§1270.13.  Warranty; compensation; audits of motorcycle or all-terrain vehicle dealer records

A.(1)  It shall be a violation of this Chapter for a manufacturer, a distributor, a wholesaler, distributor branch or factory branch of motorcycles or all-terrain vehicles, or officer, agent, or other representative thereof to fail to adequately and fairly compensate its motorcycle or all-terrain vehicle dealers for labor, parts, and other expenses incurred by such motorcycle or all-terrain vehicle 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 motorcycle or all-terrain vehicle dealers at a price or rate for warranty work that is less than that charged by the motorcycle or all-terrain vehicle dealer to the retail customers of the motorcycle or all-terrain vehicle dealer for nonwarranty work of like kind.

(3)  Warranty work includes parts and labor performed.

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

(5)  The obligations in this Subsection as they relate to motorcycles or all-terrain vehicles may be modified by contract.

B.(1)  Notwithstanding the terms of any franchise, warranty, and sales incentive, audits of motorcycle or all-terrain vehicle 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 motorcycle or all-terrain vehicle 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 be only for the twelve-month period immediately following the date of the final payment to the motorcycle or all-terrain vehicle dealer under a promotion, event, program, or activity. In no event shall the manufacturer, distributor, distributor branch, or factory branch fail to allow the motorcycle or all-terrain vehicle 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 motorcycle or all-terrain vehicle reported incorrectly shall be due in connection with the audit.  With respect to motorcycles or all-terrain 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 motorcycle or all-terrain vehicle 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 motorcycle or all-terrain vehicle dealer unless it can be shown that one 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 motorcycle or all-terrain vehicle dealer failed to reasonably substantiate the repair in accordance with reasonable written requirements of the manufacturer or distributor, if the motorcycle or all-terrain vehicle 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 motorcycle or all-terrain vehicle dealer's incidental failure to comply with a specific claim processing requirement, or a clerical error, or other administrative technicality.

(4)  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.

(5)  It shall be deemed an unfair act pursuant to this Chapter to audit a motorcycle or all-terrain vehicle 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.

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

Acts 2012, No. 326, §1.