STAND. COM. REP. NO. 907

                                 Honolulu, Hawaii
                                                   , 1999

                                 RE: H.B. No. 411
                                     H.D. 1




Honorable Calvin K.Y. Say
Speaker, House of Representatives
Twentieth State Legislature
Regular Session of 1999
State of Hawaii

Sir:

     Your Committee on Consumer Protection and Commerce, to which
was referred H.B. No. 411 entitled: 

     "A BILL FOR AN ACT RELATING TO MOTOR VEHICLES,"

begs leave to report as follows:

     The purpose of this bill is to provide a three-day right of
rescission for new motor vehicle sales or leases, where the
consumer has not taken delivery of the vehicle or has driven the
vehicle less than 100 miles.

     Testimony in support of this bill was received from the
Regulated Industries Complaints Office (RICO) of the Department
of Commerce and Consumer Affairs (DCCA), and from an interested
individual.   RICO testified that motor vehicle sales generate
the largest number of inquiries to RICO from consumers seeking to
rescind the purchase contract for a new vehicle, most believing
that there is a three-day right of rescission.  RICO supported
the bill's effort to address the need for clarity on the rights
of a consumer who is encouraged to take, and does take,
possession of the motor vehicle before financing has been
approved, and later learns that financing has been disapproved.

     The DCCA Office of Consumer Protection (OCP) provided
comments on the impact this measure would have on the Motor
Vehicle Lease Disclosure Act (chapter 481L, Hawaii Revised
Statutes) including a suggestion that the right of rescission be
conspicuously disclosed prior to or at the time of the
transaction.

 
 
                                 STAND. COM. REP. NO. 907
                                 Page 2

 
     The Hawaii Automobile Dealers Association (HADA) strongly
opposed the bill, listing numerous problems that would be created
for dealers, including the effect of the rescission period on
manufacturer's rebates, and the shortened warranty period for
subsequent purchasers of vehicles returned due to rescinded
contracts.

     Your Committee recognizes that a motor vehicle sale or lease
is one of the largest purchases or obligations incurred by the
average consumer, and involves a decision often made under high
pressure sales tactics, sometimes resulting in buyer's remorse,
and accompanied by the buyer's belief that a three-day right of
rescission exists.  Your Committee believes that numerous issues
raised by HADA, RICO, and OCP warrant further study as this bill
proceeds through the Legislature but, at the very least,
consumers should be clearly advised, prior to signing a sales or
lease agreement, whether or not there is a three-day right of
rescission.  Your Committee also understands that RICO and HADA
are continuing to work on language to provide consumer
protections and disclosure of rescission rights, if any, where a
consumer takes possession of the vehicle prior to financing being
approved.

     Upon consideration of all these factors, your Committee has
amended the bill by replacing its contents with provisions making
it a violation of the Motor Vehicle Industry Licensing laws for a
dealer or a salesperson to sell or lease a new or used motor
vehicle without specific written documentation disclosing to the
customer whether there is a three-day rescission right.

     As affirmed by the record of votes of the members of your
Committee on Consumer Protection and Commerce that is attached to
this report, your Committee is in accord with the intent and
purpose of H.B. No. 411, as amended herein, and recommends that
it pass Second Reading in the form attached hereto as H.B. No.
411, H.D. 1, and be placed on the calendar for Third Reading.

                                   Respectfully submitted on
                                   behalf of the members of the
                                   Committee on Consumer
                                   Protection and Commerce,



                                   ______________________________
                                   RON MENOR, Chair