REPORT TITLE:
Rent-A-Car Collision Waivers


DESCRIPTION:
Amends motor vehicle rental industry law to allow motor vehicle
lessors to receive commissions on an indirect basis for selling
collision damage waivers.

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                        
HOUSE OF REPRESENTATIVES                H.B. NO.642        
TWENTIETH LEGISLATURE, 1999                                
STATE OF HAWAII                                            
                                                             
________________________________________________________________
________________________________________________________________


                   A  BILL  FOR  AN  ACT

RELATING TO THE MOTOR VEHICLE RENTAL INDUSTRY.



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

 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 fewer than fifteen rental companies in
 
14 Hawaii and, in part due to the disclosure law, there exists much
 
15 less of a basis to regulate the rental car industry through the
 
16 prohibition of commissions on the sale of collision damage
 
17 waivers.  In addition, the legislature finds that there are many
 
18 segments of the tourism industry that pay commissions and
 
19 evaluate or reward their employees based on their performance in
 

 
Page 2                                                     
                                     H.B. NO.642        
                                                        
                                                        

 
 1 selling the various packages and programs offered by the
 
 2 employer.  Given this, the legislature believes that the motor
 
 3 vehicle rental industry should no longer be singled out by a law
 
 4 barring the payment of commissions calculated in part from the
 
 5 sale of collision damage waivers.
 
 6      The purpose of this Act is to allow the motor vehicle rental
 
 7 industry to receive commissions calculated in part from the sale
 
 8 of collision damage waivers.
 
 9      SECTION 2.  Section 437D-8.5, Hawaii Revised Statutes, is
 
10 amended to read as follows:
 
11      "437D-8.5  Commissions.  (a)  No lessor or officer,
 
12 employee, agent, or other representative of the lessor shall pay
 
13 or receive a direct commission for selling collision damage
 
14 waivers.  Any violation of this section shall be an unfair or
 
15 deceptive act or practice as provided in section 480-2.
 
16      (b)  As used in this section, ["commission for selling
 
17 collision damage waivers"] "direct commission for selling
 
18 collision damage waivers" includes any compensation, bonus,
 
19 award, or remuneration, [whether direct, indirect, or otherwise,]
 
20 which is calculated by means of a formula, process, evaluation,
 
21 or other [mechanisms] mechanism which [considers sales of
 
22 collision damage waivers as a factor in any manner.] utilizes as
 

 
 
 
Page 3                                                     
                                     H.B. NO.642        
                                                        
                                                        

 
 1 its sole basis, the sale of collision damage waivers.
 
 2 ["Commission for selling collision damage waivers" also includes
 
 3 any performance evaluation which could be used in determining
 
 4 promotions, raises, or other personnel decisions, or any other
 
 5 device which serves to encourage the sale of collision damage
 
 6 waivers.]"
 
 7      SECTION 3.  Section 437D-15, Hawaii Revised Statutes, is
 
 8 amended to read as follows:
 
 9      §437D-15  Unfair trade practices.  Each lessor, and each
 
10 officer, employee, agent, and other representative thereof, is
 
11 prohibited from engaging in any practice constituting a violation
 
12 of chapter 480.  The following shall be per se violations of
 
13 section 480-2:
 
14      (1)  The making of any material statement which has the
 
15           tendency or capacity to mislead or deceive, either
 
16           orally or in writing, in connection with the rental of,
 
17           offer to rent, or advertisement to rent a vehicle;
 
18      (2)  The omission of any material statement which has the
 
19           tendency or capacity to mislead or deceive, in
 
20           connection with the rental of, offer to rent, or
 
21           advertisement to rent a vehicle;
 

 
 
 
 
 
Page 4                                                     
                                     H.B. NO.642        
                                                        
                                                        

 
 1      (3)  The making of any statement to the effect that the
 
 2           purchase of a collision damage waiver is mandatory[;],
 
 3           or that the cost of commissions will not be passed on
 
 4           to the lessee;
 
 5      (4)  Any violation of sections 437D-5 through 437D-14 and
 
 6           [[]section[]] 437D-17.5;
 
 7      (5)  The charging by the lessor to a lessee of more than the
 
 8           cost of the parts and labor necessary to repair a
 
 9           damaged vehicle in accordance with the standard
 
10           practices in the automobile repair industry in the
 
11           community; and
 
12      (6)  The making of any statement by the lessor to the effect
 
13           that the lessee is or will be confined to remain within
 
14           boundaries specified by the lessor unless payment or an
 
15           agreement relating to the payment of damages has been
 
16           made by the lessee."
 
17      SECTION 4.  Statutory material to be repealed is bracketed.
 
18 New statutory material is underscored.
 
19      SECTION 5.  This Act shall take effect upon its approval.
 
20 
 
21                           INTRODUCED BY:  _______________________