N.Y. Vehicle and Traffic Law 465 – Procedures relating to warranties and sales incentives
§ 465. Procedures relating to warranties and sales incentives. 1. Every franchisor shall properly fulfill any warranty agreement and/or franchisor's service contract and shall compensate each of its franchised motor vehicle dealers for warranty parts and labor in amounts which reflect reasonable compensation for such work. All warranty claims and/or claims under a franchisor's service contract made by franchised motor vehicle dealers shall be paid within thirty days following their approval. For parts reimbursement, other than components, systems, fixtures, appliances, furnishings, accessories and features of a house coach that are designed, used and maintained primarily for nonvehicular residential purposes, and for labor reimbursement, reasonable compensation shall not be less than the price and rate charged by the franchised motor vehicle dealer for like services to non-warranty and/or non-service contract customers. For purposes of this section, the price and rate charged by the franchised motor vehicle dealer for parts may be established by submitting to the franchisor one hundred sequential nonwarranty customer-paid service repair orders or the number of sequential nonwarranty customer-paid service repair orders written within a ninety day period, whichever is less, covering repairs made no more than one hundred eighty days before the submission, and declaring the price and rate, including average markup for the franchised motor vehicle dealer as its reimbursement rate. The reimbursement rate so declared shall go into effect thirty days following the declaration and shall be presumed to be reasonable, however a franchisor may rebut such presumption by showing that such rate so established is unreasonable in light of the practices of all other franchised motor vehicle dealers in the vicinity offering the same line make. The franchised motor vehicle dealer shall not request a change in the reimbursement rate more often than once in each calendar year. In establishing the labor reimbursement rate, the franchisor shall not require a franchised motor vehicle dealer to establish said rate by a methodology, or by requiring information, that is unduly burdensome or time consuming to provide, including, but not limited to, a transaction by transaction calculation. For the purposes of this section, the following parts or types of repairs shall be excluded from the parts and/or labor calculations and the franchisor's reimbursement requirements under this section: (a) parts sold at wholesale; (b) tires; (c) routine maintenance not covered under any retail customer warranty such as fluids, filters and belts not provided in the course of repairs; (d) vehicle reconditioning; and (e) batteries replaced as part of a routine maintenance operation. If the franchisor rejects the declaration or attempts to rebut the declaration because of an error in the dealer's submission, the franchisor shall identify with specificity the reason for rejection and identify the error or errors within the submission. In the event the franchisor rejects or rebuts the dealer's initial declaration, the dealer shall have the opportunity, within sixty days to resubmit the full and corrected declaration addressing the alleged error or errors identified by the franchisor. The franchisor shall respond within sixty days. The one hundred eighty day requirement for the repair orders shall be stayed from the date of initial submission. In any action or proceeding held pursuant to this subdivision, the franchisor shall have the burden of proving that the rate declared by the dealer was unreasonable as described in this subdivision and that the proposed adjustment of the average percentage markup or rejection of the submission is reasonable pursuant to the provisions of this subdivision.
Terms Used In N.Y. Vehicle and Traffic Law 465
- Contract: A legal written agreement that becomes binding when signed.
- Franchised motor vehicle dealer: means : (a) any person required to be registered pursuant to section four hundred fifteen of this title which has been granted a franchise as defined in subdivision six of this section, or (b) any person engaged in the business of selling snowmobiles, all terrain vehicles and/or personal watercraft at wholesale or retail who has been granted a franchise; provided, however, that any person primarily engaged in the sale of vessels and other marine items who meets the definition of "dealer" as provided in subdivision one of § 810 of the general business law shall not be a "franchised motor vehicle dealer" pursuant to this article. See N.Y. Vehicle and Traffic Law 462
- Franchisor: means any manufacturer, distributor, distributor branch or factory branch, importer or other person, partnership, corporation, association, or entity, whether resident or non-resident, which enters into or is presently a party to a franchise with a franchised motor vehicle dealer. See N.Y. Vehicle and Traffic Law 462
- Fraud: Intentional deception resulting in injury to another.
- Good faith: means , in addition to any common law definitions of that term, honesty in fact and the observation of reasonable commercial standards of fair dealing in the trade. See N.Y. Vehicle and Traffic Law 462
- house coach: shall mean any vehicle motivated by a power connected therewith or propelled by a power within itself, which is designed to provide temporary living quarters, and which is built onto, as an integral part of, or is permanently attached to a motor vehicle chassis, and contains at least four of the following independent life support systems if each is permanently installed and designed to be removed only for purposes of repair or replacement and meets the standards of the American National Standards Institute for recreation vehicles:
(a) a cooking facility with an on-board fuel source;
(b) a gas or electric refrigerator;
(c) a toilet with exterior evacuation;
(d) a heating or air conditioning system with an on-board power or fuel source separate from the vehicle engine;
(e) a potable water supply system that includes at least a sink, a faucet and a water tank with an exterior service supply connection; and
(f) a 110-125 volt electric power supply. See N.Y. Vehicle and Traffic Law 462 - Line make: means all models of a specific brand of motor vehicle manufactured by a manufacturer that may manufacture several brands, each of which are a separate line of make; except that, as such term applies to the sale of any new house coach, means that group or those groups of house coaches, as defined by the terms of the written franchise. See N.Y. Vehicle and Traffic Law 462
- Manufacturer: means any person, partnership, corporation, association, factory branch or other entity engaged in the business of manufacturing or assemblying new and unused motor vehicles for sale in this state. See N.Y. Vehicle and Traffic Law 462
- Markup: The process by which congressional committees and subcommittees debate, amend, and rewrite proposed legislation.
- Motor vehicle: means : (a) any motor vehicle as defined in section one hundred twenty-five of this chapter, (b) any snowmobile as defined in article forty-seven of this chapter, (c) any all terrain vehicle as defined in article forty-eight-B of this chapter and (d) any personal watercraft as defined in § 2 of the navigation law, provided the commissioner shall have authority to except by regulation vehicles other than passenger automobiles, trucks and motorcycles from such definition. See N.Y. Vehicle and Traffic Law 462
2. All warranty or sales incentive claims shall be either approved or disapproved within thirty days after their receipt. When any such claim is disapproved the franchised motor vehicle dealer shall be notified in writing of its disapproval within said period. Each such notice shall state the specific grounds upon which the disapproval is based. Failure to disapprove a claim within thirty days shall be deemed approval.
3. No franchisor shall conduct an audit or charge back any warranty payment, or any sales, advertising or marketing incentive payment ("incentive payments") or otherwise hold a franchised motor vehicle dealer liable for charges more than one year, or five years in the case of fraud, after the date the franchisor made such payment to the dealer, without providing a notice to a franchised motor vehicle dealer of, or a mechanism that makes available to a franchised motor vehicle dealer, information regarding errors or issues regarding such dealer's warranty, sales, advertising or marketing incentive claims that are the subject of the audit or chargeback. Nothing in this section shall be deemed to grant a dealer the right to access any file held by the manufacturer evaluating such dealer. In connection with a claim for warranty reimbursements, the dealer's failure to document properly one part of a warranty repair that contains more than one part shall not be the sole basis to charge back the entire repair. A manufacturer shall not deny a claim submitted under this section based solely on a dealer's incidental failure to comply with a specific claim processing requirement, a clerical error, or other administrative technicality, provided that the failure does not call into question the legitimacy of the claim and that the dealer corrects the claim according to franchisor guidelines.
4. A franchisor shall not charge a dealer back subsequent to the payment of a warranty, sales, advertising or marketing incentive claim unless a representative of the franchisor has met in person at the dealership, or by telephone, with an officer or employee of the dealer designated by the dealer and explained in detail the basis for each of the proposed charge backs and thereafter given the dealer's representative a reasonable opportunity at the meeting, or during the telephone call, to explain the dealer's position relating to each of the proposed charge backs. In the event the dealer was selected for audit or review on the basis that some or all of the dealer's claims were viewed as excessive in comparison to average, mean or aggregate data accumulated by the franchisor, or in relation to claims submitted by a group of other franchisees, the franchisor shall, at or prior to the meeting or telephone call with the dealer's representative, provide the dealer with a written statement containing the basis or methodology upon which the dealer was selected for audit or review.
5. A franchisor shall not deny or charge back a payment for warranty work claimed by the dealer unless the franchisor satisfies its burden of proof that the dealer did not make a good faith effort to comply with the reasonable written procedures of the franchisor or that the dealer did not actually perform the work.
6. A franchisor shall not deny or charge back a sales, advertising or marketing incentive payment made to a dealer unless the claim was materially false or fraudulent or the dealer failed to reasonably substantiate the claim in accordance with the manufacturer's reasonable procedures.
7. After all internal dispute resolution processes provided through the franchisor have been resolved, the franchisor shall give notice to the dealer of the final amount of a proposed warranty, sales, advertising or marketing incentive charge back. If the dealer institutes an action pursuant to this article within thirty days of receipt of such notice, the proposed charge back shall be stayed, without bond, during the pendency of such action and until the final judgment has been rendered in an adjudicatory proceeding or action as provided in section four hundred sixty-nine of this article. The franchisor shall not impose the chargeback, debit the dealer's account, or otherwise seek to obtain all or any part of the chargeback funds from the dealer during the thirty-day period in which the dealer has the opportunity to file an action as set forth above.