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SF 1333

as introduced - 85th Legislature (2007 - 2008) Posted on 12/15/2009 12:00am

KEY: stricken = removed, old language.
underscored = added, new language.
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A bill for an act
relating to commerce; enacting a car buyers' bill of rights; requiring disclosures;
capping dealer compensation for vehicle financing; regulating the sale of
"certified" used motor vehicles; requiring a cancellation option on purchase of
a used motor vehicle; amending Minnesota Statutes 2006, sections 53C.01, by
adding subdivisions; 53C.08, subdivision 4, by adding a subdivision; 297B.01,
subdivision 8; 325F.662, subdivision 10, by adding subdivisions; proposing
coding for new law in Minnesota Statutes, chapter 53C.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

Section 1.

Minnesota Statutes 2006, section 53C.01, is amended by adding a
subdivision to read:


new text begin Subd. 6a. new text end

new text begin Regulation Z. new text end

new text begin "Regulation Z" means a rule, regulation, or interpretation
promulgated by the Board of Governors of the Federal Reserve System under the federal
Truth in Lending Act, as amended (United States Code, title 15, section 1601, et seq.),
and an interpretation or approval issued by an official or employee of the Federal Reserve
System duly authorized by the board under the Truth in Lending Act, as amended, to issue
the interpretations or approvals.
new text end

Sec. 2.

Minnesota Statutes 2006, section 53C.01, is amended by adding a subdivision
to read:


new text begin Subd. 12a. new text end

new text begin Service contract. new text end

new text begin "Service contract" means a motor vehicle service
contract as defined in section 65B.29.
new text end

Sec. 3.

Minnesota Statutes 2006, section 53C.01, is amended by adding a subdivision
to read:


new text begin Subd. 12b. new text end

new text begin Surface protection product. new text end

new text begin "Surface protection product" means the
following products installed by the seller after the motor vehicle is sold:
new text end

new text begin (1) undercoating;
new text end

new text begin (2) rustproofing;
new text end

new text begin (3) chemical or film paint sealant or protectant; or
new text end

new text begin (4) chemical sealant or stain inhibitor for carpet and fabric.
new text end

Sec. 4.

Minnesota Statutes 2006, section 53C.01, is amended by adding a subdivision
to read:


new text begin Subd. 12c. new text end

new text begin Theft deterrent device. new text end

new text begin "Theft deterrent device" means the following
devices installed by the seller after the motor vehicle is sold:
new text end

new text begin (1) a vehicle alarm system;
new text end

new text begin (2) a window etch product;
new text end

new text begin (3) a body part marking product;
new text end

new text begin (4) a steering lock;
new text end

new text begin (5) a pedal or ignition lock; or
new text end

new text begin (6) a fuel or ignition kill switch.
new text end

Sec. 5.

Minnesota Statutes 2006, section 53C.08, is amended by adding a subdivision
to read:


new text begin Subd. 1a. new text end

new text begin Disclosures required. new text end

new text begin Prior to the execution of a retail installment
contract, the seller shall provide to a buyer, and obtain the buyer's signature on, a written
disclosure that sets forth the following information:
new text end

new text begin (1) a description and the total price of all items sold in the following categories if
the contract includes a charge for the item:
new text end

new text begin (i) a service contract;
new text end

new text begin (ii) an insurance product;
new text end

new text begin (iii) a debt cancellation agreement;
new text end

new text begin (iv) a theft deterrent device; or
new text end

new text begin (v) a surface protection product;
new text end

new text begin (2) the amount that would be calculated under the contract as the regular installment
payment if charges for the items referenced under clause (1) are not included in the
contract. The amount disclosed under this subdivision must be labeled "Installment
Payment EXCLUDING Listed Items";
new text end

new text begin (3) the amount that would be calculated under the contract as the regular installment
payment if charges for the items referenced under clause (1) are included in the contract.
The amount disclosed under this subdivision must be labeled "Installment Payment
INCLUDING Listed Items"; and
new text end

new text begin (4) the disclosures required under this subdivision must be in at least ten-point type
and must be contained in a document that is separate from the retail installment contract
and any other purchase documents.
new text end

Sec. 6.

Minnesota Statutes 2006, section 53C.08, subdivision 4, is amended to read:


Subd. 4.

Contract transferability.

new text beginExcept as limited under section 53C.085, new text endany
sales finance company hereunder may purchase or acquire from any retail seller any
retail installment contract on such terms and conditions as may be mutually agreed upon
between them.

Sec. 7.

new text begin [53C.083] CREDIT SCORES.
new text end

new text begin (a) A retail seller that obtains a credit reporting product known as a "credit score"
from a consumer reporting agency, as defined in section 13C.001, subdivision 4, for
use in connection with an application for credit initiated by a buyer for the purchase or
lease of a motor vehicle, shall provide, prior to the sale or lease of the motor vehicle, the
following information to the buyer in at least ten-point boldface type on a document
separate from the sale or lease contract:
new text end

new text begin (1) the credit score obtained and used by the retail seller and the name of the credit
reporting agency providing the credit score to the retail seller;
new text end

new text begin (2) the range of possible credit scores established by the credit reporting agency
that provided the credit score; and
new text end

new text begin (3) the following notice, which must include the name, address, and telephone
number of each credit reporting agency providing a credit score that was obtained and
used by the retail seller:
new text end

new text begin "NOTICE TO MOTOR VEHICLE CREDIT APPLICANT
new text end

new text begin If the dealer obtains and uses a credit score from a consumer reporting agency in
connection with your application to finance the acquisition of a motor vehicle, the dealer
must disclose the score to you.
new text end

new text begin The credit score is a computer generated summary calculated by a consumer
reporting agency at the time the dealer requests the score and is based on information
the consumer reporting agency has on file. The scores are based on data about your
credit history and payment patterns. Credit scores are important because they are used
in determining whether to extend credit. The score may also be used to determine the
annual percentage rate you may be offered. Credit scores can change over time, depending
on your conduct, how your credit history and payment patterns change, and how credit
scoring technologies change. Credit scores may also vary from one credit reporting
agency to another.
new text end

new text begin If you have questions about your credit score, contact the consumer reporting agency
at the address and telephone number provided. The consumer reporting agency does not
participate in the decision to take any action on your application for credit and is unable to
provide you with specific reasons for any decision on the credit application.
new text end

new text begin If you have questions concerning credit terms relative to your purchase or lease of
a motor vehicle, ask the dealer."
new text end

new text begin (b) This section does not require a dealer to provide more than one disclosure for
each purchase or lease transaction.
new text end

Sec. 8.

new text begin [53C.085] CONSIDERATION FOR ASSIGNMENT OF RETAIL
INSTALLMENT CONTRACT.
new text end

new text begin (a) In consideration of the assignment of a retail installment contract, the seller shall
not receive or accept from the assignee any payment or credit based upon any amount
collected or received, or to be collected or received, under the contract as a finance charge
except to the extent the payment or credit does not exceed the amount that would be
calculated in accordance with Regulation Z, whether or not Regulation Z applies to the
contract, as the contract's finance charge using, for the purposes of the calculation, an
annual percentage rate equal to 2.5 percent for a contract having an original scheduled
term of 60 monthly payments or less or two percent for a contract having an original
scheduled term of more than 60 monthly payments.
new text end

new text begin (b) Paragraph (a) does not apply in the following circumstances:
new text end

new text begin (1) an assignment that is with full recourse or under other terms requiring the seller
to bear the entire risk of financial performance of the buyer;
new text end

new text begin (2) an assignment that is more than six months following the date of the retail
installment contract; and
new text end

new text begin (3) isolated instances resulting from bona fide errors that would otherwise constitute
a violation of paragraph (a) if the seller maintains reasonable procedures to guard against
any errors and promptly, upon notice of the error, remits to the assignee any consideration
received in excess of that permitted by paragraph (a).
new text end

Sec. 9.

Minnesota Statutes 2006, section 297B.01, subdivision 8, is amended to read:


Subd. 8.

Purchase price.

(a) "Purchase price" means the total consideration valued
in money for a sale, whether paid in money or otherwise. The purchase price excludes the
amount of a manufacturer's rebate paid or payable to the purchaser. If a motor vehicle
is taken in trade as a credit or as part payment on a motor vehicle taxable under this
chapter, the credit or trade-in value allowed by the person selling the motor vehicle shall
be deducted from the total selling price to establish the purchase price of the vehicle
being sold and the trade-in allowance allowed by the seller shall constitute the purchase
price of the motor vehicle accepted as a trade-in. The purchase price in those instances
where the motor vehicle is acquired by gift or by any other transfer for a nominal or no
monetary consideration shall also include the average value of similar motor vehicles,
established by standards and guides as determined by the motor vehicle registrar. The
purchase price in those instances where a motor vehicle is manufactured by a person who
registers it under the laws of this state shall mean the manufactured cost of such motor
vehicle and manufactured cost shall mean the amount expended for materials, labor,
and other properly allocable costs of manufacture, except that in the absence of actual
expenditures for the manufacture of a part or all of the motor vehicle, manufactured costs
shall mean the reasonable value of the completed motor vehicle.

(b) The term "purchase price" shall not include the portion of the value of a motor
vehicle due solely to modifications necessary to make the motor vehicle disability
accessible.

(c) The term "purchase price" shall not include the transfer of a motor vehicle by
way of gift between a husband and wife or parent and child, or to a nonprofit organization
as provided under subdivision 7, paragraph (e), nor shall it include the transfer of a motor
vehicle by a guardian to a ward when there is no monetary consideration and the title to
such vehicle was registered in the name of the guardian, as guardian, only because the
ward was a minor.

(d) The term "purchase price" shall not include the transfer of a motor vehicle as a
gift between a foster parent and foster child. For purposes of this subdivision, a foster
relationship exists, regardless of the age of the child, if (1) a foster parent's home is or was
licensed as a foster family home under Minnesota Rules, parts 9545.0010 to 9545.0260,
and (2) the county verifies that the child was a state ward or in permanent foster care.

(e) There shall not be included in "purchase price" the amount of any tax imposed by
the United States upon or with respect to retail sales whether imposed upon the retailer or
the consumer.

new text begin (f) The term "purchase price" does not include that portion of the sales price returned
to the purchaser of a used motor vehicle under section 325F.662, subdivision 8b.
new text end

Sec. 10.

Minnesota Statutes 2006, section 325F.662, is amended by adding a
subdivision to read:


new text begin Subd. 8a. new text end

new text begin Certified motor vehicle. new text end

new text begin (a) It is unlawful for a dealer to advertise for
sale or sell a used motor vehicle as "certified" or use any similar descriptive term in
the advertisement or the sale of a used motor vehicle that implies the vehicle has been
certified to meet the terms of a used motor vehicle certification program if any of the
following apply:
new text end

new text begin (1) the dealer knows or should have known that the odometer on the vehicle does not
indicate actual mileage, has been rolled back or otherwise altered to show fewer miles, or
replaced with an odometer showing fewer miles than actually driven;
new text end

new text begin (2) the dealer knows or should have known that the vehicle was reacquired by the
vehicle's manufacturer or a dealer pursuant to state or federal warranty laws;
new text end

new text begin (3) the title to the vehicle has been inscribed with the notation "damaged," "flood,"
"junk," "lemon law buyback," "manufacturer repurchase," "nonrepairable," "rebuilt,"
"reconditioned," "salvage," or similar title designation required by this state or another
state;
new text end

new text begin (4) the vehicle has sustained damage in an impact, fire, or flood, that substantially
impairs the use or safety of the vehicle;
new text end

new text begin (5) the dealer knows or should have known that the vehicle has sustained frame
damage;
new text end

new text begin (6) prior to sale, the dealer fails to provide the buyer with a completed inspection
report indicating all the components inspected;
new text end

new text begin (7) the dealer disclaims any warranties of merchantability on the vehicle;
new text end

new text begin (8) the vehicle is sold "AS IS"; or
new text end

new text begin (9) the term "certified" or any similar descriptive term is used in any manner that
is untrue or misleading.
new text end

new text begin (b) This section does not abrogate or limit any disclosure obligation imposed by
any other law.
new text end

Sec. 11.

Minnesota Statutes 2006, section 325F.662, is amended by adding a
subdivision to read:


new text begin Subd. 8b. new text end

new text begin Contract cancellation option. new text end

new text begin (a) A dealer shall not sell a used motor
vehicle to a consumer without granting the consumer a contract cancellation option that
allows the consumer to return the vehicle without cause and without cost, except for a
restocking fee as permitted by this subdivision. This subdivision does not apply to a used
motor vehicle having a purchase price of $40,000 or more.
new text end

new text begin (b) The contract cancellation option must be contained in a document separate from
the retail installment contract or other vehicle purchase agreement and must contain, at a
minimum, the following:
new text end

new text begin (1) the name of the dealer and the consumer;
new text end

new text begin (2) a description and the vehicle identification number of the vehicle purchased;
new text end

new text begin (3) a statement specifying the time within which the consumer must exercise the
right to cancel the purchase under the contract cancellation option and return the vehicle
to the dealer. The dealer shall not specify a time that is earlier than the dealer's close
of business on the second day following the day on which the vehicle was originally
delivered to the consumer by the dealer;
new text end

new text begin (4) a statement that clearly and conspicuously specifies the dollar amount of any
restocking fee the buyer must pay to the dealer to exercise the right to cancel the purchase
under the contract cancellation option. The restocking fee must not exceed $175 if the
vehicle's cash price is $5,000 or less, $350 if the vehicle's cash price is less than $10,000
but more than $5,000, and $500 if the vehicle's cash price is $10,000 or more;
new text end

new text begin (5) a statement specifying the maximum number of miles that the vehicle may be
driven after its original delivery by the dealer to the consumer to remain eligible for
cancellation under the contract cancellation option. A dealer shall not specify fewer than
250 miles in the contract cancellation option;
new text end

new text begin (6) a statement that the contract cancellation option gives the consumer the right to
cancel the purchase and obtain a full refund; and that the right to cancel will apply only if,
within the time specified in the contract cancellation option, the following are personally
delivered to the dealer by the consumer:
new text end

new text begin (i) a written notice exercising the right to cancel the purchase signed by the
consumer;
new text end

new text begin (ii) any restocking fee specified in the contract cancellation option;
new text end

new text begin (iii) the original contract cancellation option document and vehicle purchase contract
and related documents, if the dealer gave those original documents to the consumer;
new text end

new text begin (iv) all original vehicle titling and registration documents, if the dealer gave those
original documents to the consumer; and
new text end

new text begin (v) the vehicle, free of all liens and encumbrances other than any lien or
encumbrance created by or incident to the sales contract, any loan arranged by the dealer
or any purchase money loan obtained by the consumer from a third party, and in the same
condition as when it was delivered by the dealer to the consumer, reasonable wear and tear
and any defect or mechanical problem that manifests or becomes evident after delivery
that was not caused by the buyer excepted, and which must not have been driven beyond
the mileage limit specified in the contract cancellation option. The agreement may also
provide that the consumer will execute documents reasonably necessary to effectuate the
cancellation and refund and as reasonably required to comply with applicable law; and
new text end

new text begin (7) at the bottom of the contract cancellation option document, a statement that
may be signed by the consumer to indicate the consumer's election to exercise the
right to cancel the purchase under the terms of the contract cancellation option, and
the last date and time by which the option to cancel may be exercised, followed by a
line for the consumer's signature. A particular form of statement is not required, but
the following statement is sufficient: "By signing below, I elect to exercise my right to
cancel the purchase of the vehicle described in this agreement." The consumer's delivery
of the contract cancellation option document to the dealer with the consumer's signature
following this statement shall constitute sufficient written notice exercising the right to
cancel the purchase. The dealer shall provide the consumer with the statement required
by this paragraph in duplicate to enable the consumer to return the signed contract
cancellation document and retain a copy of the contract cancellation document.
new text end

new text begin (c)(1) No later than the second day following the day on which the consumer
exercises the right to cancel the purchase in compliance with the contract cancellation
option, the dealer shall cancel the contract and provide the consumer with a full refund; and
new text end

new text begin (2) the dealer shall return to the consumer, no later than the day following the day
on which the consumer exercises the right to cancel the purchase, any motor vehicle
the consumer left with the dealer as a downpayment or trade-in. If the dealer has sold
or otherwise transferred title to the motor vehicle that was left as a downpayment or
trade-in, the full refund described in clause (1) shall include the fair market value of the
motor vehicle left as a downpayment or trade-in, or its value as stated in the sale contract
or purchase order, whichever is greater.
new text end

new text begin (d) If the dealer received a portion of the purchase price by credit card, or other
third-party payer on the consumer's account, the dealer may refund that portion of the
purchase price to the credit card issuer or third-party payer for credit to the consumer's
account.
new text end

new text begin (e) Notwithstanding paragraph (a), a dealer is not required to grant a contract
cancellation option to an individual who exercised the individual's right to cancel the
purchase of a vehicle from the dealer pursuant to a contract cancellation option during the
immediately preceding 30 days or to an individual that has exercised a purchase option on
a vehicle the individual has previously leased. A dealer is not required to give notice to a
subsequent consumer of the return of a vehicle under this section. This subdivision does
not abrogate or limit any disclosure obligation imposed by any other law.
new text end

new text begin (f) This subdivision does not affect or alter the legal rights, duties, obligations, or
liabilities of the consumer, the dealer, or the dealer's agents or assigns, that would exist in
the absence of a contract cancellation option. The consumer is the owner of the vehicle
when the consumer takes delivery until the vehicle is returned pursuant to a contract
cancellation option, and the existence of a contract cancellation option must not impose
permissive user liability on the dealer under section 169.09, subdivision 5a, or otherwise.
new text end

Sec. 12.

Minnesota Statutes 2006, section 325F.662, subdivision 10, is amended to
read:


Subd. 10.

Limitation on actions.

A private civil action brought by a consumer
under this section new text beginwith respect to a warranty claim new text endmust be commenced within one year
of the expiration of the express warranty.