senate Bill S6872B

Relates to the refund to a consumer of money from a used car dealer for failing to correct a malfunction or defect

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Bill Status


  • Introduced
  • In Committee
  • On Floor Calendar
    • Passed Senate
    • Passed Assembly
  • Delivered to Governor
  • Signed/Vetoed by Governor
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actions

  • 02 / Apr / 2012
    • REFERRED TO CONSUMER PROTECTION
  • 30 / Apr / 2012
    • 1ST REPORT CAL.615
  • 01 / May / 2012
    • 2ND REPORT CAL.
  • 02 / May / 2012
    • ADVANCED TO THIRD READING
  • 21 / May / 2012
    • AMENDED ON THIRD READING 6872A
  • 18 / Jun / 2012
    • AMENDED ON THIRD READING (T) 6872B
  • 21 / Jun / 2012
    • PASSED SENATE
  • 21 / Jun / 2012
    • DELIVERED TO ASSEMBLY
  • 21 / Jun / 2012
    • REFERRED TO CODES

Summary

Establishes when a used car dealer has to refund a consumer his or her money for failing to correct a malfunction or defect as required by the warranty.

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Bill Details

See Assembly Version of this Bill:
A8250C
Versions:
S6872
S6872A
S6872B
Legislative Cycle:
2011-2012
Current Committee:
Assembly Codes
Law Section:
General Business Law
Laws Affected:
Amd §198-b, Gen Bus L; amd §63, Exec L
Versions Introduced in Previous Legislative Cycles:
2009-2010: A4911, A4911
2007-2008: A9208, A9208
2011-2012: A893

Sponsor Memo

BILL NUMBER:S6872B

TITLE OF BILL:
An act to amend the general business law and the executive law, in
relation to the refund to a consumer of money from a used car
dealership for failing to correct a malfunction or defect

PURPOSE OR GENERAL IDEA OF BILL:
To include within the Used Car Lemon Law a similar provision to one
that exists within the New Car Lemon Law.

SUMMARY OF SPECIFIC PROVISIONS:
This bill amends paragraph 1 and subparagraph f of paragraph 3 of
subdivision c of Section 198-b of the General Business Law to
establish a mileage credit for cars that qualify under the Used Car
Lemon Law.

JUSTIFICATION:
On December 14, 2006 the Court of Appeals issued a decision in the
combined cases of In the Matter of General Motors Corporation v. James
Warner and In the Matter of Daimler Chrysler Corporation v. Eliot
Spitzer. 7 N.Y.3d 653 that upheld the Attorney General's revised
interpretation of the New Car Lemon Law. The Attorney General's new
interpretation held that a consumer may be entitled to relief if,
within the prescribed periods, four or more unsuccessful repair
attempts were made or the vehicle was out of service for 30 days,
notwithstanding that the condition complained of was subsequently
repaired. Previously, a consumer would be eligible for a refund or
replacement vehicle only when the purchaser could demonstrate that a
defect still existed as of the date of arbitration. Similar provisions
exist under the Used Car Lemon Law, except that only three or more
repair attempts are required to qualify. A consumer has four years in
which to bring an action under the Used Car Lemon law. At the oral
arguments before the Court of Appeals, the issue was raised that a
consumer could drive the car for significant period of time before
filing an action, either because the car was repaired prior to the
commencement of the action or because the defect which caused the car
to qualify was not such that the car was unsafe or undriveable,
thereby significantly altering the value of the vehicle once returned.
The Attorney General's office indicated that the mileage credit
formula in the New Car Lemon Law that reduces the amount which the
consumer recoups upon return of the vehicle was a significant tool to
prevent any attempted fraud. Such a mileage credit does not exist in
the Used Car Lemon Law. This legislation would include in the Used Car
Lemon Law this important anti-fraud measure that is necessary given
the Court of Appeals decision.

PRIOR LEGISLATIVE HISTORY:
New Bill.

FISCAL IMPLICATIONS:
None.

EFFECTIVE DATE:
This act shall take effect on the ninetieth day with provisions.


view bill text
                    S T A T E   O F   N E W   Y O R K
________________________________________________________________________

                                 6872--B
    Cal. No. 615

                            I N  S E N A T E

                              April 2, 2012
                               ___________

Introduced  by  Sen.  ZELDIN -- read twice and ordered printed, and when
  printed to be committed to the Committee  on  Consumer  Protection  --
  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 executive law, in
  relation to the refund to a consumer of money from a used car  dealer-
  ship for failing to correct a malfunction or defect

  THE  PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
BLY, DO ENACT AS FOLLOWS:

  Section 1. Paragraph 1 of subdivision c of section 198-b of the gener-
al business law, as amended by chapter 444  of  the  laws  of  1989,  is
amended and a new paragraph 5 is added to read as follows:
  1. If the dealer or his agent fails to correct a malfunction or defect
as required by the warranty specified in this section which substantial-
ly  impairs  the value of the used motor vehicle to the consumer after a
reasonable period of time, the dealer shall accept return  of  the  used
motor  vehicle  from  the  consumer  and refund to the consumer the full
purchase price, or in the case of a lease  contract  all  payments  made
under  the  contract,  including  sales or compensating use tax, less AN
AMOUNT EQUAL TO A MILEAGE CREDIT ALLOWANCE AS CALCULATED PURSUANT TO THE
METHODS SET FORTH IN PARAGRAPH FIVE OF THIS SUBDIVISION, FOR  EACH  MILE
IN EXCESS OF THE WARRANTY MILEAGE APPLICABLE TO THE VEHICLE CONTAINED IN
SUBDIVISION B OF THIS SECTION THAT THE VEHICLE HAS BEEN DRIVEN SINCE THE
DATE OF DELIVERY OF SUCH VEHICLE BY THE DEALER TO THE CONSUMER, AND LESS
a reasonable allowance for any damage not attributable to normal wear or
usage,  and  adjustment  for  any modifications which either increase or
decrease the market value of the vehicle or of the lease  contract,  and
in  the  case of a lease contract, shall cancel all further payments due
from the consumer under the lease contract. In determining the  purchase
price  to  be refunded or in determining all payments made under a lease
contract to be refunded, the purchase price, or all payments made  under
a  lease  contract,  shall be deemed equal to the sum of the actual cash

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD00803-11-2

S. 6872--B                          2

difference paid for the used motor vehicle, or for the  lease  contract,
plus,  if  the dealer elects to not return any vehicles traded-in by the
consumer, the wholesale value of any such traded-in vehicles  as  listed
in  the  National Auto Dealers Association Used Car Guide, or such other
guide as may be specified in regulations promulgated by the commissioner
of motor vehicles, as adjusted for mileage, improvements, and any  major
physical  or  mechanical defects in the traded-in vehicle at the time of
trade-in. The dealer selling or leasing the  used  motor  vehicle  shall
deliver  to the consumer a written notice including conspicuous language
indicating that if the consumer should be entitled to a refund  pursuant
to  this section, the value of any vehicle traded-in by the consumer, if
the dealer elects to not return it to  the  consumer,  for  purposes  of
determining the amount of such refund will be determined by reference to
the National Auto Dealers Association Used Car Guide wholesale value, or
such  other  guide as may be approved by the commissioner of motor vehi-
cles, as adjusted for mileage, improvements, and any major  physical  or
mechanical  defects, rather than the value listed in the sales contract.
Refunds shall be made to the consumer and lienholder, if any,  as  their
interests  may appear on the records of ownership kept by the department
of motor vehicles. If the amount to be refunded to the  lienholder  will
be  insufficient  to  discharge  the  lien,  the dealer shall notify the
consumer in writing by registered or certified mail  that  the  consumer
has  thirty  days  to pay the lienholder the amount which, together with
the amount to be refunded by the dealer, will be sufficient to discharge
the lien. The notice to the consumer shall contain conspicuous  language
warning  the  consumer  that failure to pay such funds to the lienholder
within thirty days will terminate the dealer's obligation to  provide  a
refund.  If  the consumer fails to make such payment within thirty days,
the dealer shall have no further  responsibility  to  provide  a  refund
under  this  section.    Alternatively, the dealer may elect to offer to
replace the used motor vehicle with a comparably  priced  vehicle,  with
such adjustment in price as the parties may agree to. The consumer shall
not  be obligated to accept a replacement vehicle, but may instead elect
to receive the refund provided under this section. It shall be an affir-
mative defense to any claim under this section that:
  (a) The malfunction or  defect  does  not  substantially  impair  such
value; or
  (b)  The  malfunction  or  defect  is  the result of abuse, neglect or
unreasonable modifications or alterations of the used motor vehicle.
  5. THE MILEAGE CREDIT ALLOWANCE AUTHORIZED BY PARAGRAPH  ONE  OF  THIS
SUBDIVISION  SHALL  BE EQUAL TO THE DEPRECIATION ADJUSTMENT FOR STANDARD
MILEAGE RATE, AS PUBLISHED IN INTERNAL REVENUE SERVICE PUBLICATION  FOUR
HUNDRED SIXTY-THREE, APPLICABLE FOR THE SAME TAX YEAR, OR THE YEAR PRIOR
TO  IT,  WHICHEVER  IS LOWEST, IN WHICH THE CONSUMER PURCHASED OR LEASED
THE VEHICLE FROM THE DEALER. IN THE EVENT THAT AN ARBITRATOR  RENDERS  A
DECISION  OR A TRIAL COURT RENDERS A JUDGMENT THAT DIRECTS THE DEALER TO
ACCEPT RETURN OF THE VEHICLE, THE  CONSUMER  SHALL  HAVE  THE  RIGHT  TO
RETURN  THE VEHICLE TO THE DEALER'S PLACE OF BUSINESS ON THE FIRST BUSI-
NESS DAY FOLLOWING SUCH DECISION UP TO AND INCLUSIVE  OF  THE  THIRTIETH
DAY,  AND  WITHIN  NORMAL  BUSINESS  HOURS.    WHETHER OR NOT THE DEALER
ACCEPTS THE VEHICLE, THE DEALER AND CONSUMER SHALL COMPLETE AND  SIGN  A
MILEAGE  CREDIT  CALCULATION  FORM AS PUBLISHED BY THE ATTORNEY GENERAL,
WHICH SHALL BE USED TO RECORD THE MILEAGE OF THE VEHICLE AT THE TIME  OF
DELIVERY  OR  ATTEMPTED  DELIVERY. FOR THE PURPOSES OF THIS SECTION, THE
MILEAGE CREDIT ALLOWANCE SHALL NOT BE APPLIED  TO  ANY  MILES  THAT  THE
VEHICLE  HAS BEEN DRIVEN AFTER SUCH FORM IS SIGNED.  IN THE EVENT THAT A

S. 6872--B                          3

DEALER REFUSES TO SIGN SUCH FORM, THE EFFECTIVE MILEAGE CREDIT ALLOWANCE
SHALL BE NO GREATER THAN THE SPECIFIC SUM WHICH WAS  SET  FORTH  IN  THE
DECISION  OF  AN  ARBITRATOR OR JUDGMENT OF THE TRIAL COURT.  THE DEALER
SHALL  PROVIDE  A  COPY  OF  THE COMPLETED FORM, WHICH SHALL CONTAIN THE
SIGNATURE OF THE DEALER AND CONSUMER ATTESTING TO THE  ODOMETER  READING
OF  THE  MOTOR  VEHICLE,  TO:  THE ARBITRATOR OR COURT THAT RENDERED THE
DECISION OR JUDGMENT; AND, AT NO CHARGE, THE CONSUMER.
  S 2. The opening paragraph of paragraph 1 of subdivision f of  section
198-b of the general business law, as separately amended by chapters 444
and 609 of the laws of 1989, is amended to read as follows:
  If  a  dealer  has  established or participates in an informal dispute
settlement procedure which complies in all respects with the  provisions
of  part  seven  hundred  three  of title sixteen of the code of federal
regulations  the  provisions  of  this  article  concerning  refunds  or
replacement  shall  not apply to any consumer who has not first resorted
to such procedure. Dealers utilizing informal dispute settlement  proce-
dures pursuant to this subdivision shall insure that arbitrators partic-
ipating in such informal dispute settlement procedures are familiar with
the  provisions  of  this  section  and shall provide to arbitrators and
consumers who seek arbitration a copy of the provisions of this  section
AND  THE APPLICABLE MILEAGE CREDIT ALLOWANCE RATE AS CALCULATED PURSUANT
TO THE METHOD SET FORTH IN PARAGRAPH  FIVE  OF  SUBDIVISION  C  OF  THIS
SECTION,  together  with  the  following notice in conspicuous ten point
bold face type:
  S 3.  Subparagraphs 5 and 6 of paragraph 1 of subdivision f of section
198-b of the general business law, as separately amended by chapters 444
and 609 of the laws of 1989, are amended to read as follows:
  5. If the  same  problem  cannot  be  repaired  after  three  or  more
attempts,  you  are  entitled  to return the car and receive a refund of
your purchase price or of all payments made under your  lease  contract,
and  of  sales tax and fees, minus THE MILEAGE CREDIT ALLOWANCE FOR EACH
MILE IN EXCESS  OF  THE  WARRANTY  MILEAGE  APPLICABLE  TO  THE  VEHICLE
CONTAINED  IN  SUBDIVISION  B  OF THIS SECTION THAT THE VEHICLE HAS BEEN
DRIVEN SINCE THE DATE OF DELIVERY OF SUCH VEHICLE BY THE DEALER  TO  THE
CONSUMER,  AND  LESS a reasonable allowance for any damage not attribut-
able to normal usage or wear, and, in the case of a  lease  contract,  a
cancellation  of all further payments you are otherwise required to make
under the lease contract.
  6. If your car is out of service to repair a problem for  a  total  of
fifteen  days  or  more  during  the warranty period you are entitled to
return the car and receive a refund of your purchase  price  or  of  all
payments  made  under  your  lease  contract, and of sales tax and fees,
minus THE MILEAGE CREDIT ALLOWANCE  FOR  EACH  MILE  IN  EXCESS  OF  THE
WARRANTY MILEAGE APPLICABLE TO THE VEHICLE CONTAINED IN SUBDIVISION B OF
THIS SECTION THAT THE VEHICLE HAS BEEN DRIVEN SINCE THE DATE OF DELIVERY
OF  SUCH  VEHICLE  BY  THE DEALER TO THE CONSUMER, AND LESS a reasonable
allowance for any damage not attributable to normal usage or wear,  and,
in  the case of a lease contract, a cancellation of all further payments
you are otherwise required to make under the lease contract.
  S 4.  Subparagraphs 7, 8, 9, 10 and 11 of paragraph 1 of subdivision f
of section 198-b of the general business  law  are  renumbered  subpara-
graphs  8, 9, 10, 11 and 12 and a new subparagraph 7 is added to read as
follows:
  7. THE MILEAGE CREDIT ALLOWANCE DESCRIBED IN PARAGRAPHS FIVE  AND  SIX
OF  THIS  SUBDIVISION  SHALL BE CALCULATED PURSUANT TO THE METHOD ESTAB-
LISHED IN PARAGRAPH FIVE OF SUBDIVISION C OF THIS SECTION.  THE  MILEAGE

S. 6872--B                          4

CREDIT  ALLOWANCE  SHALL  BE  NO  GREATER  THAN (INSERT THE DEPRECIATION
ADJUSTMENT FOR STANDARD MILEAGE RATE, AS PUBLISHED IN  INTERNAL  REVENUE
SERVICE  PUBLICATION  FOUR  HUNDRED SIXTY-THREE, APPLICABLE FOR THE SAME
TAX  YEAR,  OR  THE  YEAR PRIOR TO IT, WHICHEVER IS LOWEST, IN WHICH THE
CONSUMER PURCHASED OR LEASED THE VEHICLE  FROM  THE  DEALER)  CENTS  PER
MILE.
  S  5.  Paragraphs  4, 5 and 6 of subdivision f of section 198-b of the
general business law are renumbered paragraphs 5, 6  and  7  and  a  new
paragraph 4 is added to read as follows:
  4.  IN  THE EVENT THAT AN ARBITRATOR OR TRIAL COURT RENDERS A DECISION
THAT DIRECTS THE DEALER TO ACCEPT RETURN OF THE VEHICLE, THE  ARBITRATOR
OR  COURT  SHALL,  UPON  RENDERING  SUCH DECISION, PROVIDE THE FOLLOWING
NOTICE TO THE CONSUMER ON A SEPARATE WRITING  AND  IN  AT  LEAST  TWELVE
POINT BOLD FONT:
  AS  A  PREVAILING CONSUMER YOU HAVE THE RIGHT TO RETURN THE VEHICLE TO
THE DEALER'S PLACE OF BUSINESS ON THE FIRST BUSINESS DAY FOLLOWING  THIS
DECISION  AND  UP  TO  AND INCLUSIVE OF THE THIRTIETH DAY (WITHIN NORMAL
BUSINESS HOURS). WHETHER OR NOT THE DEALER ACCEPTS THE VEHICLE, YOU  AND
THE  DEALER  SHALL  COMPLETE AND SIGN A MILEAGE CREDIT CALCULATION FORM.
YOU ARE NOT RESPONSIBLE FOR ANY MILEAGE ACCRUED WHILE YOU  ARE  LAWFULLY
USING  THE  VEHICLE  DURING  AN APPEAL THAT A DEALER BRINGS TO VACATE OR
MODIFY AN ARBITRATOR'S DECISION OR A TRIAL COURT JUDGMENT.
  S 6. Section 63 of the executive law is amended by adding a new subdi-
vision 16 to read as follows:
  16. PROMULGATE REGULATIONS PROVIDING FOR THE CREATION AND  PUBLICATION
OF A MILEAGE CREDIT CALCULATION FORM TO BE USED BY CONSUMERS AND DEALERS
PURSUANT  TO  SECTION ONE HUNDRED NINETY-EIGHT-B OF THE GENERAL BUSINESS
LAW. SUCH FORM SHALL BE MADE AVAILABLE TO DEALERS BY THE  DEPARTMENT  ON
ITS WEBSITE.
  S  7.  This  act shall take effect on the ninetieth day after it shall
have become a law; provided, however, that the provisions  of  this  act
shall  not apply to any contract executed prior to the effective date of
this act; provided, further, that effective immediately, the  department
of law shall publish on its website on or before such effective date the
mileage  credit  calculation  form,  as described in section one of this
act, that is to be used by consumers and dealers in the manner set forth
in such section, with such form, including instructions,  necessary  for
the proper completion of such form by a dealer.

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