NY State Senate Bill 2017-S5276

Senate Bill S5276

2017-2018 Legislative Session

Requires motor vehicle dealers to disclose price markups to the purchasers of motor vehicles

download bill text pdf

Archive: Last Bill Status - In Senate Committee Transportation 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 transportation
Mar 20, 2017	referred to transportation

2017-S5276 (ACTIVE) - Details

See Assembly Version of this Bill:: A3096
Current Committee:: Senate Transportation
Law Section:: Vehicle and Traffic Law
Laws Affected:: Amd §415, V & T L; amd §404, Fin Serv L
Versions Introduced in Other Legislative Sessions:: 2015-2016: S5491, A7985
2019-2020: S2258, A3898
2021-2022: S1614, A6127
2023-2024: S5847, A1125

2017-S5276 (ACTIVE) - Summary

Requires motor vehicle dealers to disclose price markups to the purchasers of motor vehicles; provides failure to so disclose shall be grounds for revocation of the dealer's registration and imposes civil liability to purchasers for damages; authorizes the financial frauds and consumer protection unit of the department of financial services to study problematic practices in the price markups of motor vehicle dealers.

2017-S5276 (ACTIVE) - Sponsor Memo

                                 BILL NUMBER:  S5276

 TITLE OF BILL :

An act to amend the vehicle and traffic law, in relation to requiring
retail motor vehicle dealers to disclose to purchasers any markups in
the cost of a motor vehicle as the result of financing the cost
thereof; and to amend the financial services law, in relation to
authorizing the financial frauds and consumer protection unit to study
motor vehicle dealer price markups

 PURPOSE :

This bill requires auto dealers to disclose any financing markups to
consumers. It also allows the Department of Motor Vehicles to take
corrective action in the event that a dealership does not comply, and
allows consumers an avenue of recovery if the dealership does not
disclose this markup. This bill also authorizes the Financial Frauds
and Consumer protection Unit of the Department of Financial Services
to conduct a study on race impacts in auto dealer financing markups
and to make recommendations regarding the elimination of practices
that cause markups to have a race-based impact.

 SUMMARY OF PROVISIONS :

Section 1: Amends Section 415 of the vehicle and traffic law to

require auto dealers to disclose any markups on the vehicle financing.
In the event that an auto dealer fails to disclose a markup, the
Department of Motor Vehicles shall have the power to suspend or revoke
the registration issued to such dealer. This section also entitles an
aggrieved purchaser to compensatory damages equal to the cost of the
financing markup and reasonable attorney's fees.

Section 2: Amends Section 404 of the financial services law to
authorize the Financial Frauds and Consumer Protection Unit of the
Department of Financial Services to conduct a study of the patterns
and practices of motor vehicle financing markups to identify
problematic practices, including race discrimination, and to make
recommendations for the elimination of such practices. This section
also directs the Unit to send the findings of its study to certain
parties.

Section 3: 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, auto dealers do not have to disclose any markup on
the back end of the financing and generally have discretion to add a
cost of between 0-3% to the financing; this cost is shouldered by the
consumer.

 JUSTIFICATION :

Dealerships earn additional revenue from the back-end of the financing
when they include a markup between 0-3% on the financing. This is a
legitimate means for dealerships to earn revenue by facilitating
financing for a buyer, but the buyer should be aware that the
dealership is charging them this extra fee to do so.

There is no transparency involving the markup and the consumer is
almost never aware this markup even exists. It incentivizes auto
dealers to seek more expensive financing (when that more expensive
financing allows a larger. dealer markup) and roll add-ons into the
financing to inflate back-end financing profits.

Additionally, Federal and advocacy organization investigations have
demonstrated that these markups are being applied in a
race-discriminatory fashion. One report found that in New York,
African-Americans were being subjected to dealer markups at a rate
311% higher than those given to Caucasians.

 LEGISLATIVE HISTORY :

S.5491 (Klein) of 2015- referred to Transportation Committee
S.5491 (Klein) of 2016- referred to Transportation 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-S5276 (ACTIVE) - Bill Text download pdf

                            
 
                     S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                   5276
 
                        2017-2018 Regular Sessions
 
                             I N  S E N A T E
 
                              March 20, 2017
                                ___________
 
 Introduced  by  Sen.  KLEIN  -- read twice and ordered printed, and when
   printed to be committed to the Committee on Transportation
 
 AN ACT to amend the vehicle and traffic law, in  relation  to  requiring
   retail  motor vehicle dealers to disclose to purchasers any markups in
   the cost of a motor vehicle as the result of financing the cost there-
   of; and to amend the financial services law, in relation to  authoriz-
   ing  the  financial frauds and consumer protection unit to study motor
   vehicle dealer price markups
 
   THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND  ASSEM-
 BLY, DO ENACT AS FOLLOWS:
 
   Section  1.  Section  415 of the vehicle and traffic law is amended by
 adding a new subdivision 3-a to read as follows:
   3-A. RETAIL DEALER FINANCING MARKUP.  A.  EVERY  RETAIL  DEALER  SHALL
 DISCLOSE  TO EACH PURCHASER OF A MOTOR VEHICLE, AT THE TIME OF SALE, ANY
 MARKUPS IN THE COST OF SUCH MOTOR VEHICLE RELATED TO THE  ENTRY  INTO  A
 RETAIL INSTALLMENT CONTRACT, LOAN AGREEMENT OR OTHER FINANCING AGREEMENT
 FOR  THE  VEHICLE PURSUANT TO ARTICLE NINE OF THE PERSONAL PROPERTY LAW.
 THE FAILURE OF ANY RETAIL DEALER TO COMPLY WITH THE PROVISIONS  OF  THIS
 PARAGRAPH  SHALL  BE GROUNDS FOR THE DEPARTMENT TO SUSPEND OR REVOKE THE
 REGISTRATION ISSUED TO SUCH DEALER PURSUANT TO THIS SECTION.
   B. UPON VIOLATION OF THE PROVISIONS OF PARAGRAPH A  OF  THIS  SUBDIVI-
 SION,  AN  AGGRIEVED PURCHASER SHALL BE ENTITLED TO COMPENSATORY DAMAGES
 EQUAL TO THE FINANCING MARKUP, AND REASONABLE ATTORNEY'S FEES.
   § 2. Section 404 of the financial services law is amended by adding  a
 new subsection (d) to read as follows:
   (D)(1) THE FINANCIAL FRAUDS AND CONSUMER PROTECTION UNIT IS AUTHORIZED
 TO  CONDUCT A STUDY OF THE PATTERNS AND PRACTICES OF MOTOR VEHICLE PRICE
 MARKUPS BY MOTOR  VEHICLE  DEALERS  TO  IDENTIFY  PROBLEMATIC  PRACTICES
 INCLUDING, BUT NOT LIMITED TO, RACE DISCRIMINATION, AND MAKE RECOMMENDA-
 TIONS FOR THE ELIMINATION OF SUCH PROBLEMATIC PRACTICES.
 
  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                       [ ] is old law to be omitted.
                                                            LBD08578-01-7

 S. 5276                             2
 
   (2) THE FINANCIAL FRAUDS AND CONSUMER PROTECTION UNIT SHALL SUBMIT THE
 FINDINGS  AND  RECOMMENDATIONS OF ITS STUDY, CONDUCTED PURSUANT TO PARA-
 GRAPH ONE OF THIS SUBSECTION, TO THE GOVERNOR, THE  TEMPORARY  PRESIDENT
 OF THE SENATE, THE SPEAKER OF THE ASSEMBLY, AND THE CHAIRS OF THE SENATE
 AND ASSEMBLY BANKS COMMITTEES.
   §  3. 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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