Rent-A-Car Collision Waivers

Prohibits the payment or receipt of direct commissions from the
sale of collision damage waivers; requires lessors to report
information related to employee compensation plans that include
indirect commissions.

THE SENATE                              S.B. NO.           2188
TWENTIETH LEGISLATURE, 2000                                
STATE OF HAWAII                                            

                   A  BILL  FOR  AN  ACT



 1      SECTION 1.  In 1990, the legislature barred the payment of
 2 commissions on the sale of rental vehicle collision damage
 3 waivers because of lessee confusion about the nature of collision
 4 damage waivers and the potential for abuse relating to their
 5 sale.  At the time there were over thirty-five rental companies
 6 operating in Hawaii, and related disclosure legislation in
 7 section 437D-5, Hawaii Revised Statutes, which required a
 8 boldface plain language description of the scope, optional
 9 nature, and cost of the collision damage waiver, as well as of
10 the possibility that the lessee might already be covered by the
11 lessee's personal automobile policy, had only been in existence
12 since 1988.
13      At present, there are significantly fewer complaints due to
14 a lesser number of rental companies in Hawaii (about fifteen),
15 and to the disclosure law.  Today, there exists much less of a
16 basis to regulate the rental car industry through the prohibition
17 of commissions on the sale of collision damage waivers.  In
18 addition, the legislature finds that there are many segments of
19 the tourism industry that pay commissions and evaluate or reward

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                                     S.B. NO.           2188

 1 their employees based on their performance in selling the various
 2 packages and programs offered by the employer, and such
 3 commission payments are not prohibited by Hawaii law.  Given
 4 this, the legislature believes that the motor vehicle rental
 5 industry should no longer be singled out by a law barring the
 6 payment of commissions calculated in part from the sale of
 7 collision damage waivers.
 8      The purpose of this Act is to allow the motor vehicle rental
 9 industry to receive commissions that are not calculated directly
10 from the sale of collision damage waivers.
11      SECTION 2.  Section 437D-8.5, Hawaii Revised Statutes, is
12 amended to read as follows:
13      "437D-8.5  Commissions.  (a)  No lessor or officer,
14 employee, agent, or other representative of the lessor shall pay
15 or receive a direct commission for selling collision damage
16 waivers.  Any violation of this section shall be an unfair or
17 deceptive act or practice as provided in section 480-2.
18      (b)  As used in this section, ["commission for selling
19 collision damage waivers"] "direct commission for selling
20 collision damage waivers" includes any compensation, bonus,
21 award, or remuneration, [whether direct, indirect, or otherwise,]
22 which is calculated by means of a formula, process, evaluation,
23 or other [mechanisms which considers sales of collision damage

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                                     S.B. NO.           2188

 1 waivers as a factor in any manner.  "Commission for selling
 2 collision damage waivers" also includes any performance
 3 evaluation which could be used in determining promotions, raises,
 4 or other personnel decisions, or any other device which serves to
 5 encourage the sale of collision damage waivers.] mechanism by
 6 which a person is able to calculate the amount of any
 7 compensation, bonus, award, or remuneration based directly on the
 8 sales of collision damage waivers."
 9      SECTION 3.  Section 437D-8.6, Hawaii Revised Statutes, is
10 amended to read as follows:
11      "437D-8.6  Collision damage waiver statistics.  [Lessors]
12 (a)  Each lessor shall submit [data or information] a report to
13 the director regarding [their] its sale of collision damage
14 waivers in a given year and amounts expended to repair damage to
15 rental vehicles caused while the vehicles are subject to the
16 collision damage waiver.  
17      (b)  Lessors shall maintain all records reflecting these
18 statistics.  
19      (c)  Neither the director, nor any other employee of the
20 department of commerce and consumer affairs, nor any other person
21 appointed by the director as provided by law, shall release or
22 divulge any of the information or data required by this section,
23 except as may be requested by the legislature, or as required or

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                                     S.B. NO.           2188

 1 allowed by rules adopted pursuant to section 437D-18.
 2      (d)  By January 1, 2001, each lessor shall submit a report
 3 to the director on its compensation plans for employees who
 4 assist or direct the sale of the collision damage waivers as of
 5 January 1, 2000, which shall include details on all factors used
 6 to calculate employee compensation.
 7      (e)  By January 1, 2002, and each year thereafter, each
 8 lessor shall submit a report to the director that includes
 9 details on the following:
10      (1)  Compensation plans of the lessor that reflect all
11           factors, including indirect commissions for selling
12           collision damage waivers, used to calculate employee
13           compensation;
14      (2)  Performance standards or benchmarks that are used in
15           determining promotions, raises, or other personnel
16           decisions; and
17      (3)  Any other device used by the lessor to encourage the
18           sale of collision damage waivers."
19      SECTION 4.  Statutory material to be repealed is bracketed.
20 New statutory material is underscored.
21      SECTION 5.  This Act shall take effect upon its approval.
23                       INTRODUCED BY:  ___________________________