NY State Senate Bill 2017-S5274

Senate Bill S5274

2017-2018 Legislative Session

Authorizes the superintendent of financial services to oversee and regulate car dealer transactions with consumers

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Archive: Last Bill Status - In Senate Committee Banks Committee

Introduced
- In Committee Assembly
- In Committee Senate
- On Floor Calendar Assembly
- On Floor Calendar Senate
- Passed Assembly
- Passed Senate
Delivered to Governor
Signed By Governor

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Actions

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	Assembly Actions - Lowercase Senate Actions - UPPERCASE
Jan 03, 2018	referred to banks
Mar 20, 2017	referred to banks

co-Sponsors

2017-S5274 (ACTIVE) - Details

See Assembly Version of this Bill:: A4619
Current Committee:: Senate Banks
Law Section:: Financial Services Law
Laws Affected:: Amd §301, Fin Serv L; amd §302, Pers Prop L; add §§417-c & 417-d, V & T L
Versions Introduced in Other Legislative Sessions:: 2015-2016: S5490, A7866
2019-2020: A4856
2021-2022: A5997
2023-2024: A3924

2017-S5274 (ACTIVE) - Summary

Authorizes the superintendent of financial services to oversee and regulate car dealer transactions with consumers; requires motor vehicle retail installment contracts to include an itemized listing of all costs related to the purchase of a motor vehicle and disclosure of the prohibition of conditional delivery; requires motor vehicle dealers to provide credit applicants with copies of all credit application documents; prohibits the conditional delivery of a motor vehicle.

2017-S5274 (ACTIVE) - Sponsor Memo

                                 BILL NUMBER:  S5274

 TITLE OF BILL :

An act to amend the financial services law, in relation to authorizing
the superintendent of financial services to oversee and regulate sales
of motor vehicles to consumers; to amend the personal property law, in
relation to the contents of motor vehicle retail installment
contracts; and to amend the vehicle and traffic law, in relation to
requiring motor vehicle dealers to provide credit applicants with a
copy of all loan application documents, and prohibiting conditional
deliveries of motor vehicles

 PURPOSE :

This bill will make the auto loan financing process more transparent
through disclosure and documentation requirements. It will also
provide remedies for consumers who are not provided with
documentation. Finally, it prevents conditional deliveries of
vehicles.

 SUMMARY OF PROVISIONS :

Section 1: Amends Section 301 of the financial services law to add a
new subsection (d) which permits the superintendent of the Department
of Financial Services to oversee and regulate the financing of new and

used motor vehicles.

Section 2: Amends Section 302 of the personal property law to add new
subdivisions 5-a and 5b. 5-a will require a disclosure on motor
vehicle retail installment contracts to consumers that conditional
deliveries are not allowed. 5-b will require that all motor vehicle
retail installment contracts itemize the following: the price paid for
the vehicle, the price of each option, add-on and additional charge
relating to the sale of the motor vehicle, all fees imposed by a
lender upon the dealer or buyer which are related to the financing of
the motor vehicle, and the total price of the motor vehicle including
all charges.

Section 3: Amends the vehicle and traffic law to add two new sections
417-c and 417-d which provide that dealers must review and confirm
with all credit applicants the accuracy of the information contained
on any loan application forms, and both the dealer and applicant must
attest to the truth of the information to the best of their knowledge.
Failure of the dealer to comply with these provisions shall entitle
the buyer to void the sale of the vehicle within thirty days and
receive a full refund for the vehicle and financing charges, and the
fair market private sale value of any vehicle traded in.  Prevailing
plaintiffs under this section will be entitled to court costs and
reasonable attorney's fees. This section also explicitly prohibits
conditional deliveries. All sale terms must be in writing and clearly
disclosed to the consumer. Every dealer shall provide a copy of the
written disclosures and maintain them for a period of not less than
seven years.

Section 4: This act shall take effect on the first of January next
succeeding the date on which it shall have become a law.

 EXISTING LAW :

Under current law, conditional deliveries are not explicitly
prohibited. Disclosure requirements during the financing and sale of
vehicles, as well as remedies for consumers, are not as robust. The
Department of Financial Services does not currently have jurisdiction
over the financing of motor vehicles.

 JUSTIFICATION :

Abuses in the auto loan financing industry are harming many of New
York's most vulnerable consumers. Most consumers do not have the
industry-specific knowledge to properly negotiate with auto dealers on
even footing, and the auto loan financing process is opaque.
Requirements for disclosures and maintenance of important loan
documents must be improved.

Additionally, consumers are often not aware that with subprime auto
loans, the cost of financing can be more than double the actual value
of the purchased vehicle, due to high APRs and expensive add-ons like
warranties and service contracts. To make matters worse, dealerships
sometimes provide fraudulent loan applications to lenders without
informing consumers that the application was ever filed. Lenders
sometimes turn a blind eye to this activity, even when consumers
inform lenders of it. False applications result in the approval of
loans which consumers cannot afford.

Another confusing issue for purchasers buying vehicles are conditional
deliveries, sometimes used to scam consumers into taking bad deals on
autos. Spot delivery scams are a problem that could be addressed
through conditional delivery bans and transparency measures that
inform consumers of the ban. Conditional delivery scams are also known
as "spot delivery" scams or "yo-yo financing" scams. These scams
involve putting a buyer into a vehicle and having the buyer take it
home; the dealership then calls the buyer later to tell them the
favorable terms on which they purchased the vehicle are invalid.  The
buyer, enjoying their new vehicle and fearing they have no other
options, often agrees to the less favorable terms simply for the sake
of keeping the vehicle. The less favorable terms are more profitable
for the dealer.

This legislation would help consumers better understand the auto
financing process with more transparent documentation, and would
prevent confusing and deceptive tactics like spot delivery scams.

 LEGISLATIVE HISTORY :

S.5490A of 2015 (Savino) - Referred to Banks
S.5490A of 2016 (Savino) - Reported from Banks and committed to Rules
Committee

 FISCAL IMPLICATIONS :

None.

 LOCAL FISCAL IMPLICATIONS :

None.

 EFFECTIVE DATE :
This act shall take effect on the first of January next succeeding the
date on which it shall have become a law.

2017-S5274 (ACTIVE) - Bill Text download pdf

                            
 
                     S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                   5274
 
                        2017-2018 Regular Sessions
 
                             I N  S E N A T E
 
                              March 20, 2017
                                ___________
 
 Introduced  by  Sens.  SAVINO, KLEIN, HAMILTON -- read twice and ordered
   printed, and when printed to be committed to the Committee on Banks
 
 AN ACT to amend the financial services law, in relation  to  authorizing
   the superintendent of financial services to oversee and regulate sales
   of motor vehicles to consumers; to amend the personal property law, in
   relation   to   the  contents  of  motor  vehicle  retail  installment
   contracts; and to amend the vehicle and traffic law,  in  relation  to
   requiring  motor  vehicle  dealers to provide credit applicants with a
   copy of all loan application documents,  and  prohibiting  conditional
   deliveries of motor vehicles
 
   THE  PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
 BLY, DO ENACT AS FOLLOWS:
 
   Section 1.  Section 301 of the financial services law  is  amended  by
 adding a new subsection (d) to read as follows:
   (D)  THE  SUPERINTENDENT  SHALL HAVE THE POWER TO OVERSEE AND REGULATE
 THE FINANCING OF BOTH NEW AND USED  MOTOR  VEHICLES  PURCHASED  IN  THIS
 STATE,  INCLUDING  THE  IMPLEMENTATION  OF  ARTICLE NINE OF THE PERSONAL
 PROPERTY LAW, AND MOTOR  VEHICLE  DEALER  TRANSACTIONS  WITH  CONSUMERS,
 INCLUDING  THOSE  SUBJECT  TO  THE  PROVISIONS OF ARTICLE SIXTEEN OF THE
 VEHICLE AND TRAFFIC LAW.
   § 2. Section 302 of the personal property law is amended by adding two
 new subdivisions 5-a and 5-b to read as follows:
   5-A. EVERY RETAIL INSTALLMENT CONTRACT  SHALL  INCLUDE  THE  FOLLOWING
 STATEMENT IN TWELVE POINT TYPE:
   "CONDITIONAL  DELIVERIES  PROHIBITED: IN ACCORDANCE WITH SECTION 417-D
 OF THE NEW YORK STATE VEHICLE AND TRAFFIC LAW,  WHEN  THIS  CONTRACT  IS
 SIGNED  BY THE DEALER AND THE BUYER, AND THE BUYER TAKES THE VEHICLE OFF
 THE DEALER LOT, THE BUYER IS THE OWNER OF THE VEHICLE AND HAS THE  RIGHT
 TO  KEEP THE VEHICLE EXCEPT FOR REASONS OF NON-PAYMENT OF THIS CONTRACT.
 THE DEALER MAY NOT DEMAND THAT THE VEHICLE BE RETURNED FOR  ANY  REASON,
 INCLUDING  ALLEGED DENIAL OF ANY FINANCING. DEALERS AND LENDERS MAY ONLY
 
  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                       [ ] is old law to be omitted.

                                                            LBD00441-01-7

 S. 5274                             2
 
 DEMAND THE VEHICLE BE RETURNED FOR REASONS OF NON-PAYMENT BY THE  BUYER.
 DEALERS CANNOT MAKE AN EXCEPTION TO THIS PROVISION WITH ANOTHER CONTRACT
 OR DOCUMENT."
   5-B.  EVERY  RETAIL INSTALLMENT CONTRACT SHALL SEPARATELY ITEMIZE EACH
 OF THE FOLLOWING:
   (A) THE PRICE PAID FOR THE MOTOR VEHICLE;
   (B) THE PRICE OF EACH OPTION, ADD-ON AND ADDITIONAL CHARGE RELATING TO
 THE SALE OF THE MOTOR VEHICLE;
   (C) ALL FEES IMPOSED BY A LENDER UPON THE DEALER OR BUYER  RELATED  TO
 FINANCING THE PURCHASE OF THE MOTOR VEHICLE;
   (D) THE TOTAL PRICE OF THE MOTOR VEHICLE INCLUDING ALL CHARGES IMPOSED
 PURSUANT TO PARAGRAPHS (A), (B) AND (C) OF THIS SUBDIVISION.
   § 3. The vehicle and traffic law is amended by adding two new sections
 417-c and 417-d to read as follows:
   §  417-C. CREDIT APPLICATIONS FOR PURCHASE OF MOTOR VEHICLES. 1. EVERY
 DEALER WHICH APPLIES FOR OR GRANTS  ELIGIBILITY  FOR  THE  PROVISION  OF
 CREDIT FOR THE PURCHASE OF A MOTOR VEHICLE SHALL REVIEW AND CONFIRM WITH
 THE  APPLICANT  FOR SUCH CREDIT ALL INFORMATION INCLUDED IN THE APPLICA-
 TION THEREFOR. SUCH  REVIEW  AND  CONFIRMATION  SHALL  INCLUDE  SPECIFIC
 CONSIDERATION OF EACH ITEM OF INFORMATION AS TO ITS ACCURACY TO THE BEST
 OF  THE  KNOWLEDGE  OF  THE PARTIES. NO SUCH APPLICATION SHALL BE DEEMED
 COMPLETE NOR SHALL IT BE SUBMITTED UNLESS  THE  DEALER  AND  THE  CREDIT
 APPLICANT SHALL HAVE SIGNED THEIR SIGNATURES ATTESTING THAT ALL INFORMA-
 TION  IN THE APPLICATION IS ACCURATE AND TRUE TO THE BEST OF THEIR KNOW-
 LEDGE.
   2. THE FAILURE OF ANY DEALER TO COMPLY WITH  THE  PROVISIONS  OF  THIS
 SECTION, SHALL GRANT ANY CREDIT APPLICANT, WHO TAKES DELIVERY OF A MOTOR
 VEHICLE PURCHASED ON THE BASIS OF CREDIT ACQUIRED FOR HIM OR HER BY SUCH
 DEALER,  THE OPTION TO VOID THE SALE OF SUCH MOTOR VEHICLE WITHIN THIRTY
 DAYS OF THE DELIVERY OF SUCH VEHICLE.  UPON  THE  VOIDING  OF  ANY  SALE
 PURSUANT  TO  THIS SUBDIVISION THE DEALER SHALL IMMEDIATELY REPAY TO THE
 PURCHASER ALL COSTS INCURRED BY SUCH PURCHASER AS A CONSEQUENCE  OF  THE
 VOIDED  SALE, INCLUDING ANY FINANCING CHARGES AND INTEREST, AND THE FAIR
 MARKET PRIVATE SALE VALUE OF ANY MOTOR VEHICLE TRADED-IN IN  THE  COURSE
 OF SUCH SALE. FURTHERMORE, IN THE EVENT A PURCHASER COMMENCES A CAUSE OF
 ACTION  TO  ENFORCE  THE  PROVISIONS  OF  THIS SUBDIVISION, A PREVAILING
 PURCHASER SHALL BE ENTITLED TO COURT  COSTS  AND  REASONABLE  ATTORNEY'S
 FEES.
   3.  THE  PROVISIONS  OF  THIS SECTION SHALL NOT BE DEEMED TO LIMIT ANY
 OTHER RIGHT OR REMEDY OF A PLAINTIFF IN LAW OR EQUITY.
   § 417-D. CONDITIONAL DELIVERIES; PROHIBITED. 1. NO MOTOR VEHICLE  SOLD
 BY  A DEALER SHALL BE DELIVERED TO THE POSSESSION OF A PURCHASER SUBJECT
 TO ANY CONDITION TO BE COMPLIED WITH AFTER DELIVERY OF POSSESSION OF THE
 MOTOR VEHICLE.
   2. ALL TERMS AND CONDITIONS OF THE SALE OF A MOTOR  VEHICLE  SHALL  BE
 FULLY  AND  CLEARLY DISCLOSED, IN WRITING, TO THE PURCHASER PRIOR TO THE
 DELIVERY OF POSSESSION OF SUCH VEHICLE, AND SHALL BE SIGNED BY BOTH  THE
 DEALER AND THE PURCHASER.
   3.  EVERY  DEALER  SHALL  PROVIDE  A  COPY  OF THE WRITTEN DISCLOSURES
 REQUIRED BY SUBDIVISION TWO OF THIS SECTION, AND SHALL ALSO  MAINTAIN  A
 COPY THEREOF FOR A PERIOD OF NOT LESS THAN SEVEN YEARS.
   §  4. This act shall take effect on the first of January next succeed-
 ing the date on which it shall have become a law.

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Senate Bill S5274

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Sponsored By

Diane J. Savino