SF 2361

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

A bill for an act
relating to commerce; enacting a car buyers' bill of rights; requiring disclosures;
regulating the sale of used motor vehicles; requiring a cancellation option on
purchase of a used motor vehicle; amending Minnesota Statutes 2006, sections
53C.01, by adding a subdivision; 53C.08, subdivision 2; 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.08, subdivision 2, is amended to read:

Subd. 2.

Contents.

The retail installment contract shall contain the following items:

(1) the cash sale price of the motor vehicle which is the subject matter of the retail
installment contract new text begin , which may not include any amount for items listed in clause (4) or
otherwise required to be listed separately new text end ;

(2) the total amount of the retail buyer's down payment, whether made in money or
goods, or partly in money or partly in goods;

(3) the difference between clauses (1) and (2);

(4) the amount, if any, included in the transaction deleted text begin but not included in clause (1) deleted text end to
pay the balance of an existing purchase money motor vehicle lien which exceeds the value
of the trade-in amount, to discharge an interest in an existing motor vehicle lease, for any
insurance, specifying the types of coverage, taxes, fees, and charges that actually are or
will be paid to public officials or government agencies, including those for perfecting,
releasing, or satisfying a security interest, and any other amount to be financed that is
related to the transaction;

(5) principal balance, which is the sum of clauses (3) and (4);

(6) the amount of the finance charge;

(7) the total of payments payable by the retail buyer to the retail seller and the
number of installment payments required and the amount of each installment expressed
in dollars or percentages, and date of each payment necessary finally to pay the total of
payments, which is the sum of clauses (5) and (6) new text begin ; and
new text end

new text begin (8) the amount of consideration the retail seller will receive from any assignee
or buyer of the retail installment contract, expressed in total and as a percentage of the
finance charge under the contract, together with the amount of the monthly payment
attributable to the consideration received by the retail seller for the assignment new text end .

Provided, however, that said clauses (1) to deleted text begin (7) deleted text end new text begin (8) new text end inclusive need not be stated in the
terms, sequence, or order set forth above. Provided further, that clauses (6) and (7) may
be disclosed on the assumption that all scheduled payments under the contract will
be made when due.

deleted text begin In lieu of the above clauses, the retail seller may give the retail buyer disclosures which
satisfy the requirements of the federal Truth-In-Lending Act in effect as of the time of the
contract, notwithstanding whether or not that act applies to the transaction.
deleted text end

Sec. 3.

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 score is 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. 4.

new text begin [53C.087] OFFERING AND ACCEPTING POSSESSION OF TRADE-IN
VEHICLE.
new text end

new text begin Subdivision 1. new text end

new text begin Written offer required; oral offer prohibited. new text end

new text begin (a) A retail seller or
seller's agent may not respond to an inquiry by a retail buyer concerning a trade-in of a
vehicle or vehicles owned by a retail buyer in connection with the purchase of another
vehicle other than by providing a written offer of the consideration that will be given for
the vehicle or vehicles to be traded in. Consideration may include, but is not limited to,
cash given to the retail buyer or a credit to be applied toward a down payment on the
purchase price of the vehicle to be purchased.
new text end

new text begin (b) The written offer must contain a space for the buyer to acknowledge receipt of
the offer and to indicate acceptance or rejection of the offer.
new text end

new text begin (c) The offer required by this subdivision must be presented to the retail buyer before
any retail installment contract is prepared or presented to the buyer.
new text end

new text begin (d) No retail seller or seller's agent may communicate to a retail buyer an estimate of
the value of a vehicle to be traded in or make an oral offer.
new text end

new text begin Subd. 2. new text end

new text begin Written offer final. new text end

new text begin After a written offer has been provided to and
accepted by the retail buyer, the retail seller may not change the amount offered.
new text end

new text begin Subd. 3. new text end

new text begin Preconditions to execution of contract. new text end

new text begin A retail seller may not take
possession of a trade-in vehicle or execute a retail installment contract that includes
consideration given for a trade-in vehicle unless an offer and acceptance of consideration
for the trade-in vehicle or vehicles has been made.
new text end

new text begin Subd. 4. new text end

new text begin Preconditions to disposal or sale of trade-in vehicle. new text end

new text begin After taking
possession of a trade-in vehicle, a retail seller must retain possession and ownership
of the trade-in vehicle until any conditions placed upon the completion of the sale or
delivery of the newly purchased vehicle have been satisfied. Conditions include, but
are not limited to, a conditional delivery agreement allowing the retail seller to demand
return of a newly purchased vehicle if the retail seller is unable to assign the buyer's
retail installment contract.
new text end

new text begin Subd. 5. new text end

new text begin Enforcement. new text end

new text begin Any violation of this section is a deceptive practice under
section 325F.69 and any person injured by the violation may obtain relief under section
8.31, subdivision 3a. An action taken pursuant to this subdivision under section 8.31,
subdivision 3a, is in the public interest.
new text end

Sec. 5.

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

new text begin Subd. 2a. new text end

new text begin Disclosure of damage or defects. new text end

new text begin Prior to consummation of the sale of
a used motor vehicle by a dealer to a consumer, the dealer must clearly and specifically
disclose all material existing mechanical, electrical, and electronic defects and damage
that may be found using reasonable care. Defects and damage that must be disclosed
include, but are not limited to, damage caused by flood or other water source, and
evidence of repair of strut tower, trunk floor plan, frame, or structural portion of unibody,
including corrective welds.
new text end

new text begin For the purpose of this subdivision, "reasonable care" means a standard that requires an
interior and exterior inspection, an under-hood and under-vehicle inspection, and a test
drive. Reasonable care does not require taking the vehicle apart or running tests unless it
is necessary to diagnose apparent symptoms.
new text end

Sec. 6.

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

new text begin Subd. 2b. new text end

new text begin Disclosure of material history, prior use, and title brands. new text end

new text begin (a) Prior to
consummation of the sale of a used motor vehicle by a dealer to a consumer, the dealer
must clearly and specifically disclose, using reasonable care, all:
new text end

new text begin (1) material history;
new text end

new text begin (2) prior use; and
new text end

new text begin (3) title brands. Title brands include, but are not limited to, rebuilt salvage, flood
or water damaged, transferred to insurer upon payment of claim, manufacturer buyback,
personal use, business use, lease use, rental use, demonstrator, executive, taxicab or public
transportation, police vehicle, driver education or government vehicle, or history and use
unknown. Disclosure must include any other jurisdiction in which the vehicle has been
previously titled. If the vehicle has not been previously titled in another jurisdiction, this
disclosure shall specify Minnesota. All title brands that appear on the existing certificate
of title for the vehicle or that will appear on the new certificate of title for the vehicle
shall be disclosed.
new text end

new text begin For purposes of this subdivision, "reasonable care" means a standard that requires
providing information the dealer obtained from manufacturer and auction notices, prior
owner documents and disclosures, and the dealer's own vehicle inspection and repair
records. Reasonable care does not require contacting prior owners or obtaining records
of previous titles unless necessary to clarify inconsistent or questionable information
that is apparent.
new text end

new text begin (b) Disclosures under this section are not limited to those conditions or standards
that require title branding under section 325F.6642.
new text end

Sec. 7.

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, a recreational vehicle as
defined in section 168.011, subdivision 25, or a vehicle when physical modifications have
been requested by the prospective buyer.
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 down payment or
trade-in. If the dealer has sold or otherwise transferred title to the motor vehicle that was
left as a down payment 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 down payment or trade-in. If the dealer has sold or otherwise transferred title
to the motor vehicle that was left as a down payment or trade-in, the full refund described
in clause (1) shall be the value of the motor vehicle left as a down payment 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 this
subdivision, 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. 8.

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 begin with respect to a warranty claim new text end must be commenced within one year
of the expiration of the express warranty.