Honolulu, Hawaii
                                                   , 1999

                                 RE: H.B. No. 642
                                     H.D. 1

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


     Your Committee on Consumer Protection and Commerce, to which
was referred H.B. No. 642 entitled: 


begs leave to report as follows:

     The purpose of this bill is to modify the prohibition
against motor vehicle lessors paying commissions to their
employees for selling collision damage waivers (CDWs) to motor
vehicle lessees.  While the payment of direct commissions is
still prohibited, this bill permits payment of commissions on an
indirect basis, so that CDW sales may be one of several factors
considered in the determination of commissions, bonuses, and
other remuneration.

     Testimony supporting the bill was presented by Budget Rent A
Car, Alamo, and Catrala-Hawaii.  Supporting testimony stated that
the ban on commissions was appropriate when abuses in sales
tactics were occurring prior to 1990, but that the industry has
drastically changed both in terms of competition and complaints
about CDW sales.  Supporters also stated that Hawaii is the only
state that does not allow a company, directly or indirectly, to
consider CDW sales in evaluating job performance or in paying
commissions to an employee.  This, they claim, places the Hawaii
motor vehicle rental lessors and their employees at a
disadvantage when sales figures are compared with affiliated
rental companies in other states.  

                                 STAND. COM. REP. NO. 1031
                                 Page 2

     Testimony opposing the bill was presented by the Office of
Consumer Protection (OCP) of the Department of Commerce and
Consumer Affairs.  One of OCP's concerns is that the distinction
between direct and indirect commissions in the bill is unclear
and confusing. 

     Your Committee finds that the climate of competition in the
motor vehicle rental industry has changed considerably since the
time the prohibition was passed, and that motor vehicle rental
companies in this State and their employees should not be placed
at a disadvantage when compared to their mainland counterparts
for performance evaluation and bonus payment purposes.

     Accordingly, your Committee has amended the bill by:

     (1)  Clarifying the definition of "direct commission for
          selling collision damage waivers," which is a practice
          that will continue to be prohibited;

     (2)  Deleting an amendment to section 437D-15(3), which is
          not necessary since misrepresentations are already
          prohibited in section 437D-15(1); and 

     (3)  Making technical, nonsubstantive amendments for
          purposes of conforming to drafting conventions and

     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. 642, as amended herein, and recommends that
it pass Third Reading in the form attached hereto as H.B. No.
642, H.D. 1.

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

                                   RON MENOR, Chair