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• IIADA AWARDS 15 SCHOLARSHIPS • GETTING TO KNOW YOU• THE CARLAWYER

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V i s i t u s a t w w w . i o w a i a d a . c o m

I O W A I N D E P E N D E N T A U T O M O B I L E D E A L E R S A S S O C I A T I O N

STREET SMARTAPRIL/MAY 2012

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APRIL/MAY 2012 S T R E E T S M A R T

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BOARD OF DIRECTORSPRESIDENTDouglas Livy, Jr.Quality Motors of Ames, Ltd.705 S. Duff AvenueAmes, Iowa 50010Ph: 515-232-1780

CHAIRMAN OF THE BOARDLouise Cordes Jim Cordes Motors, Inc.104 E. Main St., P.O. Box 68New London, Iowa 52645 1-319-367-2271

VICE PRESIDENTDavid A. FarmerDavid A. Farmer, Inc.1613 FranklinCenter Point, Iowa 522131-319-849-2432

TREASURERJudy Wilson409 E. Market StreetP.O.Box 337 Panora, Ia. 50216Ph: 641-755-4177

REGIONAL REPRESENTATIVESMerrill HitchcockMerrill’s Garage317 N. 8th StreetWinterset, Ia. 50273Ph: 515-462-1683

Roger PoulsenThe Car Guys1301 S.W. 7th StreetAtlantic, Ia. 50022Ph: 712-243-6915

Robert PippertPippert Cars & Trucks2047 Highway T-47P.O. Box BGladbrook, Iowa 50635641-473-3121

Clay WinterboerCarroll Car Credit Co.409 E. 6th St., Box 805Carroll, Ia. 51401Ph: 712-792-0140

Jim HarbachJ’s Auto945 E. MainManchester, Ia. 52057Ph: 563-927-2811

Doug WilsonLake Country Auto409 East Market St.P.O. Box 341Panora, Iowa 50216641-755-3048

Linda KilgoreKilgore’s Enterprises Inc.501 E. TownlineCreston, IA 50801641-782-5512

Jeff SchneiderPocahontas Sales & Service205 E. Elm Ave., P.O. Box 66Pocahontas, IA 50574712-335-4470

Kim NelsonNelson Automotive LLC300 Sandpiper Court P.O. Box 466Polk City, IA 50226515-984-9600

ADMINISTRATIVE OFFICES409 East Market StreetP.O. Box 337Panora, Iowa 50216Ph: 641-755-4177Fax: 641-755-3247Email: [email protected] Free: 866-962-9202

THIS TELEPHONE LINE RECEIVES NUMEROUS CALLS DURING THE DAY, SO AN EMAIL ADDRESS HAS BEEN ESTABLISHED WHERE QUESTIONS CAN BE SENT. THE EMAIL ADDRESS IS: [email protected].

The Motor Vehicle Investigations Information Line provides a way for the public to request information, ask questions, or file a complaint related to investigative duties and responsibilities.

This line is the primary point of contact to reach an investigator who is responsible for investigations in a specific area of the State of Iowa. To ensure accurate information is provided, the Motor Vehicle Investigations Information Line is answered by a Motor Vehicle Enforcement Investigator.

The hours of operation are Monday through Friday 8:30 a.m. to 3:30 p.m. As this line receives numerous calls during the day, please leave a message if the line is busy and your call will be returned promptly.

KNOW WHERE TO LOOK FOR RECALL INFORMATION ON VEHICLES

Vehicle dealers needing information on factory recalls can visit www.recalls.gov or find manufacturer toll-free numbers by going to www.autopedia.com/html/HotLinks.html and making contact with the respective automaker.

Know what recalls are pending on vehicles before you purchase them and give your customers peace of mind by checking out possible recalls before you retail the vehicle.

NEW MEMBER BENEFITS

• You don’t buy a newspaper, you buy the news• You don’t buy life insurance, you buy security for others• You don’t buy glasses, you buy vision• You don’t buy awnings, you buy shade

• You don’t buy membership in IIADA, you buy cooperation of the ablest men and women in your profession with whom you can join hands to accomplish things you could not do alone.

YES, IT COSTS TO JOIN IIADA – BUT IT PAYS TO BELONG – THINK ABOUT IT

INVESTIGATIONS INFORMATION LINE TOLL FREE: 1-866-908-4636

FOR INFORMATION ON HOW TO BECOME A MEMBER PLEASE CONTACT JUDY WILSON IIADA • 409 EAST MARKET • PANORA, IA 50216(641) 755-4177 • [email protected]

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WHAT’SNEW

MAGAZINECONTENTS

ADVERTISERSINDEX

10 Auto Shopping Goes Mobile12 IIADA Awards 15 Scholarships14 The CARLAWYER

NATIONAL INDEPENDENT AUTOMOBILE DEALERS ASSOCIATIONWWW.NIADA.COM • WWW.NIADA.TVNIADA HEADQUARTERS: 2521 BROWN BLVD. • ARLINGTON, TX 76006-5203 PHONE (817) 640-3838FOR ADVERTISING INFORMATION CONTACT: TROY GRAFF (800) 682-3837 OR [email protected] SMART IS PUBLISHED 6 TIMES PER YEAR BY THE NATIONAL INDEPENDENT AUTOMOBILE DEALERS ASSO-CIATION SERVICES CORPORATION, 2521 BROWN BLVD., ARLINGTON, TX 76006-5203; PHONE 817-640-3838. PERI-ODICALS POSTAGE PAID AT DALLAS, TX AND AT ADDITION-AL OFFICES. POSTMASTER: SEND ADDRESS CHANGES TO NIADA STATE PUBLICATIONS, 2521 BROWN BLVD., AR-LINGTON, TX 76006-5203. THE STATEMENTS AND OPIN-IONS EXPRESSED HEREIN ARE THOSE OF THE INDIVIDUAL AUTHORS AND DO NOT NECESSARILY REPRESENT THE VIEWS OF STREET SMART OR THE NATIONAL INDEPEN-DENT AUTOMOBILE DEALERS ASSOCIATION. LIKEWISE, THE APPEARANCE OF ADVERTISERS, OR THEIR IDENTIFICA-TION AS MEMBERS OF NIADA, DOES NOT CONSTITUTE AN EDORSEMENT OF THE PRODUCTS OR SERVICES FEA-TURED. COPYRIGHT© 2012 BY NIADA SERVICES, INC. ALL RIGHTS RESERVED.STATE MAGAZINE MGR./SALES Troy Graff • [email protected] Andy Friedlander • [email protected]/PRODUCTION MGR. Christy Haynes • [email protected] Nieman Printing

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ADESA ......................................... Inside Front Cover Ally ......................................................................11AutoTrader.com ...................................... Back CoverChase ...................................................................16Manheim.com ........................................................9Manheim Minneapolis ................ Inside Back CoverManheim Northstar .................... Inside Back CoverManheim Omaha ....................................................5Nowcom ................................................................7QRP Central ..........................................................15ShipCarsNow .......................................................13

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FOR INFORMATION ON HOW TO BECOME A MEMBER PLEASE CONTACT JUDY WILSON IIADA • 409 EAST MARKET • PANORA, IA 50216(641) 755-4177 • [email protected]

The Internal Revenue Service (IRS) has announced the 2012 optional standard mileage rates used to calculate the deductible costs of using a vehicle for business, charitable, medical or moving purposes.

Beginning Jan. 1, the standard mileage rates will be 55.5 cents per mile for business use, 23 cents per mile for medical or moving purposes and 14 cents per mile in service of charities. The rate for business miles is unchanged from a mid-year adjustment that became effective July 1, 2011. The medical and moving rate has been reduced by 0.5 cents per mile.

The standard mileage rate for business is based on an annual study of the fixed and variable costs of operating a car. The IRS reminds taxpayers they always have the option of calculating the actual costs of using their vehicles rather than using the standard mileage rates.

It seems like spring is right around the corner, though we are getting the snow we missed in December and January.

Usually, we would be gearing up for the spring car market, but it seems like it never left after last year. The markets are short on vehicles, thus we have extremely high prices.

It seems like there are fewer and fewer nice vehicles at each sale and more and more high-mileage units to pick from. Yet as the mileage goes up, so do the prices. Average vehicles are bringing clean book prices.

Who would have guessed this? The market shows no signs of falling back, and the number of units offered seems to grow smaller each week.

Be careful in your buying. Some late model units are bringing more than the new ones. It makes no sense, but they are. Get your run list early and study it. Be prepared when you go to the sales.

I think good gas mileage units have not seen the top of the market as gasoline prices climb. I don’t see the big rush to market for the trucks we had before, but I do see the good gas mileage units climbing higher.

Good luck at the sales, make sure you are prepared and keep a positive attitude.

Happy Selling,Doug Livy

MESSAGE FROM IIADA PRESIDENT

R A2Z EDUCATION SERIES - AutoZoneEducating the independent dealer to deliver the highest

quality service levels to your customers, manage your shop efficiently, train your technicians and maximize profits.niada.tv

R NATIONAL TIRE SAFETY WEEK: June 3-9National Tire Safety Week is a nationwide event

sponsored by the Rubber Manufacturers Association to raise consumer awareness about tire safety, help consumers keep their tires safe and demonstrate the industry’s commitment to motorist safety.

Visit www.betiresmart.org and fill out the form to receive your free National Tire Safety Week kit that includes brochures and other materials.

IRS ANNOUNCES 2012 STANDARD MILEAGE RATES

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S T R E E T S M A R T APRIL/MAY 2012

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Business trade trucks were established by law in 2008. The Iowa code defines a business trade truck as:

• A model year 2010 or newer motor truck with an unladen weight of 10,000 pounds or less.

• Owned by a corporation, LLC or partnership or person who files a Schedule C or F form with the IRS, and is eligible for depreciation.

• Leased vehicles follow the same guidelines with the primary purpose for that of the business operations.

The business owner is not required to show proof of filing Schedule C or F at the time of registration or renewal. However, the owner must check the “I claim a business trade exemption for my truck” box on the title application at the time of initial registration to claim the business trade exemption. At the time of renewal, the registration renewal form serves as the owner’s recertification.

Business trade trucks are registered by tonnage like other trucks. Penalties, up to $2,250, apply for falsely registering a vehicle as a business trade truck.

With the exception of leased vehicles, the code of Iowa does not limit personal use of a business trade vehicle. For example, there are no rules preventing a non-leased business trade truck from pulling a travel trailer or hauling furniture. The code requires leased business trade trucks to be primarily used for the purpose of the business.

Effective January 2012, the business trade truck will not have a special license plate. The motor vehicle registration and records will state the business trade truck designation. Personalized or county plates shall be used.

Owners of trucks with business trade truck plates issued prior to January 2012 can continue to display the plates on the business trade truck as long as they own the vehicle. On transfer of ownership, the plates must be turned in and new plates issued. Remember to include plate postage fees with paperwork on which business trade plates must be surrendered.

Iowa Code Section 321.120 states that on request from the Department of Transportation or a county treasurer, the Department of Revenue shall confirm or refute, according to the most

recent records available, that an applicant for registration of a business trade truck is either a corporation, limited liability company, partnership or person allowed a depreciation deduction with respect to the vehicle under section 167 of the Internal Revenue Code.

If the department determines by audit or other means that a person has registered a vehicle as business trade truck that is not qualified for such registration, the person shall be required to pay the difference between the regular annual registration fees owed for the vehicle for each year the vehicle was registered in violation of this section and the fees actually paid.

If the department determines by audit or other means that the person knowingly registered a vehicle as a business trade truck that is not qualified for such registration, the person shall be required to pay a penalty for improper registration in the amount of $750 for each registration year in which the vehicle was registered in violation of this section, not to exceed $2,250.

• §32704 Service, repair, & replacement • (a) Adjusting Mileage. A person may service, repair or replace an odometer of

a motor vehicle if the mileage registered by the odometer remains the same as before the service, repair or replacement. If the mileage cannot remain the same (1) the person shall adjust the odometer to read zero; and (2) the owner of the vehicle or agent of the owner shall attach a written notice to the left door frame of the vehicle specifying the mileage before the service, repair, or replacement and the date of the service, repair, or replacement.

TITLE 49 USC §§ 32705(a)(1)• § 32705. Disclosure requirements on transfer of motor vehicles• (a) (1) Disclosure Requirements. Under regulations prescribed by the Secretary of

Transportation that include the way in which information is disclosed and retained under this section, a person transferring ownership of a motor vehicle shall give the transferee the following written disclosure:

• (A) Disclosure of the cumulative mileage registered on the odometer. • (B) Disclosure that the actual mileage is unknown, if the transferor knows that the

odometer reading is different from the number of miles the vehicle has actually traveled. TITLE 49 USC §§ 32709 PENALTIES

(b) Criminal Penalty. A person that knowingly and willfully violates this chapter or a regulation prescribed or order issued under this chapter shall be fined under title 18, imprisoned for not more than 3 years, or both.

Odometer fraud is on the increase in the United States, and knowing the proper way to service or repair an odometer is very important. We’ve included part of the U.S. federal code regarding the repair, replacement and service of odometers (right), as well as examples of the types of door stickers that are required.

Dealers have wrong information and need to understand what can and cannot be done regarding repair and replacement of odometers. All odometers have a reading of some sort – they are actual, not actual or exceed the mechanical limit.

When the word exempt is used, it simply means exempt from written disclosure. If you have a vehicle with 258,000 miles on it and the odometer breaks or does not function and you replace it with an odometer that has 158,000 miles on it, you could be charged with intent to defraud a consumer or another dealer.

It seems apparent you knew the vehicle had 258,000 miles on it, and by replacing the odometer you removed 100,000 miles from the odometer reading. If you placed a new odometer head in the vehicle with 158,000 miles on it, you need to disclose that the vehicle has 100,000 more miles than it shows and that the miles are not actual – but don’t forget to disclose how many miles it had on it at one time. You can be fined and penalized for what you know and do not disclose.

Help Stomp Out Odometer Fraud

Business Trade Trucks

By Jana Bratland, Humboldt County Treasurer

US FEDERAL CODE _ ODOMETERS49 USC §§ 32704(a)

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Effective Feb. 20, 2012, the postage fee charged for mailing license plates from the county treasurer’s office to your customers was increased from $2.60 to $3.

MIDWEST AUTO AUCTION DIRECTORYADESA DES MOINES1800 Gateway DriveGrimes, IA 50111(515) 986-1200Fax: (515) 986-1201www.adesa.comGeneral Manager: Jeff LisleFleet/Lease Manager: Kevin ParmenterConsignment Sale every Tuesday at 9:30 a.m.Fleet/Lease Sale Tuesday 10:30 a.m.

ADESA KANSAS CITY101 S.W. Oldham RoadLee’s Summit, MO 64081(816) 525-1100(800) 950-2350Fax: (816) 525-4714General Manager: Harold ChapmanDealer Sales Manager: Tamara Kunkel Tuesday 9:30 a.m.

ADESA MINNEAPOLIS18270 Territorial RoadDayton, MN 55369763-428-8777763-428-8701Sale: Tuesday, 10 a.m.www.adesa.com

ADESA SIOUX FALLS46893 271st StreetP.O. Box 218Tea, SD 57064(605) 368-5364 Fax: (605) 368-2808 General Manager: Bob HolmWednesday Sale 10:00 a.m. IAAI SALVAGE SALE EVERY OTHER WEDNESDAY – 8:30 A.M.

ADESA ST.LOUIS7858 Highway 61-67Barnhart, Missouri 63012636-475-9311

ADESA WISCONSINW 10415 State Road 33Portage, WI 53901608-742-8245608-742-4415 (f)Tony Manwarren, general managerSale: Thursday, 9:30 a.m.www.adesa.com

AMERICAS AUTO AUCTION14001 S. KarlovCrestwood, Il 60445(708) 389-4488Fax: (708) 389-4558General Manage/Owner: Larry Hero Wednesday 10 a.m.

DEALERS CHOICE AUTO AUCTION, INC.503 South Wapello RoadMediapolis, IA 52637(319) 394-3510(888) 771-6810Fax: (319) 394-3511www.dcaa.comPresident: Monte DelzellNationwide Transportation:EZ Auto ShoppersSteve Miller – (866) 310-5936Fleet/Lease Manager: Kerri WilkersonConsignment Sale every Tuesday at 6 p.m. Fleet/Lease Sale Tuesday 6 p.m. Group SalesDealer Sales 6 p.m. as scheduled.

DES MOINES AUTO AUCTION1530 S.E. McKinley RoadDes Moines, Iowa 50320(515) 285-8911 Fax: (515)256-9161FRIDAY AT 9:30 A.M. Todd Givant, General Manager

GREATER QUAD CITY AUTO AUCTION4015 78th AvenueMilan, Il 61264(309) 787-6300Fax: (309) 787-4541Tuesday 10 a.m. – Thursday – 6 p.m.General Manager: Larry Anderson

GREATER ROCKFORD AUTO AUCTION5937 Sandy Hollow RoadRockford, Il 61109(815) 874-7800(800) 830-4722Fax: (815) 874-1325 General Manager: Mark Capriola Wednesday 10 a.m.

KCI AUTO AUCTION11101 N. CongressKansas City, MO816-502-3318816-801-8565 (f)Doug DollConsignment Sale: Thursday,9:30 a.m. www.kciaa.com

MANHEIM ARENA ILLINOIS200 West Old Chicago DriveBolingbrook, Il 60440(630) 759-3800(630) 759-9668General Manager: John OlejniczakDealer Sales Manager: Louis Palermo Tuesday 9 a.m.

MANHEIM CHICAGO20401 COX AVENUEMATTESON, ILLINOIS 60443815-806-4222Mike Cesta, General Manager

MANHEIM KANSAS CITY3901 North Skiles RoadKansas City, MO 64161(800) 247-7163Fax: (816) 452-2393 General Manager: Peggy SprengerDealer Sales Manager: Kevin Rhoads Wednesday 9:30 a.m.

MANHEIM MINNEAPOLIS 8001 Jefferson HighwayMaple Grove, MN 55369-4924(763) 425-7653(800) 622-7653Fax: (763) 493-0310www.manheim.comGeneral Manager: Jerry AmanAuction Manager: Carter TheissenAssistant General Manager: Jon EisenmannFleet Manager: Commercial Accounts MGR: Candice CrockettSale every Wednesday; 9am Ford Credit, 9:30am TD Auto Finance, Select Lane and Fleet/Lease/Rental Groups, 9:45am Dealer Consignment. Ford Factory Sale bi-weekly Wednesdays at 12 Noon. TRA Sale weekly, Tuesdays at 1:00pm. Specialty Sale (Heavy Trucks/Equipment/Powersports) bi-weekly, Wednesdays at 12:30pm.

MANHEIM MILWAUKEE561 South Highway 41 - 27th StreetCaledonia, WI 53108(262) 835-4436(800) 662-2947Fax: (262) 835-2684 General Manager: Dennis Worthy Dealer Sales Manager: Kimberly Schure Wednesay 9 a.m.

MANHEIM NORTHSTAR MINNESOTA4908 Valley Industrial Blvd. NorthShakopee, MN 55379(952) 445-5544(888) 445-2277Fax: (952) 445-6773General Manager: Jerry AmanThursday 9 a.m.

MANHEIM OMAHA9201 S. 144th StreetExit 440 off of I-80Omaha, NE 68138(402) 896-8000(800) 218-4192Fax: (402) 896-6758 General Manager: Todd Pfeifer Assist. Gen Manager: Korey Grell Thursday 9:30am.

MID-STATE AUTO AUCTION100 Bach Ave.New York Mills, MN218-385-3777218-385-3232 (f)Rob Thompson, presidentSale: Friday, 10 a.m.www.msaanym.com

MISSOURI AUTO DEALERS EXCHANGE5912 Mitchell Ave.St. Joseph, MO 64507816-232-7653816-232-3019 (f)Pam and Scott WallConsignment Sale: Wednesday, 5:45 p.m.www.moautoexchange.com

NEBRASKA AUTO AUCTION7500 N. 56TH St.Lincoln, NE 68514402-466-8477402-466-7932 (f)www.nebraskaautoauction.comDave LaFleurConsignment Sale: Tuesday, 10:30 a.m.

PLAZA AUTO AUCTION, INC.320 Highway 30 West P.O. Box 147Mt. Vernon, IA 52314(319) 895-6232Fax: (319) 895-6727www.plazaaa.comOwner: Mark GrebOffice Manager: Debbie WelshBecky Thuerauf: Fleet/Lease AdministrationConnie Van Ginkel: Consignment ManagerConsignment Sale every Wednesday at 6:30pm. Fleet/Lease/Repo Sale Wednesday at 7pm.

MANHEIM ST. LOUIS13813 St Charles Rock RoadBridgeton, MO 63044(314) 739-1300(800) 533-5414Fax: (314) 298-3347 General Manager: Mike Goodsell General Sales Manager: Chuck WickleyTuesday 9 a.m.

TRI-STATE AUTO AUCTIONJct. Highway 11 & 80P.O. Box 735Cuba City, WI 53807(608) 744-2020 (608) 744-3418(800) 356-0625Fax: (608) 744-7425 Owners/Managers: Gerald and Helen BrogleyThursday 6:30 p.m.

WEST CENTRAL AUTO AUCTIONP.O. Box 700I-80 Exit 1173277 Ute AvenueWaukee, IA 502 63(515) 987-1700(800) 987-7778Fax: (515) 987-3005www.wcaaonline.comOwner: Frank ScaglioneSales: Phyllis FasbenderConsignment Sale every Thursday at 9:30 a.m.

News From Iowa DOT

THANK YOU

Thank you to all the advertisers of Street Smart – your support is greatly appreciated!

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Getting to Know You


Reliable Auto Finance, Inc., of Grand Rapids, Mich., started in business in 1991 with the goal of financing vehicles for family-owned car lots. In 1997, RAF realized it could help more customers, as well as other dealers, by providing financing for customers who didn’t have many financing options.

RAF began to assist auto dealers throughout Michigan. In January 2007, RAF started working with Indiana auto dealers. It expanded into Ohio in December 2007 and in February 2011 came into Iowa to work with auto dealers.

In May 2011, RAF became an approved benefit provider to the Iowa Independent Automobile Dealers Association and has been an exceptional partner for our members. RAF’s portfolio includes 3,400 customers and several thousand loans per year.

Brian Chisholm is chief operating officer of Reliable Auto Finance. The ownership of RAF encourages its employees to be active in community service, and manages the organization to be a good corporate citizen. RAF is well

represented by many of its staff members on nonprofit boards.

RAF, which maintains an A-plus rating with the Better Business Bureau, employs 24 people, plus four contract employees, working throughout the states they serve.

“The simplicity of our product is one of the key issues that can help auto dealers sell their vehicles,” Chisholm said.

Brian has roots in Iowa.“Iowa has always had a warm place in my

heart after I attended wrestling camps at Iowa State University in Ames while I was still in high school,” he said. “In 2002, the University of Iowa contacted our oldest child about attending. Our daughter, Kate, had a wonderful 4-plus years at Iowa and our family enjoyed several Saturday afternoons at Kinnick Stadium.

“Since her graduation we have continued to travel to Kinnick – our second child, Eric, graduated from Michigan and our youngest, Angie, is a Michigan State graduate.”

Brian and his wife, Carole, have been married

for 33 years and are very much enjoying their first grandchild.

Brian’s previous experience in the lending world includes service with Mercantile Bank of Michigan as senior vice-president of the retail loan division and president of Mercantile Bank Mortgage Co. He also served as vice president of retail lending for FMB First Michigan Bank/Grand Rapids.

Brian’s community service includes working with Network 180, a community mental health program, as vice chairman, and serving on the boards of Habitat for Humanity and the Grand Rapids Urban League.

He holds a master’s degree in management and a B.S. in business administration.

Take the time to learn about the offerings of RAF and how they can assist your dealership in obtaining financing for your credit-challenged customers by visiting www.reliableautofinance.com or calling 800-814-9294. Brian can be reached at [email protected].

Brian Chisholm, Chief Operating Officer, Reliable Auto Finance

News from the Linn County TreasurerBy Sharon Gonzalez

Allowable Tax Credits When Items Other Than Cars Are Traded In on Cars

Question 1: A licensed auto dealer also sells tires. If the dealer takes in tires as a trade, can the customer get a tax credit toward the purchase of a vehicle since the dealer is in the business of retailing tires?

Question 2: A customer trades in a golf cart on the purchase of a vehicle. The dealer also sells golf carts at retail. Can the customer get a tax credit on the traded-in golf cart?

Checking with the Iowa Department of Revenue, the answer is yes to both questions. The trade-in allowance can be given in both instances.

Rise Above the CrowdBecome a Certified Master DealerBe on the lookout for your next chance to become an NIADA Certified Master Dealer. The

association holds CMD classes at various times during the year, giving dealers nationwide the opportunity to learn in one of the auto industry’s most respected training programs.

The course, taught by Joe Lescota, former chairman of Northwood University’s Automotive Marketing Department, focuses on areas such as business management, merchandising, financial management, business planning and human resources. Lescota is a former retail automotive executive with more than 25 years of frontline dealership, sales, management and training experience.

Dealership associates whose employer is already a Certified Master Dealer or has been approved for CMD training can also attend the training session.

The CMD program was developed in 2001 to provide dealers with the education and tools to take their businesses to higher levels of service, efficiency and profitability. Dealers who attend the training are committed to our industry, support ethical business standards and are leaders in their communities. They bring a wide range of experience to each class and leave with new strategies for analyzing their business practices and increasing their bottom line. They make friends who share their interests and their challenges and who often become valuable professional resources.

The cost for the three-day course is $2,995 for dealers and $2,795 for associates. In addition, Certified Master Dealers seeking recertification – they must have 12 hours of NIADA-approved continuing education every three years to retain certification – can attend for $995.

FOR APPLICATIONS AND INFORMATION ON YOUR NEXT CHANCE TO EARN THE TITLE OF CERTIFIED MASTER DEALER, VISIT WWW.NIADA.COM/CERTIFIED_MASTER_DEALER.PHP.

Jim Sommers & Brian Chisholm (RAF)

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BY DANI LUNSFORDDANI LUNSFORD IS A NATIONAL SALES AND MARKETING EXECUTIVE WITH SHOWCASE PUBLICATIONS, INC. SHE HAS BEEN IN THE RETAIL AUTOMOTIVE INDUSTRY FOR 14 YEARS, WORKING IN SALES, SERVICE, E-COMMERCE MANAGEMENT AND AS A CONSULTANT TO IT COMPANIES AND DEALER GROUPS. SHE CAN BE REACHED AT [email protected].

Smart Dealers Should Aim Their Ads at Smartphones

Did you know that men aged 30-49 do more mobile shopping than other age groups? That 50 percent of the popular Groupon’s business over the next couple of years will come from mobile devices? That Starbucks has taken more than 3 million micropayment transactions?

A Leger Marketing survey reported one in 10 respondents said they’d rather lose their mother-in-law than their cellphone.

Those trends and figures are not only interesting, they affect mobile shopping for cars and trucks as a whole. Understanding the upcoming trends will help car dealers see how important mobile sites, mobile applications and mobile marketing campaigns will be.

In 2011, mobile auto consumers climbed 60 percent. Used car sales are soaring, and more people are looking to buy thanks to a comfort level they have achieved with the state of the economy.

According to Google/Compete Research, 81 percent of smartphone users access the Internet on their mobile devices, and one of three searches has a local intent. Out of all the mobile shoppers in the world, 17 percent are looking at automotive websites and 53 percent of those end up at a dealership buying a car.

Because shoppers use their mobile phones to search for “stuff” in time of need, you have an opportunity to reach them when they are ready to buy or shop your dealership. According to Go Mobile, adding GPS capability to mobile phones has transformed the phone into a targeted weapon focused on the immediate surroundings.

According to the 2011 Auto Shopper Behavior Study by Google/Compete/R.L. Polk, today’s auto shoppers research and decide faster, use searches to navigate and compare, and expect dealer sites to be helpful.

The study also determined:• Mobile shoppers watch videos to discover

and compare brands. • Some 81 percent of mobile auto shoppers

make a decision within three months. • New car purchasers tend to search for

“Offers” first, followed closely by “Build Your Car,” “Locate a Dealer” and “Search Inventory. ”

• More shoppers than ever are searching inventory on third party sites – 42 percent of them searched “Inventory” first, then “Model Information” (32 percent) and “Trade-In” (29). “Request a Quote” and “Reviews” were next, cited by 22 percent.

• The most frequent research conducted on

mobile phones was comparing features at 55 percent, followed by price comparisons at 47 percent and reading general car and truck information at 44 percent.

• The advertisements cited as most useful by mobile users were online videos at 52 percent, sponsored or paid search engine listings (49 percent) and, surprisingly, newspaper ads at 45 percent.

All that data should speak loudly to car dealers. We must start following shoppers through this complex yet simple path to purchase rather than relying on traditional online destinations alone.

Car dealers need to examine their digital presence and understand navigation is the key to helping auto shoppers do research through many mobile portals.

So here are six things to take to the next level:

GPS-based marketing: Location-based services are mobile marketing platforms dealers can use to engage shoppers and develop promotions.

Dealer apps: A basic app, including inventory, costs about $300 per rooftop, but it’s worth its weight in gold. You can also allow users to accept notifications and send out weekly sales and alerts.

Mobile-friendly websites: A developer can easily add codes to your home page to adjust to tablet or cell sizes, allowing your website to display content quickly and optimize even on a very small screen.

Mobile ad campaigns: Target customers who are looking to fill an immediate need – oil changes, tire rotations, a special of the week, manager’s special or aged inventory on sale.

QR or 2D codes: Incorporate QR codes on all web pages and in newspaper or magazine ads. A QR code is a symbol with an embedded URL. When smartphone users scan it, it drives them to the URL. Some areas to advertise are: browse a website, send an email, make a phone call, Google maps, Foursquare venue, latest tweet, follow us on Facebook, Wi-Fi network inside dealership, or any text or message you want the customer to see.

YouTube channel: According Google/Compete, video ads drive initial interest – online videos ranked as the most useful ad format and a significant influence of brand choices. The last bombshell is that YouTube led two of three shoppers to the car/truck they ended up buying, indicating that YouTube is a leading driver to get

customers to notice your vehicles. The new iPhone has an assistant named Siri.

She finds answers to questions from the user.If a mobile phone user asks, “Where is the

closet dealership?” Siri will deliver a specific answer with directions. She will only deliver one answer.

The problem from a car dealer’s standpoint is she is not a search engine or a database. She will only deliver qualified filtered results. Siri reportedly uses Wikipedia and Yelp, among other websites, as information providers. Each of those sources work differently. Wikipedia provides encyclopedia-style information but can be modified by any user. Yelp is a national review community.

Dealers should make it a point to claim their information on those sources and keep watch on reviews and information regarding their dealership. Many believe Apple’s goal is to move completely away from Google – there are rumors about a partnership with Bing to help power Siri (so make sure your dealership is listed with Bing).

In a study by the Arora Report, 40 percent of Siri users reported no need to search Google. That provides evidence those users changed their habits, and as a result, Google searches could decline as Siri becomes widely available.

The latest trends and statistics indicate the mini-computers we call phones will be at the heart of any and all tasks in the near future, especially auto shopping. That makes a difference for advertising purposes, including the manner in which dealers reach potential customers.

Convenience is king, and phones are becoming the go-to resource in our everyday lives. Today’s users are looking for detailed vehicle information, interesting videos and compelling mobile ads to direct their search for a vehicle.

This is a once-in-a-lifetime generation changer. As smartphones get smarter and consumer expectations rise, the automobile industry needs to offer the services customers are expecting. All dealerships’ advertising needs to be geared toward the mobile phone war.

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Smart Dealers Should Aim Their Ads at Smartphones

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s u p p o r t e d u c a t i o n

IIADA awarded 15 scholarships to the children or grandchildren of our members and to children of our members’ employees at the IIADA Annual Meeting and Vendor Exposition on March 2-3 in Cedar Rapids. Scholarship winners were:

IIADA Awards 15 Scholarships at Annual Meeting

Jesse Goetz and parents Joe and Kris Goetz Deanna Fehr and parents Byron and Anita Fehr

Emily Holtz with father Kevin Holtz Kaci Chapman and parents Nancy and Dean Chapman

Amy and Jenna Holtz and parents Dave and Tami Holtz Jake Buelt and parents Bob and Joanie Buelt

Rachel Kelly with parents Tim and Sheila Kelly Ben Landers and father Mick Landers with Linda Kilgore

Tanner Fellinger and parents Carrie and Tim Fellinger and grandmother Pam Recker

Allison Joy BontragerDaughter of Gary and Julie Bontrager of WellmanCooley Auto Sales, North Liberty

Jacob Robert BueltSon of Bob and Joanie Buelt of BredaCarroll Car Credit Company, Carroll

Kaci Lynn ChapmanDaughter of Nancy and Dean Chapman of ManchesterJ’s Auto, Manchester

Colton James ConroySon of Jeb and Diane BallJeb’s Affordable Transportation, Jefferson

Delaney Stephanie CooleyDaughter of Steve and Darcy Cooley of Iowa CityCooley Auto Sales, North Liberty

Deanna Ruth FehrDaughter of Byron and Anita Fehr of WhittemoreWhittemore Truck and Trailer, Algona

Tanner John FellingerSon of Tim and Carrie Fellinger of HopkintonGrandson of Pam ReckerRecker’s Enterprises, Hopkinton

Joshua Dee FellSon of Tawnua Tenley and Bryan Fell of Mount VernonGrandson of Gene and Vonnie HelmigH & H Heartland Motors, Morning Sun

Amy Leah HoltzDaughter of David and Tami Holtz of MarionGranddaughter of Al and Lucille HoltzAl’s Repair, dba Monticello Auto Center, Monticello

Jenna Lynn HoltzDaughter of Dave and Tami Holtz of MarionGranddaughter of Al and Lucille HoltzAl’s Repair, dba Monticello Auto Center, Monticello

Emily Louise HoltzDaughter of Kevin Holtz and Susan Schneiter of MonticelloGranddaughter of Al and Lucille HoltzAl’s Repair, dba Monticello Auto Center, Monticello

Jesse James GoetzSon of Joe and Kris Goetz of MonticelloSponsoring dealership: Al’s Repair, dba Monticello Auto CenterOwned by Al and Lucille Holtz

Rachel Marie KellyDaughter of Tim and Sheila Kelly of ParnellKelly’s Auto Center, Iowa City

Benjamin Michael LandersRecipient of the Rudy Kilgore Memorial ScholarshipSon of Mick Landers of CrestonSponsoring dealership: Kilgore’s Enterprises, Inc. of CrestonOwned by Linda Kilgore

Myah Lynn StewardDaughter of Tony and Donna StewardGranddaughter of Char and Laverne SchroderBudget Motors of Sioux City

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Kaci Chapman and parents Nancy and Dean Chapman

Latest NMB Partner Provides Emissions Diagnostics

PH2 Solutions has joined NIADA’s National Member Benefit program, offering the association’s members its award-winning PH2 Validator emissions diagnostic technology for a $259 savings with multiple payment plan options.

The diagnostic software of choice for dealers and their on-site staff rapidly identifies emission-related issues on virtually all 1996 and newer vehicles, helping save time and resources on “Check Engine Light” maintenance and repairs, emission inspection compliance, fuel consumption, vehicle

acquisition and remarketing, and reducing customer “comebacks.”

”NIADA is delighted to be working with PH2 Solutions in assisting our members to resolve ‘Check Engine Light’ and vehicle emissions issues,” NIADA vice president of member services Scott Lilja said. “NIADA is confident PH2 Solutions will be a tremendous hit with our members who have vehicle service operations as well as those that outsource.”

The PH2Validator earned first place in SEMA’s Best New Tools and Equipment Products category for 2012, and Motor magazine named it one of its Top 20 Tools for 2011.

PH2 Validator’s easy-to-use application was developed specifically to address independent repair shop challenges such as OBDII false code problems, no code faults, costly long drive cycles and other emissions-related repairs. The diagnostic software redefines conventional factory drive cycles to 10 miles or less by engaging the on-board computer (PCM) with its patented automated repetitive requests of all supported monitors simultaneously, resulting in rapid monitor

completion if conditions are met.If readiness conditions are met, the

monitors complete. If they are not met, driving beyond 10 miles will not change the outcome, and the PH2Validator’s automated data stream analysis provides technicians with a real-time record of clues as to why by simultaneously and continuously capturing out-of-range operating values and prioritizing them by seriousness.

Exclusive NIADA member-only pricing is also available to repair shops handling member repairs.

“We are honored to partner with NIADA and even more excited to offer members this game-changing technology that truly makes life easier for dealers, technicians and service centers, affording them the ability to move inventory faster and more efficiently,” PH2 Solutions president and CEO Mark L. Scotland said.

FOR MORE INFORMATION, CONTACT [email protected], AND TO ORDER, VISIT WWW.PH2SOLUTIONS.COM/NIADA0818 OR CALL (973) 902-5517.

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The CARLAWYER ©Here’s our monthly collection of selected

legislative and regulatory highlights, and a recap of some of the many auto sale and financing lawsuits we follow each month.

Remember – what we report here is not every recent development. We select those we think are important to car dealers. Note that this column does not offer legal advice. You should consult your dealership lawyer with any legal questions.

We include items from other states. Why? We want you to be able to see new legal developments and trends. Also, another state’s laws might be a lot like your own state’s laws – if AGs or plaintiffs’ lawyers are pursuing particular types of claims, those laws and claims might soon appear in your state. As always, though, there is no substitute for checking with your own lawyer before you rely on anything we report or if you have any questions.

FEDERAL LAWAll the federal news this month deals with the

new Consumer Financial Protection Bureau.Full head of steam: Or was that full steam

ahead? By now you probably know President Obama appointed Richard Cordray on Jan. 4 as the bureau’s first director. The appointment was characterized as a recess appointment, an action the president has the constitutional authority to take when Congress is not in session. Except Congress was in session on Jan. 4, or at least was not in recess. Lawsuits have already been filed challenging the constitutionality of the appointment.

Notwithstanding, the CFPB is forging ahead, exercising powers previously held in abeyance pending the appointment of a director. It has issued a spate of announcements.

ROAM database: On Jan. 25, the CFPB, the Department of Defense, the Federal Trade Commission and the New York Attorney General announced a “repeat offenders against

military” (ROAM) database that will track and report completed civil and criminal enforcement actions against companies and individuals who repeatedly target military members, veterans and their families for financial scams.

Law enforcement officials across the country, including state attorneys general, U.S. attorneys and Judge Advocates, are encouraged to contribute information to the database in order to improve communication between state and federal agencies regarding financial fraud against the military community. The database will complement the Consumer Sentinel Network, operated by the FTC, which tracks consumer complaints from the military but does not report on completed enforcement actions.

The bureau partners with the FTC: On Jan. 23, the CFPB and the FTC announced they signed a memorandum of understanding (MOU) to coordinate efforts to protect consumers and avoid duplication of federal law enforcement and regulatory efforts. The Dodd-Frank Act requires the CFPB and the FTC to work together to coordinate their enforcement activities and promote consistent regulatory treatment of consumer financial products and services.

In the MOU, the agencies have supplemented the Dodd-Frank Act requirements to create a framework for coordination and cooperation. The agencies agreed to meet regularly to coordinate upcoming law enforcement, rulemaking and other activities; to inform the other agency, absent exigent circumstances, before starting an investigation or bringing an enforcement action; to consult on rulemaking and guidance initiatives to promote consistency and reflect the experience and expertise of both agencies; to cooperate on consumer education efforts to promote consistency of messages and maximum use of resources; and to share consumer complaints.

The bureau, minorities and women: On Jan. 20, the CFPB established its Office of

Minority and Women Inclusion. Among other requirements, the OMWI is charged with developing standards for equal employment opportunity, workforce diversity and inclusion at all levels of the agency; for increased participation of minority-owned and women-owned businesses in the CFPB’s programs and contracts; and for assessing the diversity policies and practices of the CFPB’s regulated entities.

Is your dealership a “nonbank?” On Jan. 5, the bureau announced the launch of the nation’s first federal nonbank supervision program, one of the central new authorities it putatively acquired on Cordray’s recess appointment. A “nonbank,” in fedspeak, is a company that offers consumer financial services but does not accept deposits.

The nonbank program is an extension of the CFPB’s bank supervision program, which began last July and ensures that banks and nonbanks follow federal consumer financial laws.

Under the law, the CFPB has the authority to oversee nonbanks, regardless of size, in certain specific markets: mortgage companies (originators, brokers and servicers, including loan modification or foreclosure relief services), payday lenders and private education lenders. For other markets, the CFPB can also supervise the larger players, or “larger participants” – look for a proposed rule defining “larger participants” in the weeks to come. The CFPB also has authority to supervise any nonbank it determines is posing a risk to consumers.

Looking for Information: On Jan. 4, the CFPB issued Bulletin 12-01 to chief executive officers of depository institutions, credit unions and their affiliates subject to the bureau’s supervision authority to provide guidance regarding its collection of information through the supervisory process and the confidentiality protections that process provides to supervised institutions.

BY THOMAS B. HUDSON AND NICOLE FRUSH MUNRO

CONTINUED ON PAGE 15

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The CARLAWYER ©

STATE REGULATORY ACTIONSOn Dec. 29, the Massachusetts Division of

Banks issued an industry letter to clarify under what circumstances a so-called motor vehicle lease agreement would be, in fact, a retail installment contract that would subject the holder to licensing as a motor vehicle sales finance company under General Laws Chapter 255B.

On Jan. 10, the Oklahoma Motor Vehicle Commission amended the required criteria for spot delivery agreements or forms. Prior to being used by a dealer, any spot delivery agreement or form must first be approved by the OMVC. Does your state have such a requirement?

The Texas Office of The Consumer Credit Commissioner adopted rules governing disclosures and notices for credit access businesses that engage in payday or auto title loans, and adopted a provisional license procedure for those businesses. The Texas Office of the Consumer Credit Commissioner continues to review debt cancellation agreements for compliance with amendments to Chapter 348 of the Texas Finance Code, allowing debt cancellation agreements on motor vehicle installment sale contracts when a creditor requires that a buyer maintain insurance on the motor vehicle securing the transaction.

LITIGATIONService contract may run concurrently

with express warranty if it provides additional benefits: A car owner sued claiming the service contract she bought violated California’s Song-Beverly Consumer Warranty Act. The trial court granted summary judgment for the defendants and the U.S. Court of Appeals for the Ninth Circuit affirmed. Under the Song-Beverly Act, a service contract may run concurrently with a manufacturer’s express warranty if “the contract covers items or costs not covered by the express warranty or … the contract provides relief to the purchaser not available under the express warranty.”

In this case, the appellate court found that the service contract at issue provided three benefits not covered by the manufacturer’s warranty: emergency travel expense reimbursement up to $500, destination assistance of up to $75 in the event the vehicle becomes disabled due to collision or failure, and one additional annual fuel delivery service. See Orue v. Ford Motor Service Company, 2011 U.S. App. LEXIS 24680 (9th Cir. (C.D. Cal.) December 13, 2011).

Optional phone and Internet pay fees not prohibited by Wyoming Uniform Consumer Credit Code: The Wyoming Uniform Consumer Credit Code Administrator issued an order that

a creditor violated the WUCCC by charging fees for optional payment services by phone or Internet (sometimes called “convenience fees”). The creditor sought court review of the order. The trial court reversed the order and the Wyoming Supreme Court affirmed.

The high court concluded that the charges were not credit service charges within the meaning of the statute because they were not imposed directly or indirectly by the seller as an incident to the extension of credit. The high court concluded even if there was an obligation to disclose the charges, it could not be imposed on the plaintiff as an assignee after the credit transaction occurred. See Vogel v. Onyx Acceptance Corporation, 2011 Wyo. LEXIS 169 (Wyo. December 19, 2011).

TILA’s limitation on assignee liability does not bar claims under FTC Holder Rule or New York law: An uneducated Spanish-speaking Honduran immigrant on disability and food stamps was contacted by phone and mail to go to a car dealership to collect a prize. Rather than receiving a prize, the individual ended up buying a car he could not afford by signing documents written in English.

Later, the dealership told him to return the car because it was damaged and sold him a second car. The dealership promised he could return

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The CARLAWYER ©

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later and refinance to lower payments. When he returned for the refinancing, the dealership refused. Instead, the dealership told him it would repossess the second car and sell him a third car and promised the transaction would not adversely affect his credit. However, after the assignee of the finance agreement from the second sale billed him for a $23,000 deficiency, he sued, claiming the assignee was liable under the FTC Holder Rule and New York law because the dealership engaged in a scheme to entice him to the dealership with false promises of cash prizes and free cruises.

The individual argued he could assert the dealership’s fraud as an offset to the assignee’s attempt to collect the deficiency under the FTC Holder Rule and the NY Personal Property Law. The assignee moved to dismiss, and the trial court granted the motion, finding that the Truth in Lending Act limits an assignee’s liability to matters that are apparent on the face of the credit disclosures assigned by the dealership and that the dealership’s bad acts were not apparent on the face of the credit disclosures. The Supreme Court of New York, Appellate Division, reversed, finding that the limitation on assignee liability in TILA only applies to liability that arises under TILA and does not apply to liability that arises under the FTC Holder Rule or the New York law. See Ramirez v. National Cooperative Bank,

2011 N.Y. App. Div. LEXIS 8635 (N.Y. App. Div. December 6, 2011).

Failure to print first payment due date clearly and conspicuously was violation apparent on face of contract: On a retail installment sales contract a car buyer signed, the due date of the first payment was printed over preexisting text. The buyer filed a class action complaint against the dealership and the assignee of her contract under the Truth in Lending Act, claiming that the dealership failed to clearly disclose the first payment date and that the assignee accepted assignment of the contract when the TILA violations were apparent on the face of the contract.

The U.S. District Court for the District of Connecticut granted the buyer’s motion for partial summary judgment. After stating that the contracts issued to the class members ranged from “indistinct to indiscernible” and that an average reasonable person could not find any of the disclosures to be clear and conspicuous, the court found there was no genuine issue of material fact as to whether the dealership had failed to clearly and conspicuously disclose the first payment due date.

Likewise, after noting TILA provides for assignee liability only if the violation is apparent on the face of the contract, the court summarily stated the violation was apparent on the face

of the contract. See LeFoll v. Key Hyundai of Manchester LLC, 2011 U.S. Dist. LEXIS 142396 (D. Conn. December 12, 2011).

Spanish-speaking class members lacked commonality due to varying degrees of fluency with English: Spanish-speaking consumers sued various payday lenders for failing to provide notices to them in Spanish as required by California law. The court refused to certify a class for lack of commonality in which the consumers – and each potential class member – had a unique ability to speak both English and Spanish, and the degree of fluency varied with each individual. Thus, the potential class members did not have questions of law or fact common to them. See Stone v. Advance America, 2011 U.S. Dist. LEXIS 142464 (S.D. Cal. December 12, 2011).

So there you have it! Stay legal, and we’ll see you next time.

BY THOMAS B. HUDSON AND NICOLE FRUSH MUNROTOM ([email protected]) AND NIKKI ([email protected]) ARE PARTNERS IN THE LAW FIRM OF HUDSON COOK, LLC. TOM IS THE AUTHOR OF SEVERAL BOOKS, AVAILABLE AT WWW.COUNSELORLIBRARY.COM. TOM IS ALSO THE PUBLISHER OF SPOT DELIVERY®, A MONTHLY LEGAL NEWSLETTER FOR AUTO DEALERS, AND THE EDITOR IN CHIEF OF CARLAW®, A MONTHLY REPORT OF LEGAL DEVELOPMENTS IN ALL STATES FOR THE AUTO FINANCE AND LEASING INDUSTRY. NIKKI IS A CONTRIBUTING AUTHOR TO THE F&I LEGAL DESK BOOK AND FREQUENTLY WRITES FOR SPOT DELIVERY. SPOT DELIVERY, CARLAW AND THE BOOKS ARE PRODUCED BY COUNSELORLIBRARY.COM LLC. FOR INFORMATION, CALL 410-865-5411 OR VISIT WWW.COUNSELORLIBRARY.COM. COPYRIGHT COUNSELORLIBRARY.COM 2011, ALL RIGHTS RESERVED. SINGLE PUBLICATION RIGHTS ONLY, TO THE ASSOCIATION. (1/12) HC# 4829-1372-1870.


The CARLAWYER ©

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17


The CARLAWYER ©Here’s our latest collection of selected

legislative and regulatory highlights, and a recap of some of the many auto sale and financing lawsuits we follow each month. Remember, what we report here is not every recent development. We select those we think are important to car dealers. Note that this column does not offer legal advice. You should consult your dealership lawyer with any legal questions.

We include items from other states. Why? We want you to be able to see new legal developments and trends. Also, another state’s laws might be a lot like your own state’s laws – if AGs or plaintiffs’ lawyers are pursuing particular types of claims, those laws and claims might soon appear in your state. As always, though, there is no substitute for checking with your own lawyer before you rely on anything we report or if you have any questions.

FEDERAL LAWOnce again, all the federal news deals with the

new Consumer Financial Protection Bureau and the “old” Federal Trade Commission.

Want some advice? On Feb. 23, the CFPB announced the establishment of the Consumer Advisory Board, which will advise and consult with the bureau in the exercise of the bureau’s functions under federal consumer financial protection laws and will provide information concerning emerging trends and practices in the financial services and financial products industries.

The CFPB published a Federal Register notice seeking nominations for the Consumer Advisory Board – nominations closed March 30.

Something to say? Drop us a line: On Feb. 21, the FTC announced that as part of its ongoing project to gather information on consumers’ experiences related to the sale, financing and leasing of vehicles at dealerships, the agency would continue to seek public comments until April 1.

The FTC held three roundtables around the country in 2011 to gather information about practices related to motor vehicle sales, financing and leasing. In seeking comments, the FTC editorialized, “Financing obtained at a dealership may provide benefits for many consumers, such

as convenience, special manufacturer-sponsored programs, access to a variety of banks and financial entities or access to credit otherwise unavailable to a buyer. Dealer-arranged financing, however, can be a complicated, opaque process and could potentially involve unfair or deceptive practices.”

Streamlining regulations: On Feb. 16, the CFPB launched its regulation streamlining feedback web tool, which accepts public input on ways to streamline the regulations the CFPB inherited under the Dodd-Frank Act. The CFPB is requesting feedback on what parts of these regulations it should make the highest priority for updating, modifying or eliminating.

In addition to comment boxes, the new web tool has drop-down menus that list each regulation and its sections while also linking directly to the text of the regulation.

ENFORCEMENT ACTIONSMaine Attorney General William Schneider

recently settled claims alleging unfair and deceptive practices by a dealer who made implied warranty and remedy disclaimers to new car buyers. Maine’s implied warranty law protects consumers for up to four years after the purchase of all household or personal goods except used cars.

The dealer allegedly told consumers that only the manufacturer, and not the dealer, was responsible if the new car had a serious defect. In addition to a $5,000 civil penalty, the dealer will inform past customers that implied warranty and remedy disclaimers are retracted and customers who were improperly turned down can seek reimbursement for repairs of serious defects.

LITIGATIONArbitration provision in buyer’s order not

enforceable where RISC, which included integration clause, did not contain arbitration provision: A customer bought a car and signed a buyer’s order, a retail installment sales contract and a disclosure agreement. The buyer’s order and disclosure agreement contained arbitration provisions but the RISC did not.

When the customer sued the dealership where she bought her car, the dealership moved

to compel arbitration. The trial court denied the motion, and the Court of Appeals of Texas affirmed. The appellate court noted that the RISC included an integration clause stating, “This contract contains the entire agreement between you and us relating to the sale and financing of the vehicle. If any part of this contract is not valid, all other parts stay valid.”

The appellate court found that because the RISC contained an integration clause and did not incorporate any provisions from the buyer’s order or the disclosure agreement, including the arbitration provisions, the buyer’s order and the disclosure agreement did not govern the sale or financing of the vehicle. See Fazeli Imports, Ltd. v. Davis, 2012 Tex. App. LEXIS 546 (Tex. App. January 25, 2012).

Note that Texas law defines a buyer’s order as a nonbinding, preliminary written computation relating to the purchase in a retail installment transaction of a motor vehicle that describes specifically the motor vehicle being purchased and each motor vehicle being traded in. Dealers in Texas should think twice before relying on a buyer’s order for an enforceable agreement when they are selling a motor vehicle in an installment sale transaction, even absent an integration clause.

Vehicle-secured debt not dischargeable where debtor applied for and received credit in her name but intended her father to make the payments: An individual bought a pickup truck on credit for her father, who could not get his own financing because of poor credit, titled the truck in her name, and expected her father to make the payments. However, the credit application she signed stated she was applying for individual credit and was relying on her income or assets for repayment of the credit.

When the individual filed a Chapter 7 bankruptcy petition, the creditor repossessed the truck, leaving a $10,793 deficiency. The creditor sued to have the deficiency declared nondischargeable, and the U.S. Bankruptcy Court for the Western District of Michigan found the debt should be excepted from discharge. Though the court found the dealership where the individual bought the car was complicit in the deception, it nevertheless found the individual


BY THOMAS B. HUDSON AND NICOLE FRUSH MUNRO

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Three “think outside the box” techniques when shopping for health insurance.

Anyone who had has the experience of shopping for health insurance knows it’s not an easy task. Figuring out ways to keep premiums affordable can be a major struggle. Shopping for apples-to-apples coverage with several carriers is nearly impossible and premiums for similar plans are vastly different from one carrier to the next.

So what’s a person to do?Purchasing health insurance requires a

“think outside the box” approach. Here are three simple tips to help you along the way:

• Consider shopping for a much higher deductible than you are accustomed to. Shop for plans that have a $10,000 deductible or more. It may shock you how drastically lower premiums will be. Too much risk for you? We will show you a way to combat that next. If you would like to see a rate for a higher deductible in comparison, visit www.NIADAHealthPlans.com for an instant online rate.

• To offset the high deductible, consider purchasing a critical illness rider, which attaches to your major medical policy. Critical illness riders pay a cash benefit for conditions like cancer, heart disease, stroke, coma and kidney disease, and the benefit can be used to pay off your deductible and leave you with additional money for other expenses, such as loss of income. Riders can be purchased to cover your deductible or more – up to $100,000 in cash coverage. Believe it or not, the premiums are very affordable.

• Also to help offset risk, consider purchasing an accident rider to attach to your major medical policy. Like critical illness riders, accident riders pay a cash benefit for accidents or injuries such as cuts, burns, broken bones or strained and pulled muscles. Again the benefit can be used to pay your deductible in the event you or your family is injured. If you have children,

especially ones in sports, this is a must-have rider. The premiums are even more affordable. So what types of claims will you then need

to worry about?Since health care reform passed, additional

benefits have now been added so you will not have to pay out of pocket for adult and child wellness exams, such as checkups, immunizations, lab work, mammograms, pap smears, PSAs and EKGs. They are all covered at 100 percent with no deductible. Why purchase a lower deductible when it’s covered regardless?

Additionally, there are no lifetime maximums. After your deductible, you are covered at 100 percent until infinity. There are no lifetime caps like $2 million, $3 million, etc. If you have a $20 million medical bill, your insurance must now cover it.

With a high-deductible policy you will have to pay for such claims as office calls for a cold/flu, asthma, skin disorders (other than cancer) and other forms of illness. However, most people would rather save $300, $400 or more per month and pay for the occasional office call themselves. And you will still receive the insurance company’s discounted rate for office calls.

Doing the same thing over and over again and expecting a different result … well, you know the rest. Thinking “outside the box” can not only save you money, but can also provide you with better coverage than you had before.

FOR MORE INFORMATION, PLEASE CALL THE NIADA HEALTH PROGRAM AT 1-888-308-9340 OR VISIT WWW.NIADAHEALTHPLANS.COM

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IOWA USED MOTOR VEHICLE DEALER EDUCATION CLASSESFIVE-HOUR CONTINUING EDUCATION CLASS MUST BE TAKEN PRIOR TO DEC. 31, 2012

CLASSESFriday, April 20, 2012, 8 a.m.-1 p.m.: Hawkeye Community College, Cedar Falls, Cedar Falls Industrial Park, Business & Community Education, 5330 Nordic Drive, Cedar Falls, Iowa. Please arrive at 7:45 a.m. To register, call 319-277-2490. Courses offered: Paperwork, Paperwork, Paperwork (Course No. 037652), Room L-108; Environmental and Safety Compliance (Course No. 037650), Room C-101; Carknowlogy: Financing Regulations and Responsibilities (Course No. 037651), Room C-104.

Friday, May 18, 2012, 8 a.m.-1 p.m.: Indian Hills Community College Advanced Technology Center, 626 Indian Hills Drive, Ottumwa, Iowa. Please arrive at 7:45 a.m. To register, call 1-800-346-4413 or 641-683-5249. Courses offered: Carknowlogy: Financing Regulations and Responsibilities (Course No. 12/Yr*Rel*2904*501), Room 134; Paperwork, Paperwork, Paperwork (Course No. 12/Yr*Rel*2906*501), Room No. 132; Environmental and Safety Compliance (Course No. 12/Yr*Rel*2903*501), Room 142.

Friday, June 15, 2012, 8 a.m.-1 p.m.: North Iowa Area Community College, 500 College Drive, Muse Norris Conference Center, Mason City, Iowa. Please arrive at 7:45 a.m. To register, call 888-466-4222, ext. 4358, or 641-422-4358. Courses offered: Carknowlogy: Financing Regulations and Responsibilities (Course No. 80946), Room NC 180; Environmental And Safety Compliance (Course No. 80956), Room NC 180; Paperwork, Paperwork, Paperwork (Course No. 80953), Room NC 180.

Thursday, June 21, 2012, noon-5 p.m.: Des Moines Area Community College, FFA Building, 2006 S. Ankeny Blvd., Ankeny, Iowa. Please arrive at 11:45 a.m. To register, call 515-964-6800 or 800-342-0033. Course offered: Paperwork, Paperwork, Paperwork (Course No. 32651), Room 112, FFA Building.

Friday, June 22, 2012, 8 a.m.-1 p.m.: Des Moines Area Community College, FFA Building, 2006 S. Ankeny Blvd., Ankeny, Iowa. Please arrive at 7:45 a.m. To register, call 515-964-6800 or 800-342-0033. Courses offered: Environmental and Safety Compliance (Course No. 32650), Rooms 112 and 113, FFA Building; Carknowlogy: Financing Regulations and Responsibilities (Course No. 32649), Rooms 108 and 109, FFA Building; Compliance Tools for Buy Here-Pay Here Dealers (Course No. 32647), Rooms 114 and 115, FFA Building.

Friday, June 29, 2012, 8 a.m.-1 p.m.: Northeast Iowa Community College, Town Clock Center, Suite 1, 700 Main Street, Dubuque, Iowa. Please arrive at 7:45 a.m. To register, call 563-557-8271, ext. 380. Courses offered: Carknowlogy: Financing Regulations and Responsibilities, Room 106A; Environmental and Safety Compliance, Room 106C; Paperwork, Paperwork, Paperwork, Room 106B

During 2012, the five-hour dealer continuing education classes will again be held at community colleges throughout Iowa.The following is an overview of the specialty classes dealers may select from:

PAPERWORK, PAPERWORK, PAPERWORKThis class is an excellent refresher for the veteran dealer, and beginning dealers will become familiar with every facet of the paperwork required for operating a dealership in Iowa. Attendees will learn how to properly complete titles and related documents as well as developing compliant procedures for cash sales, financed sales and wholesale sales that everyone at your dealership can follow to help ensure adherence, consistency and correctness. You will discover how to set up your dealership to meet compliance requirements at the state and federal level. Updates from the Iowa Department of Transportation, the Consumer Protection Division of the Iowa Attorney General’s office and other state and federal agencies will be reviewed.

COMPLIANCE TOOLS FOR BUY HERE-PAY HERE DEALERSParticipants will learn how to avoid fines and penalties. This class will provide an in-depth discussion of policies and procedures that must be followed by BHPH dealers and those considering a Buy Here-Pay Here dealership in Iowa. Advertising rules for dealerships will also be shared. Updates from the Iowa Department of Transportation, the Consumer Protection Division of the Iowa Attorney General’s office, the new Federal Consumer Financial Protection Bureau and other state and federal agencies will be reviewed.

CARKNOWLOGY: FINANCING REGULATIONS AND RESPONSIBILITIESDealers who offer consumer financing and those considering making financing available should take this course to understand fully how to conduct business legally, ethically and in compliance with state and federal law. Discover what lenders expect from you and your customers regarding compliance with sales, consumer finance rules, regulations and law. The course will include a review of the legal requirements of selling service contracts, warranties and insurance products, plus the importance of working with reputable providers. You will take part in a hands-on review of all legal requirements and document preparation for the sales of motor vehicles when lenders are involved. Updates from the Iowa Department of Transportation , the Consumer Protection Division of the Iowa Attorney General’s office, the new Federal Consumer Financial Protection Bureau and other state and federal agencies will be reviewed.

ENVIRONMENTAL AND SAFETY COMPLIANCEDNR, EPA AND OSHA Requirements: If you think you are exempt, think again. This course will be beneficial to dealers who have service departments, body shops and those who have a used motor vehicle dealer license coupled with a recycler’s license. If you have employees, you will want to become better aware of these state and federal compliance issues. Updates from the Iowa Department of Transportation, the Consumer Protection Division of the Iowa Attorney General’s office and other state and federal agencies will be reviewed.

Class locations, times and course numbers will be posted on the IIADA website (www.iowaiada.com) and will be included in Street Smart magazine throughout 2012.

Weather could be a factor, so please listen to local radio stations to insure the class will be held.

If you arrive more than 15 minutes late, the community college may ask that you register for a future class.

If you have any special needs, please let the community college know when you register for a class. You may bring an interpreter to class, but please let the college know you will be doing so.

Registration: Dealers will be asked to provide the following information: the class name and section number, and the participant’s social security number, date of birth, name, address, phone number, email address and credit card information. Prepayment is required. Most colleges accept VISA, Mastercard, Discover and American Express.

Fees: The five-hour continuing education class cost is $159, which includes an updated manual.

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ADVANCED BUSINESS PRODUCTS, INC. Printing, Promotional Products, & WearablesContact: Scott Jayne PO Box 71547 Des Moines IA 50325Phone: 515-225-6343Toll Free: 888-464-2274Fax: 515-225-6510Toll Free Fax: 877-987-3514Website: www.go4abpi.com

ASHTON BONDING AGENCY7505 NE Ambassador Place, Suite APortland, OR 97220800-452-2663503-253-1353 (fax)[email protected]

ASSOCIATIONS MARKETING GROUP INCHealth Insurance Jesse Patton1112 Maple StreetWest Des Moines, Iowa 50265Toll Free: 800-798-6772Phone: 515-270-8178 Fax: 515-270-0398E-mail: [email protected]

AUTO OWNERS INSURANCE 10% DISCOUNT TO ALL IIADA MEMBERSCorcoran & Associates, Inc.Mick and Teresa Corcoran2525 E. Euclid, Suite 102Des Moines, Iowa 50317Phone: 515-262-3141Fax: 515-262-3086Toll Free: 877-518-4051E-mail: [email protected]

AUTO OWNERS INSURANCEEASTERN BORDER OF IOWAAmy GoodnightLOHMAN COMPANIES3901 15TH STREET DMOLINE, IL 61265800-747-8431309-764-5967 (fax)[email protected]

AUTOJINI.COMWebsites for Dealers Contact: Syed Azam310 Main Street Ste 201Ames IA 50010Phone: 515-232-2024E-mail: [email protected]

AUTOMOTIVE DEVELOPMENT GROUP, LLCDealer Compliance Education,F & I Compliance and Training, ServiceContracts, GAP and Protective CoatingsContact: Scott Erikson100 Prairie Center Drive, Suite 200Eden Prairie, Minnesota 55344Scott: (402) [email protected]

CITIZENS COMMUNITY CREDIT UNION2012-1ST AVENUE SOUTHFORT DODGE, IOWA 50501Phone: 515-955-5524, Ext. 202Fax: 515-955-8241

CORCORAN & ASSOCIATES INC.Various Types of InsuranceContact: Teresa Corcoran18-2nd St., N.E.Mason City, Iowa 50401Phone: 877-518-4051Phone: 515-262-3141Fax: 515-262-3086Email: [email protected]

CYCLONE AUTOMOTIVE TRAINING INC.F&I Training, Sales Training, Service Contracts, Rob Miller and Chris Hochstein515 N Jefferson Way Ste HIndianola IA 50125Phone: 515-962-0099 or 515-962-0100Fax: 515-961-8400Rob: 515-205-5900 cellChris: 515-205-5800 cellE-mail: [email protected]

FOLLOW-UP PLUS“Customers for Life”Repeat Sales, Referrals & Customer LoyaltyContact: Terry & Sue NewellP.O. Box 294Carthage IL 62321Ph: 888-353-2668Fax: 217-357-9076E-mail: [email protected]

FRAZER COMPUTING, INC.2564 W. Main St., P.O. Box 569Canton, New York 13617Phone: 888-963-5369Fax: 888-963-3366E-mail: [email protected] Rep: Mike Frazer -Dealer Management Software for Used Car Dealers

FRAZER COMPUTING, INC.Contact: Scott Erikson, Iowa Rep100 Prairie Center Drive, Suite 200Eden Prairie, Minnesota 55344Scott Erikson: [email protected]

GLOBE ACCEPTANCE INCSub-prime LenderContact: Sarah GrishamP.O. Box 65400West Des Moines, Iowa 50265Phone: [email protected] Website: www.GlobeAcceptance.com

GOLDSTAR GPS2093 20th Ave. S.E.DYERSVILLE, IOWA 52040PHONE: 866-655-8825 Ext. 120Fax: 866-655-8285Contact: Mark VanDykee-mail: [email protected]: www.goldstargps.com

GREATER IOWA CREDIT UNION1630 – 22nd StreetWest Des Moines, Iowa 50266-1407Gene Holtorf, Dealer Direct ManagerPh: 515-954-1666 F: [email protected]

INNOVATIVE DEALER SERVICES, INC.Dealer Software Management SystemsP.O. Box 23189Shawnee, Kansas 66283913-312-7344 – Ext. 11Fax: 810-821-1718Website: innovativedealer.comContact: Deems Peterson, Sales [email protected]

JR 5 TRANSPORTATIONTransport ServicesJohn Robinson, President1109 S.W. 63rd StreetDes Moines, Iowa 50312515-822-3447

NADA BOOKS Official Used Car Guides, Subscription Discounts, Annual Subscription through IIADA, Save $$ Contact IIADA at Phone: 641-755-4177E-mail: [email protected]

PROSOURCE FINANCE, LLC3126 1044th StreetUrbandale, Iowa 50322Jeff Rubino [email protected]

RELIABLE AUTO FINANCE INC. 954 28th St. SWP.O. Box 9700Grand Rapids, MI 49509800-814-9294Brian [email protected]

REYNOLDS & REYNOLDS INC.Dealer BondsLong Term Care InsuranceVarious types of insuranceContact: Dean M Clark300 Walnut Street Ste 200Des Moines IA 50309Phone: 515-243-1724Toll Free: 800-767-1724Fax: 515-243-6664E-mail: [email protected]

S & C AUTOMOTIVE, INC.Service Contracts, GAP, Aftermarket ProductsSales & F & I Training thru Star Training Group3828-70th StreetUrbandale, Iowa 50322515-276-9622800-776-9622515-276-8472 (fax)e-mail: [email protected]: www.scautoia.com Contact: Doug Eckhart

SECURITY AUTO LOANS (SAL)Sub-prime LenderContact: Scott Erikson/Joe Ruhland4900 Highway 169 N., Suite 205New Hope, Minnesota 55428P: 763-559-5892F: 763-559-7549website: www.securityal.com Scott: 402-639-0664e-mail:[email protected]: 612-804-0720e-mail: [email protected]

SMARTAUCTIONMatthew Mohler4300 SW Cambridge AvenueTopeka, Kansas [email protected] Iowa Rep: Seth Fair [email protected] 515-777-4592

WILSON DISTRIBUTOR SERVICE IIADA DEALER CAP FORMSCar Brite Products Forms, Detail Supplies, Equipment & More Jason & Lisa Goody 105 N McCoy Mt. Pleasant IA 52641Phone: 800-634-0974Fax: 319-385-2927 E-mail: [email protected]: www.wds-usa.com

ZURICH Garage Keepers, Property, Garage Liability Dealer Bonds7045 College Blvd.Overland Park, Kansas 66211Michael Novak – Western Iowa [email protected], Ext. 3909Scot Smith – Eastern Iowa [email protected] Free: 800-840-8842, Ext. 3944

APPROVED MEMBER BENEFIT PROVIDERS

CODE OF ETHICS We will have a general duty of integrity, honor and fair dealing toward the general public.

We will comply with all city, county, state and federal laws and shall endeavor to keep ourselves informed of those laws governing our business.

We will not intentionally injure the business reputation of another member or competitor. We will employ truth and accuracy in advertising and selling.

We will stand behind any guarantee given with the sale of a motor vehicle.

We will not perform any act which would bring disrepute to the motor vehicle industry.

We will expose or halt, where found, any scheme designed to deceive or defraud the automobile buying public and aid in prosecuting those guilty of such acts.

We will constantly strive to improve business methods to the end that the public will be better served.

We will encourage the American system of free enterprise.

MISSION STATEMENT The mission of the National Independent Automobile Dealers Association, the only national not-for-profit organization representing the independent motor vehicle industry, is to promote, educate and advance the independent motor vehicle dealer by: • Accumulating, processing and

disseminating information relative to the motor vehicle industry;

• Developing, compiling and providing to the consumer, information which will promote a better understanding of the independent motor vehicle dealers’ place in the economy;

• Providing relevant information to regulatory and lawmaking bodies so that they may have a better understanding of the possible effects of proposed laws, rules and regulations on the consumer and the motor vehicle industry;

• Assisting in the promotion and organization of local, state or regional independent motor vehicle dealer associations; and

• Anticipating, recognizing and responding to current and future issues and needs of the independent motor vehicle industry and the consumer.

HISTORY OF NIADANIADA was founded in 1946 to lobby for the repeal of rationing of tires and automotive parts after World War II. The efforts put forward by the organization under the leadership of founding President Charlie Hillard resulted in the successful repealing of those wartime restrictions by the end of 1947. To learn more about NIADA’s history, visit http://www.niada.com/about.php.

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“played a significant and causative role in perpetrating a fraud against [the creditor] by inducing it to make a loan that it would not otherwise have made.” See In re Russell (Astera Credit Union v. Russell), 2012 Bankr. LEXIS 233 (Bankr. W.D. Mich. January 25, 2012).

California law could not be applied to nationwide class alleging misleading advertising in connection with collision avoidance technology: An individual and his wife bought a vehicle from a dealer that included a collision mitigation braking system. The manufacturer promoted the system in various ways. The couple filed a class action complaint against the manufacturer, claiming the manufacturer violated California’s Unfair Competition Law, False Advertising Law and Consumer Legal Remedies Act because it did not warn consumers that the system’s three-step warning process might overlap, the system might not warn driver in time to avoid an accident and the system shuts off in bad weather.

The couple moved to certify a nationwide class of all consumers who purchased or leased vehicles with the system during a three-year period. The trial court certified the class, but the U.S. Court of Appeals for the Ninth Circuit reversed, holding that because the laws of multiple jurisdictions would apply, variances in those state laws would overwhelm common issues and preclude predominance for a nationwide class. See Mazza v. American Honda Motor Company, Inc., 2012 U.S. App. LEXIS 626 (9th Cir. (C.D. Cal.) January 12, 2012).

California law requires creditor to state monthly payments, late fees and enforcement fee in notice of intent to sell for reinstatement purposes: After an individual defaulted on his vehicle retail installment contract, the assignee of the contract repossessed and sold the vehicle. The individual sued the assignee in the U.S. District Court for the Southern District of California, alleging that it violated, among other things, California’s Unfair Competition Law. Specifically, the individual claimed the notice of intent to sell the vehicle did not include all of the conditions precedent to reinstatement of the contract, as required under California’s Automobile Sales Finance Act.

The court found the monthly payments and late fees were conditions precedent to reinstatement and the assignee should have known those amounts and should have included them in the notice. The court further found that payment of the law enforcement fee was necessary for the individual to regain possession of his vehicle because, even though the fee was not a fee payable to the assignee, the individual would not have reinstated the contract without also wanting possession of his vehicle. Therefore, the court determined payment of the law enforcement fee was a condition precedent to reinstatement as well. See Aho v. Americredit Financial Services, Inc., 2012 U.S. Dist LEXIS 11000 (S.D. Cal. January 31, 2012).

Assignee not identified as lien holder on title had the right to repossess vehicle: An individual bought a car with a loan from a bank. The car title documents identified the bank as the lien holder. The bank sold the loan under a master loan purchase and sale agreement. Under that agreement, all of the bank’s interest in the loan and the vehicle collateral passed to the loan buyer when the buyer paid the bank the purchase price for the loan.

When the individual defaulted on the loan, the loan buyer repossessed the car. The individual sued for return of the vehicle and also alleged the loan buyer violated the Ohio Consumer Sales Practices Act. The trial court dismissed the case, and the Court of Appeals of Ohio affirmed.

The individual argued Ohio’s vehicle title law required a secured party to note its lien on the title documents, and because the loan buyer never changed the title documents to identify itself as the lien holder, it did not have a right to repossess the car. The appellate court disagreed, noting that because the bank transferred its security interest to the loan buyer pursuant to the Uniform Commercial Code, the buyer owned the security interest and had the right to repossess the car. See Gati v. Americredit Financial, 2012 Ohio App. LEXIS 309 (Ohio App. February 2, 2012).

So there you have it! Stay legal, and we’ll see you next month.

BY THOMAS B. HUDSON AND NICOLE FRUSH MUNROTOM ([email protected]) AND NIKKI ([email protected]) ARE PARTNERS IN THE LAW FIRM OF HUDSON COOK, LLC. TOM IS THE AUTHOR OF SEVERAL BOOKS, AVAILABLE AT WWW.COUNSELORLIBRARY.COM. TOM IS ALSO THE PUBLISHER OF SPOT DELIVERY®, A MONTHLY LEGAL NEWSLETTER FOR AUTO DEALERS, AND THE EDITOR IN CHIEF OF CARLAW®, A MONTHLY REPORT OF LEGAL DEVELOPMENTS IN ALL STATES FOR THE AUTO FINANCE AND LEASING INDUSTRY. NIKKI IS A CONTRIBUTING AUTHOR TO THE F&I LEGAL DESK BOOK AND FREQUENTLY WRITES FOR SPOT DELIVERY. SPOT DELIVERY, CARLAW AND THE BOOKS ARE PRODUCED BY COUNSELORLIBRARY.COM LLC. FOR INFORMATION, CALL 410-865-5411 OR VISIT WWW.COUNSELORLIBRARY.COM. COPYRIGHT COUNSELORLIBRARY.COM 2011, ALL RIGHTS RESERVED. SINGLE PUBLICATION RIGHTS ONLY, TO THE ASSOCIATION. (1/12) HC# 4829-1372-1870.


The CARLAWYER ©

Many Sheriffs Create Regulatory Uncertainty

Remember when the Dodd-Frank bill was being debated in Congress and we all hoped motor vehicle dealers would be exempt from the oversight of the new sheriff – the Consumer Financial Protection Bureau (CFPB)?

Be careful what you wish for. You just might get it. As you know, a “dealer exclusion” was included in the Dodd-

Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act). Ironically, the dealer exclusion might only increase industry regulatory oversight and add compliance uncertainty.

Under Section 1029 of the Dodd-Frank Act, the CFPB may not exercise regulatory supervision or enforcement authority over “a motor vehicle dealer that is predominantly engaged in the sale and servicing of motor vehicles, the leasing and servicing of motor vehicles, or both.”

An exception to the exclusion is that the CFPB does have authority over businesses that provide “the extension of retail credit or leases involving motor vehicles,” retail credit or retail leases “directly to consumers” and a contract covering the retail sale or lease that is “not routinely assigned to an unaffiliated third-party finance or leasing source.”

The exclusion and exceptions can be a bit confusing, but the net result is that the CFPB has regulatory authority over Buy Here-Pay Here dealers. And even dealers who do not consider themselves to be Buy Here-Pay Here might be regulated by the CFPB if they are assigning contracts to an affiliated third-party finance or leasing source, or if they are not “routinely” assigning contracts to an unaffiliated third party. If you assign some contracts and hold others, there might be some uncertainty about whether you are regulated by the CFPB.

The CFPB authority leaves us with a framework in which some auto dealers are regulated by the CFPB and the rest are regulated by the Federal Trade Commission (FTC). That means that in spite of the “dealer exclusion,” we have two sheriffs in town.

The two federal regulators have promised to work together, but the regulatory framework itself could create obstacles. For example, the CFPB now has rulemaking authority for a number of consumer financial protection laws formerly granted to several federal agencies, including the Truth in Lending Regulation Z and Consumer Leasing Regulation M. In republishing these regulations, the CFPB made it clear that they applied “except with respect to persons excluded from the bureau’s rulemaking authority by section 1029 of the Dodd-Frank Act.“ That is a clear reminder that CFPB enforcement authority of Regulations Z and M are technically separate from the enforcement authority of the FTC.

Dodd-Frank also authorized states to enforce certain federal consumer protection laws. The concern is that might result in local differences in interpretation and enforcement of federal requirements. So essentially, there are now three sheriffs in town.

Over time, rules, regulations and interpretations will be published providing clarification on the scope and limits of authority assigned to those three. But for now, we need to deal with the regulatory uncertainty as best we can.

It is helpful to keep in mind that the various regulating authorities are trying to protect consumers from unfair and unscrupulous consumer credit transactions. The best practices for these times apply in all situations – be clear, be transparent and be honest in your sales and financing transactions. That should help you satisfy the spirit and intentions of all but the most technical standards of any regulator.

BY CHIP ZYVOLOSKIChip Zyvoloski is a senior attorney for indirect lending at Wolters Kluwer

Financial Services.

For more information, visit www.wolterskluwerfs.com/indirect.

ComplianceOverdrive

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Many Sheriffs Create Regulatory Uncertainty

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