Motor and Other Vehicles

CHAPTER 31-5.1
Regulation of Business Practices Among Motor Vehicle Manufacturers, Distributors, and Dealers

SECTION 31-5.1-6

§ 31-5.1-6. Warranty agreement.

(a) Every manufacturer shall properly fulfill any warranty agreement and adequately and fairly compensate each of its motor vehicle dealers for labor and parts. In no event shall that compensation fail to include reasonable compensation for diagnostic work, as well as repair service and labor. All claims made by motor vehicle dealers for labor and parts shall be paid in accord with the provisions of subsection (b) of this section. Any delay in payment after approval or disapproval that is caused by conditions beyond the reasonable control of the manufacturer shall not constitute a violation of this section. Reimbursement for warranty repairs or diagnostic work shall be at the dealer retail rate in effect at the time the warranty repair or diagnostic work is performed.

(b) A claim filed under this section by a dealer with a manufacturer or distributor shall be:

(1) In the manner and form prescribed by the manufacturer or distributor; and

(2)(i) Approved or disapproved within (30) days of receipt.

(ii) A claim not approved or disapproved within thirty (30) days of receipt shall be deemed approved.

(iii) Payment of, or credit issued on, a claim filed under this section shall be made within thirty (30) days of approval.

(3)(i) If a claim filed under this section is shown by the manufacturer or distributor to be false or unsubstantiated, the manufacturer or distributor may charge back the claim within twelve (12) months from the date the claim was paid or credit issued.

(ii) A manufacturer or distributor shall not charge back a claim based solely on a motor vehicle dealer's incidental failure to comply with a specific claim processing requirement, such as a clerical error or other administrative technicality that does not put into question the legitimacy of the claim after the motor vehicle dealer properly resubmits the claim in accordance with the manufacturer's or distributor's submission guidelines.

(iii) A dealer shall have no less than sixty (60) days from the date of notification by a manufacturer or distributor of a charge back to the dealer to resubmit a claim for payment or compensation if the claim was denied for a dealer's incidental failure as set forth in subsection (3)(ii) of this section, whether the chargeback was a direct or an indirect transaction.

(iv) This subdivision does not limit the right of a manufacturer or distributor to charge back for any claim that is proven to be fraudulent.

History of Section.
(P.L. 1974, ch. 292, § 1; P.L. 1981, ch. 346, § 1; P.L. 1982, ch. 448, § 1; P.L. 1995, ch. 339, § 1; P.L. 2014, ch. 353, § 1; P.L. 2014, ch. 397, § 1.)