights and obli- gations.

(10) Amends § 396-z(4)(g) to provide that, within six months from the effective date of the bill, the printed notices regarding the availabil- ity of optional vehicle protection shall be in boldface type and in no smaller print than 12-point type instead of the current 10-point type requirement.

(11) Amends § 396-z(4)(h) to provide that, within six months from the effective date of the bill, contract provisions regarding conditions and exclusions from optional vehicle protection coverage shall be in bold- face type and in no smaller print than 12-point type instead of the current 10-point type requirement.

(12) Amends § 396-z (5) to unravel currently-confusing language relating to the rights of a renter or other authorized driver and/or his or her insurance company to inspect a damaged vehicle, and the time periods controlling this process, while maintaining all the existing time peri- ods or notice requirements of the existing provision.

Currently, when a rental vehicle company determines that there is damage to a vehicle, the renter and/or his/her insurance company have a right to inspect the vehicle within 7 days from the return/recovery of the vehicle. However, notice of an intention to inspect must be made within 72 hours of return or recovery of the vehicle. Since the vehicle may be returned during normal business hours, after hours, or recovered by the rental vehicle company, consumers face a moving and inconsistent target for when the clock starts on the 72 hours, potentially depriving the renter of an opportunity to inspect. This bill amends the section to provide that the 72 hours start when the renter has received an incident report from the rental vehicle company by certified or registered mail with return receipt. The subdivision is further amended to provide how renter or other authorized driver may satisfy incident report require- ments.

(13) Amends § 396-z (6) to clarify that damages related to loss of use and administrative fees may not be assessed against a renter or author- ized driver, but may be assessed against a negligent third party. It also adds a working definition of "normal wear and tear" based on normal insurance industry standards. Current law uses that term, but without a definition, and it can lead to wildly different interpretations. Final- ly, this provision adds clarity to, and removes redundancies from how a damage claim is presented to the customer's insurance carrier.

(14) Amends § 396-z (7)(a)-(c) to clarify language consistent with the original legislative intent that when there is a dispute over damages to a rental vehicle, a rental vehicle company may present a claim for damages to the renter or responsible insurance company, but no rental vehicle company may collect payment against a security deposit or credit card hold, nor shall they report a debt to any credit bureau during the term of the rental agreement or pending resolution of any such dispute. Recovery of any damages by the rental vehicle company may be sought only after there is an agreement as to damages, or alternatively, damages have been determined pursuant to law or the specific terms of the rental agreement, provided the agreement is consistent with the provisions of § 396-z.

(15) Amends § 396-z(7)(d) to clarify that a cause for action can be brought in any court of competent jurisdiction provided that the rental vehicle company has first provided the customer with a demand letter. The elements of the demand letter and the manner of its service on the renter or other authorized driver are specified. The renter, authorized driver, or his or her respective insurance companies may agree to submit a claim by the rental vehicle company to arbitration or mediation but only if an agreement to do so is executed after a claim of loss. Exist- ing law requires that unresolved disputes must be litigated, where, in instances where damages exceed $5,000, the renter could be compelled to engage an attorney and incur related court costs - often in excess of the amount in dispute. This amendment provides the consumer with a choice.

(16) Adds a new § 8-a to prohibit a rental vehicle company from refusing to rent a vehicle, from imposing additional charges, or from imposing additional terms and conditions based solely on the geographical location of the residence of a New York State resident.

(17) Adds a new § 396-z (16) to provide a methodology for addressing the law's statutory notice provisions when a customer rents a car in a manner that bypasses the traditional "counter," e.g., customers who rent electronically and take the option to go directly to their vehicle. Customers electing to receive disclosures electronically must expressly consent to this option.

(18) Makes other technical and clarifying provisions and removes redun- dancies throughout the statute.

(19) Makes these changes, as well as the changes enacted by Chapter 656 of the Laws of 2002 (and extended by Chapter 14 of the Laws of 2008 and Chapter 82 of the Laws of 2013) apply until June 30, 2023, with a rever- sion to Chapter 656 of Laws of 2002 unless extended. Clarifies that these provisions apply in the event the provisions of A.11097/5.8317 are signed into law prior to the effective date of this act.

Existing law

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Justification

Chapter 656 of the Laws of 2002 represents the very core of the relationship between rental car companies and New York consumers. For more than 15 years, this statute has allowed the rental car industry to grow in New York, while providing its customers with the most comprehen- sive set of consumer protections anywhere in the country. The results have proven beneficial for both the industry and the consumer; the industry has expanded into previously underserved areas, and robust competition between the various rental companies has provided consumers with a variety of affordable options. Moreover, sale of the damage waiver as an optional product is permitted, but subject to significant and comprehensive disclosure and education regarding the consumer's options. As a result, the five-year trial was deemed a success and extended in 2008 and again in 2013.

After a decade of working within the framework of Chapter 656, some of the requirements of the law have proven to be confusing for consumers and difficult to execute for the rental companies. Other provisions have become stale in light of the new delivery methods never envisioned in 2002 (such as mobile apps). This measure seeks the multiple goals of providing certainty to the industry by making the law permanent, enhanc- ing the nation's strongest consumer protections, and clarifying some of law's more ambiguous and/or unworkable provisions. It also maintains the core intent of Chapter 656 while accommodating new methods for product delivery (e.g. mobile apps and other web-based delivery services).

Legislative history

New Bill

Fiscal implications

None

Local fiscal implications

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Effective date

This act shall take effect immediately; provided, however, section one of this act shall take effect on the ninetieth day after it shall have become a law; provided, further, that section one of this act shall expire and be deemed repealed June 30, 2023.