HOUSE BILL REPORT

ESSB 5502

As Amended by the House

BYSenate Committee on Commerce & Labor (originally sponsored by Senators Rinehart, Warnke, Halsan, Lee, Wojahn, Talmadge, Tanner, Bottiger, Bailey, Smitherman, Vognild, Williams, Garrett, Stratton and Moore)

Creating enforcement provisions for new motor vehicle warranties.

House Committe on Commerce & Labor

Majority Report:  Do pass with amendments.  (9)

      Signed by Representatives Wang, Chair; Cole, Vice Chair; Fisch, Fisher, R. King, O'Brien, Sanders, Sayan and Walker.

Minority Report:  Do not pass.  (2)

      Signed by Representatives Patrick and C. Smith.

House Staff:Joan Elgee (786-7166)

Rereferred House Committee on Ways & Means/Appropriations

Majority Report:  Do pass with amendments by Committee on Commerce & Labor.  (23)

      Signed by Representatives Locke, Chair; Allen, Belcher, Braddock, Brekke, Bristow, Ebersole, Fuhrman, Grant, Grimm, Hine, Holland, Mclean, McMullen, Nealey, Niemi, Peery, Sayan, Silver, L. Smith, H. Sommers, Sprenkle and B. Williams.

House Staff:      Susan Kavnaugh (786-7145)

AS PASSED HOUSE APRIL 17, 1987

BACKGROUND:

In 1983, the legislature established procedures for enforcement of express warranties on new motor vehicles.  An express warranty is a written statement arising out of the sale of a motor vehicle.

If a vehicle fails to conform to the warranty during its term or within a year from delivery and the buyer reports the nonconformity, the manufacturer or dealer shall begin repairs.  After a reasonable number of attempts to repair, the manufacturer must repurchase the vehicle from the buyer at the original purchase price, minus an amount based on the buyer's use.  A reasonable number of attempts is defined as four or more repair attempts of the same nonconformity or if the vehicle has been out of service more than 30 days since delivery.

As an alternative to repurchase, the buyer may choose the assistance of an informal dispute resolution procedure established at the manufacturer's option, which substantially meets federal standards.

SUMMARY:

The manufacturer or dealer shall attempt repairs of any nonconformity to the warranty reported during the period of the applicable manufacturer's written warranty (but not less than one year or 12,000 miles) or during the "warranty period," whichever is less.  The "warranty period" is two years or 24,000 miles.  A "nonconformity" is a defect, serious safety defect, or condition that substantially impairs the use, value, or safety of a new motor vehicle.

If the manufacturer or dealer is unable to correct the nonconformity after a reasonable number of attempts to repair within the warranty period, the manufacturer shall replace or repurchase the vehicle.  The repurchase price is the original price less an amount determined by formula for the buyer's use. The manufacturer must also refund all collateral charges, such as taxes, and incidental costs, such as towing charges.  A reasonable number of attempts is four attempts for the same nonconformity, two attempts for a serious safety defect, or if the vehicle has been out-of-service for 30 calendar days.  If the nonconformity is covered by a written warranty, at least one repair attempt, or 15 out-of-service days must occur during the written warranty period (but not less than one year or 12,000 miles).

The attorney general shall contract with one or more private entities to establish arbitration boards to settle disputes between consumers and manufacturers.  If the attorney general is unable to contract, by January 1, 1988, the attorney general shall establish boards, appointing three members to each board.  The attorney general shall adopt rules to implement the chapter, which shall include uniform procedural rules for the conduct of the arbitrations.  The parties may present witnesses and may also obtain and present affidavits. Within 60 days from receiving a request for arbitration, the board shall decide the dispute, and may order replacement or repurchase of the vehicle.  The consumer or the manufacturer may request a trial de novo of the arbitration decision in superior court.  If the consumer prevails, the consumer is entitled to attorneys' fees and costs, and may be awarded treble damages if the court finds the manufacturer brought the appeal without good cause.  The attorney general may fine a manufacturer who fails to comply with a board decision.  Other procedures are established.

The consumer may choose to first resort to an informal dispute resolution procedure established at the manufacturer's option, which substantially meets federal standards.

Resales of vehicles returned must be accompanied by an identification of the nonconformity and indication placed on the title that the vehicle was returned.  Vehicles with serious safety defects may not be resold unless the defect is corrected.  If a defect is corrected, the manufacturer may request a new title which indicates that the vehicle was returned but that the nonconformity has been corrected.

The attorney general is directed to compile statistics and report to the legislature.  In addition, a toll-free number shall be available, and the attorney general shall provide consumers with information on procedures and remedies.  The manufacturer shall provide specified information regarding the consumer's vehicle to the consumer.

Manufacturers and consumers do not have a cause of action against dealers under the provisions, but may pursue other rights and remedies.

A $5 fee shall be collected upon the sale of a new motor vehicle, to be deposited in the new motor vehicle arbitration account and used for purposes of the act.  The fee begins June 1, 1987.  Other provisions go into effect on January 1, 1988.

If a manufacturer makes a sales tax refund, the manufacturer may apply for a credit or refund from the Department of Revenue.

A violation of the chapter constitutes a consumer protection act violation.

By January 1, 1990, the appropriate legislative standing committees shall review the act.  The provisions expire on June 30, 1992, with a report by the legislative budget committee to be provided by January 1, 1992.

Appropriation:    $2 million from the new motor vehicle arbitration account to the attorney general.

Fiscal Note:      Requested April 6, 1987.

House Committee ‑ Testified For:    (Commerce & Labor)  Senator Rinehart, Prime Sponsor; Barbara Johnson, consumer; Robert Cassidy, consumer; Phillip E. Fluvog, consumer; Milt Harnden, American Automobile Association.

(Ways & Means/Appropriations)  None Presented.

House Committee - Testified Against:      (Commerce & Labor)  Keith Cheresko, Ford Motor Company; Ford Sims, General Motors Corporation; Bob Andrew, Better Business Bureau; Jim Boldt, Washington Auto Dealers.

(Ways & Means/Appropriations)  None Presented.

House Committee - Testimony For:    (Commerce & Labor)  Consumers have experienced multiple problems with new cars which have led to numerous unsuccessful attempts at repair. Current arbitration procedures run by the manufacturers are ineffective because the best the consumer gets is one more repair attempt. When consumers purchase a new car, they should be able to expect that it will operate for two years.

(Ways & Means/Appropriations)  None Presented.

House Committee - Testimony Against:      (Commerce & Labor)  Ninety percent of persons who go through manufacturer-run BBB arbitration report they are satisfied. State-run arbitration boards cannot act as quickly.  The legislature should await the new Federal Trade Commission rules on manufacturer-run boards.

(Ways & Means/Appropriations)  None Presented.