GNYADA November 2015 Newsletter

Federal Law Mandates Floor Plan Reimbursement for Recalled Vehicles

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Manufacturers are required to pay dealers if they are unable to immediately repair or repurchase vehicles, due to a stop-drive or recall order. Dealers who cannot sell new vehicles with open recalls will accrue floorplan interest and are entitled to reim- bursement. The Motor Vehicle Act, which is administered by the National Highway Traffic Safety Administration (section 49 USC §30116(b)) provides the following: (a) Actions required of manufacturers and distribu- tors. — If, after a manufacturer or distributor sells a motor vehicle or motor vehicle equipment to a distributor or dealer and before the distributor or dealer sells the vehicle or equipment, it is decided that the vehicle or equipment contains a defect related to motor vehicle safe- ty or does not comply with applicable motor vehicle safe- ty standards prescribed under this chapter-- (1) the manufacturer or distributor immediately shall repurchase the vehicle or equipment at the price paid by the distributor or dealer, plus transportation charges and reasonable reimbursement of at least one percent a month of the price paid prorated from the date of notice of non- compliance or defect to the date of repurchase; or (2) if a vehicle, the manufacturer or distributor immedi- ately shall give to the distributor or dealer at the manufac- turer's or distributor's own expense, the part or equipment

needed to make the vehicle comply with the standards or correct the defect.

(b) Distributor or dealer installation. — The distributor or dealer shall install the part or equipment referred to in subsection (a)(2) of this section. If the distributor or deal- er installs the part or equipment with reasonable diligence after it is received, the manufacturer shall reimburse the distributor or dealer for the reasonable value of the instal- lation and a reasonable reimbursement of at least one per- cent a month of the manufacturer's or distributor's selling price prorated from the date of notice of noncompliance or defect to the date the motor vehicle complies with applicable motor vehicle safety standards prescribed under this chapter or the defect is corrected. The past year has seen a record number of vehicle recalls. Yet the Association is aware of only a few OEMs that are actually reimbursing their dealers for grounded inventory. If you were required to ground any recalled vehicles, you should review your records to determine if you have been compensated by your manufacturer. GNYADA continues to work with state and federal legis- lators to address the concerns of dealers relating to new and used vehicle recalls.

5 Telephone Recall Alerts Don’t Violate Do-Not-Call

Dealers who call customers about recall-related issues are not violating national Do-Not-Call (DNC) rules by doing so. The Do-Not-Call Registry was set up a little over a decade ago, so people could designate their phone number as off-limits for telemarketers and other solicitations. However, inform- ing a customer that their vehicle is subject to a recall does not fall into these categories; rather, it is a helpful cue to the customer that their vehicle needs servicing.

It should be noted that this exception only applies when the repair work involves no cost to the customer. Any attempts to make additional sales or extract extra money during the con- versation will designate it as a phone solicitation, which is prohibited. Cellphones, texting, autodialing and prerecorded calls are subject to com- pletely separate sets of restrictions, under the Telephone Consumer Protection Act. The cellphone stipula- tion admittedly makes the lines tricky to stay within, as a dealer may not be

able to tell whether he/she is calling a cellular or landline. However, if a customer provided you with their cellphone number in the first place, you’re probably safe dialing it, as long as you keep the discussion squarely on the subject of the recall. Dealers should consult with counsel to ensure their customer outreach procedures align with the TCPA. The FCC’s full ruling can be found here: https://apps.fcc.gov/edocs_pub- lic/attachmatch/DA-05-1667A1.pdf

Greater New York Automobile Dealers Association • www.gnyada.com

The Newsletter • November 2015 3