Senate Bill S3246A

                                 
BILL NUMBER: S3246

SPONSOR: COONEY
 
TITLE OF BILL:

An act to amend chapter 109 of the laws of 2018 amending the general
business law relating to certain rental vehicle protections, in relation
to making such provisions permanent

 
SUMMARY OF PROVISIONS:

Section 1 amends the effective date of Chapter 163 of the Laws of 2023
to make permanent the provisions of Chapter 656 of the Laws of 2002 as
amended by Chapter 109 of the Laws of 2018.

Section 2 is the effective date.

 
JUSTIFICATION:

Chapter 656 of the Laws of 2002 revised § 396-z of the GBL to bring New
York into conformance with the rest of the 49 states by restoring vehi-
cle renters' responsibility for certain damage to the vehicles while in
              

their possession. The measure also authorized rental companies to make
available optional vehicle protection ("OVP") (i.e., "collision damage
waiver" or "damage waiver") which entitles the renter/purchaser to a
waiver of claim for any damage to the vehicle. Chapter 656 essentially
"undid" an ill-conceived 1988 law that made New York the only jurisdic-
tion that outright prohibited the sale of the damage waiver option and
instead held rental car companies responsible for all but the first $100
damage to a rental vehicle.

The implications of that law were far-reaching. The 1988 statute was the
direct cause of extraordinary economic harm to the rental industry as
well as higher consumer prices and fewer choices beyond the base model
for rental cars. In fact, the law spawned a robust cottage industry in
stolen and stripped rental vehicles that, over a 13-year period, brought
about the demise of virtually every independent and franchised rental
business in New York and caused the major rental companies to shutter
locations in most urban areas. By the time Chapter 656 was enacted there
was one remaining rental location in the entire Bronx. Today Enterprise
alone has six physical locations in that Borough.

In restoring the traditional level of responsibility that applies to
other rental items, the 2002 measure included comprehensive disclosure
and other consumer-centric provisions to ensure that New York drivers
were aware that damage waiver is an optional product and that their New
York automobile insurance policies, as a matter of law, provided colli-
sion coverage while renting a vehicle. The measure also placed statutory
price caps on the cost of the damage waiver product, based on the MSRP
of the vehicle. Since chapter 656 of 2002 represented a significant
change in law, it was made subject to a five-year sunset provision. As
it turned out, the changes were so overwhelmingly embraced that it was
unanimously extended by the Legislature in 2008, and 2013.

In retrospect, it is clear that Chapter 656 dramatically altered the
rental car landscape to the benefit of both consumers and the industry.
New branches opened all over the State, hundreds of new employees were
hired, millions of new dollars were invested in providing consumers with
a broader range of choices in rental vehicles, and consumers enjoyed a
stabilization of rates derived predominantly from a renewed and robust
competition among the rental companies.

Notwithstanding the success of Chapter 656 and its extenders, in just 15
years, the rental car industry, like many other retail businesses,
changed dramatically. Surely, few could have reasonably envisioned
consumers renting cars directly from their personal hand-held computers
(a/k/a cell phones) and picking up the car up without ever visiting a
rental counter. Indeed, who could have envisioned that rental cars could
be available on an hourly basis through car share programs and those
cars could be accessed and unlocked via cell phone? Or who, in 2002,
could have imagined standard cars replete with bumper-to-bumper safety
features and high-tech sensors designed to assist drivers in avoiding
accidents?

Chapter 109 of the Laws of 2018 not only extended C.656 of 2002 by 5
years, but also addressed the many changes designed to reflect the
evolving nature of the rental car business, providing an expansive menu
of tangible new benefits to the consumer, while providing the rental
industry with the tools to offer products and services in a more effi-
cient manner; all while retaining and re-emphasizing the integrity of
the consumer disclosures that were at the heart of Chapter 656 of 2002.

When Chapter 656 was adopted in 2002 it represented a sea change in the
relationship between vehicle rental companies and consumers. At the
time, the 5-year sunset made sense. Now - more than two decades later,
after unanimously enacting four 5-year extensions, it is clear that the
sunset is no longer necessary. Currently, about half of GBL § 396-z is
subject to the sunset and the other half is not. There is no rationale
for continuing that dichotomy. If the Legislature wishes to amend that
statute, it can at any time; but removal of the sunset will allow rental
companies to plan their vehicle purchases and rental locations like any
other business regulated under the GBL.  This broadly beneficial law
should be made permanent subject to amendments adopted by the Legisla-
ture from time to time.

 
PRIOR LEGISLATIVE HISTORY:

2023-24: S.8883

 
FISCAL IMPLICATIONS FOR STATE AND LOCAL GOVERNMENTS:

None

 
EFFECTIVE DATE:
This act shall take effect immediately.