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      RS 32:1262     


§1262.  Warranty; compensation; audits of dealer records

A.(1)  It shall be a violation of this Chapter for a manufacturer, a distributor, a wholesaler, distributor branch or factory branch, or officer, agent or other representative thereof to fail to adequately and fairly compensate its dealers for labor, parts, and other expenses incurred by such dealer to perform under and comply with a manufacturer's or a distributor's warranty agreement.

(2)  In no event shall any manufacturer or distributor pay its dealers at a price or rate for warranty work that is less than that charged by the dealer to the retail customers of the dealer for nonwarranty work of like kind.

(3)  Warranty work includes parts and labor performed.

(4)  All claims made by the dealer for compensation under this Subsection shall be paid within thirty days after approval and shall be approved or disapproved within thirty days after receipt.  When any claim is disapproved, the dealer shall be notified in writing of the grounds for disapproval.

(5)  The obligations in this Subsection as they relate to recreational products may be modified by contract.

B.(1)  Notwithstanding the terms of any franchise agreement, warranty, and sales incentive, audits of dealer records may be conducted by the manufacturer, distributor, distributor branch, or factory branch.  Any audit for warranty parts or service compensation shall be for the twelve-month period immediately following the date of the payment of the claim by the manufacturer or distributor.  However, a dealer shall not be held liable by virtue of an audit for failure to retain parts for a period in excess of six months.  Any audit for sales incentives, service incentives, rebates, or other forms of incentive compensation shall only be for the twelve-month period immediately following the date of the final payment to the dealer under a promotion, event, program, or activity.  In no event shall the manufacturer, distributor, distributor branch, or factory branch fail to allow the dealer to make corrections to the sales data in less than one hundred twenty days from the program period.  Additionally, no penalty other than amounts advanced on a vehicle reported incorrectly shall be due in connection with the audit.  With respect to vehicles sold during the time period subject to the audit, but submitted incorrectly to the manufacturer, distributor, or wholesale distributor branch or factory branch, the dealer shall be charged back for the amount reported incorrectly and credited with the amount due, if anything, on the actual sale date.

(2)  No claim which has been approved and paid may be charged back to the dealer unless it can be shown that one or all of the following applies:

(a)  The claim was false or fraudulent.

(b)  The repairs were not properly made.

(c)  The repairs were unnecessary to correct the defective condition under generally accepted standards of workmanship.

(d)  The dealer failed to reasonably substantiate the repair in accordance with reasonable written requirements of the manufacturer or distributor, if the dealer was notified of the requirements prior to the time the claim arose and if the requirements were in effect at the time the claim arose.

(3)  A manufacturer or distributor shall not deny a claim solely based on a dealer's incidental failure to comply with a specific claim processing requirement, or a clerical error, or other administrative technicality.

(4)(a)  A dealer shall not be charged back on a claim when a dealer performs a repair covered by the manufacturer's or distributor's warranty, and the dealer reasonably demonstrates that the repair resolved the condition which the customer presented for resolution, and the dealer documents what has been repaired and the process utilized to accomplish the repair.

(b)  The provisions of Subparagraph (a) of this Paragraph shall not apply to recreational products dealers.

(5)  Limitations on warranty parts or service compensation, sales incentive audits, rebates, or other forms of incentive compensation, chargebacks for warranty parts or service compensation, and service incentives and chargebacks for sales compensation only shall not be effective in the case of intentionally false or fraudulent claims.

(6)  It shall be deemed an unfair act pursuant to this Chapter to audit a dealer more frequently than two sales-related and two service-related audits in a twelve-month period.  Nothing in this Subsection shall limit a manufacturer's or distributor's ability to perform routine claim reviews in the normal course of business.

(7)  No claim may be rejected as late if it has been submitted within sixty days of the date the repair order was written.

(8)  The dealer shall not be charged back for any rebate paid to a consumer pursuant to a manufacturer's rebate program, provided the dealer acted in good faith when relying on the consumer's qualifying information and otherwise complied with the program guidelines and documentation requirements.  A manufacturer's rebate program shall include but not be limited to a rebate program that targets college graduates, military personnel, first-time buyers, owner loyalty, family relationships, and any other similar program.

C.  The provisions of this Section shall not apply to a dealer, manufacturer, distributor, wholesaler, distributor branch, or factory branch of marine products, motorcycles or all-terrain vehicles, or recreational vehicles, or any officer, agent, or other representative thereof.

Acts 2005, No. 500, §1, eff. July 12, 2005; Acts 2008, No. 233, §1; Acts 2009, No. 403, §1, eff. July 7, 2009; Acts 2010, No. 1036, §1; Acts 2011, No. 89, §1; Acts 2012, No. 326, §1; Acts 2013, No. 61, §1.

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