Iowa Street Smart

ALSO IIADA Wants Your OpinionPLUS The CarLawyer

NAAA: AUCTION INDUSTRY REPORT

STREET SMARTI 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

D

ECEM

BER

2010

PRSRT StandardU.S. Postage

PAIDDALLAS, TEXASPermit No. 2079

V I S I T U S A T W W W . I O W A I A D A . C O M

Season’sGreetings

IA_1210.indd 1 11/19/10 12:37 PM

IA_1210.indd 2 11/19/10 12:37 PM

DECEMBER 2010 S T R E E T S M A R T

3

w w w . i o w a i a d a . c o m

IA_1210.indd 3 11/22/10 1:01 PM

S T R E E T S M A R T DECEMBER 2010 w w w . i o w a i a d a . c o m

OCTOBER/NOVEMBER 2010 S T R E E T S M A R Tw w w . i o w a i a d a . c o m

15

Cars.com dealers using the com-pany’s free online chat functionalitycan now communicate with cus-tomers from their Internet-enabledsmartphones. The company added on-the-go access to its chat platform to cre-ate new opportunities for dealers toconnect with buyers.“Mobile chat allows salespeople to be

more responsive to shoppers' inquiries,even if they've stepped away from theirdesk," said Michael Page, Cars.com vicepresident of advertising products. "Deal-ers can respond at shoppers' convenience,giving them the information they need totake the next step toward a purchase.Withthe popularity of smartphones in the store,dealers can use this capability to enhancetheir customer service and sell more cars."At Buster Miles Chevrolet Dealership

in Heflin,Ala., sales consultant PhilAma-

son said he appreciates the immediacy ofchat. "It’s definitely been a plus for ourstore. It’s a better way for customers toreach us live and for us to respond. Theyget immediate access to the informationthey need, and I think that’s really key.”Amason, who added online chat about

a year ago, reported an increase in busi-ness after he began testing the new mo-bile chat enhancement. “I was able toaccept two chats last month that I wouldnot have been available for if it weren't formobile chat. I know this resulted in twosales. They were two hard, trackablesales," he said. “In my experience, ap-pointment rates are higher with live chatcompared to traditional email and phoneappointments. There seems to be a betterquality interaction because of minimaldelay in response."

Dealers interested in adding chat func-tionality to their online advertising pack-age can contact their sales representative.To help dealership sales teams incorporatechat into their sales process, Cars.compresented “Chat Up Your Inventory:Leverage Chat to Reach In-Market Shop-pers and Win Sales" through its Dealer-ADvantage Live webinar series. Arecording of the free workshop is avail-able at http://dealers.cars.com/live.Cars.com launched online chat for its

customers in January 2009 at no addi-tional charge as a way to help dealers con-nect with more online shoppers. Thetechnology is delivered through a part-nership with Contact At Once! Mobilechat capabilities are made available aspart of a renewed agreement, also an-nounced today, between the two compa-nies.

TO MOBILE DEVICES TO HELP DEALERS CONNECT WITH SHOPPERSCars.com Extends Online Chat

WILSON DISTRIBUTOR SERVICEIIADA DEALER CAP FORMSCar Brite ProductsForms, Detail Supplies, Equipment & MoreJason & Lisa Goody105 N McCoyMt. Pleasant IA 52641Phone: 800-634-0974Fax: 319-385-2927E-mail: [email protected]: www.wds-usa.com

AUTO OWNERS INSURANCE10% 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]

ASSOCIATIONS MARKETING GROUP INCHealth InsuranceJesse Patton1112 Maple StreetWest Des Moines, Iowa 50265Toll Free: 800-798-6772Phone: 515-270-8178Fax: 515-270-0398E-mail: [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 or515-962-0100Fax: 515-961-8400Rob: 515-205-5900 cellChris: 515-205-5800 cellE-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.sandcsales.comContact: Doug Eckhart

NADA BOOKSOfficial Used Car Guides, Subscription Discounts,Annual Subscription through IIADA, Save $$Contact IIADA atPhone: 641-755-4177E-mail: [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]

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

ZURICHGarage Keepers, Property, Garage LiabilityDealer Bonds7045 College Blvd.Overland Park, Kansas 66211Jeff Severino, Regional Sales ManagerPhone: 913-664-3944Fax: 913-498-5521Toll Free: 800-840-8842, Ext. 3944

GLOBE ACCEPTANCE INCSub-prime LenderContact: Sarah GrishamP.O. Box 65400West Des Moines, Iowa 50265Phone: 515-225-9067E-mail: [email protected]: www.GlobeAcceptance.com

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.comScott: 402-639-0664e-mail:[email protected]: 612-804-0720e-mail: [email protected]

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

CORCORAN & ASSOCIATES INC.Various Types of InsuranceContact: Mick Corcoran,Janet Solberg or Donna Torkelson18 – 2nd Street, N.E.Mason City, Iowa 50401Phone: 866-494-1814Fax: 641-494-1819E-mail: [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 ManagerE-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]

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

MICROBILT CORPORATIONCredit Reports From Equifax, Experian andTrans Union; Employment BackgroundScreening; Driver’s License & MotorVehicle Searches

111 Butler StreetLexington, South Carolina 29072Contact: Randy Mosteller866-277-7707randy_mosteller@microbilt.comwww.microbilt.com

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]

MONSTERLOT.NETAutomotive Development Group, LLCDealer to Dealer Inventory /Trading and sharingFree Unlimited Web Accesswww.MonsterLot.netE-mail: [email protected]: Scott Erikson402-639-0664

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

CHASE CUSTOM FINANCEChase Auto Finance1800 S. Naperville RoadWheaton, Illinois 60189Christopher ComptonAssistant [email protected]

SMARTAUCTIONMatthew Mohler4300 SW Cambridge AvenueTopeka, Kansas [email protected]

IIADA APPROVED MEMBER BENEFIT PROVIDERS

IA_1010.qxd:Layout 1 11/19/10 12:20 PM Page 15

4

By David Angelicchio >>

2011 FEBRUARY 22 - DES MOINES AREA COMMUNITY COLLEGE

F EBRUARY 23 - IND IAN H I L LS COMMUNITY COLLEGE

MARCH 10 - K IRKWOOD COMMUNITY COLLEGE

MARCH 16 - IOWA WESTERN COMMUNITY COLLEGE

MARCH 24 - NORTHEAST IOWA COMMUNITY COLLEGE -CALMAR

APR I L 19 - DES MOINES AREA COMMUNITY COLLEGE

View the Biodiesel Education Calendar at www.onesourcetraining.com

BIODIESEL EDUCATION CLASSES There are some misconceptions about

biodiesel fuel. It is a clean-burning alter-native fuel, produced from domestic, re-newable resources. Biodiesel is simple to use, biodegradable, nontoxic and es-sentially free of sulfur and aromatics. The community colleges are offering a 3-hour education class in cooperation with the

Iowa Biodiesel Board.This course is in the approval process

with the National Automotive Technicians Education Foundation (NATEF) to qualify as an ASE Certified Training Provider of Continuing Automotive Service Education (CASE).

Classes are offered in the evenings

along with a meal, the workshop will up-date you about biodiesel and its clean per-formance in diesel engines.

Iowa’s 15 community colleges in part-nership with Iowa Biodiesel Board are of-fering FREE workshops this coming spring. Take advantage of this opportunity to at-tend at NO COST.

IA_1210.indd 4 11/19/10 12:37 PM

IA_1210.indd 5 11/19/10 12:37 PM

S T R E E T S M A R T DECEMBER 2010

6


WHAT DO YOU THINK?1. Iowa Code 321.50 states the holder of a security interest, dis-charged by payment, who fails to release the security interest within fifteen (15) days after being requested in writing to do so shall forfeit to the person making the payment the sum of $25.

DO YOU THINK LIEN HOLDERS NEED TO BE MORE PROMPT IN SENDING TITLES TO DEALERS/CUSTOMERS AFTER PAY OFFS. YES _________ NO _________ DO YOU THINK PENALTIES SHOULD BE INCREASED? YES ____ NO___IF YES, WHAT WOULD YOU SUGGEST? ____________

2. Many states have raised the fees for dealer licenses. Iowa currently is at $70 for the license and $70 for the registration or a total of $140 to obtain an Iowa motor vehicle dealer license. Do you think this fee should be increased? YES ______ NO_____

If yes, what would you suggest? $300 $500 $750 $1,000 OR $_______________

3. Iowa dealer plates cost $ 40 each. Do you think this fee should be increased? Yes _____ No ______ If yes, what would you suggest dealer plate fees be? $ _________________

4. Dealer Bonds. Currently those who are licensed motor vehicle dealers in Iowa are required to hold a $ 50,000 surety bond. Do you think this is an adequate amount or should it be increased? Adequate ____ Increase it to ______________

5. Currently Iowa dealers are required to county plate and register pickups used to tow trailers. This process is inclusive of paying the “fee for new registration” (use tax) on the pickup. Do you think a dealer should be allowed to county plate and register their pickup without paying the use tax for a period of90 days? YES ___________ NO ______________

6. Suggestions or comments you would like to make:

PLEASE RETURN TO IIADA, 409 EAST MARKET ST., P.O. BOX 337, PANORA, IOWA 50216, 641-755-4177, E-MAIL [email protected],

FAX 641-755-3247.

IA_1210.indd 6 11/22/10 12:54 PM


7

w w w . n i a d a . c o m

IA_1210.indd 7 11/19/10 12:38 PM


8

Current dealer licenses and plates expire on Dec. 31, 2010. Any old dealer plates still in use after Dec. 31, 2010, should be destroyed to avoid action by law enforcement.

The DOT Office of Vehicle Services sent renewal notices in September 2010 and is processing dealer license renewal applications. To be guaranteed your new dealer plates, the DOT asked that dealers submit their renewal application early in November. If you do not send in your renewal application you may not receive your new dealer plates by Jan. 1, 2011. HOWEVER, you will be sent temporary dealer plates until your metal plates are sent to you.

PLEASE DO NOT USE YOUR NEW METAL DEALER PLATES UNTIL 1/1/2011 AND DESTROY YOUR OLD DEALER PLATES AS THESE ARE NOT VALID AFTER 12/31/10

MOTOR VEHICLE ENFORCEMENT CORNERIOWA DEPARTMENT OF TRANSPORTATION

INTERNET SALES The use of the Internet has proven an effective way to buy and sell cars both

for licensed motor vehicle dealers and for the general public. The Internet will not go away anytime soon and we anticipate a continued increase in the use of the internet for motor vehicle transactions. While the internet is a great tool, it also brings about issues with regard to how licensed dealers use it to offer vehicles for sale.

To summarize Iowa law, Iowa Code section 322.3(11) states a licensed dealer shall not sell, offer for sale, display, represent, or advertise they intend to sell vehicles from a location other than their licensed location. Iowa Code section 321.104(2) states a dealer shall not hold or display for sale a motor vehicle with-out having obtained a title for the vehicle, unless allowed by law.

If a licensed dealer has a motor vehicle offered for sale on the Internet, the motor vehicle title must properly show this dealer as the owner. Also, this ve-hicle can only be physically displayed and offered for sale at the licensed loca-tion of the specific dealer who is offering the vehicle for sale on the Internet. Retail brokering and retail consignment selling of motor vehicles is not allowed in Iowa. This applies to all motor vehicle sales including salvage titled vehicles.

If you have questions regarding motor vehicle dealer license regulations, please contact the Office of Motor Vehicle Enforcement, Investigative Unit, at 866-908-4636.

RENEWAL OF DEALER LICENSES AND PLATES

NIADA has unveiled a brand new website that’s easy to navigate and offers many new technologically-advanced features for dealer members. Among them:

• The entire NIADA membership roster is now included on the home page via a state map.

• All state magazines published by NIADA can now be viewed inclusive of advertisements. The magazines also will be archived on the site. Plus, those same state associations will have direct links from their websites to our site promoting readership of their particular state magazine. To view these magazines go to http://www.niada.com/state_magazines.php

• NIADA National Corporate Partners (NCP) will now have the ability to add a company or product-specific video next to their NCP description.

• NIADA’s new dealer social network will be unveiled early 2011.

NIADA.COM ALL NEW FOR YOU!

IA_1210.indd 8 11/19/10 12:38 PM

IA_1210.indd 9 11/19/10 12:38 PM

S T R E E T S M A R T DECEMBER 2010

10


ECONOMY: SLOWDOWN?The recovery started strong as businesses re-

built inventories after slashing them to extremely low levels in anticipation of a worse recession than actually occurred. This is typical during business cycles, as firms do not know how bad things will get and overreact to protect them-selves against the worst. Then economic growth slowed as inventories were brought into balance with sales. A slowdown in growth at this stage of the recovery also is fairly typical, as the growth driver moves from inventory building to housing, consumer spending, and business investment.

While consumer spending has not been as robust as in some past recoveries, it has been growing at a modest pace and business investment has been relatively strong. Lack of growth in housing, re-lated to the extreme amount of overbuilding that was a major cause of the recession, has been a significant factor holding this recovery back. In addition, the uncertainty associated with the election, taxes, and health care appears to be lim-iting employment gains to less than what would be expected with recent real GDP growth.

As the uncertainty dissipates after the election and decisions on taxes and health care are made,

we should see a pickup in hiring and a decline in the unemployment rate. If this does not occur, the Federal Reserve is ready to provide more stimulus and, whatever the election results, poli-ticians will act if the unemployment rate stays close to 10 percent. With less uncertainty and the beginning of a true housing recovery next year, we expect real GDP growth to average around 3-4 percent during the next two years.

NEW VEHICLE SALES: SALES GAINS CONTINUE!

Third-quarter 2010 new light vehicle sales came in at an annual rate of 11.6 million units, the highest quarterly total in two years. On a year-over-year basis, the third quarter gain was only 0.6 percent above the Cash for Clunkers-boosted third-quarter 2009 sales rate. New light vehicle sales have recovered sharply from the 9.5 million rate in the first half of 2009. How-ever, we will not likely see the 16 million rate the industry averaged from 1994 to 2007 until the unemployment rate moves down to around 6 percent (probably not before 2014).

USED VEHICLE SALES: SALES FLAT!Third quarter 2010 used vehicle sales were

flat with last year as September sales fell 5.6 per-cent after being up 3.6 percent in the first half.

AUCTION VOLUME: VOLUME WEAK!Auction volume continued declining in the

third quarter at about the same rate as in the first half, as a small gain in dealer consignment was not enough to offset large declines in the fleet/

National Auto Auction Association Auction Industry Report

IA_1210.indd 10 11/19/10 12:38 PM


11


lease and manufacturer/factory categories.Since Prices were flat with last year in the

third quarter, gross value declined at about the same rate as volume

Regions: Third quarter volume in the North-east was relatively stronger than in the other regions for the second quarter in a row. Unit volume in the Southeast and North Central were both down double-digit in the third quarter.

TYPE: Dealer consignment volume was only up 0.8 percent in the third quarter, the only sales type with an increase in each of the last three quarters. Reflecting weak past new sales, fleet/lease and manufacturer/factory volume declined in the third quarter by 17.2 percent and 25.5 percent respectively. The improving economy continued to result in reduced repos with a 24 percent decline in the third quarter, after a 32 percent increase in 2009.

SEGMENT: Although declining in the third quarter, CUVs and passenger cars continued to be relatively strong, while other segments were down sharply.

AUCTION PRICE: NO INCREASE!After five quarters of year-to-year increases

in the 4-10 percent range, auction prices in the third quarter were flat with last year. Year-to-date auction prices are still up 4.2 percent. The move up in auction and used car prices over the past year has brought the relationship between used and new car prices to a point where buyers see less benefit in buying a used car versus a new car - - putting a cap on used retail and auction price inflation.

3rd quarterNational Auto Auction Association Auction Industry Report

Source: AuctionNet from NADAAuction data come from a number of different sources and may not always appear to be consistent. In order to provide the most useful and up-to-date information about the industry, we utilize data from the most appropriate sources and provide you with the underlying implications. Due to their relatively small size and volatility, certain sales types are not included in the above table.

IA_1210.indd 11 11/19/10 12:38 PM


12

Welcome back to our monthly collec-tion of selected legislative and regulato-ry highlights, and a recap of some of the many auto sale and financing suits we track each month. As September passes into October, things usually start stirring in Wash-ington, D.C., and in the state capitals. This year is no different…

Remember, what we report here is not every re-cent development, just ones that we think are of particular interest to car dealers - and note this col-umn doesn’t offer legal advice. You need to 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 devel-opments and trends. Also, another state’s laws might be a lot like your own state’s laws – if new laws are being enacted there, or AGs or plaintiffs’ lawyers are pursuing particular types of claims, those laws and claims might soon ap-pear 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 LawDodd-Frank News. The Treasury Secre-

tary has announced July 21, 2011, as the des-ignated transfer date for various transitions to the Bureau of Consumer Financial Protection (“BCFP”) under the Dodd-Frank Wall Street Reform and Consumer Protection Act. The des-ignated transfer date will occur exactly a year after President Obama signed Dodd-Frank into law. On the designated transfer date, consumer financial protection functions of several federal agencies, including banking agencies and the Federal Trade Commission will transfer to the bureau, and other provisions of Dodd-Frank take effect.

On September 17, President Obama an-nounced the appointment of Elizabeth Warren to serve as assistant to the president and special advisor to the secretary of the Treasury on the BCFP. The Dodd-Frank Act gives the Treasury Department the authority to establish the bureau. In a blog post after the announcement, Warren stated “(t)he new consumer bureau is based on a pretty simple idea: people ought to be able to read their credit card and mortgage contracts and know the deal. They shouldn’t learn about an unfair rule or practice only when it bites them - way too late for them to do anything about it. The new law creates a chance to put a tough cop on the beat and provide real accountability and oversight of the consumer credit market. The time for hiding tricks and traps in the fine print is over. This new bureau is based on the simple idea that if the playing field is level and families can see what’s going on, they will have better tools to make better choices.”

Faxing Can be Dangerous. On September 16, the Federal Communications Commission issued eight forfeiture orders, totaling more than $3 million, against several companies for delivering unsolicited advertisements to the fax machines of others. You might want to put your fax machine under lock and key, unless you just like writing checks to the feds.

Looking for Fraud. The FTC also announced on August 31 it is seeking public comment on a planned survey on the prevalence of consumer fraud in the U.S., following two previous sur-veys conducted in 2003 and 2005. The results will help the agency determine the incidence of consumer fraud and whether the type and fre-quency of consumer fraud is changing.

State Legislative and Regulatory Developments

Clarifications from the Hawkeye State. The Iowa Transportation Department amended or re-scinded various rules concerning vehicle regis-tration and certificates of title, special registra-tion plates, salvage, driver’s privacy protection, and vehicle and travel trailer dealers, manufac-turers, distributors and wholesalers to conform to recent legislation, to clarify and streamline procedures, and to clean up and clarify rules.

Airbag News from the Ocean State. Rhode Island SB 2514 establishes penalties for fraudu-lent installation or reinstallation of an airbag in a vehicle and provides for certain requirements and disclosures regarding airbags when a ve-hicle is manufactured, sold, or in an accident.

Plain Talk from the Lone Star State. The Texas Office of Consumer Credit Commissioner made technical corrections to its rules on plain language contract provisions. The OCCC also amended its rules on files and records required for retail sellers collecting installments on retail installment sales contracts to return inadvertent-ly omitted language (two lists concerning pay-ment history information and collection contact history) to the required account record informa-tion outlined in §84.708(e)(3)(A).

Business Taxes in the Old Dominion. Vir-ginia AG Ken Cuccinelli released an opinion on August 24th concluding that liability for pay-ment of business, professional, and occupation-al license (“BPOL”) taxes always lies with the persons engaged in businesses, professions, or occupations upon which localities levy the tax-es, and not with their customers. Absent an ex-press statutory authorization such as that apply-ing to motor vehicle dealers, no business may pass through to its customers by way of a sur-charge the BPOL taxes attributable to the gross receipts generated by sales to those customers without the surcharge also being included in the gross receipts of the business and subjected to the BPOL tax.

LitigationDebtor Entitled to Seek Statutory Damages

and Protection from Deficiency Judgment Un-der Kansas Law: After a creditor repossessed and sold a buyer’s car for nonpayment, the buyer sued the creditor, claiming it violated the Missouri Commercial Code by failing to pro-vide him with a required notice before the sale, violated the Missouri Merchandising Practices Act, and was liable for conversion. The buyer sought to prohibit the creditor from collecting a deficiency balance, and also sought damages. The creditor moved for summary judgment. The court denied the motion. The creditor argued the buyer could not recover both statutory damages and prohibit the creditor from obtaining a defi-ciency judgment. The court determined the Kan-sas Uniform Consumer Credit Code, applicable because the sale took place in Kansas, prohibits a creditor that violates the UCCC from seeking a deficiency judgment, and the UCC provides for statutory damages in certain transactions. The court noted because there is no conflict be-tween those two remedies, both remedies could apply. See Hopkins v. Kansas Teachers Com-munity Credit Union, 2010 U.S. Dist. LEXIS 86947 (W.D. Mo. August 24, 2010).

Creditor Must Provide Notice of Reinstate-ment When Debtor Voluntarily Surrenders Car: An individual voluntarily surrendered two cars to the secured creditor when he could no longer afford the payments. The creditor sent the individual a repossession notice, as required by the Pennsylvania Motor Vehicle Sales Finance Act, but the notice did not contain information about his right to reinstate. The individual filed a class action, claiming the repo notice was insuf-ficient because it did not notify him of his right to reinstate and the creditor misrepresented that he could get the cars back only if he paid the full amount owed. The creditor moved for summary judgment, arguing under the MVSFA, it was not required to notify the individual of his reinstate-ment rights because he voluntarily surrendered the cars. The court denied the motion, finding the notice requirements under the MVSFA don’t depend on whether the individual’s car was forcefully seized or voluntarily surrendered. See Cosgrove v. Citizens Automobile Finance, Inc., 2010 U.S. Dist. LEXIS 88202 (E.D. Pa. August 26, 2010).

Spot Delivery Agreement Nullifies TILA Disclosures: An individual bought a used car and signed a retail installment sale contract and a spot delivery agreement. The spot deliv-ery agreement stated if the dealer was unable to find someone to purchase the RISC within 10 days, then either party could cancel the sale agreement. A few days later, the dealer invited the buyer back to the dealership and told him it was unable to sell the RISC and he would need

The C A R L AW Y E R©

IA_1210.indd 12 11/19/10 12:38 PM


13


The C A R L AW Y E R©By Thomas B. Hudson

and Nicole Frush Munro

to sign a new RISC, with higher payments, if he wanted to keep the car. The buyer signed the new RISC. Thereafter, he sued the dealer, alleging the dealer violated, among other stat-utes, the Truth in Lending Act, and asked the court to certify the action as a class action. The court certified a class. Both parties moved for summary judgment. The court granted sum-mary judgment to the buyer, deciding the spot delivery agreement nullified the RISC and rendered the TILA disclosures meaningless. The court was disturbed by the fact the spot delivery agreement was a stand-alone agree-ment, and not incorporated into the RISC it-self. See Salvagne v. Fairfield Ford, Inc., 2010 U.S. Dist. LEXIS 85098 (S.D. Ohio August 19, 2010).

Car Buyers’ Fraud Claim Against Deal-er Negated by Buyer’s Fraud: Car buyers claimed a dealership fraudulently induced them to enter into a contract to buy a second car after they learned the first car they bought had more miles than represented. The contract for the second car had a higher interest rate than the contract for the first car. The dealer-ship counterclaimed for fraud, claiming one of the buyers made up an employment history to boost his or her credit. The jury found the dealership fraudulently induced the buyers to enter into the second contract. The trial court then ruled the buyers engaged in their own fraud, preventing them from recovering on their fraudulent inducement claim. The Court of Appeals of Florida upheld the trial court’s ruling on the fraud in the inducement claim. The evidence showed, and the jury found, the buyers submitted false information on their credit application. The appellate court agreed the trial court could not condone those illegal acts and properly ruled against the buyers on their fraud claim. See Dorestin v. Hollywood Imports, Inc., 2010 Fla. App. LEXIS 12337 (Fla. App. August 11, 2010).

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

Tom ([email protected]) and Nikki ([email protected]) are partners in the law firm of Hudson Cook, LLC. Tom is the author of several books, are available at www.counselorli-brary.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 (not to be confused with the book). 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.counselorli-brary.com. Copyright CounselorLibrary.com 2010, all rights reserved. Single publication rights only, to the Association. (10/10). HC# 4813-5875-7639.

As we bring an end to 2010 and look forward to 2011, I would like to take this moment to wish everyone a Happy Holiday Season. Whether it was a good year, average year or an off year, it was a struggle for everyone. With the high auction prices and shorter numbers of units available, it was tough sledding to keep your inventories up and in line with price point marketing.

It’s looking like 2011 may be a repeat of 2010, so it means working a little harder and a lot smarter. This means working the auctions, the Internet, and the newspapers in an at-tempt to purchase inventory for your lot.

Make sure you get the customers to give you all the information you can because the right vehicle may show up two hours or two days later. If you don’t have the correct information, you won’t be selling that customer a vehicle. It all goes back to what I learned early in my selling career, if you start right, you will end right. If you start wrong, the outcome will usually be negative. It’s time to roll up our sleeves and get to work.

Good luck and happy selling!Doug LivyIIADA President

President’s Letter

IA_1210.indd 13 11/19/10 12:38 PM


14

IA_1210.indd 14 11/19/10 12:38 PM

IA_1210.indd 15 11/19/10 12:38 PM

IA_1210.indd 16 11/19/10 12:38 PM

Documents

Iowa Street Smart