SB2967 100TH GENERAL ASSEMBLY

LRB100 17538 JLS 35784 b

100TH GENERAL ASSEMBLY
State of Illinois
2017 and 2018
SB2967

Introduced 2/14/2018, by Sen. Terry Link

SYNOPSIS AS INTRODUCED:

815 ILCS 505/2VVV new

Amends the Consumer Fraud and Deceptive Business Practices Act. Provides that it is an unlawful practice to advertise or offer free prizes, gifts, or incentives in connection with the sale of motor vehicles except under specified conditions. Prohibits the advertisement of a warranty as being free of charge. Sets forth conditions under which a warranty may be offered. Terminates the operation of certain administrative rules relating to gifts and free offers in connection with the sale of a vehicle.

FISCAL NOTE ACT MAY APPLY

A BILL FOR

AN ACT concerning Business.

Be it enacted by the People of the State of Illinois, represented in the General Assembly:

Section 5. The Consumer Fraud and Deceptive Business Practices Act is amended by adding Section 2VVV as follows:

(815 ILCS 505/2VVV new)

Sec. 2VVV. Gifts and free offers by automobile dealers.

(a) In this Section:

"Dealer" and "used car dealer" have the meanings ascribed to those terms in the Illinois Vehicle Code.

"Clear and conspicuous" (including the term "clearly and conspicuously") means that the statement, representation, or term being conveyed is: in close proximity to the statement, representation, or term it clarifies, modifies, explains, or to which it otherwise relates; readily noticeable; reasonably understandable by the person to whom it is directed; and not contradictory to any terms it purports to clarify, modify, or explain. A statement, representation, or term is not clear and conspicuous unless:

(1) For printed, written, typed, or graphic advertisements, it:

(A) employs abbreviations only if they are commonly understood by the public (such as AC, AM/FM, AUTO, AIR, 2DR, CYL, and MSRP) or approved by federal or State law (including terms allowed by the federal Truth in Lending Act or the Consumer Leasing Act of 1976 such as APR) and does not employ abbreviations that are not commonly understood (such as WAC and PEG); and

(B) it is of sufficient prominence in terms of print, size, and color contrast, as compared with the remainder of the advertisement, so as to be readily noticeable to the person to whom it is directed. Any type size that is 10-point type or larger is deemed readily noticeable.

(2) For radio advertisements and the audio portion of television advertisements or advertisements in any other audio-visual medium:

(A) it is at a decibel level equal to the highest decibel level used in the advertisement; and

(B) it is at a speed equal to or slower than any other statement, representation, or term contained in the advertisement.

(3) For required superimposed written copy ("super") in a television advertisement or advertisements in any other audio-visual medium:

(A) the minimum height of supers are:

(i) capital and lower case letters: 24 video scanlines;

(ii) capital letters only: 18 video scanlines;

(B) it appears on the screen for a duration sufficient to allow a viewer to have a reasonable opportunity to read and understand the statement, representation, or term.

There is a rebuttable presumption that the super is sufficient if the super meets the following on-screen minimum display time:

(1) 3 seconds for the first line of text; and

(2) one second for each additional line.

"Material terms and conditions" means all terms and conditions relating to the offer so as to leave no reasonable probability that the offering might be misunderstood. "Material terms and conditions" includes, without limitation, those mandated by federal or State law and terms without which the advertisement would be false or misleading.

"Service contract" has the meaning ascribed to that term in the Service Contract Act.

(b) It is an unlawful practice within the meaning of this Act to advertise or offer free prizes, gifts, or other incentives in connection with the sale or lease of a vehicle when the vehicle is sold or leased at a price arrived at through bargaining or negotiation, unless the dealer meets the requirements of subsection (c) of this Section.

(c) A free prize, gift, or other incentive may be advertised or offered in connection with the sale or lease of a vehicle if:

(1) the free prize, gift, or other incentive is offered through a manufacturer's program or a manufacturer's authorized and approved dealer advertising association without any participation by the dealer, excluding dues or assessments that are required to participate in the advertising association, and the identity of this program or association is clearly and conspicuously disclosed; and

(2) all material terms and conditions relating to the offer are clearly and conspicuously disclosed at the outset of the offer.

(d) Nothing in this Section prohibits any dealer from including a warranty with the purchase or lease of a vehicle as long as the following conditions are met:

(1) the warranty is not advertised as free using the word "free", or words of similar import;

(2) the warranty program offered by the dealer is not a service contract;

(3) the dealer is ultimately financially responsible for any and all covered claims;

(4) the dealer clearly and conspicuously discloses to consumers all material terms and conditions of the warranty program.

A dealer may only offer under this subsection a warranty that covers the mechanical components of a vehicle. Under no circumstances may a dealer offer a warranty under this subsection that covers tires, oil changes, other routine maintenance, fabric protection, paint protection, road side assistance, dent and ding repair, or any other similar products or services.

A dealer may contract with a third party to establish, administer, or service the warranty program. If the dealer elects to contract with a third party, the dealer must undertake the following:

(1) the dealer shall establish the claim procedure process including any applicable restrictions or requirements associated with the warranty;

(2) the dealer shall oversee the third party;

(3) the dealer shall make all final decisions on claims and claim eligibility; and

(4) in the event of insolvency of the third party, the dealer remains financially responsible to administer, service, and pay any claims for the covered warranty period.

A contractual liability insurance policy may be purchased to cover the obligations of the warranty program. If the dealer elects to purchase liability insurance to cover the obligations of a warranty program, the dealer must undertake the following:

(1) the dealer shall establish the claim procedure process, including any applicable restrictions or requirements associated with the warranty;

(2) the dealer shall make all final decisions on claims and claim eligibility;

(3) the insurance policy shall have a minimum rating of A-minus; and

(4) in the event of insolvency of the insurance company, the dealer remains financially responsible to administer and pay any claims for the covered warranty period.

(e) On and after the effective date of this amendatory Act of the 100th General Assembly, Section 475.590 of Title 14 of the Illinois Administrative Code is inoperative.