Section 9 Delivery and preparation obligations; express warranty agreements; audit of claims
Section 9. (a) Every manufacturer or distributor shall specify to its motor vehicle dealers the delivery and preparation work, if any, to be performed by its motor vehicle dealers. The compensation provided for the services shall be reasonable.
(b) Every manufacturer or distributor shall within a reasonable time fulfill its obligations under all express warranty agreements made by them with respect to any product manufactured, distributed or sold by them and shall adequately and fairly compensate any motor vehicle dealer who, in accordance with its franchise obligations, furnishes labor and materials pursuant to the warranty agreements. Unless the manufacturer or distributor and motor vehicle dealer otherwise agree in writing, fair and adequate compensation shall, for purposes of this section, be computed at the rate normally charged by the motor vehicle dealer to the public for the labor and materials and shall include a fair charge for diagnostic and test services; provided, however, that fair and adequate compensation shall, for purposes of this section for powersport vehicles, be computed at the rate normally charged by the motor vehicle dealer to the public for the labor and materials and shall include a fair charge for diagnostic and test services; provided, further, that notwithstanding the foregoing fair and adequate compensation shall, for purposes of this section for recreational vehicles, be computed at the rate normally charged by the motor vehicle dealer to the public for the labor and shall include a fair charge for diagnostic and test services, and shall, for the purposes of this section for recreational vehicles, be computed for the materials at the rate of not less than actual wholesale cost, plus a handling charge of 30 per cent of the cost and the cost, if any, of freight to return the warranty materials to the manufacturer. All claims made by a motor vehicle dealer under this section for labor and materials shall be either approved or disapproved within 30 days after their receipt. When the claim is disapproved the motor vehicle dealer who submits it shall be notified in writing of its disapproval within the 30 day period, and the notice shall state the specific grounds upon which the disapproval is based. All such claims shall be paid within 30 days following their approval.
(c) Every manufacturer or distributor shall retain the right to audit claims submitted by a motor vehicle dealer and paid by the manufacturer or distributor for warranty service, parts recall service, and sales incentive, bonus, or other claims relating to the sale of new motor vehicles or services, for 1 year after the date on which a claim is paid or the end of any program period, whichever is later, and to charge back any amounts paid on claims identified in subsections (d) and (e). If there is evidence of fraud or if there has been fraudulent concealment, said manufacturer or distributor shall have a right to audit records for periods exceeding 1 year.
(d) A warranty service or part recall service claim submitted by a motor vehicle dealer and paid by the manufacturer or distributor may be charged back to the motor vehicle dealer only if the claim was fraudulent or false, the repairs were not properly made or were not necessary to remedy the defective condition, or the motor vehicle dealer failed to comply with the reasonable written requirements of the manufacturer or distributor in effect at the time the claim was presented for payment.
(e) A sales incentive, bonus or comparable claim relating to the sale of new motor vehicles or services submitted by a motor vehicle dealer and paid by the manufacturer or distributor may be charged back to the motor vehicle dealer only if the claim was fraudulent or false, the sales were not made, the sales were not timely, or the motor vehicle dealer failed to comply with the reasonable written requirements of the manufacturer or distributor in effect at the time that the claim was presented for payment.
(f) The persons conducting an audit shall use their best efforts while present at the dealership facility not to unreasonably interfere with the ongoing business of the dealer. All audits shall be completed within a reasonable period of time.
(g) In conducting an audit or examination, the amount of a discrepancy for any period shall not be determined in whole or in part by extrapolating audit or examination results from a prior or subsequent period without the consent of the dealer.
(h) The results of each audit or examination shall be compiled in writing and a copy shall be timely provided to the motor vehicle dealer not later than the time that any charge back occurs. The motor vehicle dealer may protest the results of the audit, including the manner in which it was conducted.
(i) It shall be a violation of subsection (a) of section 3 for any manufacturer or distributor to audit or examine any sales or service account or activity of a motor vehicle dealer as retribution because the motor vehicle dealer exercised any right or remedy under this chapter or exercised any right pursuant to its franchise agreement.
(j) If a motor vehicle dealer is required to file an incentive payment claim with the manufacturer or distributor, then the motor vehicle dealer may submit any such incentive claim at anytime within 6 months after the date of the retail sale or the end of the program period, whichever is later; but if the incentive program does not require the motor vehicle dealer to file any claim form or take any action other than to report retail sales to the manufacturer or distributor, then the manufacturer or distributor may base the incentive payment upon the sales which the motor vehicle dealer timely and accurately reports, as determined by the reasonable written requirements of the manufacturer or distributor in effect at the time that the sales were made, during the period of the incentive program.