December 15, 2004
Honorable Sheldon Silver
Dear Speaker Silver:
It is my pleasure to forward to you the 2004 Annual Report of the Assembly Standing Committee on Consumer Affairs and Protection.
The work accomplished during the 2004 Legislative Session reflects the Committee's dedication to and concern for consumer's basic rights, safety, and interests. Through hard work and diligence, the Committee was responsible for enacting legislation regulating fees and requiring disclosure of terms and conditions for gift certificates. Chapters 170, 171, and 507 of the Laws of 2004 prohibit retroactive fees and prohibit monthly service fees prior to the thirteenth month of dormancy. As well, the Chapters require the terms and conditions of a gift certificate to be disclosed at the time of the purchase and require the notice to be given to consumers in advertisements and during on-line purchasing of gift certificates.
Several other laws were enacted this year to protect consumers in the marketplace. Chapter 225 of the Laws of 2004 restricts the use of drawstrings in children's clothing. This will help protect children against strangulation, choking, and being snagged via drawstrings in their clothing. Chapter 476 of the Laws of 2004 prohibits rental car companies from using information gathered from a global positioning device to impose fees on the authorized driver for the use of the rental vehicle. This legislation is important in protecting consumers in a changing technological landscape.
I would like to take this opportunity to thank the Committee members for their continued contributions to this past year's achievements. I would also like to express my appreciation for the assistance that the Committee received from the Committee staff in the course of our work. Finally, Mr. Speaker, I commend you for your continued leadership and support of our legislative initiatives to better protect New York State consumers.
2004 ANNUAL REPORT
STANDING COMMITTEE ON CONSUMER AFFAIRS AND PROTECTION
AUDREY I. PHEFFER, CHAIR
Peter J. Abbate, Jr.
David G. McDonough,
Joanne Barker, Legislative Coordinator
|Table of Contents|
The Assembly Consumer Affairs and Protection Committee (the "Committee") is responsible for developing legislation aimed at protecting consumers' rights and ensuring the public's ability to make informed choices in the marketplace. Generally, the Committee has jurisdiction over legislation that amends sections of the General Business and Personal Property Laws and parts of the Agriculture and Markets and Education Laws. The broad interests of the Committee reflect the fact that today's consumers can be victims of fraud, misinformation, or lack of information that is vital to their health, safety, and welfare.
To protect consumers' rights and help them make informed choices, the Committee works with consumer groups and state and federal agencies. At the State level, these agencies include: the Department of Law; the Consumer Protection Board; the Department of Education; the Department of Environmental Conservation; the Department of Health; the Department of Agriculture and Markets; and the Department of State. The federal government agencies with which the Committee works include: the Federal Trade Commission (FTC); the Food and Drug Administration (FDA); the Federal Communications Commission (FCC); the Consumer Product Safety Commission (CPSC); and the National Highway Traffic Safety Administration (NHTSA). The Committee also works with local agencies, such as the New York City Department of Consumer Affairs, local consumer affairs offices, numerous Better Business Bureaus, and bar associations throughout the State.
In addition, the Committee works to help consumers in the development of legislation under the jurisdiction of other Assembly standing committees. Such committees include: Transportation; Corporations, Authorities, and Commissions; Economic Development, Job Creation, Commerce, and Industry; Agriculture; and Insurance.
The Assembly has traditionally been a strong advocate for the protection of consumers' rights, including the protection of personal privacy. As technology continues to evolve, the potential for inappropriate actions concerning personal information has risen dramatically. The public is increasingly aware that it has less control over its personal and sensitive information. Privacy issues include a number of very broad topics, such as: the theft of identity; credit reporting; and telecommunications.
The Committee has taken great strides in promoting legislation that would protect the privacy of New York State's consumers.
This bill would restrict the dissemination and collection of Social Security Numbers, thereby protecting the personal privacy of New Yorkers.
This bill tracks the intent of the federal Privacy Act of 1974 by stipulating that every person, firm, partnership, or corporation that requests a social security number from an individual shall inform such individual, in writing or orally when the request is made orally, whether federal or state law or regulation authorizes the solicitation of the social security number, whether disclosure of such number is mandatory or voluntary, and the principal purpose or purposes for which such information is intended to be used. If a person refuses to supply his or her social security number and a federal or state law or regulation does not mandate it, the person cannot be denied service. (Passed Assembly)
This bill would reduce the proliferation of unsolicited mail caused by the release or sale of cardholder information by granting consumers the choice of having personal information kept confidential.
Consumer resistance to unsolicited direct mail has been steadily increasing. Some responsible card issuers recognize the importance of consumer privacy and limit the release of cardholder information or notify their customers of the option not to have their personal data released. Unfortunately, not all consumers are aware of this option. (Passed Assembly)
This bill would prohibit the sale, lease, or exchange of a consumer's electronic mail address without that consumer's consent.
It would protect the privacy interests of consumers who unknowingly have their electronic mail address and other personal identifying information "harvested" online. Specifically, this bill prohibits the sale, lease, or exchange of such information without the subject's affirmative consent. (Passed Assembly)
This bill would prohibit a merchant from writing a customer's address and telephone number on a sheet of paper attached to a credit card transaction form. The bill also would remove the exception in the credit card privacy law that allows a merchant to record the customer's name and address when the amount of the transaction is below the store's floor limit. (Passed Assembly)
The purpose of this bill is to provide consumers with certain necessary and clear information in a separate written contract for the sale of a memorial or monument.
Existing statute, commonly referred to in the death-care industry as the "separate contract law," requires that each sale of a monument be evidenced by a contract separate and apart from any other funeral goods or services, and provides for specific contractual provisions and requirements. This law includes municipal corporations and political subdivisions within the definition of "seller" of memorials and monuments, thereby requiring a separate contact in these instances as well.
This legislation clarifies that the definition of "gift certificates" includes gift cards and requires that limitations placed on gift certificates by issuers (including expiration dates, any fees charged against the balance, and replacement policy) shall be disclosed to a consumer at the time of purchase.
The purpose of this law is to address the fees that are charged against a gift certificate.
This measure prohibits the imposition of retroactive fees and the imposition of monthly service fees until the thirteenth month of dormancy.
This law increases the fine for violating the provisions of the State No-Telemarketing-Sales-Calls Statewide Registry to the same level as the penalty for violating the National Do-Not-Call Registry. The increase is from $5,000 to $11,000.
This law prohibits a rental vehicle company from using information from any global positioning system technology to determine or impose any costs, fees, charges, or penalties on an authorized driver for such driver's use of a rental vehicle. However, this law will not limit the ability of a rental vehicle company to impose fees for the recovery of that vehicle if it is lost, misplaced, or stolen.
This law: (1) requires, at a minimum, that the gift certificate's expiration date and the terms of any service fees and replacement card fees to be on the gift certificate; (2) eliminates the complete exemption for gift certificates that are sold below face value or at a volume discount to consumers and employees or to nonprofit and charitable organizations or educational institutions for fundraising purposes, but retains the exemption from the sign posting requirement; and (3) provides that local governments are preempted from adopting requirements that differ from the state law.
This law requires commercial towers responding to a call for assistance from a stranded motorist to either repair the vehicle and render it safely operable or transport both the vehicle and its occupants to a reasonably safe location where such repairs can be made. The commercial tower would also be required to accept cash and all other forms of payment that such commercial tower accepts in the ordinary course of business, including credit and debit cards.
The purpose of this bill is to prohibit price gouging by rental car companies for gasoline used by renters.
This bill would define "flat rate" for the purposes of this section, and cap the amount, per gallon, that rental car companies may charge renters to refill rental cars. The cap would be set at five percent (5%) above the average retail price for the same motor fuel graded product sold at self service pumps in the region, as recorded by the State Energy Office, or other responsible state agency. This bill would exempt rental car companies which disclose their fuel charge policies to renters.
This bill would require that rented clothing be cleaned prior to re-rental. Most consumers assume that rental clothing is cleaned prior to being rented. However, under current law, there is no requirement that businesses do so.
A consumer's expectation for hygienic rental practices should be met. Customers who are paying for the rental of clothing should know that such item has been properly cleaned and cared for before it is available for rent. (Passed Assembly)
This legislation would require telephone service providers to furnish toll-free customer service numbers for consumers offered unsolicited services through a negative option-sales plan. Under current law, a company or business offering unsolicited telephone service in New York State for any specific period of time is not required to provide a toll-free number for consumers to discontinue such service.
Without appropriate access to service providers in respect to billing, rate, and other information, a consumer may be vulnerable to charges for additional services that they do not want or cannot afford. (Passed Assembly)
The purpose of this bill is to prohibit credit card companies from imposing a fee on customers who choose not to carry a monthly balance. Paying off the monthly balance on a credit card is something many people strive to accomplish. Imposing a fee on such conscientious credit card holders to offset the losses incurred by other card holders is an unjust business practice.
This bill would send a clear message that companies should support their customers who pay off their bills in a timely manner and not penalize them. (Passed Assembly)
This bill would prohibit charging consumers for unordered or unrequested goods and services and "negative-option plans" - offers by businesses that purport to be accepted if not rejected by the consumer within a stated period of time. The bill would carve out an exception for membership or club arrangements in which the recipient receives goods at specified intervals and plans pursuant to which the recipient agrees to receive goods without further obligation. (Passed Assembly)
This bill would prohibit the advertising or offering of free estimates unless the estimate is in writing and there is no charge for providing such estimate. Unscrupulous merchants sometimes offer "free estimates." After providing the offered estimate, the merchant then insists on being paid for a written estimate.
This proposed legislation would require that estimates advertised as free are indeed provided at no charge to the customer. This requirement would protect consumers from merchants who might try to employ misleading business practices. (Passed Assembly)
This bill would protect consumers from fraudulent practices by computer manufacturers and retailers by prohibiting the industry from selling as "new" computers and computer accessories with old or recycled parts. For example, in 1996, the Packard-Bell Computer Company was caught and convicted of trying to pass off as new remanufactured and used computer parts.
This bill would mandate that the computer industry use only new computer parts when it sells "new" computer hardware, monitors, printers, and other accessories to consumers. It also would require retailers to affix a label or tag on the outside of the container box indicating that only new parts have been used on the computer. (Passed Assembly)
This bill would prohibit unsolicited facsimiles to an individual or business if no prior business relationship was established. This bill would eliminate the loophole in the current law, which allows companies to transmit advertising faxes overnight during the time between 9:00 p.m. and 6:00 a.m. This bill would still allow the transmittal of faxes if there were a previous business relationship with the person receiving them.
This bill attempts to secure a person's peace and quite without interruption from the ringing of their fax machine that is receiving an advertisement from a company with which they never had a business relationship. (Passed Assembly)
This bill would prohibit the offering of a prize, if in order to claim the prize, the consumer must call a pay-per-call service where the charge for such service is greater than the charge for the transmission of the call as assessed by a telephone corporation regulated by the public service commission. (Passed Assembly)
This bill would require any written solicitation, the purpose of which is to provide credit protection services, to disclose that the purchase of such services is not required to secure or retain a credit card. In addition, the solicitation would also include a concise statement about a consumer's rights under the Fair Credit Reporting Act. The bill would prohibit the automatic renewal of credit protection services unless the consumer is notified not more than sixty days in advance nor less than fifteen days prior to the termination of the existing agreement.
Companies that offer credit card protection services should be required to disclose current federal regulations regarding consumer credit and debit card liability, as well as consumer rights under the Fair Credit Reporting Act. These simple disclosures will enable a consumer to make an informed decision prior to entering into a credit protection service agreement. (Passed Assembly)
This bill would increase, from $500 to $5,000, the maximum penalty that may be imposed on a commercial enterprise that engages in an unfair or deceptive trade practice.
The New York law, which provides for penalties of up to $500 per violation of the state's deceptive practices and false advertising statutes, went into effect in 1963 and the amount of the penalty has not been adjusted upward since then. This amount is grossly outdated and such an insignificant penalty does not provide a disincentive to the commission of deceptive acts and practices. (Passed Assembly)
This bill would require farm-raised or wild salmon sold at retail to be labeled accordingly. (Passed Assembly)
This law clarifies who is eligible to dispense ephedra supplements under Chapter 385 of the Laws of 2003. However, subsequent to the enactment of this bill, the Food and Drug Administration has banned the sale of dietary supplements containing ephedra (ephedrine alkaloids) due to concerns over their cardiovascular effects, including increased blood pressure and irregular heart rhythm.
This bill would prohibit the sale of any clothing from children's size 2T up to children's size 16, inclusive, that has a drawstring at the bottom opening of an upper garment or a drawstring at the waist longer than three inches. The bill would also prohibit the sale of any children's clothing up to and including children's size 12 that has a hood or neck opening drawstring, and defines "drawstring," "tie," "hood," "neck opening," toggle, and "aglet".
This law prohibits the sale of utility knives or "box cutters" to persons under the age of eighteen. In the past few years, the incidence of assaults on students and teachers in New York State has escalated dramatically, and utility knives are sometimes being used as weapons by students. This legislation would prevent these tools from being misused and brought into schools. In addition, this legislation would allow communities to enact laws stricter than the state law regarding the sale and regulation of box cutters. (Passed Assembly)
The purpose of this bill is to provide consumers with guidance and protection when choosing weight loss services and products. It requires anyone selling or offering for sale weight loss services or products to provide certain disclosures to the consumer.
Millions of New Yorkers have tried or are trying to lose weight for medical and cosmetic reasons. It is estimated that dieters across the nation are spending as much as $33 billion each year on diet programs and products. Unfortunately, the results of medical research about the safety and effectiveness of diet programs are often vague and contradictory. This makes it difficult for consumers to decide what programs and products to use. The disclosure of certain weight loss and dieting information will be useful to such a consumer prior to purchasing a product or service. (Passed Assembly)
This bill would require all sunscreen products to be labeled with an expiration date. According to the American Cancer Society, over 800,000 new skin cancer cases of highly curable basal cell or squamous cell cancers are diagnosed each year. Since 1973, the incidence of skin cancer has increased about 4% per year.
Many consumers use sunscreen products to prevent the risk of skin cancer. In light of how important these products are in combating skin cancer, it is important that the consumer be aware that sunscreen does not protect against the sun's rays after a certain shelf life. This legislation would increase consumer awareness of sunscreen product effectiveness by requiring all products to be labeled with an expiration date and storage recommendations. (Passed Assembly)
This bill would prohibit the sale of laser pointing devices to persons under eighteen years of age. The Food and Drug Administration (FDA) warns parents that children may risk their eyesight if they play with laser pointing devices. The FDA has stated that the light energy that such devices emit can be more damaging than staring directly into the sun. Eye injuries have already been reported to the FDA as a result of improper use of such devices. In addition, this bill would set up restricted access for the sale of these devices in stores. (Passed Assembly)
This bill would mandate labeling to inform consumers of the date of preparation of foods intended for off-premises consumption offered for sale in delicatessens, salad bars, and other food establishments by requiring a label indicating the date of preparation. By labeling the freshly prepared food, consumers will be given the information necessary to decide whether it is in their best interest to purchase the item. (Passed Assembly)
This bill would apply the same consumer protections that currently exist for purchasers of motorized wheelchairs to non-motorized wheelchairs. It would extend warranty, replacement, and quality standards to wheelchairs purchased by State agencies, non-profit medical, dental, health and hospital service corporations, and health maintenance organizations.
Wheelchairs and their customized component parts are absolutely essential to the mobility of many persons with disabilities. Wheelchairs are also very expensive, costing as much as $8,000. Much of this equipment is subject to frequent breakdown and is often not covered by warranties or other basic consumer protection. This bill would significantly reduce financial stress for those citizens who rely on wheelchairs to meet their basic transportation needs. (Passed Assembly)
This bill would require health clubs that provide training services to have in attendance during business hours at least one employee who has satisfactorily completed a course in cardiopulmonary resuscitation and first-aid. (Passed Assembly)
This law amends the definition of "living facilities" to describe in greater detail motor home components that are not covered under the Lemon Law.
As well, this measure permits two repair attempts to a motor home or permits the motor home to be out of service for twenty-one days, whichever occurs first, before triggering a notice requirement. The consumer would notify the manufacturer or the dealer, of the defect by certified mail, return receipt requested, and may institute any proceeding or other action pursuant to this section if the motor home has been out of service by reason of three repair attempts or for at least thirty-six days.
This law does not count a repair attempt if the repair facility is not authorized by the applicable motor home manufacturer to perform warranty work on the identified nonconformity. It counts as only one repair attempt for a motor home if the same nonconformity is being addressed a second time due to the consumer's decision to continue traveling and to seek the repair of the same nonconformity at another repair facility rather than wait for the initial repair to be completed.
The bill would add a "New Motor Home Lemon Law Bill of Rights" outlining the rights and responsibilities of the consumer and manufacturer and dealer.
This bill would require airbags to be sold without such sale being tied into the sale of other goods and services. The requirements under this bill are applicable to new motor vehicles only and would not apply to airbags required to be installed by federal law. A motor vehicle dealer shall not be in violation of this section if the dealer, after due diligence, is unable to acquire from the manufacturer a vehicle equipped with airbags as an option without the purchase of a package of options. (Passed Assembly)
Currently, only the State Attorney General is empowered to bring legal action against violators of the price gouging statute. This bill would leave the Attorney General's powers intact, but would also permit individual victims of price gouging to sue the price gougers directly. (Passed Assembly)
This bill would correct a legislative oversight, by affording consumers who allege anti-trust violations the right to file suit as part of a class action and seek damages as a group.
Section 340 of the General Business law provides that agreements for monopoly or in restraint of trade are illegal and void and that the state or any person damaged by such agreements may sue for damages. In 1999, a new subdivision was added, providing a right of action where the claim arose from a purchase made indirectly. In 2000, the New York Supreme Court dismissed two class action suits brought pursuant to section 340 of the General Business law holding that section 340 provides for treble damages and is therefore punitive. In that instance a class action will survive only when a statute specifically provides for it.
This bill would extend that remedy to private suits. The history of the anti-trust law reflects the desire of the legislature to protect consumers and to enable them to seek damages if appropriate. Broadening the methods of righting the wrong would better utilize resources and reduce the costs of bringing actions. This would serve both the legal system and the consumer. (Passed Assembly)
This bill would permit the arbitrator in a dispute over a motorized wheelchair warranty to award reasonable attorney fees and the reasonable and necessary costs of attending an in-person hearing to a prevailing consumer. Current law provides that each party has the right to be in attendance at any presentation, but does not provide for reimbursement to disabled consumers the cost of transportation to a presentation. (Passed Assembly)
On September 24, 2004, the Committee held a joint hearing with the Committee on Banks. The purpose of the hearing was to discuss issues regarding the suspension of CashPoint's license to operate in New York State. CashPoint was a licensed money transmitter as well as provided bill paying and check cashing services. On April 21, 2004, the New York State Banking Department suspended the license of CashPoint Network Services, Inc., citing that the company had as much as $40 million in outstanding debt to creditors.
The goal was to examine this situation within the context of what went wrong, what the consequences of the suspension will be to consumers, businesses, and the banking community, and what might be done in the future to avoid a situation like this.
Representatives included the first deputy superintendent of banks from the New York State Banking Department, the president of Financial Service Centers of New York, the executive director of the National Money Transmitters Association, Inc., and general counsel from External Compliance Officer, Inc.
The hearing marked a successful dialogue on possible legislative solutions, as well as a possible educational campaign for consumers. The committees plan to continue the dialogue with government, consumers, and industry participants.
The 2005 Legislative Session promises to present many challenges to the Consumer Affairs and Protection Committee. The Committee will pursue many of the issues it addressed during the 2004 Session, and new issues will emerge for consideration. As in the past, the Committee will continue to address issues brought to its attention by legislators, the executive branch, staff, and by the people of the State of New York.
CHAPTERS OF 2004
2004 BILLS PASSED BY THE ASSEMBLY
VETO'S of 2004
2004 SUMMARY OF ACTION ON ALL BILLS REFERRED TO THE ASSEMBLY COMMITTEE ON CONSUMER AFFAIRS AND PROTECTION
New York State Assembly
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