Legislature(2009 - 2010)BELTZ 105 (TSBldg)

03/11/2010 01:30 PM Senate LABOR & COMMERCE

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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
Moved SB 262 Out of Committee
Moved SB 263 Out of Committee
Moved SB 272 Out of Committee
+ Bills Previously Heard/Scheduled TELECONFERENCED
Rescind 1/26/10 Action
                   SB 272-RENTAL CAR CHARGES                                                                                
CHAIR PASKVAN announced SB 272 to be up for consideration.                                                                      
1:54:41 PM                                                                                                                    
SENATOR  HUGGINS, sponsor  of SB  272, explained  that this  is a                                                               
consumer  protection bill  that will  help people  who rent  cars                                                               
know what  their charges will be.  He said they had  all traveled                                                               
places and got  a quote for a $50-dollar vehicle  and by the time                                                               
it was all  done, it was a $75-dollar vehicle  because of all the                                                               
things  they didn't  know  about.  He said  SB  272 creates  full                                                               
disclosure  and  if  you  violate  that,  it's  an  unfair  trade                                                               
1:57:13 PM                                                                                                                    
EDRA MORELEDGE, staff to Senator  Huggins, said SB 272 will allow                                                               
rental car companies  to do in Alaska what they  already do in 30                                                               
other  states. Alaska  law is  currently silent  on the  issue of                                                               
separately  listed  charges  on  rental car  statements  for  the                                                               
recovery  of fees.  This bill  would require  that those  fees be                                                               
listed separately and be clearly identified on the agreement.                                                                   
In  addition  to  government taxes  and  surcharges,  rental  car                                                               
companies  also   assess  additional  cost  recovery   fees,  she                                                               
explained, and  consumers should  be made aware  of those  and be                                                               
able to see the fees they are  being charged on both the bill and                                                               
the  online  quote.  SB  272 provides  for  full  disclosure  and                                                               
transparency of  cost recovery fees  that are included  in rental                                                               
car  agreements.  In  addition,   it  would  make  violating  the                                                               
provisions of this bill an unfair trade practice.                                                                               
SENATOR BUNDE said she used two  different terms and he wanted to                                                               
make sure that  when she said allow the credit  card companies to                                                               
do this, she actually meant  requires them to list those separate                                                               
MS.  MORELEDGE  responded  that  Alaska  doesn't  have  any  laws                                                               
currently on this issue, so she  used the word allow to mean they                                                               
were putting a law on the books.                                                                                                
SENATOR HUGGINS added that SB  272 requires disclosure before and                                                               
after. Some  car companies have  an energy  fee or tire  fee, but                                                               
this doesn't  allow that. It  protects our Alaskan  neighbors and                                                               
doesn't allow big international organizations to gouge them.                                                                    
CHAIR  PASKVAN asked  if  the  intent of  the  bill  is that  the                                                               
ultimate charge has  to be their advertised charge,  and if there                                                               
are  governmental  mandated  fees  or airport  facility  fees  in                                                               
addition to that, at least the core rental has to be disclosed.                                                                 
SENATOR HUGGINS replied yes, and  those fees have to be itemized;                                                               
otherwise it's an unfair trade practice violation.                                                                              
SENATOR THOMAS asked  if anything in the bill  requires the print                                                               
to be any larger in the rental agreements.                                                                                      
SENATOR  HUGGINS  quipped  back  that   they  are  working  on  a                                                               
magnifying glass provision for the older guys.                                                                                  
2:00:58 PM                                                                                                                    
DON  FONTE, Director,  Government  Relations, Hertz  Corporation,                                                               
said  Hertz  supports  the  concept of  this  legislation  as  it                                                               
relates  to full  disclosure to  the  consumer of  any taxes  and                                                               
other charges in a vehicle  rental agreement. But Hertz's concern                                                               
is with  the provision that  limits the permissible  charges that                                                               
may  be  included  in  a   rental  agreement,  he  said,  and  he                                                               
respectfully urged  them to consider  amending the bill  to allow                                                               
additional separately  itemized charges  in the  rental agreement                                                               
aside from  those listed in  the bill  provided so that  all such                                                               
charges  are fully  disclosed  to  the consumer  at  the time  of                                                               
reservation and rental.                                                                                                         
He said  disclosure of  those charges  is common  practice within                                                               
the  car   rental  industry.  He   added  that  all   of  Hertz's                                                               
distribution  channels, whether  it's on  their company  website,                                                               
through their 800-number, or even  third-party booking sites like                                                               
Travelocity.  The consumer  is provided  a total  estimated price                                                               
and has available all the component parts of that price.                                                                        
MR.  FONTE  said  that  he  had forwarded  an  amendment  to  the                                                               
committee  that  would  make  those   changes  and  make  SB  272                                                               
consistent with  similar statutes that  were adopted in  a number                                                               
of states  over the last  couple of years. The  relevant language                                                               
in those  statutes was agreed to  by all of the  major car rental                                                               
companies within  the industry.  Currently two states  have bills                                                               
pending with  their proposed amendment.  He said it  would simply                                                               
bring  Alaska into  alignment  with those  states.  He said  that                                                               
Hertz completely  agrees with Senator  Huggins' concept  of fully                                                               
disclosing to the  consumer what their charges  are including the                                                               
base rate and the total estimated price.                                                                                        
2:03:58 PM                                                                                                                    
SENATOR BUNDE  asked why not roll  all the costs into  the bottom                                                               
line instead of separating them.                                                                                                
MR. FONTE responded  that it comes down to the  fact that many of                                                               
the  fees   are  governmentally  imposed,  and   they  felt  that                                                               
itemizing the  charges is appropriate. It  also makes transparent                                                               
to the consumer what the component parts of the total are.                                                                      
SENATOR HUGGINS  said he had  made an interesting point,  but the                                                               
amendment Mr. Fonte was representing  would essentially "gut this                                                               
bill," because  it would  be open-ended and  they could  list any                                                               
charges they wanted to. He agreed  with Senator Bunde -  if Hertz                                                               
wants to  include some things outside  of this bill, just  add it                                                               
to the  overall price of  the car. "This is  about Alaska...There                                                               
are 30 states  that are doing what we're describing  here, and he                                                               
talked about two states."                                                                                                       
CHAIR PASKVAN asked  if he felt that SB 272  as currently written                                                               
is the best protection for Alaska consumers.                                                                                    
SENATOR  HUGGINS  replied, "It's  as  good  as it  gets  consumer                                                               
protection wise in rental cars in Alaska."                                                                                      
2:07:15 PM                                                                                                                    
ED SNIFFEN,  Consumer Protection  Unit, Department of  Law (DOL),                                                               
agreed  with  Senator  Huggins.  He said  SB  272  provides  good                                                               
consumer  protection and  the department  supports it.  He stated                                                               
that  some   terms  of   art  were  being   used  by   the  Hertz                                                               
representative. There  is a  base price and  a total  price. What                                                               
you see when you go online and rent  your car is the base price -                                                               
$19.95, for instance. Then three  pages deep into the process you                                                               
might see cleaning and inspection  fees and fuel surcharges added                                                               
that bring  that price up  to $69.95.  It's that kind  of conduct                                                               
that  this bill  would prohibit.  This bill  isolates only  those                                                               
charges  that are  actually paid  out  to a  government entity  -                                                               
things like  the airport  fees, the  governmental taxes,  and the                                                               
vehicle  licensing fee  which  is paid  to  DMV. Itemizing  those                                                               
charges at  the end  of the  transaction is  appropriate, because                                                               
consumers  expect those  to  be  added on  just  like they  would                                                               
expect  a hotel  to add  on the  hotel tax  that is  paid to  the                                                               
He added  that some companies  add on  a host of  "other creative                                                               
fees" to a  bill; consumers are sometimes misled  by them because                                                               
they may think  they are required by state law.   And while those                                                               
can be  disclosed like  the Hertz  representative said,  when you                                                               
get off  the plane, you're  tired and  you don't really  read the                                                               
fine print  when you sign the  contract. You want to  get in your                                                               
car and  get to  the hotel.  Making those  full disclosures  in a                                                               
meaningful comprehensive way is tricky.                                                                                         
2:09:57 PM                                                                                                                    
CHAIR PASKVAN closed public testimony on SB 272.                                                                                
SENATOR  THOMAS  moved  to  report SB  272  from  committee  with                                                               
individual recommendations and zero fiscal note.                                                                                
SENATOR  BUNDE objected  so he  could thank  Mr. Sniffen  for his                                                               
good counsel;  then he removed  his objection. Therefore,  SB 272                                                               
moved from committee.                                                                                                           
2:11:26 PM                                                                                                                    
CHAIR PASKVAN announced an at ease from 2:11 p.m.                                                                               

Document Name Date/Time Subjects
SB 272 Bill Packet.pdf SL&C 3/11/2010 1:30:00 PM
SB 272