SENATE FILE _____

BY  (PROPOSED COMMITTEE ON COMMERCE BILL BY CHAIRPERSON DANDEKAR)

A BILL FOR

An Act relating to prohibited concealments, suppressions, or omissions of material facts in connection with new motor vehicle repairs.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:

   Section 1.  Section 714.16, subsection 2, paragraph a, Code 2011, is amended to read as follows:
   a.
  (1)  The act, use, or employment by a person of an unfair practice, deception, fraud, false pretense, false promise, or misrepresentation, or the concealment, suppression, or omission of a material fact with intent that others rely upon the concealment, suppression, or omission, in connection with the lease, sale, or advertisement of any merchandise or the solicitation of contributions for charitable purposes, whether or not a person has in fact been misled, deceived, or damaged, is an unlawful practice.
   (2)  It is deceptive advertising within the meaning of this section for a person to represent in connection with the lease, sale, or advertisement of any merchandise that the advertised merchandise has certain performance characteristics, accessories, uses, or benefits or that certain services are performed on behalf of clients or customers of that person if, at the time of the representation, no reasonable basis for the claim existed. The burden is on the person making the representation to demonstrate that a reasonable basis for the claim existed.
   (3)  A retailer who uses advertising for a product, other than a drug or other product claiming to have a health related benefit or use, prepared by a supplier shall not be liable under this section unless the retailer participated in the preparation of the advertisement; knew or should have known that the advertisement was deceptive, false, or misleading; refused to withdraw the product from sales upon the request of the attorney general pending a determination of whether the advertisement was deceptive, false, or misleading; refused upon the request of the attorney general to provide the name and address of the supplier; or refused to cooperate with the attorney general in an action brought against the supplier under this section.
    (4)(a)
  “Material fact” as used in this subsection does not include repairs of damage to or adjustments on or replacements of parts with new parts of otherwise new merchandise, other than repairs to, adjustments on, or replacements of parts of a new motor vehicle as defined in section 321.1, if the repairs, adjustments, or replacements are made to achieve compliance with factory specifications and are made before sale of the merchandise at retail and the actual cost of any labor and parts charged to or performed by a retailer for any such repairs, adjustments, and parts does not exceed three hundred dollars or ten percent of the actual cost to a retailer including freight of the merchandise, whichever is less, providing that the seller posts in a conspicuous place notice that repairs, adjustments, or replacements will be disclosed upon request.
   (b)  “Material fact” as used in this subsection does not include repairs of damage to or adjustments on or replacements of parts with new parts on a new motor vehicle, if the repairs, adjustments, or replacements are made to achieve compliance with factory specifications and the actual cost of any labor and parts charged to or performed by a retailer for any such repairs, adjustments, and parts does not exceed five percent of the actual cost to a motor vehicle dealer including freight of the new motor vehicle, provided that the seller posts in a conspicuous place notice that repairs, adjustments, or replacements will be disclosed upon request.
   (c)  The exemption exemptions provided in this paragraph “a”does do not apply to the concealment, suppression, or omission of a material fact if the purchaser requests disclosure of any repair, adjustment, or replacement.
   Sec. 2.  Section 714H.4, subsection 2, Code 2011, is amended to read as follows:
   2.
  a.  “Material fact” as used in this chapter does not include repairs of damage to, adjustments on, or replacements of parts with new parts of otherwise new merchandise, other than repairs to, adjustments on, or replacement of parts of a new motor vehicle as defined in section 321.1, if the repairs, adjustments, or replacements are made to achieve compliance with factory specifications and are made before sale of the merchandise at retail and the actual cost of any labor and parts charged to or performed by a retailer for any such repairs, adjustments, and parts does not exceed three hundred dollars or ten percent of the actual cost to a retailer including freight of the merchandise, whichever is less, provided that the seller posts in a conspicuous place notice that repairs, adjustments, or replacements will be disclosed upon request. The exclusion provided in this subsection does not apply to the concealment, suppression, or omission of a material fact if the purchaser requests disclosure of any repair, adjustment, or replacement.
   b.  “Material fact” as used in this chapter does not include repairs of damage to or adjustments on or replacements of parts with new parts on a new motor vehicle, if the repairs, adjustments, or replacements are made to achieve compliance with factory specifications and the actual cost of any labor and parts charged to or performed by a retailer for any such repairs, adjustments, and parts does not exceed five percent of the actual cost to a motor vehicle dealer including freight of the new motor vehicle, provided that the seller posts in a conspicuous place notice that repairs, adjustments, or replacements will be disclosed upon request.
EXPLANATION
   This bill relates to prohibited concealments, suppressions, or omissions of material facts in connection with new motor vehicle repairs.
   Currently, consumer fraud protection provisions in Code section 714.16, and Code chapter 714H provide that it is not a prohibited concealment, suppression, or omission of a material fact for a retailer to fail to disclose that new merchandise was repaired to factory specifications if the cost to repair the merchandise does not exceed the lesser of $300 or 10 percent of the cost of the merchandise, and the retailer posts a sign stating that all repairs will be disclosed upon request. The bill changes the threshold amount under which a prohibited concealment, suppression, or omission of a material fact has not occurred, with respect to new motor vehicles, to 5 percent of the cost of the new motor vehicle.