REPORT TITLE:
Rental Cars; Unfair Practices


DESCRIPTION:
Adds to per se violations of unfair competition, the making of a
statement that the cost of commissions for collision damage
waivers will not be passed on to the lessee.  Prohibits receiving
or paying a direct commission for selling collision damage
waivers in rental car industry.

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                        
THE SENATE                              S.B. NO.           1449
TWENTIETH LEGISLATURE, 1999                                
STATE OF HAWAII                                            
                                                             
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                   A  BILL  FOR  AN  ACT

RELATING TO MOTOR VEHICLE RENTAL INDUSTRY.



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

 1      SECTION 1.  The legislature finds that in 1990 and 1991
 
 2 there was abuse relating to the payment of commission for selling
 
 3 collision damage waivers on rental vehicles.  At that time there
 
 4 were over thirty-five rental companies operating in Hawaii and
 
 5 the abuse was widespread and difficult to control.  As a result,
 
 6 the legislature barred the payment of such commissions by
 
 7 adopting and revising section 437D-8.5, Hawaii Revised Statutes,
 
 8 in 1990 and 1991.
 
 9      The legislature finds that there are fewer than fifteen
 
10 rental companies in Hawaii and the level of complaints in the
 
11 motor vehicle rental industry is much less in comparison to 1990
 
12 and 1991.
 
13      As a result, the legislature further finds that there no
 
14 longer exists any urgent need to control the industry in this
 
15 particular area.  The legislature notes that there are many
 
16 segments of the tourism industry that pay commissions, evaluate
 
17 or reward their employees based on their performance in selling
 
18 various packages and programs.  The legislature believes there no
 
19 longer is a need to single out the motor vehicle rental industry
 

 
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 1 by barring such payments and evaluations.
 
 2      The purpose of this Act is to amend section 437D-8.5, Hawaii
 
 3 Revised Statutes, to allow commissions for selling collision
 
 4 damage waivers, and the passing on of these costs to the lessee
 
 5 of a rental car.
 
 6      SECTION 2.  Section 437D-8.5, Hawaii Revised Statutes, is
 
 7 amended to read as follows:
 
 8      "�437D-8.5  Commissions.  No lessor or officer, employee,
 
 9 agent, or other representative of the lessor shall pay or receive
 
10 a direct commission for selling collision damage waivers.  Any
 
11 violation of this section shall be an unfair or deceptive act or
 
12 practice as provided in section 480-2.  As used in this section,
 
13 "commission for selling collision damage waivers" includes any
 
14 compensation, bonus, award, or remuneration, [whether direct,
 
15 indirect, or otherwise,] which is calculated by means of a
 
16 formula, process, evaluation, or other mechanisms which directly
 
17 considers sales of collision damage waivers as a direct factor in
 
18 any [manner.] calculations.  "Commission for selling collision
 
19 damage waivers" also includes any performance evaluation which
 
20 could be used in determining promotions, raises, or other
 
21 personnel decisions, or any other device which serves to
 
22 encourage the sale of collision damage waivers."
 
23      SECTION 3.  Section 437D-15, Hawaii Revised Statutes, is
 

 
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                                     S.B. NO.           1449
                                                        
                                                        

 
 1 amended to read as follows:
 
 2      "�437D-15  Unfair trade practices.  Each lessor, and each
 
 3 officer, employee, agent, and other representative thereof, is
 
 4 prohibited from engaging in any practice constituting a violation
 
 5 of chapter 480.  The following shall be per se violations of
 
 6 section 480-2:
 
 7      (1)  The making of any material statement which has the
 
 8           tendency or capacity to mislead or deceive, either
 
 9           orally or in writing, in connection with the rental of,
 
10           offer to rent, or advertisement to rent a vehicle;
 
11      (2)  The omission of any material statement which has the
 
12           tendency or capacity to mislead or deceive, in
 
13           connection with the rental of, offer to rent, or
 
14           advertisement to rent a vehicle;
 
15      (3)  The making of any statement to the effect that the
 
16           purchase of a collision damage waiver is mandatory[;],
 
17           or that the cost of commissions will not be passed on
 
18           to the lessee;
 
19      (4)  Any violation of sections 437D-5 through 437D-14 and
 
20           [[]section[]] 437D-17.5;
 
21      (5)  The charging by the lessor to a lessee of more than the
 
22           cost of the parts and labor necessary to repair a
 
23           damaged vehicle in accordance with the standard
 

 
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                                     S.B. NO.           1449
                                                        
                                                        

 
 1           practices in the automobile repair industry in the
 
 2           community; and
 
 3      (6)  The making of any statement by the lessor to the effect
 
 4           that the lessee is or will be confined to remain within
 
 5           boundaries specified by the lessor unless payment or an
 
 6           agreement relating to the payment of damages has been
 
 7           made by the lessee."
 
 8      SECTION 4.  Statutory material to be repealed is bracketed.
 
 9 New statutory material is underscored.
 
10      SECTION 5.  This Act shall take effect upon its approval.
 
11 
 
12                              INTRODUCED BY:______________________