SB 56: "An Act relating to product warranties and services for certain products; relating to certain dealers, distributors, and manufacturers; and establishing an unfair trade practice under the Alaska Unfair Trade Practices and Consumer Protection Act."
00 SENATE BILL NO. 56 01 "An Act relating to product warranties and services for certain products; relating to 02 certain dealers, distributors, and manufacturers; and establishing an unfair trade 03 practice under the Alaska Unfair Trade Practices and Consumer Protection Act." 04 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: 05 * Section 1. AS 45.45 is amended by adding new sections to read: 06 Sec. 45.45.772. Warranty provided. (a) A manufacturer shall provide, 07 through the dealer or distributor, to the covered product's ultimate purchaser, if the 08 ultimate purchaser has obtained the covered product from a dealer or distributor, the 09 manufacturer's standard written warranty, if any, that is in effect at the time of delivery 10 of the covered product to the dealer or distributor. 11 (b) If a manufacturer contracts with a person to provide the manufacturer's 12 warranty required by (a) of this section on behalf of the manufacturer, 13 (1) the manufacturer remains subject to the obligations imposed on the 14 manufacturer under AS 45.45.772 - 45.45.788;
01 (2) when the contractor provides warranty services under the contract, 02 (A) the contractor shall comply with the manufacturer's 03 obligations under AS 45.45.772 - 45.45.788 that apply to the warranty 04 services; and 05 (B) the manufacturer is responsible for the contractor's 06 compliance with the manufacturer's obligations under AS 45.45.772 - 07 45.45.788 that apply to the warranty services; and 08 (3) the acts of the contractor that apply to the manufacturer's warranty 09 obligations under AS 45.45.772 - 45.45.788 are treated as the acts of the manufacturer. 10 Sec. 45.45.773. Dealer or distributor warranty representations; manuals. 11 A dealer or distributor may not make a representation about a warranty that is not 12 made in the warranty. A dealer or distributor shall deliver the manuals on the 13 operation and maintenance of a covered product to the ultimate purchaser and make 14 the warranty known to the ultimate purchaser, including all disclaimers and 15 limitations. 16 Sec. 45.45.774. Warranty service and claims. A dealer or distributor shall 17 provide warranty service in accordance with the applicable warranty on all of the 18 manufacturer's products sold by the dealer or distributor and shall make all claims for 19 warranty reimbursement in the manner established by the manufacturer. 20 Sec. 45.45.775. Restrictions not allowed. A manufacturer may not, by 21 distributorship agreement, by restrictions on reimbursement, or by another method, 22 restrict the nature or extent of covered products provided or labor performed by a 23 dealer or distributor if the restriction impairs the dealer's or distributor's ability to 24 satisfy a required service in accordance with generally accepted standards. 25 Sec. 45.45.776. Payment for required services. A manufacturer of a covered 26 product shall pay a dealer or distributor to complete a required service under 27 AS 45.45.772 - 45.45.788 using the standard claim procedures and methods of the 28 applicable industry. 29 Sec. 45.45.777. Required service reimbursement. (a) A manufacturer shall 30 use the criteria established in this section to reimburse a dealer or distributor for 31 performing a required service.
01 (b) If the technicians performing a required service meet the certification 02 standards in the distributorship agreement, the manufacturer shall pay the dealer or 03 distributor providing the required service at a rate that is not less than the highest of 04 the following for the labor of the technicians: 05 (1) the rate the dealer or distributor customarily charges a customer for 06 work that is not a required service; 07 (2) the manufacturer's printed flat rate; or 08 (3) the rate established by a flat rate manual for dealers or distributors, 09 if the manual is produced for dealers or distributors by a nationally recognized 10 industry consultant. 11 (c) The payment under (b) of this section must include payment for clean-up, 12 preparation, diagnosis, disassembly, repair, assembly, testing, and final cleaning as 13 needed to provide a quality result and customer satisfaction. 14 (d) In addition to the payment under (b) of this section, the manufacturer shall 15 pay a dealer or distributor a minimum of one hour at the dealer's or distributor's 16 standard labor rate for the administration of each required service claim. 17 (e) The manufacturer shall reimburse the dealer or distributor for the 18 transportation and lodging costs of the employees of the dealer or distributor when it is 19 necessary for the employees to travel to the location of a product to perform a required 20 service. 21 Sec. 45.45.778. Reimbursement for products used. A manufacturer shall 22 reimburse a dealer or distributor at the current manufacturer's full suggested retail 23 price for covered products in the dealer's or distributor's inventory that the dealer or 24 distributor uses for a required service. 25 Sec. 45.45.779. Transportation of needed covered products. (a) If the 26 inventory of a dealer or distributor does not contain a new or replacement covered 27 product that is needed to complete a required service, the manufacturer shall pay the 28 cost for transporting the new or replacement covered product to the dealer or 29 distributor who sold the covered product or who is located nearest to the ultimate 30 purchaser, whichever the ultimate purchaser chooses. The manufacturer is not required 31 to pay the cost of transportation from the dealer or distributor to the ultimate purchaser
01 or from the ultimate purchaser to the dealer or distributor. 02 (b) When transporting a covered product under (a) of this section, the 03 manufacturer shall use a method of transportation that will deliver the covered product 04 as soon as possible considering the time constraints of the situation. 05 Sec. 45.45.780. Timely reimbursement for claims. A manufacturer shall pay 06 a properly submitted required service claim of a dealer or distributor within 30 days 07 after receiving the claim from a dealer or distributor. Unless a manufacturer issues a 08 written notice of disapproval under AS 45.45.781 within the 30 days, if a 09 manufacturer fails to pay a claim within 30 days after receipt, the failure is considered 10 an acceptance of the claim as submitted, and the manufacturer shall pay the dealer or 11 distributor interest at the rate of 1.5 percent a month on the claim. 12 Sec. 45.45.781. Claim disapproval. If a manufacturer does not approve a 13 claim submitted under AS 45.45.780, the manufacturer shall issue a written notice of 14 disapproval to the dealer or distributor within 30 days after the manufacturer receives 15 the claim. The notice must contain the specific reasons for the disapproval. 16 Sec. 45.45.782. Repairs required. If a covered product does not conform to a 17 warranty that is applicable to it and the ultimate purchaser of the covered product 18 reports the defect to the manufacturer of the covered product or to the manufacturer's 19 dealer or distributor during the term of the warranty, the manufacturer, dealer, or 20 distributor shall make the necessary repairs to conform the covered product to the 21 warranty. 22 Sec. 45.45.783. Replacement or refund. (a) If, during the term of a warranty 23 or within one year after the date of the delivery of the covered product to the ultimate 24 purchaser, whichever period ends first, the manufacturer, dealer, or distributor is 25 unable to conform a covered product to an applicable warranty after a reasonable 26 number of attempts, the manufacturer shall accept the return of the covered product, 27 and, at the ultimate purchaser's option, shall replace the covered product with a new 28 comparable covered product or refund the full purchase price to the owner after 29 deducting a reasonable amount of money for the ultimate purchaser's use of the 30 covered product from the date the covered product was delivered to the ultimate 31 purchaser.
01 (b) The reasonable amount of money deducted under (a) of this section may 02 not exceed an amount that is equal to the sum of 03 (1) the amount of money that reflects the depreciation in value of the 04 covered product for the period during which the covered product was available for use 05 by the ultimate purchaser, as calculated by a straight line depreciation method over 06 seven years; and 07 (2) an amount of money that is equal to the depreciation in value of the 08 covered product that was caused by 09 (A) neglect or abuse by the ultimate purchaser; or 10 (B) body damage that was not caused by the defect. 11 (c) The manufacturer shall make the refund required by this section 12 (1) to the lienholder of record for the covered product, if any, to the 13 extent of the lienholder's interest, and, if there is a balance after satisfying the 14 lienholder's interest, to the ultimate purchaser; or 15 (2) entirely to the ultimate purchaser, if there is no lienholder of record 16 for the covered product. 17 (d) In this section, 18 (1) "costs" include original registration fees, transportation fees, 19 dealer's or distributor's preparation fees, and the cost of options installed by the dealer 20 or distributor; 21 (2) "full purchase price" means the total price paid for a covered 22 product by the ultimate purchaser, including any costs added to the retail price. 23 Sec. 45.45.784. Notice by ultimate purchaser. (a) To claim a refund or 24 replacement under AS 45.45.783, an ultimate purchaser shall give written notice by 25 certified mail to the manufacturer and its dealer or distributor before 60 days have 26 elapsed after the termination of whichever of the following periods ends first: 27 (1) the term of the warranty; or 28 (2) one year after the date of delivery of the covered product to the 29 ultimate purchaser. 30 (b) The notice required by (a) of this section must 31 (1) state that the covered product has a defect;
01 (2) provide a reasonable description of the defect; 02 (3) state that the manufacturer, dealer, or distributor has made a 03 reasonable number of attempts to conform the covered product to the warranty; and 04 (4) state that the ultimate purchaser demands that a refund or a 05 replacement of the covered product be delivered on or before the 60th day after the 06 mailing date of the written notice. 07 (c) Within 30 days after receiving the notice required by this section, the 08 manufacturer may make a final attempt to conform the covered product before the 09 manufacturer is required to make a refund or replacement under AS 45.45.783. 10 Sec. 45.45.785. Exceptions. An ultimate purchaser may not receive a refund 11 for or replacement of a covered product under AS 45.45.772 - 45.45.788 claimed to 12 have a defect if the manufacturer shows that the problem or condition because of 13 which the ultimate purchaser is claiming a refund or a replacement 14 (1) is not a defect; or 15 (2) is a defect that resulted from 16 (A) alteration of the covered product by the ultimate purchaser, 17 or by a person who is not the dealer or distributor or authorized by the 18 manufacturer or distributor to make the alteration; or 19 (B) abuse or neglect by the ultimate purchaser or another 20 person other than the dealer or distributor. 21 Sec. 45.45.786. Presumption. A rebuttable presumption that a reasonable 22 number of attempts have been made to conform a covered product to an applicable 23 warranty is established if 24 (1) the defect continues to exist even though the same defect has been 25 subject to repair three or more times by the manufacturer, dealer, or distributor during 26 the term of the warranty or the one-year period after the date of delivery of the 27 covered product to the ultimate purchaser, whichever period ends first; or 28 (2) the covered product is out of service for repair for a total of 30 or 29 more days on which the dealer or distributor is open for business during the term of 30 the warranty or during the one-year period after the date of delivery of the covered 31 product to the ultimate purchaser, whichever period ends first; a period during which
01 repairs are not performed for reasons that are beyond the control of the manufacturer, 02 dealer, or distributor is not included in satisfying the 30-day period. 03 Sec. 45.45.787. Products covered. If the manufacturer has an agreement with 04 a dealer or distributor that requires the dealer or distributor to provide a warranty or 05 warranty service for the products, AS 45.45.772 - 45.45.788 apply to the following 06 products: 07 (1) equipment, tools, or motor vehicles if the equipment, tools, or 08 motor vehicles are designed to be used primarily for construction, road building, snow 09 removal, mining, oil projects, gas projects, forestry, resource development, or a similar 10 type of project; in this paragraph, "motor vehicle" means a motor vehicle that is not 11 subject to registration under AS 28.10.011; or 12 (2) parts or accessories for the items identified in (1) of this section. 13 Sec. 45.45.788. Coverage of warranty service. To qualify as warranty 14 service, the service must be covered by the manufacturer's warranty during the 15 original period of the warranty. 16 * Sec. 2. AS 45.45.790(4) is amended to read: 17 (4) "merchandise" includes covered products, parts, and accessories; 18 * Sec. 3. AS 45.45.790 is amended by adding new paragraphs to read: 19 (6) "covered product" means a product to which AS 45.45.772 - 20 45.45.788 apply under AS 45.45.787; 21 (7) "defect" means a condition in a covered product that is caused by a 22 manufacturer, distributor, or authorized dealer and that 23 (A) substantially decreases the dollar value of a covered 24 product to the owner when compared to the dollar value of a similar covered 25 product that does not have the condition; or 26 (B) prevents a covered product from being operated or used or 27 makes the covered product unsafe; 28 (8) "manufacturer" means 29 (A) a person who fabricates, manufactures, or assembles 30 covered products; "manufacturer" does not include a person who converts, 31 modifies, or otherwise alters a covered product fabricated, manufactured, or
01 assembled by another person; 02 (B) a manufacturer branch and a manufacturer sales 03 representative; or 04 (C) a distribution entity that is 05 (i) owned or controlled by a person described under (A) 06 or (B) of this paragraph; and 07 (ii) separate from a person described under (A) or (B) of 08 this paragraph; 09 (9) "required service" means a service performed by a dealer or 10 distributor on behalf of a manufacturer to complete 11 (A) warranty service as described under AS 45.45.788; or 12 (B) a modification or safety update required by the 13 manufacturer; 14 (10) "required update" means an update that a manufacturer requires a 15 dealer or distributor to perform for a covered product transferred to a dealer or 16 distributor under a distributorship agreement; 17 (11) "ultimate purchaser" means a purchaser, other than for resale, of a 18 new covered product; or a person to whom ownership of a new covered product is 19 transferred; 20 (12) "warranty" means a warranty provided by the manufacturer of a 21 covered product or by a person who contracts with the manufacturer to provide the 22 warranty on behalf of the manufacturer. 23 * Sec. 4. AS 45.50.471(b) is amended by adding a new paragraph to read: 24 (58) violating AS 45.45.772 - 45.45.788 (covered product warranties 25 and services). 26 * Sec. 5. The uncodified law of the State of Alaska is amended by adding a new section to 27 read: 28 APPLICABILITY. This Act applies to merchandise transferred under a distributorship 29 agreement entered into on and after the effective date of this Act. In this section, 30 "distributorship agreement" and "merchandise" have the meanings given in AS 45.45.790.