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|May 2018 Government Affairs Update|
WHAT YOU NEED TO KNOW FOR May 2018
· AOCA Obtains Federal Trade Commission Warning to Hyundai About Magnuson Moss Warranty Act Violations
· Government Affairs Committee Drafting One-Pager to Help Fast Lube Operators Comply with Weights & Measures Regulatory Requirement for Bulk Oil Delivery Receipts
· Membership Open for New Bicoastal Subcommittee to Tackle Fast Lube Issues in the High Population, High Regulation Areas of California and the New York Metro
Federal Trade Commission Warns Hyundai
On April 9, 2018, the Federal Trade Commission (FTC) issued a “compliance warning” to Hyundai Motor Company regarding violations of the Magnuson Moss Warranty Act (MMWA)’s prohibition against tie-in sales of branded products and services as a condition of warranty coverage. FTC specified the following website statement as problematic: “The use of Hyundai genuine parts is required to keep your Hyundai manufacturer’s warranties and any extended warranties intact.” Should Hyundai fail to eliminate such statements, FTC may take “legal action.”
AOCA submitted a Freedom of Information Act request to obtain the letter, which members can now access here. Curiously, most of FTC’s objections relate to website statements despite pending complaints against Hyundai for overtly tying brand oil filters to warranty coverage. AOCA filed those complaints with FTC and the National Highway Traffic Safety Administration in 2012 and 2016 over Hyundai and Kia Motors’ Technical Service Bulletins #114 and #12-EM-006 which directed their dealerships to assume aftermarket oil filters were the cause of any engine knocking noise and to refuse warranty coverage associated with oil system maintenance and repairs. Many of the vehicles impacted by those bulletins later became the subjects of class action lawsuits (Wallis v. Kia and Mendoza v. Hyundai) and subsequent recalls and settlements which determined the engine knocking noises were the result of engine defects, not aftermarket oil filters or non-dealership service.
Going forward: Both U.S. and Canadian AOCA members are urged to take note of any branded product or service tying by Hyundai and send the information to AOCA headquarters. In addition to motivating FTC to take further action, the Government Affairs Committee is investigating potential action under Canada’s Competition Act, which prohibits anti-competitive tying arrangements.
A New Way to get Bulk Oil Delivery Receipts from Distributors
The 2018 NIST Handbook 130 Method of Sale and Uniform Engine Fuels & Automotive Lubricants Regulations require that when transmission fluid is sold in bulk, an invoice, bill of lading, shipping paper, or other documentation must accompany each delivery and include the following: (a) the brand name; (b) the name and place of business of the manufacturer, packer, seller, or distributor; (c) the words “Transmission Fluid,” which may be incorporated into a more specific description of transmission type such as “Automatic Transmission Fluid” or “Continuously Variable Transmission Fluid:” (d) the primary performance claim or claims met by the fluid or reference to where these claims may be viewed (for example, website reference); and (e) an accurate statement of the quantity in terms of liquid measure.
The same NIST Handbook 130 regulations require that when engine oil is sold in bulk, an invoice, bill of lading, shipping paper, or other documentation must accompany each delivery that includes the following: (a) quantity; (b) viscosity; (c) intended use; (d) brand; (e) engine service category; (f) the name and address of the seller and buyer; and (g) the date and time of sale.
The Government Affairs Committee is working on a one-pager that fast lube operators can use to educate their distributors about these requirements and, if necessary, serve as receipt documentation to be filled out and signed at the time of delivery should a distributor not be prepared to provide it. The required distributor receipt information is important for fast lube operators twice over because they are required by the same regulation to provide the product details on customer invoices.
This subject was covered extensively at iFlex. Members who want compliance support on this subject but could not attend the convention are encouraged to contact AOCA headquarters to obtain recordings and related documents, and also to participate on the Government Affairs Committee.
New Bicoastal Subcommittee
AOCA’s new Bicoastal Subcommittee of the Government Affairs Committee was created primarily to cover the issues arising in the high population/regulation states of California and New York, some of which overlap and all of which have the potential to affect a significant percentage of the association’s membership. The subcommittee is seeking co-chairs, one from California and one from New York.
California: One of the issues facing California operators is how best to support the important concept of “preventative maintenance” where the Bureau of Automotive Repair (BAR) and many high-profile repair business interests have sought to erase the distinction from “repairs.” The original fast lube business model was strictly preventative maintenance and an estimated 70 – 90 California fast lube facilities still use it, which until the last few years gave them an unchallenged exemption from registering with BAR under the 1970s California Automotive Repair Act (ARA). Adding the ARA’s formal repair estimate procedures to the streamlined preventative maintenance-only model slows it down enough to destroy its profitability, so the prospect of registering with BAR is a very serious matter for affected businesses. The subcommittee is working on potential solutions for this dilemma.
New York: For five years running now, New York legislators have proposed legislation that would require every New York fast lube operator to post a sign conspicuous to customers that reads:
“OIL CHANGES EVERY 3,000 MILES DO NOT NECESSARILY RESULT IN BETTER VEHICLE PERFORMANCE OR LONGER ENGINE LIFE. REFER TO YOUR MANUFACTURER'S RECOMMENDED MAINTENANCE SCHEDULE FOR OIL CHANGE GUIDANCE."
According to this year’s version of the bill, A7914, the only way to avoid the sign would be to include the same information on every decal, sticker or other form of customer-targeted notice. Additionally, fast lube operators would be prohibited from making any mileage reference other than the motor vehicle's actual mileage, rounded to the nearest full mile, on the odometer at the time of an oil change on decals, stickers or any other form of customer-targeted notice.
A violation of these requirements would be punishable by a civil penalty of not more than five hundred dollars for the first offense and not more than one thousand dollars for each subsequent offense. If an average fast lube that services approximately 240 cars per six-day week runs afoul of requirements like these for a month, that’s $959,500 in civil penalties. Even if that fast lube gave each customer perfect service accurate to their individual automaker’s recommendations, the lack of signage or the inclusion of customers’ chosen intervals preferences on decals would trigger punishment.
This legislation has been passed by the Assembly Committee on Consumer Affairs & Protection and the Committee on Codes. It has also been referred to the Committee on Rules, which is chaired by Speaker Carl E. Heastie. Government Affairs Committee member Ron Slone took action by contacting Senator Amedore, who agreed with his opposition to the bill.
TAKE ACTION: New York fast lube operators who do not want this legislation to become law should follow Ron’s lead and urge their state representatives to VOTE NO on A7914. It isn’t just about stopping the bill this year, but also educating legislators about why it shouldn’t be considered every session for the next five years either. A copy of AOCA’s letter to Speaker Heastie is available for talking points and for general forwarding to individual state representatives.
Not sure who your New York reps are? Use this form: http://nyassembly.gov/mem/search/