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STATE OF NEW YORK ________________________________________________________________________ 6655 2019-2020 Regular Sessions IN ASSEMBLY March 14, 2019 ___________ Introduced by M. of A. CARROLL -- read once and referred to the Committee on Consumer Affairs and Protection AN ACT to amend the vehicle and traffic law and the general business law, in relation to designating new automotive broker businesses The People of the State of New York, represented in Senate and Assembly, do enact as follows: 1 Section 1. Subdivision 1 of section 415 of the vehicle and traffic law 2 is amended by adding a new paragraph n to read as follows: 3 n. "New automobile broker business" shall have the same meaning as set 4 forth in subdivision four of section seven hundred thirty-six of the 5 general business law. 6 § 2. Section 736 of the general business law is amended by adding a 7 new subdivision 4 to read as follows: 8 4. "New automobile broker business" means any person who, for a fee, 9 commission or other valuable consideration, regardless of whether such 10 fee, commission or consideration is paid directly by a consumer, offers 11 to provide, provides or represents that he or she will provide a service 12 of purchasing, arranging, assisting, facilitating or effecting the 13 purchase or lease of a previously unregistered automobile as agent, 14 broker, or intermediary for a consumer. "New automobile broker business" 15 does not include any person registered as a new vehicle dealer for the 16 new automobile brand or brands for which such services are provided, 17 pursuant to article sixteen of the vehicle and traffic law nor any bona 18 fide employee, as opposed to an independent contractor, of such a regis- 19 tered dealer while acting for such dealer. For the purposes hereof, any 20 employee who, pursuant to department of labor guidelines, rules and 21 regulations, would be an independent contractor for a registered dealer 22 shall not be deemed a bona fide employee. 23 § 3. Subdivision 3-a and paragraph b-3 of subdivision 5 of section 415 24 of the vehicle and traffic law, as added by chapter 477 of the laws of 25 2017, are amended to read as follows: EXPLANATION--Matter in italics (underscored) is new; matter in brackets [ ] is old law to be omitted. LBD08916-04-9 A. 6655 2 1 3-a. Automobile broker business [registration] or new automobile 2 broker business. No person shall engage in the automobile broker busi- 3 ness, the new automobile broker business or represent or advertise that 4 he or she is engaged or intends to engage in the automobile broker busi- 5 ness or new automobile broker business in this state, unless there shall 6 have been issued to him or her a certificate of registration as an auto- 7 mobile broker business or new automobile broker business, as the case 8 may be, by the commissioner under this section pursuant to an applica- 9 tion for registration submitted pursuant to subdivision five of this 10 section. 11 b-3. In the case of an application for registration as an automobile 12 broker business or new automobile broker business, the name and address 13 of the surety company which will issue the bond required by subdivision 14 one of section seven hundred forty-a of the general business law. If the 15 bond is to be issued by an authorized agent of the surety company 16 licensed by the state, then the name and address of that agent may be 17 provided in lieu of the information concerning the surety company. 18 § 4. Subdivision 5 of section 415 of the vehicle and traffic law is 19 amended by adding a new paragraph e to read as follows: 20 e. Before application for a new automobile broker business is 21 approved, the applicant must have submitted along with the application, 22 written confirmation from the new motor vehicle manufacturer authorizing 23 such applicant to serve as a broker for the sale or lease of the lines 24 or makes of the new motor vehicles which applicant proposes to broker 25 from the locations described in the application. 26 § 5. Subdivision 1 of section 736-a of the general business law, as 27 added by chapter 477 of the laws of 2017, is amended to read as follows: 28 1. No person shall engage in business as an automobile broker business 29 or as a new automobile broker business, as such terms are defined in 30 section seven hundred thirty-six of this article, without first having 31 been issued a certificate of registration for an automobile broker busi- 32 ness or new automobile broker business pursuant to paragraph c of subdi- 33 vision seven of section four hundred fifteen of the vehicle and traffic 34 law. 35 § 6. Section 737 of the general business law, as added by chapter 616 36 of the laws of 1988, is amended to read as follows: 37 § 737. Advance fees prohibited. No automobile broker business or new 38 automobile broker business shall solicit, receive or collect from a 39 consumer any fee, or commission, in advance of the performance of those 40 services specified in the contract as required by section seven hundred 41 thirty-eight of this article. 42 § 7. The opening paragraph of subdivision 1 of section 738 of the 43 general business law, as amended by chapter 28 of the laws of 2018, is 44 amended to read as follows: 45 Every contract between a consumer and an automobile broker business, 46 which for the purposes of this section shall include new automobile 47 broker businesses, for the purchase of an automobile shall be in writ- 48 ing, shall be dated, shall contain the street address of the automobile 49 broker business and the consumer and shall be signed by the consumer and 50 by the automobile broker business. Every contract shall comply with the 51 requirements set forth in this section and contain the following: 52 § 8. Section 740 of the general business law, as added by chapter 616 53 of the laws of 1988, is amended to read as follows: 54 § 740. Escrow required for advance payments. All monies paid by a 55 consumer to an automobile broker business or a new automobile broker 56 business in connection with a transaction covered by this article shall A. 6655 3 1 be trust funds in the possession of such automobile broker business or 2 new automobile broker business and shall be deposited by it within five 3 days after receipt thereof, in an account in a banking organization 4 within the state. The automobile broker business or new automobile 5 broker business shall thereupon notify in writing the consumer, giving 6 the name and address of the banking organization and the amount deposit- 7 ed. The monies shall be held on deposit until fully applied to the 8 contract price at the time the automobile is delivered to the consumer, 9 unless sooner repaid in accordance with the provisions of this article. 10 § 9. Section 740-a of the general business law, as added by chapter 11 579 of the laws of 2011 and subdivision 1 as amended by chapter 477 of 12 the laws of 2017, is amended to read as follows: 13 § 740-a. Automobile broker business and new automobile broker business 14 surety bond. 1. Automobile broker businesses and new automobile broker 15 businesses shall obtain and continue in effect a surety bond in an 16 amount of one hundred thousand dollars executed by a surety company 17 authorized to transact business in the state by the department of finan- 18 cial services of the state or its successor. The bonds shall be approved 19 as to form by the secretary of state and shall be conditioned on the 20 automobile broker business' or new automobile broker business' payment 21 of all valid bank drafts, including checks, drawn for the purchase of 22 motor vehicles and safekeeping of all customer deposits related to the 23 sale of a motor vehicle between the time of receipt of such customer 24 deposit and the transfer of good title to the vehicle to the customer. 25 2. Recovery against a bond may be made by a person, including the 26 state, who obtains a judgment against the automobile broker business or 27 new automobile broker business for an act or omission on which the bond 28 is conditioned if the act or omission occurred during the term of the 29 bond. The total liability imposed on the surety under this section for 30 all breaches of the bond condition is limited to the face amount of the 31 bond. Such liability may include, but is not limited to, the amount of 32 the valid bank drafts, including checks, drawn by the automobile broker 33 business or new automobile broker business for the purchase of motor 34 vehicles. In no event shall the surety on a bond be liable for total 35 claims in excess of the bond amount, regardless of the number or nature 36 of claims made against the bond or the number of years the bond remained 37 in force. 38 3. Any surety issuing a bond pursuant to this subdivision shall be 39 required to provide sixty days' notice to the secretary of state prior 40 to the effective date of cancellation of the bond. 41 § 10. Section 741 of the general business law, as added by chapter 616 42 of the laws of 1988, is amended to read as follows: 43 § 741. Deceptive acts prohibited. It is hereby declared to be a decep- 44 tive trade practice and unlawful for an automobile broker business or 45 new automobile broker business to misrepresent directly or indirectly in 46 its advertising, promotional materials, sales presentation, or in any 47 manner: 48 1. The nature of the services to be performed; 49 2. The time within which the services will be performed; 50 3. The cost of the services to be performed; and 51 4. The ability of the automobile broker business or new automobile 52 broker business to perform the services. 53 § 11. Section 741-a of the general business law, as amended by chapter 54 477 of the laws of 2017, is amended to read as follows: 55 § 741-a. Advertising. Automobile broker businesses and new automobile 56 broker businesses shall clearly and conspicuously disclose the following A. 6655 4 1 in all advertisements in any medium, and in any print advertisement such 2 disclosures shall not appear in any footnotes and shall be situated in 3 the top half of any such advertisement in an easily readable typeface: 4 (a) That the automobile broker business or new automobile broker busi- 5 ness is not a registered new motor vehicle dealer but is a registered 6 automobile broker business or new automobile broker business as defined 7 in section four hundred fifteen of the vehicle and traffic law; 8 (b) The registration number issued to the automobile broker business 9 or new automobile broker business pursuant to section four hundred 10 fifteen of the vehicle and traffic law; 11 (c) Whether any fees may be imposed by the automobile broker business 12 or new automobile broker business for services rendered. Details of such 13 compensation shall be provided by the automobile broker business or new 14 automobile broker business upon request by the consumer; and 15 (d) That no warranty repair services will be provided by the automo- 16 bile broker business or new automobile broker business. 17 § 12. Section 415 of the vehicle and traffic law is amended by adding 18 a new subdivision 21 to read as follows: 19 21. Penalties and rights of action for failure to obtain a certificate 20 of registration as a new automobile broker pursuant to subdivision 21 three-a and paragraph b-3 of subdivision five of this section. a. The 22 commissioner, or any person designated by him or her, may proceed 23 against a party who has operated as a new automobile broker without 24 certificate of registration in accordance with the provisions of this 25 article, in any one or more proceedings and by order require the offend- 26 ing party to pay the people of this state a penalty in a sum not to 27 exceed two thousand dollars for each violation found to have been 28 committed. Civil penalties assessed under this subdivision shall be paid 29 to the commissioner for deposit into the state treasury, and unpaid 30 civil penalties may be recovered by the commissioner in a civil action 31 in the name of the commissioner. For the purposes of this subdivision, a 32 "violation" shall mean each vehicle sold or leased to a consumer for 33 which the party that failed to obtain certification as a new automobile 34 broker has served as a new automobile broker. 35 b. In addition to any civil action brought by the commissioner or any 36 person appointed by him, any complainant or complainants who are 37 aggrieved by any violation of subdivision three-a and paragraph b-3 of 38 subdivision five of this section, shall be entitled to sue for and have 39 injunctive relief and damages against, any party in violation of subdi- 40 vision three-a and paragraph b-3 of subdivision five of this section in 41 any court of the state having jurisdiction over the parties. In any 42 such judicial action or proceeding, the court may also award necessary 43 costs and disbursements plus reasonable attorney's fees and costs. 44 § 13. This act shall take effect immediately; provided that all auto- 45 mobile brokers registered on the effective date of this act shall have 46 ninety days to come into compliance with the provisions of this act.