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SF 1333

1st Engrossment - 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;
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, by adding a subdivision;
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:
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:
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;
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;
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 single document that is separate from the retail installment
contract and any other vehicle purchase documents.
new text end

Sec. 6.

new text begin [53C.083] CONSUMER REPORT DISCLOSURE.
new text end

new text begin (a) When a consumer report from a consumer reporting agency has been obtained
for use in connection with an application for credit initiated by a buyer for the purchase
or lease of a motor vehicle, the retail seller shall provide, prior to the sale or lease of the
motor vehicle, the following notice in at least ten-point boldface type on a document
separate from the sale or lease contract, which must include the name, address, and
telephone number of each credit reporting agency providing a consumer report 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 The dealer used a consumer report from a consumer reporting agency in connection
with your application to finance the acquisition of a motor vehicle. Consumer reports
include data about your credit history and payment patterns. Consumer reports are
important because they are used in determining whether to extend credit and may be used
to determine the annual percentage rate you may be offered.
new text end

new text begin If you have questions about your consumer report, please contact the consumer
reporting agency at the address and telephone number provided. You are entitled under
federal law to a free copy annually of your consumer report by calling 1-877-322-8228 or
visiting annualcreditreport.com."
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. For purposes of this section, "consumer report" and
"consumer reporting agency" have the meanings given in section 13C.001.
new text end

Sec. 7.

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
has been 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 dealer knows or should have known that 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 dealer knows or should have known that 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; or
new text end

new text begin (8) the vehicle is sold "AS IS".
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. 8.

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 $125 if the
vehicle's cash price is $10,000 or less, $250 if the vehicle's cash price is less than $15,000
but greater than $10,000, $375 if the vehicle's cash price is less than $20,000 but greater
than or equal to $15,000, and $500 if the vehicle's cash price is $20,000 or greater;
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;
new text end

new text begin (v) an amount in certified funds to reimburse the dealer for its payments on the
buyer's behalf to discharge a lien on a vehicle left by the buyer 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 reimbursement amount owed to the dealer is only
the amount that the dealer's payment to the lienholder exceeds the value of the vehicle
as indicated on the sales contract or purchase order; and
new text end

new text begin (vi) 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 third 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 in person or
by United States first class mail, postage prepaid; and
new text end

new text begin (2) the dealer shall return to the consumer, no later than three days after 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 be the value of the motor vehicle left as a downpayment or trade-in,
as stated in the sale contract or purchase order less any amount paid by the dealer to a
lienholder on the buyer's behalf. The dealer shall provide the full refund in the form of
cash, a negotiable instrument as defined in section 336.3-104, or draft conditioned on the
verification of an instrument accepted by the dealer as part of the buyer's down payment.
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 must 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) If the dealer received a portion of the purchase price by check or other negotiable
instrument as defined in section 336.3-104, the dealer need not return the amount of
the payment until after the check or negotiable instrument is finally paid as provided in
section 336.4-213.
new text end

new text begin (f) A dealer whose cancellation offer exceeds the requirements contained in
subdivision 8b, and whose cancellation offer in the contract of sale provides a purchase
cancellation agreement disclosing the terms of that cancellation offer shall be deemed to
have complied with this section.
new text end

new text begin (g) 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 (h) 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. Notwithstanding the existence of a contract
cancellation option and the fact that the dealer may retain title to the vehicle, the consumer
is deemed the owner of the vehicle for purposes of sections 65B.41 to 65B.71, and 169.09,
subdivision 5a, when the consumer takes delivery until the vehicle is returned pursuant
to a contract cancellation option.
new text end

Sec. 9.

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.

Sec. 10. new text beginEFFECTIVE DATE.
new text end

new text begin This act is effective January 1, 2008.
new text end