Senate Study Bill 1098 - Introduced SENATE FILE _____ BY (PROPOSED COMMITTEE ON COMMERCE BILL BY CHAIRPERSON DANDEKAR) A BILL FOR An Act relating to prohibited concealments, suppressions, or 1 omissions of material facts in connection with new motor 2 vehicle repairs. 3 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 4 TLSB 2296SC (3) 84 rn/nh

S.F. _____ Section 1. Section 714.16, subsection 2, paragraph a, Code 1 2011, is amended to read as follows: 2 a. (1) The act, use , or employment by a person of an unfair 3 practice, deception, fraud, false pretense, false promise, 4 or misrepresentation, or the concealment, suppression, or 5 omission of a material fact with intent that others rely upon 6 the concealment, suppression, or omission, in connection with 7 the lease, sale, or advertisement of any merchandise or the 8 solicitation of contributions for charitable purposes, whether 9 or not a person has in fact been misled, deceived, or damaged, 10 is an unlawful practice. 11 (2) It is deceptive advertising within the meaning of 12 this section for a person to represent in connection with the 13 lease, sale, or advertisement of any merchandise that the 14 advertised merchandise has certain performance characteristics, 15 accessories, uses, or benefits or that certain services are 16 performed on behalf of clients or customers of that person if, 17 at the time of the representation, no reasonable basis for 18 the claim existed. The burden is on the person making the 19 representation to demonstrate that a reasonable basis for the 20 claim existed. 21 (3) A retailer who uses advertising for a product, other 22 than a drug or other product claiming to have a health related 23 benefit or use, prepared by a supplier shall not be liable 24 under this section unless the retailer participated in the 25 preparation of the advertisement; knew or should have known 26 that the advertisement was deceptive, false, or misleading; 27 refused to withdraw the product from sales upon the request of 28 the attorney general pending a determination of whether the 29 advertisement was deceptive, false, or misleading; refused 30 upon the request of the attorney general to provide the name 31 and address of the supplier; or refused to cooperate with the 32 attorney general in an action brought against the supplier 33 under this section . 34 (4) (a) “Material fact” as used in this subsection 35 -1- LSB 2296SC (3) 84 rn/nh 1/ 4

S.F. _____ does not include repairs of damage to or adjustments on 1 or replacements of parts with new parts of otherwise new 2 merchandise , other than repairs to, adjustments on, or 3 replacements of parts of a new motor vehicle as defined in 4 section 321.1, if the repairs, adjustments , or replacements 5 are made to achieve compliance with factory specifications 6 and are made before sale of the merchandise at retail and the 7 actual cost of any labor and parts charged to or performed by a 8 retailer for any such repairs, adjustments , and parts does not 9 exceed three hundred dollars or ten percent of the actual cost 10 to a retailer including freight of the merchandise, whichever 11 is less, providing that the seller posts in a conspicuous place 12 notice that repairs, adjustments , or replacements will be 13 disclosed upon request. 14 (b) “Material fact” as used in this subsection does not 15 include repairs of damage to or adjustments on or replacements 16 of parts with new parts on a new motor vehicle, if the repairs, 17 adjustments, or replacements are made to achieve compliance 18 with factory specifications and the actual cost of any labor 19 and parts charged to or performed by a retailer for any such 20 repairs, adjustments, and parts does not exceed five percent 21 of the actual cost to a motor vehicle dealer including freight 22 of the new motor vehicle, provided that the seller posts in 23 a conspicuous place notice that repairs, adjustments, or 24 replacements will be disclosed upon request. 25 (c) The exemption exemptions provided in this paragraph “a” 26 does do not apply to the concealment, suppression , or omission 27 of a material fact if the purchaser requests disclosure of any 28 repair, adjustment , or replacement. 29 Sec. 2. Section 714H.4, subsection 2, Code 2011, is amended 30 to read as follows: 31 2. a. “Material fact” as used in this chapter does not 32 include repairs of damage to, adjustments on, or replacements 33 of parts with new parts of otherwise new merchandise , other 34 than repairs to, adjustments on, or replacement of parts 35 -2- LSB 2296SC (3) 84 rn/nh 2/ 4

S.F. _____ of a new motor vehicle as defined in section 321.1, if the 1 repairs, adjustments, or replacements are made to achieve 2 compliance with factory specifications and are made before 3 sale of the merchandise at retail and the actual cost of any 4 labor and parts charged to or performed by a retailer for any 5 such repairs, adjustments, and parts does not exceed three 6 hundred dollars or ten percent of the actual cost to a retailer 7 including freight of the merchandise, whichever is less, 8 provided that the seller posts in a conspicuous place notice 9 that repairs, adjustments, or replacements will be disclosed 10 upon request. The exclusion provided in this subsection does 11 not apply to the concealment, suppression, or omission of a 12 material fact if the purchaser requests disclosure of any 13 repair, adjustment, or replacement. 14 b. “Material fact” as used in this chapter does not include 15 repairs of damage to or adjustments on or replacements of 16 parts with new parts on a new motor vehicle, if the repairs, 17 adjustments, or replacements are made to achieve compliance 18 with factory specifications and the actual cost of any labor 19 and parts charged to or performed by a retailer for any such 20 repairs, adjustments, and parts does not exceed five percent 21 of the actual cost to a motor vehicle dealer including freight 22 of the new motor vehicle, provided that the seller posts in 23 a conspicuous place notice that repairs, adjustments, or 24 replacements will be disclosed upon request. 25 EXPLANATION 26 This bill relates to prohibited concealments, suppressions, 27 or omissions of material facts in connection with new motor 28 vehicle repairs. 29 Currently, consumer fraud protection provisions in Code 30 section 714.16, and Code chapter 714H provide that it is not a 31 prohibited concealment, suppression, or omission of a material 32 fact for a retailer to fail to disclose that new merchandise 33 was repaired to factory specifications if the cost to repair 34 the merchandise does not exceed the lesser of $300 or 10 35 -3- LSB 2296SC (3) 84 rn/nh 3/ 4

S.F. _____ percent of the cost of the merchandise, and the retailer posts 1 a sign stating that all repairs will be disclosed upon request. 2 The bill changes the threshold amount under which a prohibited 3 concealment, suppression, or omission of a material fact has 4 not occurred, with respect to new motor vehicles, to 5 percent 5 of the cost of the new motor vehicle. 6 -4- LSB 2296SC (3) 84 rn/nh 4/ 4