For the past few years, state laws have been written and passed to update older dealer franchise laws or current franchise laws some automakers are trying circumvent. No doubt dealers and dealer associations have been lobbying hard for the changes and New York has just introduced new dealer franchise legislation and some of it covers warranty reimbursement and audits.
Here’s a quick rundown of the changes in law that will be implemented when the bill finally becomes law.
- Automakers can go back five years (from date of payment) to charge back claims due to fraud. Current law did not put any limitation on automakers as to how far they can go back charging back claims for fraud.
- Warranty audit chargebacks can only be charged back to the dealer after all internal dispute processes are exhausted. When a dealer initiates an action to dispute any warranty chargebacks, the chargebacks will be put on hold until a final decision is made in the venue chosen to dispute the chargebacks. Current law does not stop the automaker from immediately charging back claims after an audit.
- All warranty claims must be approved or disapproved within thirty days of receipt by the automaker. If a warranty claim is not disapproved in that time frame, the warranty claim is considered approved. Current law requires approval or disapproval of warranty claims within thirty days but does not assume that a claim is
considered approve if the claim is not disapproved within thirty days.
- An automaker cannot deny or charge back a claim unless it satisfactorily proves that the dealer did not make a good faith effort with the reasonable written procedures of the automaker or that the dealer did not actually perform the work. Current law has no similar requirements.
- An automaker must have a meeting with a dealership officer or designated employee to discuss in detail each of the proposed warranty claim chargebacks and give the dealership an opportunity to offer any explanations of the issues found before levying any chargebacks. Current law has no similar requirements.
- If a dealer is chosen for a warranty audit based on the assumption that their warranty claims are excessive when compared to other dealers, a written statement must be provided containing the basis or method used to select the dealer for an audit. Current law has no similar requirements.
- A mathematical method is provided for dealers to use to determine a parts reimbursement rate to request from the automaker. Dealers can only submit two requests per calendar year. An automaker may rebut a request by showing it’s unfair and unreasonable compared to dealers of like franchises in the area.
- When determining a warranty labor rate for a dealer, the automaker cannot require the dealer to use unduly burdensome or time consuming methods to calculate the labor rate.
The Assembly and Senate both passed the bill on June 24th. The bill was delivered to the governor on July 25th and as of now remains unsigned. Once it is signed, the law should kick in on January 1, 2009.
