Last spring, we reported on proposed legislation in New York that will require all motor vehicle lessors to obtain a dealer’s license in order to legally lease vehicles in the State of New York. While this legislation does not have the headline appeal of mask mandates, it should be a cause for concern among vehicle lessors.
NYABA OPPOSES THIS LEGISLATION
Sloan Schickler has represented the New York Automobile Leasing Brokers Association (“NYABA”) for the last several years to oppose pending auto broker legislation. During the 2021 legislative session, the most recent iteration of anti-broker legislation was Senate Bill 4332-A and Assembly Bill 1932-A (the “Bill”) which requires all lessors, whether commercial, consumer, fleet, independent leasing companies, auto lease brokers, auto brokers, captive or bank lessors, to obtain a motor vehicle dealer’s license if they lease five or more vehicles in any calendar year. Until now, lessors were not automatically required to obtain a dealer’s license, it depended on the nature of the lessor’s business.
WHAT THE PROPOSED BILL INCLUDES
The Bill creates a new form of registration for the automotive broker business and the auto lease brokering business. It requires brokers in New York to post a $250,000 bond (this is more than for dealers), obtain three bids for every deal (unconstitutional) and financially guaranty that the vehicles they are brokering are manufactured in accordance with U.S. safety and environmental specifications! These are steep hurdles for auto lease brokers, anti-competitive measures designed to put them out of business.
Failure to obtain the license authorizes the New York Motor Vehicle Commissioner to assess a penalty of up to $10,000 for each vehicle sold or leased without a license. Essentially, the Bill will put auto lease brokers out of business and force many lessors and banks out of compliance in New York. For a comprehensive outline of how prior iterations of the Bill sought to put the brokers out of business, see Crain’s New York Business, “End of the Road for Auto Brokers” by Matthew Flamm, June 17, 2019.
WHO IS PROMOTING THIS BILL
The Bill is promoted by the Greater New York Automobile Dealers Association (“GNYADA”) and the United Auto Workers (“UAW”) who managed through intense lobbying efforts to slam the Bill through the New York State Assembly in June. However, it did not come to a floor vote in State Senate, and as a result it will die in the 2021 session.
GNYADA’s president and the UAW Local 259 president proclaimed in an opinion editorial on November 10, 2021, in Crain’s New York Business, that brokers work in New York with “virtually no oversight” and “openly flout the few laws that apply to them”. They maintain that the Bill is necessary to protect consumers. They ignore the fact that the New York General Business Law and Vehicle and Traffic Law has an entire licensing scheme in place which already mandates broker licensing and disclosure. They complain about “bad apples” but can only point to one broker that was prosecuted this year for wrongdoing and ignore the fact that there have been no complaints against the brokers for years both at the New York Attorney General’s office and in the New York court system, while there are a myriad of complaints against the dealers.
You can be sure that in January, with a new legislative session beginning, the GNYADA and the UAW will once again be pushing hard to get a broker bill passed in 2022. The new legislative session begins in January with an unprecedented shortage of vehicle inventory and a new governor for the first time in a decade. It is not clear if the governor will support such legislation if it passes. But one thing is certain, the dealers will not let it die without a fight. Stay tuned!