House Standing Committee on Consumer Protection & Commerce

Good morning. Thank you folks so much for being with us today in person to on the convening of the House Committees of Transportation and Consumer Protection and Commerce on the info briefing relating several subject matters in the realm of towing. On behalf of the Committee of Transportation today in person, I have myself. I have rep Pevslin, and I believe there are some other folks online. Rep Cochran, vice Chair Miyake.

Can I see the participant list?

I don't think anyone has a fair

Okay. That's totally fine. And then, chairman Tiyoshi.

On behalf of the consumer protection and commerce committee, we have myself and vice Chair Grant Eddy. We have rep Chun and rep Tam. I have no idea who else is online, but welcome.

See rep Hippamoto, rep Loin, and then I have rep Ratcliffe City in person as well. Couple of things, I just wanna acknowledge. I know we're going through a lot here in the state. I wanna thank everybody for being a part of the disaster relief efforts. And prefacing that that because of the relief efforts currently pulling forward, Hawaii's Department of Transportation has been pulled away, so they will not be attending today's info briefing.

But they are monitoring online, and we'll be able to follow-up questions as it relates to motor carrier law for our committee members. I also wanna wish my vice Chair a happy birthday, and I know he's on Maui celebrating, but also taking care of his community. So what has brought us here today is obviously the discussion that continues to happen every legislative session as it relates to towing in every realm.

And I participated in passing a updated toy measure two years ago, and the legislature continues to deal with this issue as it's reflected in legislative priorities, the those that are introduced. And maybe the loop the focus that exist because we are trying to figure out how to work with this industry.

And so the intent of wanting to move this forward is potentially setting the stage of what we could fix next session, what we could try next session, and having more oversight, I think, of this industry that is obviously plaguing our communities in in, lack of better words, terrible ways. So turn on to you.

No. I mean, from what I've been hearing from the community, there have been some very unsavory practices happening. And I don't know

if it's because of the lack of community awareness of what people's rights are when it comes to predatory towing. But it certainly seems like, certain towing companies are not not following the laws that we set forth, especially the ones that we passed

a couple of years ago, And that is very disturbing to the consumer protection part of this committee, especially. So I'm hoping that we can have better oversight, both by the government, and better abiding by the law from the towing companies to make sure that people aren't getting towed unnecessarily.

Thank you. And so, Amriti, on with that, I know today we have two agencies that will be presenting to the committee, and they will be able to hopefully answer questions or concerns that have been raised. First off, we have the Department of Consumer and Commerce Affairs, the Office of Consumer Protection,

and they are our first presentation. Mano. Good morning, Chair Hila, Chair Matayoshi, and honorable members of the legislature. Thank you for your attention to your constituents and your attention to these issues. My name is Pana Moriarty.

I'm the executive director at OCP, the Office of Consumer Protection. I'm here representing the OCP and director Nadine Nando on behalf of the Department of Commerce and Consumer Affairs.

I'd like to start off by situating us to the discussion that we wanna have today with an overview starting with an overview of the duties and powers of our office, an an overview of the resources available to the Office of Consumer Protection for enforcement when it comes to towing issues, and an overview more specifically of some of the towing issues and laws that we we enforce and that we are gonna be potentially looking at in the upcoming session.

The Office of Consumer Protection was created in 1969 by an act of the legislature to coordinate the various services offered to the consumer by various state and county agencies together with private organizations and to aid in the development of preventive and remedial programs affecting the interests of the consumer public.

Our general functions and duties, some of which are laid out here, include the authority to investigate and prosecute violations of consumer protection laws by breaking civil actions and proceedings, meaning that we have to go to court should we encounter a business that is not willing to cooperate with us.

We would have to go to court court to enforce the rights of the state and consumers under consumer protection laws. We are also a voice for the consumer public at the legislature. I'm familiar with many of the faces here on this panel because I appeared before the legislature on at least 20 measures last year and gave written and oral testimony. Our office testified on 60 different bills last year before the legislature. We are charged with coordinating with state and federal public officials on consumer issues.

So one of our roles and our charges from the legislature is to talk to other offices who are encountering consumer issues and bring that knowledge and our experience to bear. What you see before you is an organization chart. OCP is one of nine public facing divisions of the Department of Commerce and Consumer Affairs. This is our division's organization chart. We have an estimated $3.03 to $3,500,000 annual budget with roughly 20 full time staff positions.

More than 99% of our annual revenue is typically derived from judgments and settlements that our office enters into. As a result, the office takes zero public money in most years. We do not take general fund appropriations, and we do not receive money from a dedicated stream of revenue like licensing fees. At the higher level, we're a division within a department and the department also, relies primarily on funding derived from its own licensees and not from any general fund appropriations.

For the entire department, we must provide government services in order to obtain the revenue necessary to provide those services.

If we don't deliver government services, we don't get revenue. That's the funding model, in essence, for the Department of Commerce and Consumer Affairs. So to give you an idea of some of our enforcement activities over the last twelve months, OCP has received more than a thousand new complaints, both staff initiated and complaint driven. We have entered into two consent judgments, including a judgment against Mercedes Benz to remedy diesel engines that didn't comply with environmental laws.

We pursued a lawsuit involving the operation of PayPal and Venmo and their privacy settings that resulted in a $6,000,000 settlement with the state of Hawaii, and we've entered into assurances of voluntary compliance with other entities to resolve our consumer complaints.

Excuse me.

Some examples of laws that we enforce are listed on the slide before you. Our lawsuit against PayPal involved claims of unfair and deceptive acts or practices. We also routinely investigate matters involving security breaches that raise issues with compliance, not only with prohibition on entree or deceptive acts and practices, but also our privacy and data breach notification laws.

OCP is involved in multiple active lawsuits involving victims of mortgage rescue scams, And as we will get into during this presentation, towing routinely comprises one of the highest volume areas of complaints for OCP. Going a little further down our list, in '22 and '24, OCP successfully resolved multiple enforcement actions involving deceptive advertising.

Confusion over refunds and exchanges routinely ranks high among the areas of complaints OCP receives from the public, and we plan to work collaboratively with the legislature in 2027 to address the high volume of complaints against cosmetics businesses that refuse to honor returns and exchanges from their customers. OCP's enforcement activity is divided primarily into legal actions and investigations. Our legal actions result in judgments, settlements, and assurances of voluntary compliance.

We do not have criminal jurisdiction, so we're we are proceeding through civil proceedings typically in circuit court in the states of Hawaii. Our investigations result in numerous case dispositions.

Some cases are concluded without a finding of violation. Others may conclude with a warning, an advisory, or an educational letter, and others may conclude with an informal resolution such as a business agreeing to pay to refund money to a consumer or pay money to the state without formal legal process after they are informed that OCP has found a violation of law has occurred. I'd like to also, if I may, introduce two members of the OCP team who are with me today.

One is investigator Michael Nuss, who has joined us from Hilo today. He's flown in to be here, And in enforcement attorney Melissa Enright is here as well.

And I'm gonna turn to them as subject matter experts as we get into the towing conversation here. Towing is tracked at OCP as a standalone category of complaints and is a high volume category of complaints.

Towing has ranked as one of OCP's top four categories in terms of numbers of complaints for the past three years running, And you've got some information before you on the slide, which is a little small, I can see, but, in fiscal year twenty twenty four, towing, was the second, towing as a category had the second most complaints of any category of complaints tracked by OCP. In fiscal year twenty twenty five, towing had the most complaints of any category.

And in fiscal year twenty twenty six, which concluded 06/30/2026, towing had the fourth most complaints of any category.

A word about the numbers in this slide, many of these complaints, as we'll see, involve the same four respondents. The data presented on this slide is organized by state fiscal year, which runs from July 1 through June 30 of the succeeding calendar year, and the data coincides with the department's annual reporting period for its legislatively mandated compliance resolution fund report. The department makes a report every year of its activities, and this data is derived from that report.

When you say the same for respondents, do you mean for towing, or do you mean overall for private security refunds, everything? For towing. Okay. So there are four towing companies that have the majority of these complaints. Is that fair?

Yes. And so I'll return you to the next slide. Of the companies that are subject to the highest number of complaints, one entity does business primarily with private landlords and property managers, that is VIP Towing, and the other group of entities does business primarily with the City and County of Honolulu. That's the case of the three other companies you see there, PM Autoworks, All Island Towing Inc, and All Island Wreckers Inc.

They can be grouped together or thought of together by virtue of their common officers and directors and the fact that they're publicly reported to have held the Citi contract for the last more than the last twenty years.

This data on this slide is a source from OCP's internal complaints data. It includes closed cases and open cases and case I I wanna say this. It includes cases in which OCP has yet to determine whether a violation of a towing law has occurred. We are simply reporting complaints in this slide from members of the public against these businesses. In 2024, complaints against these four businesses made up 43% of all complaints about towing received by the office.

In 2025, 57% of complaints about towing. In 2026, year to date, here we're talking calendar years, we're talking 60% of the complaints have been made against these four companies. This data should not be interpreted as a finding of a violation in each and every case. Instead, each case represented here represents a complaint against a particular respondent.

So how many how many violations do you need as DCCA to start revoking licenses for towing companies?

Towing companies are not licensed.

Okay. Then should they be? I mean, if that's the case?

I think that's part of the discussion. So I I think then I think to Chair Matyoshi's point. Right? So forgive me, Manan. OCP oversees the complaints, but, technically, there's no license issued to do business.

The only license they would carry is technically a business license, but they're not a licensed industry.

That's correct, Shakila. They're not a licensed industry. And at this point, without a license as you know, license industries, the enforcement typically goes through an administrative process. So there might be an issuance of a citation, a field inspection, and if it's contested, the case will go through contested hearing, which is an administrative proceeding that is typically thought of as much faster than a court proceeding.

In court, you go to court, you get a conference date in civil court a few months out from the date of your filing of your complaint.

You may get a trial date, except maybe eighteen months out, maybe a year out, maybe two years out for your trial date. So we'll we'll talk about some of the challenges that that type of activity poses, and it's been proposed to me that an administrative proceeding has some advantages for regulating complaints that especially complaints that involve less than, let's say, high dollar value amounts. If you have violations, obviously, we want the executive branch to be faithfully executing the laws.

But I'm trying to set forth some context here for the Office of Consumer Protection's enforcement efforts so we can get into that discussion of maybe what some alternatives may look like. I have a little bit more to share about the towing complaints.

And here, I'm going to turn to Melissa and Mike and call them up in a moment. And let me say here that OCP routinely closes towing complaints without a finding of violation where there is no evidence or there's insufficient evidence of a violation of our towing laws. Intuitively, I think that may make sense to a number of you because I think it's fair to say that nobody enjoys having their car towed. So we receive complaints, from folks who are dissatisfied with the experience.

And in some cases, those complaints may not arise to a violation of a towing law.

I'll turn to Mike in a moment to discuss how we think about those complaints, how we evaluate the complaints from start to finish. Over the past three calendar years, OCP has obtained refunds for consumers in 14 cases, each of these resolved without the filing of a lawsuit through our informal resolutions process managed by our investigations branch.

The total amount of money returned to those 14 complainants is approximately $4,000 These include cases where fees were not These include cases where fees were not authorized to be charged that were not authorized to be charged were charged to consumers and the towing company agreed to offer a refund to the consumer and the consumer accepted the refund.

It's really low. This is a It's a really low number, though. What what are what's the why aren't were these cases being successfully prosecuted? I guess, is it a is it a lack of evidence? Is it that it was just kind of a bad complaint to start as a factual thing?

Or, I mean, did the person drop it or down? What's the main cause?

I I think you put your finger on important causes, all of them, that can be found in our case inventory, and we cannot specify one primary cause for this. We can talk certainly about the constraints of proceeding in a legal proceeding. One of them, which may be once you file a lawsuit, you're bound by that pleading. And once you file a pleading, that pleading governs the course of the case.

Now if we've got twelve to eighteen months of litigation coming up, during those twelve to months of eighteen months of litigation, we may have new complaints filed against that same business.

How do we view joining those new complaints into that ongoing law lawsuit? How do we view the evidence? Does it stand up? Is each complaint worth it? And complaints are certainly fact specific.

But let me turn to Michael Nuss to talk a little bit about how OCP handles complaints from our intake and how we begin how we begin to look at it to assess the the nature of the complaints after potential.

I have one more question for you. Sure. The amounts of these claims are obviously fairly small. I mean, nine claims are $2,500 a need. Why why aren't you taking these as small claims?

Small claims is a $5,000 jurisdictional maximum, much faster. I mean, we all any attorney in here will tell you district court, circuit court, it'll drag out at the higher rate go up. But small claims, I mean, non appealable, $5,000 or less seems to fall into this pretty squarely, and the rules of evidence are relaxed to to put it plainly. Why not bring it over there? Are you not allowed to?

That's a great question. I I do not know whether we are allowed to bring it there or not, and it is something I think we should we could give consideration to should this

So you're gonna try so where do you guys file that? This report?

These complaints were not filed. Oh. These are resolved through our informal resolutions process, which investigators like Mike Michael Nass engage in with the respondents. They engage in the back and forth, and I'll I'll have him talk to

But you just talked extensively about how difficult it is to enforce this in court, how long it takes. I mean, has there been no one? Is that not an avenue open to you?

That is an avenue open to us. K. And the challenges of proceeding in that manner are things that I I think that will be brought out a little bit further on in the presentation as as we've already alluded to.

Okay. I love a small court small claims court, twist on that whenever you guys are talking about it too. Thanks.

Thank you, Cole.

Good morning. Morning. Michael Nuss. I'm the field office investigator in Hilo. Towing has been one of my primary fortes for the last fifteen years with OCP.

Cases generally are generated, well, we'll start at the beginning. Cases come into Honolulu for processing from wherever they come from, whichever island or county. They're processed here, then they're assigned. Even me being on the Big Island, I still get cases from every other island state. First thing we do is evaluate those cases to see what the complaining party has sent us as far as testimonial evidence, physical evidence such as documentation, primarily the tow receipt.

That's what we're gonna deal with most. That's the the single most important piece of evidence because statutorily, in HRS two ninety eleven, it prescribes what fees can be charged, and that's it. It's it's it's definite and finite. Those fees also apply to HRS two ninety one c dash one sixty five point five, which is the towing by law enforcement, the term police tows. That carries over into two ninety one c.

So we look at the tow receipt to see if the charges that are towed or charged by the towing company match what is statutorily authorized. My experience has been that for the most part, they're not inflating or going outside what is statutorily authorized.

It's the add on fees that are not authorized, such as a $300 hazmat cleanup fee, sweeping the scene, a gate fee for them to open the gate and get your car out, $900 fee for every fifteen minutes that they're a standby at the scene, extra person fee, extra equipment fee, a GET because GET is not authorized for towing either. Those are the fees that we see that are being charged. Once we've evaluated the case itself, we need any other information from the complaining party.

We'll get it from them, be it testimonial or documentary, then a target lender is sent to the towing company, informing them of the investigation, of the violations that we're possibly looking at, and we request them to give us a statement or their version of what has occurred. And there are three outcomes with this almost every single time. They'll either send back a self serving statement. They will refer us to their attorney or they ignore us, and it never goes any further.

And as Lana said, just by the sheer volume and frequency of these cases, it's impractical to file a lawsuit for one case.

Two weeks later, you have 15 more from the same company. You cannot file a lawsuit every single time. It just wouldn't work. So enforcement from an investigative standpoint for us has been very difficult. We do a lot of work.

I'm trying to get the end result in something to happen, a deterrent for them to cease and desist their problematic ways isn't there. The short version is we just we don't really have the means, the ability, or enforcement authority to do much with them.

Can I ask you, any folks are actually sending these target letters asking them to comply with your folks' investigation, they more likely than what is the are would you be able to measure compliance versus noncompliance? What is what is more common practice? Is it in compliance?

Even the ones that are up to the top four, we do get an answer back, but it's always the same thing. And that is? For anything to do with all island, that's what the city's contract says we can do. That's their answer.

Is it because in two ninety one c, we've allowed the the county to to make rules and then they're not?

Well, they're saying that the contract allows them to do that. That's the that's what the city allowed them to do. Alleged.

Okay. Can't contract for something illegal, but I mean, that's

That's unfortunately, that's the way they answer. And it is the city's contract. It has some language in it that is questionable.

Yeah. This is very frustrating.

Sorry. Go ahead. No. So wait. And Department of Consumer Services Citi issues that contract or is it DCS?

It's the DCS that has issued the latest contract for the towing vendor. Yeah. That's correct.

So has the state ever then had to work with DCS to come into compliance of the law?

We've been in contact with DCS about their contracts, and we're happy to continue that consultation and advise them about state law, what state law requires.

I I kinda don't care what their contract says if they're violating state law, though, is my point. Research. Why don't we press that in court?

I would have to have somebody else answer that question.

Okay. Is AGs here? Maybe you guys should have a talk with AG about this. I mean, this this seems like if if the city is writing contracts that violate state law, that's concerning. And if the state is if the state is backing down from that, that's also concerning.

I don't know if the matter has been pressed, but if we're pressing the city and the city is allowing these people to get away with this and refusing to change their contract, I think we're gonna have

a more serious conversation in the future. But I wanna make sure that you've given them an opportunity first.

I do wanna continue this one, though. Wait. Man, how much do you have left?

We just have a few more slides, maybe five minutes.

Okay. Slide through it because I think now we probably are there's a lot of questions to be asked. Sure. Please. Sure.

I think some of this next material we can probably go through. We were going to Mike has alluded to it, but we were going to discuss some of the protections in state law already. Tow companies must not charge more than what's authorized in the statute. Tow companies must not charge any fee that's not authorized by state law. That applies to what some people call police tows, just that as it applies to the parking lot tows.

What some people call the police tow is a misnomer because the same protections apply whether the police order the tow or whether you're just a passenger stamped stranded on the side of the road and you need your vehicle moved out of traffic. The same limits on storage and tow charges apply.

Act 60, which a number of you in this room were responsible for helping to pass and shepherd through in 2024, is an attempt to ensure that credit cards are accepted by these people because we want to protect by these companies because we want to protect the interests of people who show up and they don't have ready access to cash in their accounts. Moving on to this next slide, I hope this would serve as sort of a jumping off point for our discussion.

And sort of reviewing or summarizing the status quo, under the enforcement regime where OCP is primarily the one undertaking enforcement, some of the potent the the positives here are is that there is a potential for significant UDEP remedies.

When you bring an action for a violation of an unfair for an unfair deceptive act of practice, you can get a civil penalty of at least $500 and up to $10,000 per violation. Some of the cons I've laid out in my discussion with Chair Matayoshi, litigation can last a year or more. There's no guarantee of success coupled with significant resource commitments for the office when you when you litigate a case in order to get a resolution.

If you get to the resolution stage, enforcement of judgments can be resource intensive. Enforcement just winning the judgment does not mean that you're gonna collect or that the person who was harmed will be made whole.

Another consideration, our current practice is to resolve some of these matters with informal enforcement efforts. Mister Nuss described our efforts in that regard. That can be helpful with one offs. Some of the potential benefits of an administrative enforcement scheme is that much like a traffic citation, these are issued and adjudicated very quickly. Right?

They they have to be adjudicated and turned around and you have finality. Another consideration here is if there were to be an administrative scheme of enforcement, it would have to be an agency in undertaking that enforcement scheme or it could be. Potentially, it could be through district court, but the agency would need to come up to speed and be able to potentially enact rules. They may not be experts in towing now and towing state law, but we can all assist other agencies in coming up to

speed. Another consideration is that if an administrative enforcement scheme was to be stood up, it would require significant public investment. Public resources would have to be designated, funded, and devoted to administration or enforcement through another agency with a process. Let me pause here. What I'm suggesting is that if you thought we had a licensure scheme, we don't.

Tow operators do not have a license. They do not have a bond. Some regulated industries are required to put up a bond. The licensee is required to put up a bond, and that bond could be available to the state if violations were found or to redirect provide redress to consumers who are injured by a violation of the law.

We've gotten a little bit into the county angle and I do wanna highlight that Chapter 46, which many of you know grants the powers their grants the counties their powers, does authorize counties to enact ordinances to specifically regulate towing.

For the most part, counties have not enacted any ordinances to regulate towing. Uniformity could be achieved here if all the counties had a floor of state law as your consumer protections for your administrative enforcement scheme or your county level enforcement. Another consideration that we've touched on briefly is the vendor contracts, primarily the vendor contracts operated and issued by the counties. The vendor contract issued by the city and county of Honolulu has been problematic for decades.

Historically, I think we can fairly say they have yielded mixed outcomes at best for the consumer public.

One way to to continue that process without making wholesale changes is for the county agencies responsible for issuing major vendor contracts to get updated, to get reasonable regular updates and consult with agencies like the Office of Consumer Protection who know state towing law. Another angle here is effective contract administration. When complaints are filed with the Office of Consumer Protection about a county vendor, those complaints are then forwarded to the county for their information.

And almost without exception, I I would say that I assume those county contracts have administrative requirements for their vendor, and their vendor is not simply allowed to disregard state law under the contract. If they become aware of consumer complaints that violate state law, there should be, and indeed I know that there are procedures under the county contracts for handling complaints about the county's towing vendor when there's a potential violation of state law.

So contract administration, I think, is an important another important piece here. And I wanted to close with the status quo is that the Office of Consumer Protection investigates towing complaints and where we find violations of state law, we are going to try and take action on behalf of consumers to get you a redress or a remedy.

You can file a complaint with us and, obviously, people do file a complaint with us because it is the number 1 source of our complaints in some years and the information for filing a complaint with us is included in the presentation as well.

Thank you, Juana. I do wanna preface the other presentation includes the PUC as they are some form of a regulatory licensing agency. So, like, prefacing the conversation. I me and Chair have questions. I do want to maybe just allow members of questions right now.

No. I've got a fascinating presentation. You guys don't have questions? Alright. You ready to go?

Yeah. Please, Jared. Do you wanna Okay. Mara, thank you. I I know this is a a tough presentation, I think, to talk about.

And I think your presentation kind of just highlights the fact there are a lot of focus, I think, more than the legislature may have realized. Like, if I'm looking at 291CDash135, right, this or this already is, like, a violation. Right? The tow truck signage and the insurance requirements. So many of these guys guys sorry.

How many of these people I'm just saying guys and girls, that don't even put their truck sign. Right? They'll put a USDOT logo or their registration there, but this is all missing. So if somebody was just alone, are you then the OCC person to enforce this violation? Or

There there is some potential there, the potential legal avenues to enforce.

But even with that, if this is in our traffic law, would then the attorney general could technically enforce this.

That's a good question for the attorney general. I'm not gonna weigh in. But, I will say to ask, you know, our authority to, enforce the unfair and deceptive acts practices prohibition, that undergirds this whole towing enforcement regime right now. That authority is shared by the Office of Consumer Protection and the attorney general. So we are taking the lead on this, but it is absolutely a fact that that authority is shared by OCP and the attorney general.

Well, it's shared under four eighty dash two, the UDAF statute as well. Right? But you guys can enforce it independently. I I am I'm a little irritated that small claims court has not been used here to enforce UDAP claims. I mean, you quite a few of those slides involve how difficult it is and how time consuming it is to litigate.

But what you're really talking about is district court, circuit court, and then the appeals process, which fair enough. But small claims is specifically created to avoid all of that and for small claims like these. Even with treble damages, you'd be well underneath the jurisdictional limit.

So the fact that you folks have not been enforcing it because you think it's too time consuming and then think it's too resource intensive when there's another option or cheap option available to you, I think is letting these people get away with it. I mean, I I'd like, I'd like, honestly, a a bit of a better explanation as to why small claims has not been used to enforce UDAB claims by OCP when OCP has literally in that statute jurisdiction to enforce them.

So what you're suggesting is a a very interesting idea, and I'd be happy to take it back. And if this is viable, I I think there's potential there. But we'd have to vet that idea and make sure that we are comfortable with that idea and that those procedures are available, that avenue is available to us as a potential enforcement mechanism. And and I'd be happy to do that. Yeah.

And I hope you guys do, but small claims has been around for how long? I mean, I I can't believe that it hasn't been considered yet, especially when the towing companies are kind of throwing it in our faces right now and saying that, oh, well, they're not there's no enforcement. So they're they're getting away with it. That's why they're continuing to do this. I I'm disappointed that there has been less enforcement because this avenue has not been been used, quite frankly.

But, Trisha, do you wanna come up and talk a little bit? She doesn't want to, but she's gonna have to, unfortunately. Did you can you come up, please? So we do have someone from attorney general's office who probably regrets showing up today, because I don't think she had to. But welcome.

Would small claims court be an avenue that they could use for for ID dash two? Do you have any idea? Or or for you folks too, AGs is also specifically listed in that statute as a enforcer.

And good morning, chairs. I have to committee deputy attorney general Trisha Nakamatsu. This is a little outside of my wheelhouse. I am here from the criminal justice division simply to see if there was anything that might relate to criminal enforcement. It doesn't seem like there is anything at this time, so I can't speak to small claims court or civil claims.

I can take that inquiry back, and certainly our office someone else in our office would look into that.

Okay. And if OCP did press it, would your office be the one to represent them or would OCP's attorneys be there in court? And I guess that's a question for Mona too.

The AG does not represent the Office of Consumer Protection legal proceedings except in defense.

Okay. Gotcha. Thank you.

Mona, I have another question, please. So forgive me for not knowing. OCP does or does not have administrative hearing authority?

We do not have administrative hearing authority.

Okay. So in a world that I I can't say it right here. Suddenly, you're gonna get it. In a potential world, there is some regulation. Admin hearing authority is granted.

Does OCP then work with administrative hearing division on any other complaints that then bolster the hearing that they can get fined on? Like, are you folks allowed to participate in administrative hearings if it's to bring some judgment against an individual? Our statute constrains us to to proceed by civil proceedings, and we've always adhered to that statutory limitation.

One of the considerations is probably our funding structure. There are other divisions and other agencies that are set up with personnel to handle administrative proceedings. Our funding structure does not necessarily invite taking on new structures, new responsibilities, because we do pride ourselves on funding our work entirely in house without any sort of general appropriation. So we are, year in year out, receiving zero public money operating on essentially a plaintiff's firm model. Taking on a new structure would certainly have an impact on our operating model.

Hey, Trish. I'm sorry. I do have a question. And this could this is related, I guess. Hypothetically, if it is then set up by HRS that these these violations of two ninety one c dash one thirty five, two ninety one c dash one thirty six, two ninety dash 11, then have criminal effects of potential violations and fines, then the AG becomes the authority to start cracking down?

Well, typically, the county prosecutors are in charge of criminal prosecution and the attorney general assists in certain types of situations. But, yes, if there was criminal penalties, then the prosecutors, whether the county or the state or the AGs, would be involved in it.

Okay. Like, stay right there. Manah, sorry. One more question. Sure.

Actually, several. So if we assess, like, an actual statute a a schedule and then some of these HRS as it exists, then that becomes out of your hands because you folks would not be able to enforce it.

Sorry. Can can you explain So say there's a schedule, like I guess, like, we said in HRS that towing by consent and payment exist here, but there's there is no technically explicit violation if they don't comply because there's you folks would then just have to pursue an OCP complaint. But say there is, like, an HRS that exist I'm sorry. In this HRS, we add a schedule of fines for somebody who's then comes into noncompliance. Would that then be out of your folks' hands and then you folks would have to pass it on?

No. Not necessarily. I I don't think I I think the answer is probably it depends. But if you included the schedule of fines and made some sort of separate enforcement structure with the penalties set out, it doesn't automatically take that out of OCP's hands because we have the authority to enforce four eighty dash two. We can also be, you know, read this read that statute in a way that would provide for different remedies for violations.

So we would wanna have a firm footing for asserting those claims in this written into the statute, but if you were to put different remedies in separate and apart from the unfair and deceptive acts and practices penalties, for example, we could also seek those remedies in a legal proceeding. Look. The distinction may be the legal proceeding versus the admin proceeding, though that that would still be a distinction.

We are constrained by our statute to go through court to obtain a resolution when the business does not agree with our determination.

Okay. And then I don't know this. Right? But is there a then a threshold rate so technically, they are registering with DCCA as as a business license operator. Is there a threshold at some point where somebody has so much junk injunctions ordered against them that you folks can revoke the license?

Not that I'm aware of. I I think in certain instances that business dissolution is allowed when you can demonstrate that the business is, I get this is not the long term, but sort of not functioning and not not, not an ongoing entity. There are some powers that can be invoked, but those would have to be, I would defer to, our business registration division to answer to get more specific details.

I'm not personally aware of being able to, pull the business registration license because of findings of violations against the business. What the business registration does, and it's it's very useful, is it provides a local agent that, you know, we can clearly demonstrate that this business has agreed to subject itself to Hawaii's laws and that

they have an agent for service of process to contact that person. We then have to pursue remedies through the legal avenues that are available to OCP, at the end of which we may get a judgment. When it comes to a judgment, we can file a potential lien on the business. We can seek to garnish wages against individuals. Those are some of the collection tools available to us after we obtain a judgment.

Those also can require further court action, just to get at the assets that may be available to satisfy the judgment.

But that has not been pursued?

That has not been pursued through the legal avenues in the last several years.

Okay. And then as it relates I I one, I think the private is an issue, but I think the county contract is a huge issue. When you folks are asking the county to come into compliance or, like, providing information they do provide it?

The counties are happy to work with us. In our in our experience, they When

you say happy to work with you, they do provide the receipts. They provide they work with the contractor to come into compliance? Or I think what I'm trying to get at is, like, if we know like, I didn't even know that some of these these fees are exempt from GT. I didn't know that. And I could imagine the public definitely doesn't know that, and I guarantee these folks sucking the GT on.

But if it's from the county that then ordered the toll for some whatever odd reason, if they do they then work have their contractor work with you folks or come into compliance on providing the information?

In my experience, and I think investigator and us would say the same thing, we're gonna work with officials at the county. So that, for example, might be a corporation council in Honolulu or in Hawaii County, or it might be at the agency level responsible for the the contract. Typically, the county is this has not happened in my experience where the county puts us in touch directly with the vendor, and we provide some sort of training or something like that for the vendor directly.

What we have done is usually because the county is always represented. They want us to go through, and we have been going through their legal representation and working in that manner with the county.

Do you feel like that's been helpful or no?

I think it has been helpful. There are one off cases where it's been helpful. It's also been helpful in order to spot maybe systemic issues, particularly issues that arose during the last phase of the Honolulu City County vendor contract. We were able to kind of brainstorm at a high level about potential solutions. The county took our suggestions and ran with and implemented what they believe was an appropriate solution to address a a a plot of complaints.

You're talking

about the $900 fifteen minute fee?

That's what I'm talking about.

But other than that, there hasn't been much change to that contract?

That contract, I believe, has been extended. It will expire. The other area where we have been working actively with the city and county of Honolulu is in issuing the next RFP for the city and county's next vendor for towing services. We believe that with appropriate tweaking to the vent to the RFP, it will be crystal clear to anybody who applies that what the standards are that the contractor has to meet.

Another issue that we've been going through in the RFP process is whether there should be a bar on certain contractors bidding for the contract because of past interactions.

And we think that quali contractors should perhaps be required to show a history of good and faithful dealing with the contract with the public and with the city and county in order to be able to bid on the next contract led by the city.

Members, is there anybody online? Sorry. I forgot I forgot you folks. Is there any members online that have questions?

Members, is there anybody online? Sorry. I forgot I forgot you folks. Is there any members online that have questions?

I know that this, this meeting with you folks would probably bring more questions than resolution.

I think that was the intent for some of this. Oh. Rep Marten.

I, I, I do have a question. Sorry.

Yes.

So, you have been talking about violations that are around charging for things they're not allowed to charge for. What about towing when they weren't supposed to tow? Is that—does that come up as an issue?

The answer from Investigator Nuss is rarely is that the issue, which is not to say never. It's different from never, but I think by and large—and maybe I'll invite investigator Nusss to expound on that answer.

Good morning. Yes. It does happen, but very rarely and infrequently. Nothing like the excess fees or requiring cash payment. That's the other problem.

The cash payment problem creates a whole another set of headaches for us. As an example, they're requiring them to pay in cash because they say that their point of sale or POS system is down and cannot accept credit cards. That what then requires us to do is we have to subpoena their POS system for records to see whether or not any other cash transit or credit card transactions had been run during that period and whether or not the POS system was active or not active.

So, we can't do anything until we get those records back, then evaluate them and include them into the rest of the case for whatever other reason it was.

There's a second option to that. Right? I mean, they don't have to charge them either. If their POS system is down and they can't abide by the law to offer that option, they could take the loss and just let the car go. I mean, I, I, I feel bad for them, I guess, if their POS system is down, but if they can't abide by what the law says, why are we allowing them to just say, sorry, cash only? That seems like...

The best question I—the best answer I can give you is there's nothing in the law that provides for that.

Yes. Well, there, there is. They're, they're violating the law.

...No, we cannot.

Is there an exception in the law for if their POS system is down?

No.

Okay. Well, then, it's not an exception.

But if they don't wanna give the car back, they're not gonna release it, and...

But then, then you can have the data to say they didn't release the car, then it's very black and white. You don't have to subpoena their information. They, they either gave back the car, or they didn't, at that point.

Well, yeah, they won't give back the car. And if you call the police department, they will show up, but they will not intervene.

They're, they're, they're getting an exception for something that's not an exception in the law at that point.

So, without litigating this question here in a public setting, I, I think it is—I did have some further comments about Representative Marten's inquiry about towing without authority., and I, I think in a situation where that question may arguably arise is where a person whose vehicle is towed claims that they had no notice, that they would be subject to a tow. That would maybe call into question whether the, the tow was authorized or not. And we do, on occasion, get those inquiries.

We respond to them usually by sending a field investigator to investigate whether the signage was properly posted at the location where the tow was made. And in many cases, we will find that the the signage was actually present in the case, and understandably, you know, individuals may miss that signage. However, it comes up that way.

I think Investigator Nuss has educated me about the city and county of Honolulu's Tag and Bag Program, where you have violations of other traffic ordinances, such as parking in a no construction zone in a construction zone, marked as no parking, where the city will authorize a tow. And questions may be raised by the consumer public, the individuals whose vehicle's towed, was that tow made with authority or not?

In many cases, like I've said, we have the job of telling the consumer, at the end of the day, that there was no violation of law here. You may be dissatisfied, but we we have not been able to, to substantiate that a violation took place.

Rep. Marten.

Yeah. I'm all good. Thank you very much, Chairs. Aloha.

I, I think we've—so, when they're alleging that they don't have Internet access, right, that would then—I just don't feel how you how you can even operate without, without that technology. Right? Because I'm assuming it's all a, a legend. Like, these are all allegations that they're making, but I would—without assumption that they just are trying to continue cash payment, for that reason to get it through. So, you folks then are just left trying to figure out if they actually had that happen.

And then, in the case that they did or they're, they're lying to you, that then goes into the judgment?

So, do we—the, the question, I think, for every prosecutor is to evaluate the evidence. Do we have the evidence to prove that their system was down? And this issue of claiming that your system is down, it's a really thorny issue and one that I'm taking a hard look at. What, what should the approach be here to resolve claims that they made me pay cash and told me I couldn't pay credit card?

How do we address those claims with the respondents in a way to get an appropriate resolution?

Like, hypothet—I don't wanna get into hypotheticals, but I, I'd be remiss. So, like, saying 291C-136...say you say, should an operator not be able to provide payment, due to a POS or outage, with, with—without the legal jargon—could we then explicitly say that the vendor is then required to release the vehicle and pursue payment later—at, at, at a later date? And then, is that a possible?

As a policy question?

Yeah.

I see no reason why that could not be added into the law.

Okay.

Okay. Also, like, have them prove it. If they're trying to argue an exemption again, an exemption that doesn't exist in the law, but if they're trying to argue that their POS system was out and that's why they violated the law, why is it on you guys to prove it?

So, respectfully, we're—I'm not gonna try and litigate these questions in a public setting here.

But did you ask them to prove? I mean, I—it seems like you guys are taking on more burden than you need to, honestly. As they're, they're the ones being....

In the Office of Consumer Protection, there's the burden of proving their case.

But not, not to prove their defense. There's— this is a defense by them. They, they need to prove their own defense.

That's correct.

So, why, why are you guys doing it?

Yeah. Happy to take that advice back, but, again, respectfully gonna decline to engage in litigating the case in a public forum here before the case has been brought, raising potential defenses, that—this is not the forum.

We're not—we're not litigating anything. That's, that's basic. It's basic law. Right? I mean, you, you don't have to prove their defense.

Is that—am I, am I off base on that? I'm pretty sure at least two other two or three other attorneys in here too. Anyway, I don't want you guys to do more work than you have to. I mean, that's why I'm—that's why I'm trying to encourage you to make them prove their case. I mean, this isn't even a—this is kind of a BS excuse they're making anyway.

And I'm also encouraging you to, you know, pursue in small claims just because it's so much easier and simpler. So, all of these steps, I think—I mean, you've a lot of your presentation was how burdensome it is to pursue. Fair enough, if you're gonna do that in district or circuit court.

But it seems like there are avenues— it seems like you guys are making more work for yourselves and in doing so, are failing to press the case against these guys who are getting away with a lot, which no one here wants, including you. And I'm not saying that this is not in bad faith at all, but I really want your office to start enforcing on these guys, especially the ones who are clearly bad actors.

I mean, you had, by your own chart, it's the—you know the bad actors. There are three or four of them. I mean, let—let's go after these guys. Right now, they're just getting away with a lot, and it seems like the percentage is increasing every year. So, I, I really encourage your office to step up and start giving these guys trouble damages.

Yeah. And I'll be, as I mentioned, I think that's a really good proposal to evaluate the avail—the availability—of district court, small claims court, as if they need to press these proceedings. That is an important question for us to look at. We will come to a determination on that particular question, and our determination will be what it is. At that point, you know, there comes the question, are we ready to devote significant office resources to pursuing these cases and upholding the law?

And that's an important question too. You know, we've—as I hope to contextualize, we have a wide range of cases and a fairly limited set of resources we can draw upon.

But the resources you get from this case go to your office. You guys could be rich. I mean, you could you, could hire your own attorneys to do this with the income from...

I hope that's intended to be funny because trying to pull out money from these towing companies is not how anybody should be thinking about it.

I mean, they're not judgment-proof debtors, though. I've gone after judgment-proof debtors before. That's not them. Right?

I mean, these are established companies. This isn't some person who's kinda in the wind. You know exactly where they are. These are established companies that have city contracts. I mean, I don't know how much they can really run from you when you get a judgment against these guys.

Other people, maybe not. You know, I, I know you go after other claims against less reputable people, after these people are super reputable, but I don't think these are the kinds of judgment-proof debtors that you're gonna have problems collecting on, is my—yeah, is my thought, so.

Rep. Marten.

Thank you. My question—I don't know if you have the answer, but you might have insight. Usually, when I think of people trying to be paid in cash, it's to avoid paying taxes or something like that. Are these companies audited to make sure that the—they are actually reporting the, the money that they're taking in from towing, or why, why is there this preference for cash?

I, I can speculate on that, and that is an area that I'm, I'm sort of happy to speculate on, because the Legislature has already made clear, the policy here is to protect people who cannot pay with, with cash. They have access to credit. They should be able to pay by credit to get their vehicle back. That policy is clear.

My guess is that the reason that companies attempt to get around this credit card payments is because credit card payments can be challenged and can be disputed.

Congress has set up a system that allows any of us in this room, who pay by credit card, to file a dispute with with the credit card issuer, and that credit card issuer would then investigate whether the payment was lawful, was authorized, was unauthorized, whether there is a reason, in fact, to withhold payment to the merchant or claw back payment from the merchant in the form of a chargeback.

Thank you very much. I did not know that. That's very insightful.

I have a question. Do you think they should have the ATMs, right there? Because what happens is that these companies lie. They say our card machine is down, but we have a ATM five feet away, and it's a $6 transaction fee. So, it's even more of a burden to the person who's already having a terrible day.

I'm just thinking just what language to have, and if the ATMs should be there. There's a lot of establishments that don't have an ATM on presence, and that's one of the ways they use it to get around—to get the cash from the person.

Yeah. I'm very—I, I, personally, I think that's the, the approach of pushing people to an ATM that imposes an additional burden to the consumer. You're gonna have an additional fee for accessing the ATM, one that is not expressly authorized under the statute, but is undoubtedly part of the transaction at that point. You're also not gonna have recourse to the credit card company to file a dispute.

So, I think directing somebody to an ATM is absolutely an attempt to circumvent the law and that it should be treated as such, and, and our law does directly address and prohibit directing customers to the ATM instead of paying—accepting—credit cards. So, our law is on point.

What law is it?

It's Act 60. Act 60 passed in 2024.

Maybe in our law, we, we prohibit them saying—oh, I see what you're saying. You're explicitly—but yeah. Okay.

I think the practice flies in the face of the established law.

Good point.

Rep. Cochran.

Hi. Good morning. Thank you so much. So, I'm just curious if there's any Maui County—we're talking a lot about Oahu Island here and city and county—any Maui County, you know, issues that come to you folks. Because if I recall, back when I first started there in 2022, predatory towing was a thing, and that's the first time we even heard of the concept. But I came home and started asking the different condos. So, basically, residents who live in condos, their cars are getting targeted and towed. The companies knew clearly that these were cars that belong to the condo, but they were constantly getting towed.

They'd have to go through the whole rigmarole—pay and retrieve cars. So, that has been occurring. I know that was a thing. So, I think the question was asked by Rep. Marten, and you folks said that there isn't—there are no cases—that there's no cases anymore. So, maybe four years later, fast forward to today, that, that's been addressed?

No. I can say with a pretty certainty that that those issues have not been comprehensively addressed. There's still condos out there who will call a tow truck when a resident commits some kind of infraction, like parking over the line or parking in the wrong spot, and that results in a lot of headache for the the person, obviously, whose vehicle was towed. Those are not necessarily Maui-specific issues.

They occur statewide, and I think that's a—that is a good issue, and it raises the question for, I think, property owners and property managers out there.

I think there is some onus on the property owner and the property manager to know who you're dealing with. When you're dealing with a tow company, who are you gonna hire to police your parking lot?

Are you gonna hire a company with a, a, a reputation and a good rating on business—Better Business Bureau—or with fewer complaints or zero complaints, which you can verify through the DCCA's complaints history data, or are you gonna go with somebody who perhaps you've been doing business with for twenty years, but if you checked DCCA's public complaints data, you would find out that they have a 100 complaints against them?

The owner or the property manager have a responsibility to, I think, know who they're dealing with there.

I think in addition, the, the property manager has an obligation—maybe not an enforceable obligation legally, but a moral obligation—to deal in good faith with the people who use the property. And those are issues that I think people have to raise and bring to the attention of their property managers. And if they have disputes, to pursue their disputes, those are not—and I'm not going to be sort of saying that those are disputes that OCP polices because they're not.

But let me turn to Investigator Nuss to offer any additional insight about any Maui-specific issues that may be of interest to you.

Okay. Thank you.

I know of none, ma'am. I—we have an investigator for Maui. So, most everything for Maui goes there, so I don't see it. I'm sorry I can't answer your question.

Okay.

Sorry for putting him on the spot.

Well, but aside from that, what I can tell you is a number of the condominium complexes, they hire these towing companies under a contract. They give them carte blanche to troll their parking lots looking for something that's wrong, such as someone not displaying their parking permit correctly or in the right place. Or as Mona said, maybe encroaching into the next parking space or not parking in their own space.

The statute says that the man—manager or person in charge of the property—is supposed to call for these private property tows. But a way around that, these associations are providing contracts to a towing company just to let them freely troll all hours until they find something that they can tow.

Does that help?

Yeah. And so—yeah, hence, the predatory towing. The other issue that I've heard a lot, and this has to do with harbor type car keys. So, you have the visitors or anybody that goes on out, say, on a whale watch or a snorkel tour.

Right? They do the paper marking, get their tickets done, put it in the window thing. And, I mean, mother nature is what it is. Maybe you're out—so, this is a Molokini trip out of Ma'alaiya Boat Harbor.

Go out, two hour trip. You get the ticket that applies to that, but all of a sudden, you're whale mugged. You can't—the boat can't come in. The winds come up. You're slower, you know, in getting back to the harbor, whatever it is.

And it's been said the—this towing company will, like, sit there like vultures, and it's your half a minute over. Boom, they're hooking it up.

We, we still have PUC to go, Rep. Cochran, so we're gonna need to...

Okay.

We're getting a little off topic on what this info briefing was supposed to be about. But thank you for your question. You can follow-up with them after, in person.

Okay. Yeah. I'll, I'll get direct, direct in touch.

Thank you, Rep. Thank you, DCCA. I'm gonna have you stick around. I'm gonna have the PUC come forward. And as you folks prepare, PUC oversees licensing as it relates to the Motor Carrier Law.

I can ask you to give the skinny of the Motor Carrier Law.

It's a 20-page presentation, but it's okay.

The skinny.

Because I, I think, really, me asking you folks to come here was, I think, the million-dollar question, or the legislative question. Are you folks then the, the, the proper entity that could potentially—if we define a motor carrier as a tow truck company, tow truck operator?

So, good morning. Aloha, Chair Kila, Chair Matayoshi, members of the committees. My name is David Richmond. I am the Government Affairs Officer at the PUC. Today, I have Chair Johnny Tomura, Commissioner Naomi Kuwaye, our Chief Counsel, Chris Nakagawa, as well as our subject matter experts, Frank Anno and Russell Henoff from the compliance within the PUC.

I just wanted to give an overview....

please.

...Response to your question. So, in 1961, legislator—Legislature—created the Motor Carrier Law, which is 271. But just to do the skinny version is towing companies are exempt from, and we do border carriers. So, in 1961. So, it was included as part of exemption when it was first created.

Those damn old guys. That was spiky.

Yeah. But, basically, it's, it's property and passenger carriers. So, you have your, you know, a lot of rentals, things like that, people who transport, move. They're required to register with the PUC.

Now, moving forward in 2024, the PUC was doing both enforcement and registration, administrative hearings. If somebody were to come to register to be a PUC property or passenger carrier, they would come to the PUC, file an application, and then, we go through the gambit process of zone of reasonable ordinance. We have to post it, things like that. In 2024, the legislature, in its wind, decided to move the enforcement to the Department of Transportation.

Couple of the things of what that factored in, there was a bill in 2024 to deregulate order carriers from the PUC.

And then the second one was to do enforcement better. The PUC, at the time, only had one enforcement officer, so.

For the whole state?

For—oh, not for the whole state. For Oahu.

Oh.

But then, our field reps within the neighbor islands were also doing the enforcement for the Motor Carrier Law. So, the Legislature in 2024 decided, well, why don't you transfer to DOT, which is the water, Water Safety Vehicle Office, which they had a bigger staff, bigger personnel. So, we're still going through that transition phase. They—I know that they're still trying—they're not here today—but they're still trying to build up their personnel to be able to do the enforcement side of motor carriers.

But before I answer your question, I—maybe I'll defer to the Chair or even Mr. Kuwaye.

For towing companies, if there—if you remove this exception, right, then all the towing companies would have to do the same filing applications as the current property and passenger carriers, which will also require insurance. But the caveat is that for any of their revenues, they are supposed to file with the PUC. Right? Which is a quarter of 1% of whatever revenues they get. So, whether that's something that, you know—we'll leave it to you guys if that's something that you guys wanna do.

But I think—I have the PUC leadership here, whether that's a commitment, whether that is something that we can do. But internally, on the PUC side, because we do the administrative hearings and processing of those applications, that's kind of the, the easy, the easy work. It's the enforcement side, which is what DOT is currently doing.

Was there anything else you wanted to share?

I, I, I just wanted to give a few minutes. I have Scott Schlegel, who is part of the National Insurance Crime Bureau. They're a non-government entity. But because CPC is here, I want him to explain kind of the insurance side that's affecting some of—not only on OHA, but as well as...

Please.

Goof morning, chairs. Good morning, representatives. I am Scott Schlegel with the National Insurance Crime Bureau. I have a background in law enforcement. I was with HPD before most of you were born. And then, now, the, the national insurance—not you—now the National Insurance Crime Bureau represents about 1,100 insurance companies. And so, on probably a weekly basis, I get complaints from insurance companies because let's face it, if the car's in an accident, and 99% of the time, the, the, the tow company comes out there and gets it for tows in the thousands of dollars for routine collisions.

I had one yesterday for $33,000 on an outside island for a pickup truck that hit a guard rail and flipped over.

So, they use—and, and what happens is, is they go back to negotiations. The—and the tow companies really don't mind. Some of them are charging $500 a day in storage, right, to an insurance company, which eventually trickles down to everybody. On this island, it, the—those tow companies I hear about every day that we've discussed, plus others, and it's actually off all the islands where the towing industry has taken advantage of it.

In some, some areas in the law, the tow companies will say they, they weren't called by the police.

They were driving by and saw the accident. So therefore, the police contract and the state law doesn't apply because it's a private tow. Mike from the Consumer Division will call them and say it sure does and it can take a year or more to get it resolved. Other sections that I've seen tow companies playing games with—difficult hookup. I think it's whatever that fee is for difficult hookup. They'll see a car on the side of the road in gravel.

That's—yeah. They'll say it's a difficult hookup because it's in gravel, where most of us would interpret a flipped over car as a difficult hookup. Right? They'll say the car was off the road and in the ground. Right?

Which, you know, five feet off the asphalt. So, it's because somebody pulled over for their flat tire. So, there's a lot of game tthat we can get into at some point, but every tow company that is doing the wrong thing plays. So, that's kind of where we were, and like I said, I get complaints constantly from insurance carriers.

And we've had to try to tell them to negotiate with the tow truck because the insurance companies do not have an enforcement mechanism. They can't complain to the consumer department because they're for the consumer. The Insurance Fraud Bureau has to have some type of fraud complaint. The way we've prosecuted some of the tow companies under the Insurance Fraud Rule is, let's say, the tow company bills an insurance company for three tow trucks coming out. We find out there's only one.

So, those other two fees that are charged for the additional tow trucks, you know, that'll be the fraud amount. So, you—but we have to have a certain dollar amount over $750, and so on and so forth to meet the state's requirements on the on the insurance fraud section. So, if, if you have any questions, I'd be happy to answer them, but that's—it's, it's hard for the insurance companies.

As an NGO, how do you prosecute them?

We refer to the Insurance Fraud Bureau or if it involves a consumer, what we'll tell the insurance carrier to do is to tell their insured to file a complaint with the consumer division.

Oh, so you more-so help.

I'm kind of a liaison between the insurance industry and the—whichever entity it needs to be sent to.

Okay.

I'll, I'll get all the documents from the insurance company, prepare a little report narrative, and send it over to whichever agency needs it.

Before I bring DCCA back up, I think if Rep. Marten and Rep. Cochran are still on, I've worked with NICB on many issues, and I think your folks' specific ones, I think he may be a resource, so, if there's a way folks can connect after, I would highly recommend. I'm gonna bring the PUC back up.

Yup.

Thank you for being here.

You're very welcome.

And I—before you start, just wanted to add that we do not regulate Uber ride share or taxis. So, it's strictly property and passenger.

Okay. So, back to the Genesis and that million-dollar legislative question. The 1960 legislature exempts them. Has there been any attempts since that exemption to ever put them back under a definition as a "motor carrier," that you know of?

In my experience, three years of the PUC, no, but I've—we've had conversations with complaints about what tow companies were doing and whether it was an option for them. I do wanna note that we do have tow companies who are registered as property carriers, but they don't fall under the guidance of, you know, whether how they tow the car, what their rates are, and things like that. So, theirs is strictly on how—what they do with the property here.

Okay. So, then, the legislative question, should the Legislature want to pursue that definition of addition that there's passenger, there's motor carrier, and then that this new definition of a tow truck operator, can the PUC then—would you folks be able to enforce and implement that law?

I would defer to the Chair. He's here today. But in the enforcement, I, I, I think I kinda mentioned in my brief statement is that we can process the tow companies for the insurance, the practices, and complaints. But the people who bring them for administrative hearings is going to be DOT, because they have the MDSO and they're the ones who witness and cite those citations before they come to the PUC.

I think largely right because I think what...has pointed out, they're not a licensed or defined industry. So, they're kinda just flying rogue. I know you folks aren't necessarily—I, I think in the best definitions that we have, like, they probably are best suited under PUC. And, like, as we set forth these rates, I think these are also probably similar to what PUC would potentially do. Right?

We, we, we cap them at 85 for a toll. We set up mileage of 750 per mile, a 25-day infraction. Like, these are almost already set out for you folks. So, it's not like a new—Chair, can you come?

Morning, Chair Kila, Chair Matayoshi, members of the committees. I do wanna stress that, you do see a good representation of PUC here this morning because I wanted to convey our priority for this issue. And as David Richmond provided, you know, that's not currently under our jurisdiction. I do see, just from hearing this morning, we have issues of conflicts of jurisdiction, probably no uniform standards, and definitely accountability issues with the vendors or the companies.

Now, I think with regard to potential legislation, there's a lot of details that are gonna need to be considered with respect to how enforcement goes forward.

Right now, you know, there's a component of the Department of Transportation doing citations. And, and right now, we don't have that manpower to, to just take something like that back. So, yeah, they could continue, and that component would be with the Department of Transportation. On the hearing side, which is still part of enforcement, it's not entirely clear where the PUC may be, or even DCCA, on how that enforcement side crosses over or even maybe overlaps.

And that's what I think would need to be clarified in any legislation that goes forward.

But I will defer specific questions to our SMEs, but I'll stand here and say that we're committed to resolving this problem and, you know, doing whatever we can under any particular statutory obligation that comes forth.

Before I then pass it on to Chair, you folks in a violation, right, so they're gonna issue a citation, but PUC does have admin hearing authority, yes?

Currently, yes.

Let me bring up Frank Anno, our, our Chief for our Compliance Division. But as the process stands, we do have the administrative hearings process...

So, prior to the transfer...

Oh, Frank, introduce yourself.

Oh, Frank Anno, Consumer Affairs and Compliance Officer. Prior to the transfer to DOT, we did everything in house. So, our enforcement officers will be on the road to issue the citation. If the citation was contested, we would hold a hearing—we would hold a contested citation hearing in our offices in the hearing room. Now that it moved over to DOT, DOT will be out there issuing citations.

However, if there is a contested citation, the citation would come back to us to administer the hearing, the contested citation.

And then, in that case, when they—when you—issue the citation, what—how is the citation then levied? It's just an administrative fine?

Yes.

And so, with current motor carrier law, say there are violations or violators, do you folks then pursue any further than an admin—administrative fine?

The fine is one component. The second component could be they could be lacking in payment of their annual financial reports, the annual fees. So, we could show cause them and remove them also.

I guess then I think I'm trying to understand.

For verification.

So, Mana—so, Mana's issue, right, is that these guys are just—guys, girls, people—they are just egregiously violating HRS left and right, but they don't have necessarily the tool. I'm assuming that maybe folks under motor carrier law, they're not—your folks' violations, they haven't been that egregious?

We, we will receive a—maybe a 20 complaint, one maybe once every month or two. Those are there for—so, we will receive tips on possible...care violations. Those are then forwarded to the DOT to look into.

Okay. Maybe I'm learning on the spot. Would the administrator find hearing the—the administrator find...issue? If there is then no payment, you folks then can issue the order that they no longer are able to technically do business in, as a place.

We have a process where we issue bill for collection. We, we have done in the past.

But not—he's not asking.

It's been forwarded to the AG's office.

So, he's not asking for collection of the money. He's asking whether you can use the nonpayment of the fine to revoke any kind of license they have or or something like that. Right?

In my experience here, we—I haven't seen it.

Yes.

Sorry. Just to add, yes, we do. We have the authority to revoke the CPCN, which is basically their certificate for them to operate within the school.

Has that ever happened?

We can double check, but we—it is my understanding that—so, a carrier would go through a year and not report to us that they're no longer in business. So, we would follow-up with them and whether they revoke or voluntarily discharge their CPCN back to the PUC or whether they're just transferred. But because of nonpayment...

We usually go to the AG's office, and they, they have to pursue first that avenue of collecting on the nonpayment and then, whether it's further action after that.

Yeah.

I, I will say that I've, I've already—I have signed orders for revocation of CPCN, and a lot of times, it's for public transportation that either have stopped operating anyway, but, yes, the answer is yes. That remedy is available.

Sounds like these guys are screwing around, and that remedy should be maybe enforced a little bit. I mean, it—you know? If appropriate.

Yeah. So, the—okay. If I, if I'm understanding this correctly, if, if the exemption is lifted and joint companies come to—come under our jurisdiction—they would have to go through that CPCN process and in order to operate. And then, going to your, you question, "Can that be revoked?" Yes.

Okay.

And then, for not knowing, like, what, what is the range of fines that you folks have issued in the past for violation of—as motor carriers as exist now? Are they minuscule?

It depends on what is outstanding. So, especially, if they don't pay for their AFRs or there's delay, then there's an interest rate. So, if they don't pay for two years, so you can imagine it might be in the thousands. So, a lot of the, if the—the carriers right now, they, they have great track records of paying by our deadline, which is April 30 for all AFRs.

But for those who, like I mentioned earlier, like, if there's a company who's, you know, either gone bankrupt or has no longer operating, some of those are still pending in our system because they have not voluntarily discharged their, their, their CPCM.

So, we have to go back and look in the books and see if they've been operating. They have to come back to us, and that's part of the administrative hearings' process on, on that.

Because I think, like, as I'm trying to, like, put this all together, right, I'm not—OCP, right, they, it's been clear. Like, I think they could potentially pursue other litigation mechanisms. But I think for all these toll check operators that we set out in HRS and then, then defining as a motor carrier, like, these can quickly then pile up.

And then, now, suddenly, their existence of licensure now is stripped in, and I think that's the one thing that we have not been able to get to is that to operate in the state they are just flying freely. In the case where then you folks now become the issuance of licenses, a violation of HRS, has that been something that admin hearings you folks have been, have been able to accomplish? I guess it's a hypothetical because you guys don't have it yet.

Yeah. And yeah, I wanna assume that there's a cross of criminal versus civil penalties. Definitely wouldn't be criminal. But with respect to issues that come up, I think along the lines of what you're saying, there's an order to show a cause process that doesn't sound as available under the OCP process potentially. So, that provides another opportunity to just bring them in—based on complaints and could lead to a revocation as well.

You folks have deputy attorney generals in your office?

No.

So, then, who is the?

We, we have.

Do you all take the...?

In fact, we're currently hiring a, a specific attorney for the division of the.

Order carrier?

Consumer Affairs and Compliance.

Members, are there any questions? Online? Chair Matayoshi.

Thank you. You guys have any questions? CPC guys? Okay. I was considering—I, I don't know if this is a PUC thing or not.

And, and granted, you don't have necessarily jurisdiction over them yet. But if we do give it to you, I was kind of considering—anyway, directly to the right area, is it possible for PUC or someone else to require, like, a dash cam for the tow truck or something? Because the—one of the, the complaints I've heard is, the law we passed two years ago requires them to unhook the car or to not tow them if they're within 50 feet, and that hasn't been happening.

They've just sort of been grabbing it and digging.

I'd like to shift the burden of proof onto the towing company to prove that no one was around when they towed it, and that would be pretty simple with just a front and back dash cam. I think you could just see who's around. Body cams are also raised, but that might be going a little far. It's a fifty—fifty-foot thing. But, I mean, surely, dash cams would be safe for the towing company.

They could affirmatively prove it. Where—if we were to put in that kind of requirement, though, would it be through the license? Would it be through something else? Do, do you have any idea?

Off the top of my head, I would think that's a citation issue, and, and they would—it would fall under DOT's list of, you know, elements that went in their citation. But it could probably come up as a complaint issue as well in the process.

Wait. I think what Chair Matayoshi is asking, like, if licensure standards are set, could then that standard be upon the issuance of licensure that the operators are required to have dash cams installed, if they're operating as a tow truck—a licensed industry under you folks, as under motor carrier law?

Because this is a hypothetical, I would look at how other states do maybe admin rules. If there's language within the statute, then the admin rules could interpret as part of our requirements.

Are they, are they required for taxis or anything like that to...?

That's a county—yeah. It's a county.

Fair enough. Thanks.

Thank you.

NICB, I just have one follow-up question.

Yes.

If there was, like, a model state, hypothetically, that, that has regulated this, this industry phenomenally well, what would you point?

I would—well, our government affairs, Marian Smith, is online right now, and I would defer to her, and we can get you that information...

Marian, would you be able to answer that off the top of your head? Or if, if, if not, we can follow-up.

Yeah. One more time because I—I'm sorry. I, I didn't quite hear that.

No. So, say there is a model state that has phenomenally done exceptionally well regulating this industry, is there a state you would point us to?

Yes. Most definitely, we really appreciate what Michigan has done. There is an NCOIL. The National Coalition of Insurance Legislators does have a model, but I can certainly point you to model legislation. We'd be happy to do that for this meeting.

Okay. Thank you. And I think what you've heard, like, what we're trying to accomplish, if you could assist the legislature in the way potentially what model we're going towards or if there's a way to make that model better.

I'm sure Marian will come out in January too. She has no problem, she's....

Or earlier.

Yeah. No. But whenever you guys need it.

I, I, I'm here 24/7, so I—anything you guys need in the legislative law, whatever, whatever you guys need.

He said 24/7, so. Right.

We're, we're here to help. I offered this weekend, but I heard you had a little bit of a weather incident. So, I, I reside in Wyoming, and I believe I've met a few of you when I was out in Hawaii last year. But yes, we are able to assist and happy to do so.

Thank you. Thank you. Closing thoughts, I, I, I do wanna thank PUC and DCCA folks for being here today. And I wanna just acknowledge, I know this is an uncomfortable subject and topic in conversation, but I, I think it's reflective of the questions that we have, that this has been a problem that we can now blame the 1960 legislature for.

But I appreciate your folks' willingness to want to try to acknowledge the shortcomings and the shortfalls and help us make it better. I think then that's my ask is that legislature is—it's upon us. It, it does—it, it happened as soon as we adjourn. I mean, Chair Matayoshi, I, I'll let him share thoughts. We, we probably have to have more conversations.

But whatever we do decide to come to the table, I do ask that if you folks can help us make it better, be flexible, because we get these calls and complaints every single day. I, I'm sure Rep. Tam in Waikiki, Rep. La Chica and all her industries—her HOAs that exist. Rep. Ichiyama, she houses, I think, some of the tow truck operators in her district. And I, I wanna acknowledge our neighbors and legislators.

I don't know the problems you folks are facing, but you folks probably hear it on the ground too.

...And I wanna just share, I know Rep. Marten has championed legislation to try to get uniform practice, and I wanna thank you for that. And I think us scheduling this today was acknowledging that you are hearing, especially on our state harbors, our operations that exist there. We don't have the answer today.

Oh, Rep Iwamoto, downtown Ala Moana as well. I can only imagine. So, I thank you folks. We're obviously gonna have to continue these conversations and discussions. So, thank you.

You forgot...

Oh.

That's okay. Very easy. You know? Got you guys. I appreciate everyone being here. Thank you for everyone for showing up. I, I do wanna see more enforcement. I'm, I'm glad that you guys are gonna look into a different enforcement mechanism to hopefully get these cases moving.

What we really want is for our current laws in the books to be enforced. I mean, I, I'm not even sure we need to—oh, well, I think we're gonna be looking at some changes. But in the meantime, I'm hoping that these guys can stop getting rid of it. That's really what the public wants to see. They're, they're seeing us pass laws and for companies to kind of fling it in our faces.

And that, to me, is not acceptable. From a consumer protection standpoint, I think we've been passing good consumer protection laws that have not been enforced, and that's where we rely on you folks to do. So, I'm looking forward to continuing the conversation, looking forward to different bills next year. Thank you all for being here.

Thank you. You folks stay after. And this hearing is now adjourned.