Sponsor Statement for HB 142

"An act relating to the sale of new or used motor vehicles; relating to the confidentiality of certain information related to attorney general investigations of unlawful trade practices and antitrust activities; establishing additional unlawful trade practices; relating to the mail order catalog exemption from telephonic solicitation regulation; regulating the sale of business opportunities; amending Rules 4 and 73, Alaska Rules of Civil Procedure; and providing for an effective date."

HB would strengthen Alaska's consumer protection and antitrust statues in several important ways.

First, this bill would require a used car dealer to provide a prospective buyer with a copy of an auto emissions certificate of inspection or noncompliance before the sales contract is signed. Current law requires only that a used vehicle have a certificate of compliance or noncompliance before the dealer can transfer title to the buyer, yet sales contracts are commonly signed days before title transfer.

Some used car dealers have, on occasion, withheld information about a car's ability to pass emissions tests until after a sales contract is signed. Consumers often learn too late that the vehicle that they just purchased does not comply with auto emissions standards, and that they face unanticipated significant expenses, above and beyond the purchase price, to bring the vehicle into compliance. This bill would therefore protect consumers and satisfy the legislature's intent that dealers inform buyers regarding the emissions status of a used vehicle prior to sale.

Second, this bill would require car dealers, before sale, to disclose in writing to a buyer information that the dealer knows or could have reasonable known, concerning the accident history of the vehicle and any safety problems with the vehicle. The written disclosure requirement is consistent with a recent Alaska

Superior Court case involving deceptive sales practices by a car dealer. It would provide important protection for consumers by ensuring they are fully informed, before sale, of any defects that make a vehicle dangerous or inoperable, or that seriously diminish the value of the vehicle but are not obvious to the average customer.

Third, the bill would clarify existing statutes providing that the state's consumer protection and antitrust investigative files are not available for inspection under Alaska's Public Records Act. The extent to which the State's investigative records are shielded from the public scrutiny was called into question in a recent Alaska Superior Court case, and important confidentiality issues remain unresolved.

Individuals and companies will be less likely to cooperate with state enforcers if records and testimony could at some point be widely disseminated to the public at large. This bill would ensure that state enforcers can carry out their duties efficiently, effectively, and without undue interference, to the ultimate benefit of Alaska's consumers.

Fourth, this bill clarifies the existing mail order catalog exemption contained in Alaska's telemarketing law. Most telemarketers are required under current law to register with the state so that they can be tracked down if they defraud consumers. This registration requirement is a powerful enforcement tool in the fight against telemarketing fraud. But some telemarketers have attempted to avoid this registration requirement by claiming to be a mail-order firm even tough they are primarily telemarketers. Recently, a telemarketer headquartered outside Alaska asserted that the mail-order exemption can be satisfied without mailing or distributing any catalogs to Alaska. Consistent with a 1997 Alaska Supreme Court ruling, this bill would clarify that a telemarketer relying on the catalog exemption must operate a legitimate mail order business.

Finally, this bill creates a statute regulating the sale of business opportunities. High-pressure sales people have often taken unfair advantage of the entrepreneurial spirit of Alaskans by resorting to fraudulent, deceptive, and unfair sales practices. This bill, modeled after similar laws in other states, would guard against the promotion of worthless business opportunities laden with hidden costs and sold through the use of inflated earnings claims. This legislation would provide both criminal and civil remedies, and would be an important consumer protection safeguard for Alaskans.