BILL NUMBER: S7127

SPONSOR: KAVANAGH
 
TITLE OF BILL:

An act to amend the general business law, in relation to discrimination
in the rental of motor vehicles on the basis of geographic location

 
PURPOSE:

To prohibit the discriminatory practice of refusing to rent, or adding
extra terms, conditions or surcharges to the rental of a vehicle based
on the geographic location of the residence of the renter.

 
SUMMARY OF PROVISIONS:

Section 1 of the bill amends the general business law by adding a new
section 391-u which would prohibit rental vehicle companies from refus-
ing to rent, imposing any additional charge, or imposing any additional
terms, conditions or privileges on the rental of a vehicle based on the
geographic location of the residence of the renter. In addition, this
              

section would subject violations to a civil penalty of not more than
$1,000 and create a limited private right of action for individuals
aggrieved under the law. Individuals could sue to enjoin and recover
actual damages or $250, whichever is greater. The court could also award
increased damages not to exceed three times the actual damages, up to
$1500, for willful or knowing violations, as well as reasonable attor-
neys' fees, to a prevailing plaintiff.

Section 2 of the bill sets forth the effective date.

 
JUSTIFICATION:

At various times, vehicle rental companies choose to tack on an onerous
surcharge to rent a vehicle, in addition to the basic rate, based on
where the renter lives, without regard to the location the consumer
actually takes possession of the vehicle or uses it. Such surcharges
have been particularly prevalent for renters living in the Bronx, Brook-
lyn, and Queens, and they have often been added even if the consumer is
renting a vehicle from an out-of-state location.

The New York City Council attempted to outlaw this discriminatory prac-
tice by enacting a local law in 1992. The validity of the law was
promptly challenged in federal court by Hertz Corporation, which
successfully sued to enjoin the City from enforcement, pending a deci-
sion on the merits. In a 2002 decision, the federal district court found
that the local law was invalid because New York City, as a locality, did
not have the power to regulate prices in the manner the City sought to
regulate them, because the City's local law violated the federal Sherman
Act. See Hertz Corp. v. City of New York, 212 F.Supp.2d 275 (2002). The
court's ruling was based on an earlier decision in the same case by the
U.S. Court of Appeals for the Second Circuit, in which the court found
that the City did not benefit from immunity under the Sherman Act that
is available to state governments. See Hertz Corp. v. City of New York,
1 F.3d 121 (2d Cir. 1993).

In 1997, the Assembly Consumer Affairs and Protection Committee
conducted an investigation and public hearing on consumer grievances
about car rental company discriminatory practices. The Committee
published its findings in the report "The Business Practices of the
Rental Vehicle Industry." With respect to geographic discrimination
alone, the report includes allegations of: being denied a rental vehicle
due to living "in a high crime area" (American Rental Systems); being
charged over $100 above a quoted price for the same rental car from a
different location "because a lot of people in the Bronx steal cars"
(Budget Car Rental Agency); being refused the vehicle of the consumer's
choosing "because it is the policy of Enterprise not to furnish any
residents of 718 area codes with vehicles such as Cadillacs or Park
Avenues;" and being "informed that if I was flying in as a passenger
they would be glad to rent me a car. If I committed the crime of living
in the neighborhood they would not" (Budget).

Though many of the companies whose practices were examined in the report
subsequently refrained voluntarily from the practice of geographic price
discrimination, the practice remains legal.

While rental car companies have generally trended away from practicing
geographic discrimination, this bill would establish that it is the
policy of the State of New York not to permit corporations doing busi-
ness in our state to discriminate against customers based on where they
live. With the federal court having found that the City of New York does
not have the power to protect its residents in this way, the State
should act, rather than leaving it up to the corporations themselves,
which have demonstrated a poor track record in this area, to do the
right thing.

 
FISCAL IMPACT ON THE STATE:

None.

 
FISCAL IMPACT ON LOCALITIES:

None.

 
IMPACT ON REGULATION OF BUSINESSES AND INDIVIDUALS:

Prohibits rental car companies from discriminating on the basis of the
geographic address of a renter; provides private right of action for
individuals aggrieved by a violation of the law.

 
IMPACT ON FINES, IMPRISONMENT, FORFEITURE OF RIGHTS, OR OTHER PENAL
SANCTIONS:

Imposes a fine of up to $1,000 for each violation.

 
LEGISLATIVE HISTORY:

2016: A05811 (Kavanagh) - Consumer Affairs and Protection
2015:  A05811 (Kavanagh) - Codes
2014: A01043A (Kavanagh) - Rules
2013:  A01043 (Kavanagh) - Rules
2012: A05952A (Kavanagh) - Rules
2011: A05952 (Kavanagh) - Consumer Affairs and Protection
2010: A00510A (Kavanagh) - Consumer Affairs and Protection
2009: A00510A (Kavanagh) - Codes
2008: A07487 (Kavanagh) - Consumer Affairs and Protection
2007: A07487 (Kavanagh) - Consumer Affairs and Protection
2007: A01397 (Grannis) - Consumer Affairs and Protection
2006: A04035A (Grannis) - Codes
2005: A04035 (Grannis) - Consumer Affairs and Protection
2004: A07416B (Grannis) - Codes
2003: A07416A (Grannis) - Consumer Affairs and Protection

 
EFFECTIVE DATE:
This act shall take effect on the one hundred eightieth day after it
shall have become a law.