The Senate Committee on Commerce and Labor was called to order by Chairman Randolph J. Townsend, at 8:05 a.m., on Tuesday, May 4, 1999, in Room 2135 of the Legislative Building, Carson City, Nevada. Exhibit A is the Agenda. Exhibit B is the Attendance Roster. All exhibits are available and on file at the Research Library of the Legislative Counsel Bureau.

COMMITTEE MEMBERS PRESENT:

Senator Randolph J. Townsend, Chairman

Senator Ann O’Connell, Vice Chairman

Senator Mark Amodei

Senator Dean A. Rhoads

Senator Michael A. (Mike) Schneider

Senator Maggie Carlton

COMMITTEE MEMBERS ABSENT:

Senator Raymond C. Shaffer

GUEST LEGISLATORS PRESENT:

Assemblyman Richard (Rick) D. Perkins, Clark County Assembly District No. 23

Assemblywoman Vonne S. Chowning, Clark County Assembly District No. 28

Assemblywoman Jan Evans, Washoe County Assembly District No. 30

STAFF MEMBERS PRESENT:

Scott Young, Committee Policy Analyst

Kathryn Lawrence, Committee Secretary

OTHERS PRESENT:

Eric Ellman, Manager Government Affairs, Associated Credit Bureaus

Mary F. Lau, Lobbyist, Retail Association of Nevada

Steve Yarborough, Owner, Sierra Service Station Company

Georgi Cody, Lobbyist, Nevada Motor Transport Association

Larry Struve, Lobbyist

Assemblyman Richard (Rick) D. Perkins, Clark County Assembly District No. 23, stated this bill originated from complaints of a constituent who had applied for credit. He pointed out the credit report was erroneous so the individual had the report corrected. He explained this individual had suggested to him that every individual should be entitled to a free credit report so that individual can correct any errors or misunderstandings before they apply for credit.

Assemblyman Perkins stated his intern had investigated this problem and found that 29 percent of credit reports contained serious errors. He noted a serious report would contain false delinquency or an error that would not belong to the consumer. He urged 41 percent of the credit reports contained incorrect personal demographic information, which include misspellings, outdated information, information belonging to a stranger, or otherwise false information. He mentioned that up to 20 percent were missing major credit such as loan or mortgage accounts that demonstrate the credit worthiness of the consumer. He agreed 70 percent of the credit reports reviewed in this study contained either serious errors or other mistakes.

Assemblyman Perkins concurred these consumers should be allowed to review credit reports before obtaining a line of credit. He drew attention to the fact there were six states, Colorado, Georgia, Maryland, Massachusetts, New Jersey and Vermont, that grant the consumer the right to obtain one free annual copy of the credit report, upon request. He stated one free credit report be too burdensome on any franchise and it would definitely benefit the consumer. Senator O’Connell suggested ensuring the bill states "a Nevada resident" somewhere in the bill, so it would pertain only to Nevada residents. Assemblyman Perkins defined this service would be paid for by the taxpayers.

James J. Jackson, Lobbyist, Associated Credit Bureaus, stated he is opposed to this bill. He explained currently the government mandates that free credit reports are to be given to any victim of fraud, someone who has previously been denied credit, is unemployed, or is receiving any type of public assistance.

Mr. Jackson concurred the federal government has stated nobody can charge more than $8 for a credit report. He stated the Department of Motor Vehicles and Public Safety (DMV&PS) charges $5 for a credit report and these credit reports are compiled from many sources nationwide. He remarked if credit-reporting agencies are forced to give these copies free on demand, there will be a cost for additional staff.

Robert Ryan, Director, Government Affairs, Trans Union, stated Assemblyman Perkin’s study was done by members and employees, and the reports were limited. He stated he did not have the statistics to directly counter those done in the study, but he felt the statistics were several years old. He pointed out that any customers who had errors on their credit reports had no problem getting them corrected.

Senator O’Connell asked for a copy of the study and Assemblyman Perkins stated he would submit it to the committee at a later date. Mr. Ryan agreed to provide more information to the committee at a later date. Mr. Jackson stated if a dispute does arise in a credit report, the credit reporting agency has the burden to prove the error and has 30 days in which to correct the problem. He explained if they can not prove the error, they have to remove the item from the report. Senator Rhoads asked how many credit-reporting agencies are in the state.

Richard Beatty, Credit Bureau Central, stated there are two credit-reporting systems in the state, one in Las Vegas and one in Reno. He explained there are other 800 numbers for the consumer to call to get a credit report. Mr. Beatty stated his agency had 6,500 customer disclosures per month; less than 200 customers have paid for their reports, which average $15.

Chairman Townsend stated the most frustrating problem would be if you were denied credit. He noted it is always wise to get your credit report before applying for a loan, but there may be inconsistencies with your report and the credit report your lender receives. Mr. Beatty agreed there could be some variations.

Eric Ellman, Manager Government Affairs, Associated Credit Bureaus, stated for a Sears account, for example, there would be no difference in the credit reports. He recognized it is possible for certain outstanding credits to be on one report, but not the others. He explained a bankruptcy may be on one credit report, but not the other; simply for the reason one credit bureau may be more efficient at collecting bankruptcy information. He stated credit bureaus encourage consumers to verify their personal credit reports before going to make a large purchase, such as a new home.

Chairman Townsend suggested educating the general public to verify their own credit report, at least on an annual basis. Mr. Ellman stated most people who have bad credit are aware of the problem due to creditors calling them. He explained a study was done a number of years ago that indicated less than 1/10 of 1 percent are denied credit because of an error on their credit report. He summarized that an error on the credit report does not necessarily mean you will not get the loan, or credit.

Mary F. Lau, Lobbyist, Retail Association of Nevada, stated she had reviewed the option of having consumers receive a free report and she was concerned about the costs to consumers. She explained she had applied for a home loan and there was an error in her credit report. She stressed she was advised to submit a written explanation to the bank before they could consider her loan. She stated she did so and was able to get the error removed from her credit report.

Chairman Townsend closed the hearing on A.B. 8 and opened the hearing on A.B. 258.

Chairman Townsend noted, for the record, that he is in the automobile business. He stated he had checked with the legal counsel and since this bill would not affect his company any differently, he was allowed to participate.

Assemblywoman Vonne S. Chowning, Clark County Assembly District No. 28, stated automotive repair is the number one problem of the district she represents. She explained she had been advised of horror stories from consumers who have been held hostage until they paid the required fee, which was a different amount from what they were originally quoted. She claimed there have never been mandatory estimates until now, and the more reputable dealers have worked on this bill because they believed this is how the customer should be treated.

Assemblywoman Chowning asserted section 1, subsection 1, states that a customer bill of rights will be required to be posted in the business of a garage. She emphasized this will demonstrate to the customer the business is a registered garage. She explained section 2 states that estimates are mandatory on all repairs over $50. She noted section 3 states if there is an additional charge that exceeds 20 percent or $100, the customer must be notified as well.

Assemblywoman Chowning mentioned sections 4 and 5 allow the customers to waive the estimate or additional charges. She explained section 6 states if a business knowingly fails to register their business, then they may not enforce a lien for the cost of repairs, nor can they sue for the cost of those repairs. She declared section 7 states a garage doing business in Nevada must agree to a binding arbitration or post a bond of $5,000. She noted in section 7, subsection 3, there are other forms in lieu of a bond. She mentioned section 7, subsection 5, paragraph (a), which states if a person who agrees to binding arbitration fails to do so, the Department of Motor Vehicles and Public Safety shall revoke their registration. Assemblywoman Chowning clarified in section 7, subsection 6, the business owner may reinstate. She justified section 8 states if a person violates any provision, they are guilty of a misdemeanor.

Assemblywoman Chowning noted she was very concerned with businesses not being aware of the passage of the laws, but the DMV&PS would be advising the businesses upon new registrations. She stated there is no fiscal note on this bill. She then submitted letters of support to the committee (Exhibit C).

Steve Yarborough, Owner, Sierra Service Station Company, stated, upon passage of the 1997 legislation, the DMV&PS has been notifying businesses when they submit their annual registration.

Pete English, Chief, Registration Division, Department of Motor Vehicles and Public Safety, stated the registration date would be based upon their first date of registration.

Patricia Jarman-Manning, Commissioner, Consumer Affairs Division, Department of Business and Industry, stated her agency can identify more precisely the complaints than they were able to in the past. She explained the complaints are mostly automotive repair, such as transmission or motor repairs. She stated they are trying to educate the public. Chairman Townsend asked her agency to keep more precise records for complaints with franchise businesses, as opposed to non-franchise businesses.

Ms. Lau stated, for the record, the estimate of the repairs does not include items that are sold, such as batteries and tires.

John P. Sande, III, Lobbyist, Nevada Franchised Auto Dealers Association, stated he is in support of the bill.

Georgi Cody, Lobbyist, Nevada Motor Transport Association, stated she is in support of this bill.

Chairman Townsend closed the hearing on A.B. 258 and opened the hearing on A.B. 279.

Larry Struve, Lobbyist, submitted his testimony (Exhibit D) and stated he was speaking as a concerned citizen. He also submitted a letter (Exhibit E) and an article (Exhibit F) from Mr. Leavitt stating his support of the bill. He testified there is a problem of a bank drilling into a safe deposit box when the owner has not paid the rent. He explained the box contents can then be held for 5 years by the bank, and if not claimed, they are turned over to the unclaimed property division. He stated in 1996, after paying for a safe deposit box, he had received a certified letter informing him because he had not paid the rent, his safe deposit box had been drilled, and the contents were removed and inventoried. He remarked the letter stated he could collect the contents at the branch where the safety box was kept. He urged that he informed the branch manager of the problem, and had inquired as to the bank’s remedy. He mentioned he had a copy of his cancelled check to verify he had paid. He stressed the bank made apologies, but it took over a year to settle the case. He claimed he had never desired to file a lawsuit, but only to find out why this had occurred. He acknowledged his privacy had been invaded.

Mr. Struve pointed out with he would have liked to have had a mediator, but the bank disagreed. He testified 2 months after their claim was settled, they received an amended safety deposit agreement stating if a loss resulted in the bank’s negligence, the total amount of liability would be the lesser of the actual loss, or $500. He remarked the rights of the citizens are not being protected by the industry. He stated he had been informed by a bank employee that there had been several cases of safe deposit boxes erroneously opened, and one incident in Las Vegas where the contents of the box was given to the wrong individual. He concluded that, upon passage of this bill, it would ensure the banks to be more sensitive to the rights of customers’ privacy.

Senator O’Connell stated, for the record, that her husband is the chairman of a bank. She inquired what the time was between the opening of the box and the time Mr. Struve was notified. Mr. Struve answered a few weeks. He stated that with the merge of a new bank, the records were lost that stated he had previously paid for the use of the box. He commented there had been other customers’ boxes who had been drilled mistakenly. He explained there should be a remedy for the customer to follow, in order to correct this in the future.

Assemblywoman Jan Evans, Washoe County Assembly District No. 30, stated this is a good process and a workable bill. She submitted her proposal (Exhibit G) to the committee. She stated this bill would only ensure there is a procedure for the banks to follow.

Mr. Sande stated he is in strong opposition to this legislation. He stated there was an innocent mistake made with Mr. Struve. He stated for these cases to go through arbitration, there would be a tremendous cost.

There being no further business, Chairman Townsend adjourned the meeting at 10:15 a.m.

RESPECTFULLY SUBMITTED:

Kathryn Lawrence,

Committee Secretary

APPROVED BY:

Senator Randolph J. Townsend, Chairman

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