OK_0911_O

RENEWAL

DEALERS’ RESOURCEOklahoma Independent Automobile Dealers Association

In This Issue

Visit Us Online At www.e-oiada.com

It’s Time...

September 2011

• Bond and License Renewal Schedule• Servicemembers Civil Relief Act• Risk-Based Pricing Notices• Unfair and Deceptive Trade Practices

OIADA, P.O. Box 6905, Moore, OK 73153

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PAIDDALLAS, TEXASPermit No. 2079

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OIADA, P.O. Box 6905, Moore, OK 73153

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SEPTEMBER 2011 D E A L E R S ’ R E S O U R C E

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

INSIDE

OIADAOFFICE813 NORTHWEST 34TH MOORE, OK 73160EMAIL: [email protected]

ROSE & ODELL MORGAN, Executive DirectorsJACKIE GARNER, Office Manager

AMBER SNOOK, Administrative AssistantJARED MORGAN, Electronics/Software Technician

LYNNA KAY, ProgrammerSTEVE MORGAN, ConsultantMIKE MORGAN,Technical Aide

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]’ RESOURCE IS A PUBLICATION OF AUTOMOTIVE DEAL-ERS RESOURCE OF OKLAHOMA (ADR) PRODUCED ON BEHALF OF THE OKLAHOMA INDEPENDENT AUTOMOBILE DEALERS AS-SOCIATION (OIADA), P.O. BOX 6905, MOORE, OK 73153. THE DEALERS’ RESOURCE IS PUBLISHED MONTHLY BY THE NATIONAL INDEPENDENT AUTOMOBILE DEALERS ASSOCIATION SERVICES CORPORATION. PERIODICAL POSTAGE PAID AT ARLINGTON, TX, AND AT ADDITIONAL OFFICES. POSTMASTER: SEND ADDRESS CHANGES TO OIADA, P.O. BOX 6905, MOORE, OK 73153. THE STATEMENTS AND OPINIONS EXPRESSED HEREIN ARE THOSE OF THE INDIVIDUAL AUTHORS AND DO NOT NECESSARILY REP-RESENT THE VIEWS OF ADR OF OKLAHOMA, THE OKLAHOMA INDEPENDENT AUTOMOBILE DEALERS ASSOCIATION OR THE NATIONAL INDEPENDENT AUTOMOBILE DEALERS ASSOCIA-TION. LIKEWISE, THE APPEARANCE OF ADVERTISERS, OR THEIR IDENTIFICATION AS MEMBERS OF OIADA OR NIADA DOES NOT CONSTITUTE AN ENDORSEMENT OF THE PRODUCTS OR SERVIC-ES FEATURED. COPYRIGHT © 2011 BY O&R MORGAN, INC. DBA OIADA. ALL RIGHTS RESERVED. DEALERS’ RESOURCE IS A PUBLI-CATION OF AUTOMOTIVE DEALERS RESOURCE OF OKLAHOMA ON BEHALF OF THE OKLAHOMA INDEPENDENT AUTOMOBILE DEALERS ASSOCIATION (OIADA), BUT IS MAILED TO ALL DEAL-ERS IN THE STATE IN AN EFFORT TO EDUCATE AND ENCOUR-AGE NON-MEMBERS TO JOIN THE ASSOCIATION AND SUPPORT OUR EFFORTS TO IMPROVE THE IMAGE AND PROFIT POTENTIAL OF THE INDUSTRY. FOR 55 YEARS, WE HAVE WORKED TO REP-RESENT THE INDEPENDENT MOTOR VEHICLE DEALER IN OKLA-HOMA. WE NEED YOUR SUPPORT.FRONT COVER BY Mike MorganSTATE MAGAZINE MGR./SALES Troy Graff • [email protected] Mike Harbour • [email protected]/PRODUCTION MGR. Christy Haynes • [email protected] Nieman Printing

MAGAZINECONTENTS

ADVERTISERSINDEX71B Auto Auction ............................................13ADESA .............................................................17Albright Insurance .............................................. 7AutoTrader.com .................................................. 5Carco Group ...................................................15Cars.com ..................................Inside Back CoverChase................................................................22Dealer’s Auto Auction of OKC .......... Back CoverJordan Insurance ............................................... 9Leedom Group .................................................19Loftis Wetzel Insurance .....................................25Manheim.com .................................................. 24Manheim North Texas ........... Inside Front CoverProtective ..........................................................21SmartAuction ...................................................11United Acceptance ...........................................23

6 Unfair and Deceptive Trade Practices 10 Risk-Based Pricing Notices 12 Servicemembers Civil Relief Act 34 Bond and License Renewal Schedule

FOR INFORMATION ON HOW TO BECOME A MEMBER OF OIADA PLEASE CONTACT ROSE OR ODELL MORGAN AT 405-232-2947.

PRESIDENTChris GoadRegal Motors3515 N. MayOklahoma City, OK [email protected]

CHAIRMAN OF THE BOARDJohn EasttomAuto Mart of Elk CityP.O. Box 981Elk City, OK [email protected]

SECRETARY/ TREASURERBruce BeamDealers Auto Auction of OKC1028 S. PortlandOklahoma City, OK 73147405-947-2886www.daaokc.com

VICE PRESIDENTSJohn T. Longacre, IVTaft Motors, Inc.722 S. Linden St.Sapulpa, [email protected] Julian CoddingReliable Motors, Inc.9201 S. ShieldsOklahoma City, [email protected]

Monte ShockleyShockley Auto Sales2605 N. BroadwayPoteau, OK [email protected]

Glenn McDanielI-35 Credit Auto1113 SE 51st St.Oklahoma City, OK [email protected]

David McQuerryMcQuerry Motors, Inc.1302 N. Harrison St.Shawnee, OK [email protected]

OIADA BOARD OF DIRECTORS

Primary Number (OKC): 405-232-2947Toll Free: 800-346-4232

BUSY SIGNAL? The 405-232-2947 number is designed to roll over to any of four other lines in our office, but has recently not been working correctly. If you encounter a busy signal at the 232 number, please call the 800 number or any of the following:

405-799-7116

405-799-1113 405-799-8115 405-799-3759

For your convenience, we have recently added a toll free fax number: 877-804-3449.

OIADA CONTACT INFO

At its June 14 meeting, in accordance with staff recommendations, the Used Motor Vehicle and Parts Commission approved a consent agreement with one used vehicle dealer. Following an investigation by commission staff, Western Auto Connection agreed to pay a fine of $500 for late titles and unlicensed display.

Commission Fines Dealer

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5. 16 CFR Part 322—Mortgage Assistance Relief Services6. 16 CFR Part 425—Use of Prenotification Negative Option Plans7. 16 CFR Part 429—Rule Concerning Cooling-Off Period for Sales Made at Homes or at Certain Other Locations8. 16 CFR Part 433—Preservation of Consumers’ Claims and Defenses9. 16 CFR Part 444—Credit Practices10. 16 CFR Part 435—Mail or Telephone Order Merchandise11. 16 CFR Part 436—Disclosure Requirements and Prohibitions Concerning Franchising12. 16 CFR Part 437—Disclosure Requirements and Prohibitions Concerning Business Opportunities13. 16 CFR Subchapter F, Parts 603 et seq.—Fair Credit Reporting Act, except with respect to Part 681 (Identity Theft Rules), Part 682 (Disposal of Consumer Report Information and Records), & Appendix A to Part 681 (Interagency Guidelines on Identity Theft Detection, Prevention, and Mitigation)14. 16 CFR Part 901—Procedures for State Application for Exemption from the Provisions of the [Fair Debt Collection Practices] Act

It should be noted that, under Dodd-Frank, the FTC retains its authority to enforce Regulations B (Equal Credit Opportunity Act), E (Electronic Fund Transfers), M (Consumer L easing), and Z (Truth in Lending) regarding the entities within the FTC’s jurisdiction and was granted authority to enforce any CFBP rules. These include most providers of financial services that are not banks, thrifts and federal credit unions. In addition, Dodd-Frank gave the FTC new and expanded authority regarding motor vehicle dealers. The FTC retains its current law enforcement authority over dealers, although it will share that authority with the CFPB with respect to dealers engaged in certain practices. The FTC also obtains new authority to issue rules prohibiting unfair and deceptive acts and practices in connection with dealers.

We will keep you posted as events occur related to the CFPB. It is our hope many of these onerous rules related to dealers will be repealed or at least relaxed as events unfold.

Consumer Financial Protection Bureau Officially Opened

On July 21, the Consumer Financial Protection Bureau (CFPB) officially opened its doors, even

as House Republicans made effort to curtail the power of the new agency. Prior to establishment of the bureau by the Dodd-Frank Act, consumer financial protection had not been the primary focus of any federal agency, and no agency had authority to set the rules for and oversee the whole market. The consumer agency was created to consolidate consumer financial protection authorities that had existed across seven different federal agencies into one.

The same day the CFPB opened, the House approved a bill that would strengthen the veto power of the Financial Stability Oversight Council over the bureau’s decisions. The bill would also install a five-member commission rather than a single director to head the agency and delay transfer of powers to the new agency. The bill passed 241-173, largely supported by Republicans who have voiced concerns about the scope of the watchdog bureau. The bill stands little chance of survival in the Democrat-controlled Senate, however, and in spite of other ongoing efforts by Congressional Republicans, the bureau is moving ahead.

Under the interim leadership of Elizabeth Warren, the CFPB’s 500 employees have been publishing reports mandated by Dodd-Frank, issuing rules governing investigatory proceedings, meeting with banks and credit unions in all 50 states, and establishing formal relationships with other federal agencies. The bureau is still, however, awaiting a confirmation on a director. Without one, it is limited in some aspects of its authority. The President has named Ohio Attorney General Richard Cordray to replace Warren. Cordray faces confirmation hearings in the Senate.

On the designated transfer date, July 21, enforcement authority for a number of rules and orders issued under certain consumer laws transferred to the bureau. It also gained authority to enforce in some circumstances the Federal Trade Commission’s Telemarketing Sales Rule and its rules under the Federal Trade Commission Act, although the commission will retain full authority over these rules.

Below is a partial list of the rules and orders now under the bureau’s enforcement

authority. In addition, rulemaking authority for these rules, except FTC items 1 and 6 through 12, also transferred to the bureau in July.

Authority transferred from the board of governors of the Federal Reserve1. 12 CFR Part 202—Equal Credit Opportunity Act (Regulation B)2. 12 CFR Part 203—Home Mortgage Disclosure (Regulation C)3. 12 CFR Part 205—Electronic Fund Transfers (Regulation E)4. 12 CFR 208.101-.105 & Appendix A to Subpart I—Registration of Residential Mortgage Loan Originators (Regulation H, Subpart I)5. 12 CFR Part 213—Consumer Leasing (Regulation M)6. 12 CFR Part 216—Privacy of Consumer Financial Information (Regulation P)7. 12 CFR Part 222—Fair Credit Reporting (Regulation V), except with respect to §§ 222.1(c) (effective dates), 222.83 (Disposal of consumer information), 222.90 (Duties regarding the detection, prevention, and mitigation of identity theft), 222.91 (Duties of card issuers regarding changes of address), & Appendix J (Interagency Guidelines on Identity Theft Detection, Prevention, and Mitigation)8. 12 CFR Part 226—Truth in Lending (Regulation Z)9. 12 CFR Part 230—Truth in Savings (Regulation DD)

Authority transferred from the FTC1. 16 CFR Part 310—Telemarketing Sales Rule2. 16 CFR Part 313—Privacy of Consumer Financial Information3. 16 CFR Part 320—Disclosure Requirements for Depository Institutions Lacking Federal Depository Insurance4. 16 CFR Part 321—Mortgage Acts and Practices – Advertising

(CFPB) OFFICIALLY OPENED

FAQS

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I want you to think about your last couple of years in the automobile business. Think about your trips to the auction. Saleable inventory is getting harder to find. Have you ever bought a seemingly perfect, late-model, low-mileage, off-lease sedan with announced frame damage? Did you look it over out on the yard and on the block, surmising the damage was minimal? Was it sold with a drive, and the announced damage under the 25-percent disclosure requirement? When you sold that vehicle at retail did you sell it as-is? Did you disclose the damage, in detail and in writing, to the consumer?

Some of you reading this are thinking the law only requires a dealer to disclose damage in excess of 25 percent. A few more of you are thinking, “I sold it ‘as-is;’ it’s the buyers responsibility to inspect before purchase.” I would venture a guess more than a few reading this have sold that hypothetical vehicle without ever mentioning the frame damage.

Today, if you conduct a retail transaction that compares to the hypothetical, you will potentially be in violation of North Carolina law. You could be subject to civil charges of misrepresentation, and/or unfair and deceptive trade practices, all variations of fraud.

The N.C. Department of Motor Vehicles could certainly levy a fine, as well as suspend or revoke your dealer license. Your liability for civil damages can be up to three times the price of the vehicle, plus the consumer’s legal fees. Your legal fees alone may exceed $40,000 and worst yet, recently the North Carolina Court of Appeals upheld a punitive damage award of $250,000 in a case that involved a $2,000 retail sale.

Do I have your attention yet?For those that contend the law only

requires disclosure of damage exceeding 25 percent: you are only addressing one particular law applicable to the sale. However, multiple laws govern retail sales to a consumer.

The 25-percent rule is a statute expressly governing the titling requirements of vehicles found in North Carolina General Statute Chapter 20 (NCGS §20). The statutes outlining unfair and deceptive trade practices are found in NCGS §75 for consumer protection and the Uniform Commercial Code (UCC), adopted by the North Carolina General Assembly as NCGS § 25. Where NCGS § 20 regulates NCDMV and automotive commerce, NCGS§ 25 regulates all commerce, including automobile dealers.

A dealer is a merchant as defined by statute. A wholesale transaction, between two dealers, is a commercial transaction. There is certainly a duty of due diligence in a commercial transaction. The law considers merchants, in the same trade, to be on equal footing. The same does not apply in a consumer transaction.

Are You Misleading Buyers with Unfair & Deceptive Trade Practices?

Note from ADR of Oklahoma: While the following article was written by an attorney practicing law in North Carolina primarily for the benefit of North Carolina dealers, the thrust of the article, the author’s discussion of dealers being considered experts relative to the consumer, and the weight the courts in general are placing on the expert’s responsibilities to know all and disclose all when selling a vehicle apply to dealers all over the country, including Oklahoma. The references to NC’s “damage under the 25-percent disclosure requirement” and fining authority do not apply specifically to Oklahoma dealers. However, references to the Uniform Commercial Code (UCC), Buyer’s Guide, and Unfair and Deceptive Trade Practices are applicable to dealers nationwide, including Oklahoma dealers. The ADR staff believes this article is well written and may serve as a word to the wise for dealers with regard to the rapidly escalating world of laws and rules that are regularly heaped upon dealers.

The federal and state rules, regulations and statutes for operating as an independent automobile dealer are

constantly evolving. The risk of not adapting your business practices to those changes exposes you to ever-increasing liability. Simply stated, there are several previously acceptable methods of doing business that are now considered unfair and deceptive. The unfortunate likelihood is you have, and may still be, utilizing some of those methods in your business. With the current regulatory climate as it is, change is coming to many of the industry’s tried-and-true practices. In this column, I will discuss just one such change.

FAQS

A retail purchaser is legally defined as a consumer. In consumer sales, you are legally accountable as an expert in your trade. As an expert, you are held to a duty of knowing or should have known as to the condition of your inventory offered for sale. You also have a duty to conduct business in the spirit of good faith and fair dealing.

Frankly, the oft-times quoted Latin phrase caveat emptor (or buyer beware) no longer applies to consumer purchases of used vehicles.

There are many dealers who mistakenly believe they have an umbrella offered by as-is sales as a shield from liability. As-is is a term utilized to legally exclude an implied warranty of merchantability. The term is further limited by the Federal Trade Commission in its application within the Used Car Rule. This rule, which created the Used Car Buyers Guide Form expressly limits the scope of as-is to mechanical issues. Structural damage is not referenced and is therefore not waived or excluded.

Consequently, the as-is umbrella is limited protection, and it is shrinking as case law builds an increasing duty upon the dealer to inspect, investigate and disclose.

The legislature by statute, and the courts through case law have decided essentially: 1. Merchants have expert knowledge in their

trade. 2. That expert knowledge gives a merchant

an unfair advantage over a consumer. 3. Failing to disclose information gained

through expert knowledge is a deceptive trade practice.

4. Failing to exercise expert knowledge is not a defense, and could be considered negligent practice.

5. Consumers are not expected to have the same level of experience as a merchant. In fact, NCGS §20-285 expressly announces the state has a responsibility to regulate the auto industry to protect the consumer.

What’s that? You never received notice from the DMV or the attorney general’s office describing the practices that are no longer allowed? From what agency do you order the compliance manual? Well, there is no manual, there is no notice requirement and there is no defense if a dealer fails to recognize the old ways of doing business no longer apply.

You, as a merchant, are held to that previously mentioned duty of good faith and fair dealing, which entails mandates for full and complete disclosure in consumer transactions. The legislature and various regulatory agencies, however, are only required to publish rules, statutes and subsequent amendments.

So when was the last time you read the Federal Register?

B Y R . E . S T E V E N S O N I I I , E S Q .

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A DEALER IS A MERCHANT AS DEFINED BY STATUTE.

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* FOR ACCOUNTS THAT QUALIFY / ACCEPTABLE WITH UNDERWRITING

Motor vehicle dealers can expect increased scrutiny of their dealings with members of the military in coming months. The Federal Trade Commission (FTC) and the new Consumer Financial Protection Bureau (CFPB) (established by the Dodd-Frank Act) are two of the federal agencies tasked with oversight of various segments of the motor vehicle sales industry and consumer protection matters related to those sales.

Pursuant to the Dodd-Frank Act, which became effective July 21, the FTC is authorized to prescribe rules with respect to unfair or deceptive acts or practices by dealers. Under that act, the FTC retains all of its enforcement authority over dealers. The FTC’s authority is exclusive as to dealers that routinely assign credit contracts to unaffiliated third parties, and concurrent with the new CFPB as to dealers that do not [Federal Register, Vol. 76, No. 50, March 15, 2011, 14014-14017].

Both agencies have made protection of the military consumers’ interests a headline issue.

The FTC held the second in a series of motor vehicle roundtables on Aug. 2-3 at St. Mary’s University School of Law, in San Antonio, Texas. The overall objective of the discussions is to explore consumer protection issues pertaining to vehicle sales and leasing. The most recent roundtable covered topics regarding military consumers’ experiences in buying and financing motor vehicles. Agenda items included “The Auto Sales and Financing Process,” “The Online Auto Process,” “Sales Representations and Financing Process Issues,” “Complaints,” and “Vehicle Title Problems and Repossessions,” all with respect specifically to the military consumer.

In early July, the CFPB and the judge advocate generals (JAGs) of the Army, Marine Corps, Navy, Air Force, and Coast Guard announced an agreement on a joint statement of principles to provide stronger protections for service members and their families in connection with consumer financial products and services. The partnership is intended to help better protect service members and their families from unlawful acts and practices. The JAGs and the CFPB – including its Office of Servicemember Affairs and Enforcement Division – will create a formal working group with the goal of achieving a coordinated response to unlawful conduct targeted at service members and their families.

Scrutiny of vehicle sales to military personnel is only one example of the increased regulatory oversight our industry is experiencing. We believe it’s the association’s responsibility to help keep you informed of regulatory matters and apprised of changes. Elsewhere in this publication, you will find articles dealing with clarification of the Risk-Based Pricing Notice Rule, an update on the Servicemembers Civil Relief Act, and an overview of what now constitutes unfair and deceptive trade practices that should be of interest to you. And, as always, if you have questions, feel free to call the association at 405-232-2947.

Vehicle Sales to Military Personnel

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had some minor prior damage; however, he alleged he was misled, and discovered undisclosed damage. The court then determined the potential fraud of deception is a matter for a jury to decide. Reading the case history reveals the dealer failed to investigate the extent of frame damage declared at auction. The dealer settled before trial for more than $140,000. The vehicle involved sold for less than $20,000.

So far, the cases compare in a failure to disclose known damages. It is easily appreciable that both dealers had knowledge and notice of the vehicle’s previous history. In Comer, the judge recognizes there is no statutory duty to investigate the history of every vehicle purchased, but, when given notice of prior damage, there is a duty to inspect and assess the extent of those damages. The results of that inspection and assessment are then required to be disclosed to the consumer. That is precedent, and now governing law.

Recently, an area independent dealer was contacted by the attorney for a consumer who had purchased a vehicle and discovered undisclosed damage. Here are the facts of that situation:1. The consumer purchase for $30,000 had

occurred two years prior to the call. 2. The consumer had driven more than

40,000 miles since his purchase. 3. The damage discovered was the result of a

low-speed parking lot collision with a post. 4. The damage happened while the vehicle

was titled to the original owner shortly after the vehicle was purchased new, and the repairs at the time of the accident were under $2,300.

5. The repaired damage did not adversely affect the operation of the vehicle in any way.

6. The only evidence of the damage was peeling paint from a replacement radiator support, visible only from the underside of the vehicle.

7. The original owner traded the vehicle with the independent dealer and signed a damage disclosure form indicating no damage over 25 percent.

8. The vehicle report on all computer registries revealed no adverse history, and the consumer only discovered the extent of damage by contacting the previous owner.

This dealer notified his insurance carrier where he had general liability and errors and omissions insurance. The insurance company settled for an undisclosed sum, estimated to be in excess of $100,000. The company also determined it had no grounds for subrogation against the previous owner. As a consumer he had no duty to report any damage under 25 percent.Hold on; you can check your insurance policy once you finish this article. Before you close up shop, before calling the hauler to carry your entire inventory to the auction, and before you begin to ponder the

To complicate this even more, judges interpret those published statutes, producing case law or precedent, which then becomes the method of application for the law in question. The developing case law and the actual statute do not merge ostensibly to maintain the constitutional separation of the judicial and legislative branches of government. This disconnect definitely keeps the lobbyist and dealer education departments of industry trade groups busy, as well as providing job security for consumer protection attorneys.

Short of hiring a full-time compliance officer, there is realistically no way for an independent dealer to keep up.

At this time, if you are the average dealer, you have probably concluded my purpose here is to frighten you. Here I am, practically shouting, “The sky is falling” until you buy every recommended form, the dealer management software package and pre-pay for the next dealer conference. Well, every item offered by the trade groups is designed to limit your liability, but if you do not conduct business in a proper and legal manner, they are nothing but perfume on a hog.

Allow me to discuss some specific cases; in the appeal of Greene v. Royster (187 N.C.App. 71, 652 S.E.2d 277) it was revealed that:

—Evidence supported plaintiff vehicle buyer’s award of punitive damages in the amount of $250,000 upon showing that defendant auto dealer committed fraud, and thus, dealer was not entitled to new trial.

—Evidence showed that dealer sold buyer a car that was unfit for operation, in violation of state law, that considerable efforts were expended to conceal facts of similar conduct by dealer, that dealer was well aware that it was selling unfit vehicles.

Nobody reading this article would dare attempt what this dealer was found guilty of doing. He pieced together one vehicle from several salvage units and then affixed the VIN from the latest model salvage to the finished product. He then sold the vehicle as-is in a $2,000 cash sale. The consumer contacted the local DMV inspector after her complaints of mechanical problems were ignored by the dealer. After investigating, DMV determined the vehicle was unsafe to operate and revoked the dealer’s license. Undaunted, the dealer reorganized and licensed under a relative’s name. It seems he even sold his defense attorney a vehicle in similar condition.

That case is a clear-cut example of what the laws are designed for, protecting citizens and deterring corrupt individuals from transacting business in the state.

Fair enough, but in Comer v. Person Auto Sales Inc. (368 F.Supp.2d 478) the dealer, in federal court, contended he properly represented the vehicle. The consumer admitted the salesperson told him the vehicle

affordability of early retirement, realize the sky is not falling. Obviously, laws are organic and flexible. For compliance you should be flexible as well, adjusting and adapting the way you do business.There are no catch-all forms available or statutory procedures to assure compliance. However, by implementing the following practices you should reduce your potential liability:• Visually inspect every vehicle offered for

sale, or have a body shop do it.• Limit wholesale and auction purchases to

known and reputable sources.• Perform every available computer history

search and keep in the vehicle file. • Keep a list of any damage discovered upon

inspection with an estimate of the repair cost in the vehicle file.

• Teach, counsel, and/or force every salesperson to disclose every documented fault.

• Print that information on the damage disclosure form.

• Print that information on dealer letterhead disclosing the result of your inspection, the estimated cost of repairs. Sign it and have the consumer acknowledge it.

• If the prior damage materially affects the average retail value of the vehicle, disclose on the letterhead that the selling price has been adjusted to compensate for that effect.

• If the damage does not materially affect the retail value, state that on the letterhead disclosure.

• Do this for every retail sale, every time.

There is a silver lining to all this. The dealers who choose to ignore the increased attention to consumer protection will eventually be forced out of the market. Buyers will naturally do business with consumer-conscious competitors.

The law is designed to separate the dealer wheat from the chaff, ultimately providing consumers with better-qualified independent dealers to service their transportation needs.

Where your dealership falls is up to you. Until that time, good luck and happy motoring.

NOTE: The column is intended to be a practical article for understanding why and how various commercial and consumer regulations apply to retail automotive sales in North Carolina. It is further intended for informational purposes only and is not represented as legal advice or as an exhaustive research on all applicable law. You should consult your legal counsel for any individual circumstances, regardless of how they may compare to cases cited or hypothetical representations.

R.E. “Steve” Stevenson III, Esq., has more than 20 years experience in North Carolina’s retail auto industry and has held key management positions with several franchise and independent dealers. He is admitted to the N.C. State Bar, the U.S. Federal Court Eastern District of N.C. and is currently practicing law in Nashville, N.C., concentrating in dealer compliance, merchant defense and consumer protection. Stevenson can be reached at [email protected].

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The Manheim Used Car Market Report (UCMR) is the definitive source of information and trends that shape wholesale and retail used vehicle markets. The 2011 Mid-Year Report strives to help readers navigate an automotive industry facing rapid change. NIADA members may download a FREE copy of the Mid-Year UCMR via the instructions below. And new for 2011 – the Mid-Year UCMR is now available via iPhone, iPad and Android devices at no additional charge in addition to being available via the traditional .pdf format.

Free Mid-Year Used Car Market Report

F R E E M I D - Y E A R U S E D C A R M A R K E T R E P O R T

Edmunds.com, the premier online resource for automotive information, released its 15 best used vehicle bets for 2011 in June. A total of 11 makes are represented on the list, with four makes (Ford, Honda, Hyundai and Toyota) each contributing two models.

BY SEGMENT, THE WINNERS ARE: •�Compact�Sedan: 2004-2009 Hyundai Elantra•Midsize�Sedan: 2004-2009 Nissan Altima•Large�Sedan: 2006-2009 Hyundai Azera•Coupe: 2004-2009 BMW 3 Series•Convertible: 2004-2009 Mazda Miata•Wagon:�2004-2009 Pontiac Vibe•Compact�SUV/Crossover: 2004-2009 Honda CR-V•Midsize�SUV/Crossover:�2004-2009 Ford Explorer •Large�SUV/Crossover: 2004-2009 Chevrolet Tahoe •Minivan/Van: 2004-2009 Honda Odyssey•Compact�Truck: 2004-2009 Toyota Tacoma •Large�Truck: 2004-2009 Ford F-150 •Luxury: 2004-2009 Infiniti G35/G37 •Hybrid: 2004-2009 Toyota Prius•Sport�Compact: 2004-2009 Subaru Impreza WRX

A team of Edmunds.com editors assembled the list, which emphasizes the most important criteria to consider when researching and deciding on a used vehicle: reliability, safety, value and availability. Eligibility was limited to vehicles ranging in age from 2 to 7 years.

For more details on Edmunds.com’s selection process and for a brief description of all the cars on this year’s list, visit 2011 Used Car Best Bets at www.edmunds.com/car-reviews/best-used-cars.html.

Edmunds.com Names Best Bets on Used Autos for 2011

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credit to a consumer on material terms that are materially less favorable than the most favorable terms available to a substantial proportion of the creditor’s other consumers.

A typical three-party automobile financing transaction involves an automobile dealer, a consumer and a third-party creditor or financing source. In these transactions, the dealer sells a vehicle to a consumer, the consumer signs a retail installment sales contract with the dealer, and the dealer assigns the contract to a third-party financing source that has notified the dealer that it will purchase the consumer’s contract on specified terms. The third-party financing source then services the debt directly with the customer.

In three-party financing transactions, you are subject to the RBP Rule if you:

a. Set the APR of credit offered based in whole or in part on information in a credit report; or

b. Set the APR of credit offered based on a wholesale buy rate proffered by a third-party finance source, and that buy rate is based in whole or in part upon information in a credit report.

This holds true whether you directly obtain the credit report yourself or whether the third-party finance source obtains the credit report. The RBP Rule applies to the original creditor, i.e. the dealer, if that person “uses a consumer report in connection with” an application for credit.

In response to an industry inquiry, the Federal Trade Commission recently provided the following example of a three-party financing transaction in which the dealer is obliged to provide a RBP Notice:

“The specific financing situation … involves an automobile financing transaction where an automobile dealer is the original creditor. In this three-party financing transaction, a consumer visits the automobile dealer and applies for financing by completing a loan application with the dealer. The dealer submits the loan application to one or more unrelated finance sources, which finance source(s) then conducts underwriting on the consumer’s credit application. Based in whole or in part on the consumer report, the finance source(s) provides the dealer with an approval of the consumer’s application and the wholesale buy rate at which the finance source(s) will purchase the resulting credit contract from the dealer. The dealer then selects the finance source to which it intends to assign the contract and determines which credit terms, including a retail finance rate (‘APR’), it will offer the consumer. The [industry inquiry] commenter asserts

Risk-Based Pricing Notices in Three-Party Financing Transactions

If, as an auto dealer, you engage third-party finance sources in the course of your credit sales, you are likely subject

to the Risk-Based Pricing (RBP) Rule and are obliged to provide certain consumers with an appropriate notice.

Risk-based pricing is when a dealer, or the financing entity a dealer selects to finance a vehicle, directly or indirectly uses information from a credit report such as a customer’s payment history to establish the price and other terms, specifically the Annual Percentage Rate (APR), of the credit being offered or extended.

Under the RBP Rule, a RBP Notice must be provided when a creditor engaging in risk-based pricing extends

FAQS

that because the original creditor (the automobile dealer) does not directly obtain the consumer report and/or credit score from a consumer reporting agency, and instead relies upon the buy rates from the underlying financing sources, the original creditor does not ‘use’ the consumer report and is outside the scope of the risk-based pricing rules. The Commission disagrees. The automobile dealer must provide the consumer with a risk-based pricing notice.

“The original creditor has ‘used’ a consumer report in connection with an application for credit because the original creditor initiated the request that caused the financing source to obtain the consumer report and used the resulting information from the financing source to set the rate offered to consumers. Applying a causal, transaction-based analysis to the term ‘use’ is consistent with the clear intent of Congress to provide consumers with information about the role that their credit history plays in setting the terms for credit. In the scenario set forth above, the consumer report was used in connection with the application for credit made by the consumer to the automobile dealer because the consumer report was obtained by the financing source in order to fulfill a request made to it by the automobile dealer. The finance source has not obtained and used the consumer report and/or credit score independently of the automobile dealer. The finance source, at the behest of the automobile dealer, has obtained the reports and performed underwriting and has told the automobile dealer the wholesale buy rate at which it will purchase the contract. The original creditor incorporated the wholesale buy rate in the rate offered to the consumer, establishing a causal connection between the consumer report and the ultimate rate offered to the consumer. The original creditor [i.e. the automobile dealer] has ‘used’ the consumer report.”

We believe it’s the association’s responsibility to provide an option for dealers to come into compliance with both federal and state regulations in the simplest, most reasonable way. Accordingly, our staff is available to assist both member and non-member dealers in preparation of your Risk-Based Pricing Notices. Feel free to contact us at 800-346-4232 or 405-232-2947.

NOTE: We are not attorneys. This article was prepared for informational purposes only. It has been made available with the understanding that neither ADR of Oklahoma nor OIADA is engaged in rendering legal advice. You are urged to contact legal counsel for its application to your operation. Also, this article only addresses the applicability of the RBP Rule in three-party finance transactions. The RBP Rule applies to other finance transactions involving credit reports as well, including Buy Here-Pay Here transactions.

B Y A D R S TA F F

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debt incurred prior to the service member being ordered to active duty. The following specifics apply:

a. The interest rate reduction for non-mortgage debt obligations is restricted to the period of active service. The rate reduction shall be considered effective as of the date on which the service member is called to military service and extends to the last day of active service.

b. The interest in excess of 6 percent is forgiven; it is not deferred. In this case, “interest” includes service charges, renewal charges, fees, or any other charges except insurance.

c. The periodic payment must be reduced by the amount of interest forgiven that is allocable to the period for which such payment is made. The principal cannot be accelerated.

d. To attain the benefit, the service member must provide to the creditor written notice of the request and a copy of the military orders calling the service member to active military service. The request must be provided to the creditor not later than 180 days after the termination of active service.

e. Creditors are provided one avenue of relief from the rate cap. A court may grant a creditor relief from the limitation of this section if, in the opinion of the court, the ability of the service member to pay interest upon the obligation or liability at a rate in excess of 6 percent per year is not materially affected by reason of the service member’s military service. To obtain this relief, however, the creditor must petition the court. Otherwise, upon proper request by the service member, the interest must be limited to 6 percent.

Protection under installment contracts for breach of contract: During the period of active duty, a contract by the service member for the purchase or lease of a motor vehicle may not be rescinded or terminated for a breach of terms of the contract occurring before or during that person’s military service, nor may the property be repossessed for such breach without a court order. This applies only to a contract for which a deposit or installment has been paid by the service member before the service member enters military service.

Settlement of stayed cases relating to personal property: When a stay is granted pursuant to the SCRA in a proceeding to repossess personal property, or to rescind or terminate a contract for the purchase of personal property, the court may appoint three disinterested parties to appraise the property. Based on the appraisal, and if undue hardship to the service member’s dependents will not result, the court may order that the amount of the service member’s equity in the property be paid to the service member, or the service member’s dependents, as a condition of repossessing

As an independent dealer, you may have occasion to

conduct business with members of our U.S. armed forces and may serve as creditor or lessor to them in a used vehicle transaction.

In recognition of the sacrifices our military

members make, and the special circumstances in

which they often serve, federal law affords them certain protections

regarding consumer credit and leasing. The following is provided to acquaint you with particular provisions of the Servicemembers Civil Relief Act (SCRA) with the goal of enabling you to most effectively serve your military customers.

The SCRA generally applies to active duty service personnel serving in the U.S. Army, U.S. Navy, U.S. Marine Corps, U.S. Air Force, and the Coast Guard, as well as commissioned officers of the Public Health Service or the National Oceanic and Atmospheric Administration. It further applies to members of the National Guard under a call to active service authorized by the President or Secretary of Defense for a period of more than 30 days, for purposes of responding to a national emergency declared by the president and supported by federal funds.

The SCRA protects service members from various civil lawsuits or collection activities while serving on federal active military duty. It is not designed to excuse service members from paying their just debts. However, under the act, service members on federal active duty may qualify for debt relief in the form of reduced interest rates on debt, release from certain contracts and the stay of civil court actions involving foreclosures. Where applicable, a stay may delay the collection of debt or the enforcement of a judgment until the service member is finished with the active duty assignment. A number of the provisions are of particular interest to motor vehicle dealers.

Maximum rate of interest on debts. The SCRA sets a 6-percent interest rate cap on debt obligations of the service member (or the service member and spouse jointly) on

FAQS

the property or rescinding or terminating the contract.

Termination of motor vehicle leases: Under the SCRA, service members may terminate existing leases of motor vehicles upon receipt of active duty or change of station orders. The following conditions apply:

a. The right to terminate applies to leases executed by or on behalf of a person who thereafter enters active military service for a period of at least 180 days; or to leases executed by a service member who then receives notice of a permanent change of station outside the continental United States or is deployed with an active unit for 180 days or longer.

b. To terminate the lease, the lessee must provide written notification, including a copy of the service member’s military orders, to the lessor, and must return the vehicle to the lessor not later than 15 days after the date of the delivery of written notice of termination.

c. Notice of termination may be delivered by hand, by private business carrier, or by U.S. Mail addressed to the lessor bearing sufficient postage with return receipt requested.

d. The lessee may terminate the lease at any time after entry into military service, or after the date of the lessee’s orders.

e. Termination of the lease is effective on the day on which the notification and vehicle delivery requirements are met.

f. You are not obliged to forgive lease amounts unpaid for the period preceding the effective date of the lease termination. Those amounts shall be paid on a prorated basis. In the case of the lease of a motor vehicle, you may not impose an early termination charge, but any taxes, summonses, and title and registration fees and any other obligation and liability of the lessee in accordance with the terms of the lease, including reasonable charges to the lessee for excess wear, use and mileage, that are due and unpaid at the time of termination of the lease shall be paid by the lessee.

g. Lease amounts paid in advance for a period after the effective date of the termination of the lease shall be refunded to the lessee by the lessor within 30 days of the effective date of the termination of the lease.

If you receive notice of a request for an interest rate adjustment or lease termination under the SCRA, or find yourself facing any other legal issue involving military service members, seek the advice of an attorney before proceeding. Both you and the service member have rights under the SCRA, as well as under other applicable federal regulations, and you want to ensure your actions are in compliance. NOTE: We are not attorneys. This article was prepared for informational purposes only. It has been made available with the understanding that neither ADR of Oklahoma nor OIADA is engaged in rendering legal advice. You are urged to contact legal counsel for its application to your operation.

B Y A D R S TA F F

Servicemembers Civil Relief Act and the Used Dealer

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Independent Auctions: The Dealer’s FriendBY JOHN POTEET, MANAGING PARTNER, LOUISIANA’S 1ST CHOICE AUTO AUCTION

More than half of the 316 auto auctions in the National Auto Auction Association

(NAAA) are independently owned and operated. Those 176 independents make up the largest group of auctions in the NAAA and include some of the most innovative, creative entities in the industry. When it comes to customer service and dealer responsiveness, this group is second to none.

Independent auctions are very similar to independent dealers because they are often family-owned businesses and may have only one location. Yet, no matter how large or small, they understand – just as independent dealers do – the importance of customer service. When dealers visit an independent auction, they are often dealing with the owner of the business; that can make a difference in how quickly issues are resolved because owners know how important it is for an independent to get things done effectively and efficiently.

Many dealers believe independent auctions may not have the technology or the products of a chain auction, but that’s far from the truth. The services offered by independent auctions rival the latest in auction offerings by the large chains. Independents offer the basic services a dealer would expect from an NAAA auction, and most offer other services such as reconditioning, mechanical work, and transportation. In addition, many offer live simulcast sales, Internet sales through OVE, SmartAuction, or OpenLane, post-sale inspections, and array of floor planning services including MAFS, AFC, and DSC among others.

The influence of independent auctions is felt throughout the industry. Owners and managers play pivotal roles in arbitration standards, industry legislation, electronic condition reports, and NAAA standards for certification. The impact of independents is so significant 10 of the last 15 and four of the last five NAAA presidents have come from independent auctions.

Louisiana’s 1st Choice Auto Auction sums up the independents devotion to service with one Cajun French word, “lagniappe.” Pronounced LAN-yap, it means that little something extra you get when doing business with a merchant. The auction adopted this philosophy when it opened for business in 2002 to convey to dealers they were more than customers, they are special. Managing Partner John Poteet also believes outstanding service begins with outstanding people, and the tradition of lagniappe is perpetuated by the employees’ drive to go above and beyond the customers’ expectations.

An important component of Louisiana’s 1st Choice Auto Auction’s success is the commitment to the latest and best technology for their dealers. Many independent auto auctions in the NAAA are on the cutting edge of auction technology which enhances the customer experience, even when the dealer can’t see the technology in action. This goes from the latest in auction software to implementing platforms such as Auction Pipeline, AWG simulcast, Auction Access, and social networking sites such as Facebook and Twitter. As technology advances, independents are searching for better and faster ways to please their customers and make their employees more efficient.

Of course, as dealers become more technologically sophisticated, auctions must respond to their needs. For example, Louisiana’s 1st Choice Auto Auction offers free Wi-Fi for dealers enabling them to use their wireless devices to get the latest information regarding in-sale vehicle information. Another important tool for buyers is the ability to buy online with a simulcast auction. However, sellers can also utilize simulcast to sell vehicles. This is a great feature allowing remote repping for dealers and institutional sellers who cannot attend the auction.

According to Poteet, dealers can still buy and sell in the lanes as always, but at Louisiana’s 1st Choice, they also have the options of using simulcast, or buying and selling 24/7 with OVE, OpenLane, SmartAuction, and Auction Pipeline. This choice of buying and selling platforms is unique to independent auctions and gives dealers a greater opportunity to conduct business than any other venue.

MANY DEALERS BELIEVE

INDEPENDENT AUCTIONS MAY NOT HAVE THE

TECHNOLOGY OR THE PRODUCTS OF A

CHAIN AUCTION, BUT THAT’S FAR FROM

THE TRUTH. THE SERVICES OFFERED BY INDEPENDENT

AUCTIONS RIVAL THE LATEST IN AUCTION OFFERINGS BY THE

LARGE CHAINS. --- JOHN POTEET, MANAGING PARTNER,

LOUISIANA’S 1ST CHOICE AUTO AUCTION

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In today’s economic environment, there is a great deal of fraud taking place and if you aren’t careful, it could be your wallet and reputation that suffers.

To prevent fraud and protect both dealers and the general public, many dealers are utilizing the National Motor Vehicle Title Information System, or NMVTIS. The system, run by the U.S. Justice Department, was created to prevent the introduction of branded or stolen motor vehicles into interstate commerce, thus protecting auto dealers and consumers from fraud, and hopefully reducing the use of stolen vehicles for many other illicit purposes.

Through NMVTIS, businesses and consumers are empowered to check the VIN of any vehicle they are considering acquiring at an exceptionally low cost. Readily available to used auto dealers, providers of NMVTIS data also encourage wholesalers, among others, to check VINs before investing in vehicles, thus keeping them even one step further from unsuspecting buyers.

The data available through NMVTIS is unique in that, unlike other commercially available services, it’s a government program with strict regulations regarding reporting. NMVTIS information includes timely data from state motor vehicle agencies and other entire sectors (such as insurance, auto recyclers, junkyards, and salvage

businesses) that are addressed by the Anti-Car Theft Act.

Regulations require all states to participate in the NMVTIS program, and all entities are required to provide specific information to NMVTIS in a specific format. This uniformity is intended to serve as a reliable source of title and brand history for autos, and also elevates the likelihood that a vehicle stolen in Maine will be caught if resold in Florida. The accuracy, and timeliness, of the information, is what differs from other private vehicle history reporting services.

Information is updated by most states in real time and, at a minimum, by all states within several days of any transaction occurring. The system contains more than 30 million salvage and total loss records, and imposes strict penalties on entities who fail to report required information. NMVTIS also includes information on buses, trucks, motorcycles, recreational vehicles, motor homes, and tractors.

As a dealer, there are certain scenarios that should be investigated before investing in a used auto and NMVTIS is the most accurate, cost-effective source of this information. In addition to accurate, timely information on a vehicle’s title history, the system can flag any brands given to a used vehicle, as well as provide salvage and total information, and odometer readings. This means it’s likely that a vehicle that has been flooded, or totaled and rebuilt, or even had the odometer tampered with, will be identified.

According to the DOJ, the existence of NMVTIS has led to a decline in motor vehicle thefts. By reducing the market for stolen vehicles, a natural decline in thefts was sure to follow. In Virginia alone, a 17-percent decrease in thefts was reported upon the state engaging with NMVTIS. Arizona, one of the first and most active NMVTIS participant states, has experienced a 99-percent recovery rate on stolen vehicles. And in Florida, a car theft ring responsible for cloning more than 250 cars, valued at $8 million, was disbanded.

Does this mean dealers are now safe due to the mere existence of NMVTIS? Unfortunately, they are not. There are still land mines to be aware of. NMVTIS is designed to collect information from states, but not change or streamline laws and terminology from state to state. Each state has its own laws, and terminology, which may be different from their neighbors. That’s why it’s important to know the definitions in the states you are searching (if you find a used vehicle has a history there). The NMVTIS service provider has a glossary of most terms, on its website.

It is also important to know a NMVTIS Vehicle History Report is intentionally concise, and is only intended to provide data on the five key indicators associated with preventing theft and fraud. If your needs go beyond these indicators, it may be best to supplement your NMVTIS search with additional reports from other providers who specialize in different types of information.

NMVTIS Created to Help Dealers

IT IS ALSO IMPORTANT TO KNOW A NMVTIS

VEHICLE HISTORY REPORT IS INTENTIONALLY CONCISE,

AND IS ONLY INTENDED TO PROVIDE DATA ON THE FIVE KEY INDICATORS ASSOCIATED WITH PREVENTING THEFT AND FRAUD.

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w w w . e - o i a d a . c o m 1 7/27/11

SECOND QUARTER 2011 ECONOMY: TEMPORARY SLOWDOWN Temporary factors such as the Japanese earthquake, a spike in oil prices, the debt ceiling debate, and European debt problems reduced economic growth to about two percent at an annual rate in the first half of this year. While we expect growth in the second half to accelerate as the temporary problems lessen, growth will continue to be constrained by the significant drag that the absence of a housing recovery has had on the strength of the economic expansion. However, extremely low levels of new construction are reducing the overhang of available homes. With fewer houses available, and higher rents, low home prices, low mortgage rates, and a growing population boosting demand, we expect a significant move up in new home construction next year. In addition, as business sales continue to grow corporations and banks will begin to increase their support of the expansion by using their massive cash balances to invest, hire, and make loans. NEW VEHICLE SALES: DOWN, BUT NOT OUT New light vehicle sales in the second quarter declined to 12.1 million at a seasonally adjusted annual rate from 13 million in the first quarter. Despite the seasonally adjusted quarter-‐to-‐quarter decline, second quarter sales were up 7.5% from the previous year. The second quarter slowdown can be traced to a combination of higher gas prices, a weak job market, and supply problems related to the Japanese earthquake. Increased supply availability of Japanese models for purchase and comparison is expected to result in higher new vehicle sales levels in the second half. As the industry normalizes and the labor market improves, new vehicle sales are forecast to reach the 15 million level next year. USED VEHICLE SALES: SALES WEAKEN, BUT PRICES FIRM Following the decline in new vehicle sales and the resultant lack of trade-‐ins moving into the used market, year-‐to-‐year retail used vehicle sales weakened in the second quarter. For the first half of 2011, used car sales were up 3.5% compared to 4.2% in the second half of 2010. Reflecting a lack of supply relative to demand, used car retail prices have moved up sharply in the last few months with the second quarter up 4.2% and June up over 5%. AUCTION VOLUME: DISAPPOINTING Second quarter auction volume declined 11.2% year-‐to-‐year after dropping 7.8% in the previous quarter, as smaller increases in dealer consignment were more than offset by large declines in other categories. Flat prices resulted in a similar decline in gross value as in volume Regions: Volume in the Northeast and Southeast regions declined the least in the second quarter, with the Northeast doing substantially better than the other regions in the first half.

TYPE: Past large declines in new sales into leases and rental cars are continuing to reduce overall auction volume, with fleet/lease and manufacturer/factory both down sharply in the second quarter. Weak current new/used sales was reflected in the smallest dealer consignment gain in three quarters, while the improved economy reduced repossession volume by over 20% for the second quarter in a row.

SEGMENT: The decline in gas prices was quickly reflected in a relatively good performance for SUVs. Large declines in CUVs and passenger cars probably were related to problems in supply from Japanese dealers. AUCTION PRICE: FLAT Overall, second quarter average auction prices were flat with last year.

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A Dealis a Deal?B Y Z U R I C H F I N A N C I A L S E R V I C E S G R O U P

NEW FEDERAL AND STATE CONSUMER LAWS ARE PASSED

EVERY YEAR, SO IT IS IMPORTANT TO UNDERSTAND

AND EDUCATE DEALERSHIP

PERSONNEL ON HOW TO COMPLY.This Loss Prevention Bulletin is provided for informational purposes only. Please

consult with qualified legal counsel to address your particular circumstances and needs. Zurich is not providing legal advice

and assumes no liability concerning the information set forth above.

FACTS

It should be no surprise to you how many federal consumer laws and regulations affect the typical

automobile dealer. The Truth in Lending, Equal Credit Opportunity and Fair Credit Reporting acts are all too familiar. The same is true of regulations Z and B and the various Federal Trade Rules, including the Used Car Rule. Then, of course, there are state unfair business practice acts, common law fraud, misrepresentation and improper disclosure to consider.

The fact is you must be more careful than ever to ensure a deal is put together the right way. As the stack of paperwork that must be signed by your customer grows, so does the opportunity for mistakes and mistakes can cost you money – perhaps far more money than you realize. The winter issue of The Specialist reported a recent fraud and failure-to-disclose situation where a dealer’s customer was awarded $218,000 in punitive damages (not insurable in many states) as the result of a lawsuit involving damage disclosure. The customer was told the vehicle was “in perfect condition,” “had never been wrecked” and was a “one-owner vehicle.” Evidence later proved none of these assertions were true. Take appropriate measures to protect your dealership from damage disclosure and truth in lending complaints and lawsuits.

We offer the following suggestions:

MANAGEMENT ISSUES• Provide extensive training to sales and F&I personnel on all consumer laws.• Have legal counsel review all sales, leasing and other applicable documents for compliance with federal, state and local laws.• Implement a vehicle sales checklist to establish standard procedures for staff.• Have customer sign or initial forms as needed.• Establish policies to address ethical business practices and ensure your management team abides by them.TRADE-INS• Perform a title search to verify mileage, past ownership and lien holders.• Develop and use a seller’s disclosure, customer title disclosure and trade-in certification or equivalent forms to document mileage, prior damage, airbag deployment, salvage vehicles, frame damage, etc.• Odometers must be inspected carefully for rollback, replacement or tampering.• Vehicle appraisers (and managers) must be diligent in evaluating trade-ins and determining prior damage manager.

AUCTION VEHICLES• Use a title search firm or state agencies to check vehicle history.• Deal with auctions that guarantee the title is free and clean.• Don’t purchase vehicles with prior frame damage.

RETAIL TRANSACTIONS• In conjunction with legal counsel, consider developing and implementing a buyer’s arbitration agreement requiring the customer to seek relief through an arbitration process in lieu of litigation. We neither recommend nor disfavor arbitration agreements. This is a business decision that only you and your advisors can make. Note: as of Jan. 1, 1999, the American Arbitration Association (AAA) will not administer an arbitration proceeding if the signed agreement does not meet minimum standards established by its National Disputes Advisory Committee. The AAA’s Consumer Due Process Protocol includes a statement of 15 principles intended to protect consumer rights.• To avoid being held financially responsible to a creditor deemed unsecured by a bankruptcy court, process the title work promptly to ensure timely perfection in all cases within 20 days after the vehicle is delivered.• If the customers’ creditworthiness is questionable, delay the delivery as the 20 days noted above does not begin until the vehicle is delivered.• Be very cautious with deals involving out-of-state paperwork or missing titles, it may be difficult to process the necessary title paperwork• Videotape the sales transaction in the business office, but only after the customer (and your employee) voluntarily agree to be videotaped. Consult your legal counsel to determine how long the tape should be kept and the potential risk of not taping or saving all transactions. While videotaping can be a good idea, it isn’t one you should proceed to undertake without careful thought of all ramifications. New federal and state consumer laws are passed every year, so it is important to understand and educate dealership personnel on how to comply. Your legal counsel and auto dealer associations are excellent resources for keeping appraised of these new regulations. Contact your local Zurich account executive for additional information on how these laws affect your business. If you have any questions or comments, contact your Zurich account executive or the Loss Prevention Department at 800-821-7803.

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June 14, 2011

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w w w . e - o i a d a . c o m D E A L E R S ’ R E S O U R C E AUGUST 2011

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Following convening of the meeting and approval of the min-utes of the previous meeting, Chairman John Longacre called on Director John Maile for the Director’s report. Maile began his report by directing commissioners to the agency’s expen-ditures lists for May and June 2011 for their information. Commissioners voted to note for the record that the expendi-tures lists were received.

Maile reminded the commissioners of last month’s discus-sion regarding statute and rule changes. He suggested the fol-

lowing as possible items for future discussion:Review of the commission’s bond requirements. Currently, the used dealer bond is

$15,000 and it has been inadequate for a number of years. The wholesale dealer bond is $25,000. Because of the way bonding companies rate dealers, any increase could cause some dealers to have difficulty in acquiring a bond, and some dealers are already paying large amounts for their bonds because of being considered high risks. These issues must be considered in the review process.

Manufactured housing dealer bonds are at $30,000.00, but the price of manufactured homes has gone up since 1992. Maile suggested these bonds also be included in the review process.

Maile and Roy Dockum, Director of the Oklahoma Motor Vehicle Commission, have dis-cussed the need for a franchise dealer bond. Currently, a scooter dealer can buy a dozen new scooters and become a franchise dealer that is exempt from bonding requirements. Maile and Dockum discussed the possibility of creating a structured bond based on a monetary volume. A smaller dealer would have a bond of one size and a larger dealer would have a somewhat bigger bond.

During previous discussions of bonding requirements, some bonding companies in-dicated that the salesman bond subsidized the dealer bonds. There is some question about this impact, in that bonding companies use risk elements in determining the price charged for dealer bonds. Maile advised the commissioners he is still in favor of eliminat-ing the salesman’s bond and that should save dealers money.

Maile and Kenneth Whitehead, UMVPC’s Deputy Director, have discussed the possibility of creating a resident broker’s license for the Oklahoma resident who is buying and sell-ing vehicles under his or some other dealer’s out-of-state license. Their judgment is that the commission should have some control over those people. It is believed the reason dealers follow that procedure is often because they don’t want to be under the purview of the commission or don’t have sufficient credentials to get a dealer license on their own.

Another issue Maile identified as needing to be addressed was changing of the salvage title designation to a “hail damage” title where the vehicle had sustained only cosmetic damage and leave it a green title. That would allow the vehicle to be more realistically priced.

The Director would also like to create a fund for the purchase of parts that the commis-sion could use when staff is doing a salvage investigation or audit. Currently there is no funding source identified for that function.

Finally, Maile advised the commissioners that Jennifer Bates, a 20-year UMV&PC em-ployee, would be leaving at the end of July to go to work for the Motor Vehicle Commission. She will be sorely missed by staff, commissioners and others who have relied for upon her good nature and efficient help all those years.

One of the commission members expressed a desire for staff to research the potential for regulatory authority to suspend a license for a period of days, possibly up to 10, as op-posed to revoking a license for some violations. During the suspension, the dealer could be required to post a sign on the dealership’s door regarding the suspension. A third viola-tion would result in the dealer’s license being revoked.

Another commissioner reminded the group of a phony dealership that was set up on the internet by a salesman at the direction of the dealership. Some members of the com-mission believed the salesman should have lost his license for a period of time.

Whitehead’s Deputy Director’s Report indicated Commission staff had completed 33 inspections for the period. Staff handled 29 written complaints, 11 of which were title issues, 14 had to do with contract violations, one was related to mechanical issues and there were three complaints of a miscellaneous nature.

The Commission education program had 22 in attendance. Applicants for a new li-cense and dealers involved in significant rule violations are required to attend the Com-mission’s education program as a part of acquiring or maintaining a state license. These education sessions are being held at 2401 NW 23, Oklahoma City. Classes are held on Monday prior to the Commission meeting on the second Tuesday of each month. The sessions run from 9 a.m. to about noon or 1 p.m. You are asked to make reservations so staff can be prepared to accommodate you. Call the Commission at 405-521-3600 to make your reservations.

ENTITY TYPE VIOLATION CITY DATE ISSUEDTony Ali Used Dealer Oklahoma City 06/26/2011Bigman LLC Used Dealer Alva 06/29/2011Birdsell’s Used Cars Used Dealer Miami 06/20/2011Bert Brown Used Dealer Marlow 06/02/2011Marcus Cobb Rebuilder Lone Grove 06/07/2011Marcus Cobb Used Dealer Lone Grove 06/07/2011Terry Demory Insurance Pool Oklahoma City 06/14/2011El Chanro Mexican Used Dealer Waukomis 06/01/2011Omar Humphrey Used Dealer Ardmore 06/07/2011Omar Humphrey Rebuilder Ardmore 06/07/2011Larry Kable Auto Dismantler Sallisaw 06/29/2011Levings Trailer Sales Used Dealer Enid 06/01/2011Long Tide Properties Mfg Home Fort Worth, TX 06/10/2011Francisco Madera Used Dealer Oklahoma City 06/06/2011Christopher McBride Used Dealer Tulsa 06/20/2011Steve McCrosky Mfg Home Lawton 06/15/2011Ronald David Used Cars Used Dealer Tulsa 06/20/2011Santiago Serrano Insurance Pool Oklahoma City 06/14/2011Clyde Shepard Used Dealer Bartlesville 06/20/2011Brandon Smith Used Dealer Ada 06/02/2011Bill Walker Rebuilder Ardmore 06/07/2011Bill Walker Used Dealer Ardmore 06/07/2011Wholesale Auto Brokers Used Dealer Muskogee 06/20/2011Buddy Youngblood Used Dealer Cameron 06/24/2011

ENTITY CITY COMPLAINT RESOLVEDArnie’s Auto Sales Inc. Tulsa Contract 06/20/2011Automax Hyundai of Norman Norman Contract 06/28/2011Big Red Sports/Imports Norman Contract 06/24/2011Big Red Sports/Imports Norman Title 06/09/2011Blue Ribbon Chevrolet Inc. Sallisaw Contract 06/09/2011Bryan’s Car Corner III Oklahoma City Contract 06/21/2011David Stanley Hyundai LLC Oklahoma City Title 06/10/2011Eldorado Motors LLC #2 Tulsa Miscellaneous 06/10/2011Express Credit Auto #2 Oklahoma City Title 06/03/2011Fiesta Auto Plaza Oklahoma City Contract 06/10/2011Hudiburg Toyota Midwest City Contract 06/21/2011Jackson Chrysler Dodge Enid Contract 06/06/2011Jaguar & Volvo of Oklahoma City Oklahoma City Miscellaneous 06/28/2011Joe Marina Bixby Car & Truck Ctr. Bixby Contract 06/13/2011Kirkpatrick Motor Company Tulsa Title 06/20/2011Kirkpatrick Motor Company Tulsa Title 06/20/2011Kirkpatrick Motor Company Tulsa Title 06/20/2011Kirkpatrick Motor Company Tulsa Title 06/20/2011Lochwood Motors LLC Oklahoma City Contract 06/24/2011Mid-State Mfg Housing Corp. Purcell Miscellaneous 06/07/2011Mike Mowdy Autoplex Midwest City Contract 06/03/2011Overdrive Automotive Center Tulsa Contract 06/13/2011Regional Hyundai LLC Broken Arrow Contract 06/13/2011Superb Motors LLC Tulsa Title 06/20/2011Superb Motors LLC Tulsa Title 06/20/2011T or T Auto Sales Hugo Title 06/09/2011Tulsa Woodward Auto Sales Tulsa Mechanical 06/13/2011Vanhoozer Auto Sales Lawton Contract 06/09/2011Village Oaks Mfg. Community Midwest City Title 06/02/2011

REPORT OF CEASE & DESIST LETTERS ISSUED(These letters direct the individual or business to cease violations of laws or rules)

CLOSED COMPLAINT REPORTThese are complaints that have been resolved one way or another.They do not necessarily reflect any wrongdoing on the part of dealers.

LICENSES SUSPENDED OR ABANDONEDIn�other�action,�the�following�licenses�were�suspended�or�abandoned:A&J Auto Sales, Muskogee: Out of business; per owner, Billy Marler.Ajouly Auto Sales, Oklahoma City: Out of business; applied for retail license.Carboys Leasing & Sales, Yukon: Out of business; phone disconnected.Joe Cooper Easy Credit Auto #2, Edmond: Out of business; per investigator’s report.Marc Heitz Ford, Purcell: Out of business; change of ownership, bought by Patriot Ford.Montoya Motors, Oklahoma City: Out of business; change of ownership.Solitaire Home of Stillwater, Stillwater: Out of business; change of ownership.Warnke’s Car Center, Canute: Out of business; per owner, Justin Warnke.Winners Auto Sales, Lawton: Out of business; per owner, Jawad Drissi.

USED MOTOR VEHICLE AND PARTS

COMMISSION REPORT

July 12, 2011

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REPORT OF CEASE & DESIST LETTERS ISSUED(These letters direct the individual or business to cease violations of laws or rules)

LICENSES SUSPENDED OR ABANDONEDIn�other�action,�the�following�licenses�were�suspended�or�abandoned:A&J Auto Sales, Muskogee: Out of business; per owner, Billy Marler.Ajouly Auto Sales, Oklahoma City: Out of business; applied for retail license.Carboys Leasing & Sales, Yukon: Out of business; phone disconnected.Joe Cooper Easy Credit Auto #2, Edmond: Out of business; per investigator’s report.Marc Heitz Ford, Purcell: Out of business; change of ownership, bought by Patriot Ford.Montoya Motors, Oklahoma City: Out of business; change of ownership.Solitaire Home of Stillwater, Stillwater: Out of business; change of ownership.Warnke’s Car Center, Canute: Out of business; per owner, Justin Warnke.Winners Auto Sales, Lawton: Out of business; per owner, Jawad Drissi.

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Chances are your business has a business plan, a plan that describes your products, distributions

channels, marketing strategy, and revenue goals, among other things. A business plan helps you maximize the profitability of your business.

Whether you are aware of it or not, you also have a business succession plan for your business. A business succession plan is a roadmap for the transition of ownership and management of your business following disability, retirement, or death. While a business plan maximizes the profitability of your business, a well-crafted business succession plan maximizes the value of your business at the time of transition.

The challenge is, in the absence of thoughtful planning, the value of your business at the time of transition is likely to be much less than you hoped. Also, without a well-planned transition, there is a risk your business interest will end up in the hands of someone other than intended.

TRIGGERING EVENTSEvents such as disability, retirement, and

death are often referred to as triggering events. That’s because these events are so dramatic they trigger change, planned or unplanned. Understanding the natural consequences of these triggering events is often a prime motivator in developing a formal business succession plan.

Disability: The occurrence of a long-term disability – a disability lasting six months or more – that affects a small business owner impacts not only the financial well-being of the owner’s family but also the continuity of the business. In many cases, the owner is also a key employee. If an owner becomes unproductive due to disability, there may be insufficient cash flow to continue his or her salary. Even if the business is financially able to continue salary, court cases have held that, in the absence of a pre-disability salary continuation plan, payments to disabled owners may be considered non-

Business Succession PlanS M A L L B U S I N E S S F I N A N C I A L T U N E - U P :

Healthy business owners may

become resentful as they search for a

replacement for their disabled colleague while struggling to

grow the business in his or her absence.

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deductible dividends rather than deductible compensation.

But, even deductible salary continuation payments to a disabled business owner are likely to create a strain on the business in the long-term. Healthy business owners may become resentful as they search for a replacement for their disabled colleague while struggling to grow the business in his or her absence. If it becomes apparent that the disabled owner is unlikely to return to work or return to work at full strength, the healthy parties may negotiate a purchase of the disabled owner’s interest. Unfortunately, a disabled owner with dwindling resources is hardly in a position to drive a hard bargain. And, the healthy owners may face difficulties getting financing for the buyout if revenues are down.

Retirement: The retirement of a small business owner creates parallel concerns. Unless a pension, profit-sharing, or 401(k) plan is in place, the owner cannot count on an employer-sponsored retirement plan as a

source of retirement income. Also, because the net worth of many business owners is tied up in their business, the owner may be unlikely to have substantial personal savings and investments to rely on in retirement. Consequently, it is often necessary to sell the business to achieve retirement income goals.

Unfortunately, although small businesses are often cash cows while the owner is healthy and working, finding a buyer that understands the business well enough to continue it profitably and pay fair market value for it can be a challenge.

Death: Upon the death of a business owner, the business interest becomes a probate asset similar to marketable securities, real estate, and household items. If the owner has a will, the business interest passes to the named beneficiary or as part of the residual estate. If the owner lacks a will, the business interest passes to his heirs under the laws of intestacy. A common disposition pattern calls for a portion of all property to pass to the surviving spouse and children.

One concern is that, following the death of an owner, surviving family members usually need cash, not stock certificates evidencing ownership in a small business that probably does not pay dividends to inactive shareholders. Again, finding a qualified buyer – one with financing or cash who is willing to pay a fair price – may be difficult.

Bottom Line: Whether the transition is triggered by disability, death, or retirement, in the absence of a formal business succession plan, the “plan” is uncertain income continuation for the owner or his or her heirs, uncertain tax consequences to the business, and diminished business value.

0200138-00001-00, Ed 04/2011, Exp 10/22/2012Provided courtesy of Prudential. For more information, contact Kerri Allard, a financial professional associate with The Prudential Insurance Company of America’s agency located in Marlborough, Mass. She can be reached at 508-382-4929.

Business Succession Plan

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Ford F250, F350, F450, F550, MY 2002-2007Ford Excursion, MY 2002-2005Ford Ranger, MY 2004-2011NHTSA ID Number: 11V352000Exterior Lighting: Tail LightsUnits affected: 26,715

Ford is recalling certain model year 2011 Ranger trucks built from Jan. 25, 2011, through April 25, 2011, at the Twin Cities Assembly Plant, and service parts distributed to dealers for certain 2004 through 2011 model year Ranger trucks, 2002 through 2005 model year Excursion vehicles, and 2002 through 2007 model year F250, F350, F450, and F550 trucks for failing to comply with the requirements of Federal Motor Vehicle Safety Standard No. 108, “Lamps, Reflective Devices, and Associated Equipment.” The multi-function switch was shipped with a subcomponent (slider) that may experience deformation. A multi-function switch with a deformed slider may malfunction causing the turn signal, tail lights, hazard warning signal flashers and/or brake lights not to activate. Non-functioning lights could increase the risk of a crash. Dealers will replace the switches free of charge. The safety recall is expected to begin on or about Aug. 15. Owners may contact Ford at 866-436-7332.

Ford Five Hundred, MY 2007Mercury Montego, MY 2007NHTSA ID Number: 11V355000Fuel System, Gasoline: Storage: Tank Assembly: Filler Pipe and CapUnits affected: 2,945Ford is recalling certain model year 2007 Ford Five Hundred and Mercury Montego vehicles manufactured from Sept. 5, 2006, through Sept. 11, 2006. The fuel tanks may not have consistent welds between the fuel tank and fuel filler neck spud which can affect the strength of the join. Some fuel tank spud welds may not provide the expected strength in the event of a severe rear impact to the vehicle. An improper weld can result in a crack in the joint which could illuminate the emissions malfunction indicator light, cause a fuel odor, or allow fuel to leak out. Fuel leakage, in the presence of an ignition source, could result in a fire. Dealers will replace the fuel tank free of charge. The safety recall is expected to begin on or about Aug. 15. Owners may contact Ford at 866-436-7332.

Honda ST1300, MY 2008-2010Honda ST1300A, MY 2008-2010Honda ST1300PA, MY 2009NHTSA ID Number: 11V356000Service Brakes, HydraulicUnits affected: 2,232

Honda is recalling certain model year 2008 through 2010 ST1300 motorcycles manufactured from Nov. 15, 2007, through May 27, 2010, model year 2008 through 2010 ST1300A motorcycles manufactured from Nov. 7, 2007, through April 6, 2010, and model year 2009 ST1300PA police motorcycles, manufactured from Nov. 18, 2008, through Dec. 8, 2009. When the rear suspension of the motorcycle is repeatedly bottomed out (fully compressed), the rear brake reservoir hose may become damaged and leak brake fluid. The rider will experience a loss of rear brake performance or function which increases the risk of a crash. Dealer will replace the rear brake reservoir hose free of charge. The safety recall is expected to begin on or before July 26. Owners may contact Honda at 800-999-1009.

NHTSA Recalls For more information, visit www.NHTSA.gov.

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Dodge RAM 1500, MY 2008Dodge RAM 2500, MY 2003-2011Dodge RAM 3500, MY 2003-2011NHTSA ID Number: 11V350000Steering: Linkages: Tie Rod AssemblyUnits affected: 242,780

Chrysler is recalling certain model year 2008-2011 Dodge Ram 2500/3500 4X4, manufactured from Feb. 14, 2008, through March 28, 2011; model year 2008-2011 Dodge Ram 3500 Cab Chassis 4x2, manufactured from Feb. 14, 2008, through March 28, 2011; and model year 2008 Dodge Ram 1500 Mega Cab 4x4, manufactured from Feb. 14, 2008, through Aug. 15, 2008, because the left tie rod ball stud may fracture. This condition tends to occur during low speed parking lot type maneuvers when the customer is making a tight turn. Additionally, model year 2003-2008 Dodge Ram 2500/3500 vehicles may have received the affected tie rod assembly as a replacement part during normal service. This condition could result in the potential loss of directional stability in the left hand front wheel, increasing the risk of a crash. Dealers will inspect the tie rod ends for relative orientation and replace the left outer tie rod as required and perform a front end toe alignment as needed. This service will be performed free of charge. Owners may contact Chrysler at 800-853-1403.

Lexus RX400H, MY 2006-2007Toyota Highlander Hybrid, MY 2006-2007NHTSA ID Number 11V342000Electrical SystemUnits affected: 82,273

Toyota is recalling certain model year 2006-2007 Highlander Hybrid and Lexus RX400H passenger cars manufactured from February 16, 2005, through August 30, 2006. A module inside the inverter module may contain inadequately soldered transistors that during high-load driving, may be damaged by heat caused by the large current. If this occurs, various warning lamps, including the malfunction indicator lamp, slip indicator light, brake system warning light, and master warning light, will be illuminated on the instrument panel. The vehicle may enter a fail-safe/limp-home mode that limits the drivability of the vehicle. It is possible that the hybrid system will shut down while the vehicle is being driven, causing the vehicle to stall unexpectedly, increasing the risk of a crash. Toyota/Lexus will mail an interim owner notification in the middle of July 2011 to advise owners of this recall and the fact that they will receive a future notice when parts become available to complete repairs. Toyota dealers will inspect the hybrid inverter production number to determine whether the inverter contains suspect transistors and replace the module free of charge. Owners may contact Toyota at 1-800-331-4331.

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The following information regarding disaster assistance is provided to you at the request of the Internal Revenue

Service. They are in the process of providing additional disaster assistance for the state of Oklahoma in response to the severe weather that occurred last May and June.

Filing 2010 Amended ReturnTaxpayers in declared counties claiming

casualty losses will want to consider whether it is more advantageous to claim the loss now by amending their 2010 tax return or to wait and claim it on their 2011 return next year. Consider income for each year before deciding.

How to Calculate a Casualty LossThe amount of a casualty loss (business/

income producing property or non-business) is the lesser of the difference between the Fair Market Value (FMV) of the property immediately before the casualty and its FMV immediately afterward or the adjusted basis of the property immediately before the casualty. If a business or income producing property is

totally destroyed and if the FMV is less than its adjusted basis, then the casualty loss is the adjusted basis of the property. A loss is also reduced by any salvage value.

To receive expedited service from the IRS, be sure to put the disaster designation (FEMA-OK-1989) at the top of any tax return or correspondence sent to the agency.

Where to Get More InformationPublication 2194, Disaster Loss Kit For

IndividualsPublication 2194-B, Disaster Loss Kit for

BusinessesForm 4684, Casualties and Thefts

For more information, visit www.IRS.gov. Follow the links to Business, then Small Business for the Disaster Assistance and Emergency Relief for Individuals page for the necessary disaster forms and publications. Any disaster questions should be directed to the IRS Disaster Hotline at 866-562-5227.

Extended Disaster AssistanceB Y A N I T A E . D O U G L A S , I N T E R N A L R E V E N U E S E R V I C E

HELP

For more information, visit www.IRS.gov.

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COMPANY NAME JOINED CITYR Diffee Motor Co. Diffee Motor Co. 1991 BethanyR Rooks Motor Co. & Used Cars Ralph Rooks 1991 ValliantR Earl & Greg McQuerry Used Cars Greg McQuerry 1991 ShawneeR Universal M H/Used Cars Steve E. Ross 1991 Oklahoma CityR Collinsville Auto Sales Dan Perkins Jr. 2001 CollinsvilleR Kasterke Auto Mart Inc. Gary Kasterke 2003 ShawneeR Wilmes Ford-Lincoln-Mercury Jeff Wilmes 1991 AltusR Doenges Bartlesville Brad Doenges 1991 BartlesvilleR Brookside Motorcycle Co. Paul Rogers 2009 TulsaR Street Cars Inc. Lynn Aylor 2007 NormanR Dealer’s Auto Auction of OKC Gary D. Smith 1991 Oklahoma CityR Eldorado Motors Pauline Marks 1991 Oklahoma CityR Moore Imports Inc. Hossien Alizadeh 2003 MooreR Auto Ranch Inc. Jackie Rabe 2004 ArdmoreR Scott Auto Sales Herbert Garner Scott 2000 TulsaR The Car Store of Oklahoma City Jim Holman 2006 Oklahoma CityR Max Credit Auto John Hobbs 2005 Oklahoma CityR Sal’s Auto Sales Salim Salous 2010 Oklahoma CityR Taylor Motors Inc. #2 Taylor Motors Inc. 1993 SkiatookR Triple Star Auto Joe Cooper 2009 PoteauR Cars, Etc. David W. Blalock Jr. 2007 AnadarkoR Lindsey Street Motors Inc. Timothy Jay Williams 2001 NormanR Blazer Motors I-35 Paul James Jr. 2010 Oklahoma CityR TLC Motors Tom Cottrill 2001 TahlequahR Best Buy Auto Sales Junior Lorentz 2010 ArdmoreR Dallas Auto Auction David Robertson 1991 Dallas, TXR 71B Auto Auction Shane Wood 2010 Springdale, AR

The following list includes members who joined or renewed their OIADA/NIADA membership during June. We express our sincere appreciation for all the members of OIADA and we extend our invitation to dealers who are not members. A membership application can be found elsewhere in this newsletter. We urge you to be an active part of maintaining a strong and effective used car industry voice in the legislative and regulatory environment. With the current Congress, we need that voice more than ever! -- John Easttom, President

OIADA�NEW�AND�RENEWAL�MEMBERS

J U N E 2 0 11

The used motor vehicle industry is alive and well, and news of independent dealer sales eclipsing franchise dealer sales of used autos over the last few months is even more encouraging. The 13th edition of NIADA’s Used Car Industry Report brings you a snapshot of all of this activity and provides valuable insight in all aspects of dealer operations. The complete 2011 edition, unveiled at NIADA’s 65th Annual Convention & Expo last month, is available for viewing and download at www.niada.com/publications.

Business is Getting Better

2 0 1 1 • N I A D A U S E D C A R I N D U S T R Y R E P O R T 1

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

UCIR_2011.indd 1

5/27/11 2:49 PM

FAQS

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USED DEALER LICENSES COMPANY NAME CITY Ajouly Auto Sales LLC Tahani Al-Hakim Oklahoma CityCamo Corner Surplus & Truck Sales Ryan Rogers OrlandoCrown Sapulpa Jami M. Longacre Sapulpa John T. LongacreDiaz Auto Sales Inc. #2 Victor M. Garcia TulsaJ Wayne Motors Joshua Wayne Hamilton TulsaLegends Auto Sales Reza Mazrouee Bethany Hassan MazroueeMelton Truck & Trailer Sales The Hawthorn Group Inc. Tulsa Robert Eugene Ragan Jeffrey RobinsonMikes Cars Michael J. Marsh GeronimoShep’s Yamaha-Kawasaki Clyde Shepherd BartlesvilleSofia’s Motors Khosro Tavangar Oklahoma CitySpecialized Auto Sales #2 Benjamin Patnode Oklahoma CityThe Auto Bin LLC Jay R. Berger Broken Arrow Kelly BergerThrifty Car Sales OKC Jesse Greathouse Oklahoma CityThunder City Motors LLC Wood Maxwell Kaufman Edmond Dale Ray Schwartz Van Horn Motors LLC Brian Martin Van Horn Ada Jonathan Lee Van HornAmins Auto Sales LLC Farshid Amin Oklahoma City*(Two on a lot with Aztec Autos LLC)Jackson Cars & Credit Bruce Jackson Broken Arrow *(Owners, Bruce Jackson, Dusty Jackson, Shane

Jackson, & Casey Jackson are residents of Enid).* Special Circumstance

WHOLESALE DEALER LICENSES COMPANY NAME CITYAwesome Auto Sales Keith Whitehouse Tulsa

License Applicants ApprovedThe following applicants, as listed in the agenda for the Used Motor Vehicle and Parts Commission Regular Meeting of June 14 were considered for issuance of used motor vehicle dealer licenses and wholesale vehicle dealer licenses. The applications were approved pending compliance with the state licensing laws and rules, and subject to final approval by Commission staff.

We know that used auto buyers today must navigate a minefield of unscrupulous sellers and haphazardly repaired vehicles. Among the worst offenders are “curbstoners” – unlicensed individuals who buy and sell used cars to make a quick buck from unwary victims.

That is why we put together a handy guide to help used auto buyers detect collision repair. “ A Used Car Field Guide for Detecting Collision Repair,” is an online booklet full of useful tips for spotting subpar repair work, ensuring there are no disparities between what a seller says and what the vehicle shows.

To access the booklet, visit stopcurbstoning.com.

1

www.stopcurbstoning.com

A Used Car Field Guide for Detecting Collision Repair

It used to be fairly easy to spot the signs of a collision repair: overspray, bad color matching, and misaligned body panels. Now, with computers assisting with everything from frame straightening to color matching, it’s a lot harder to tell if a vehicle has been in a collision, especially if the repair was done well.

That’s great if you want your car �xed after an accident. But it makes things hard if you’re looking for a good used car.

NOTE: We’re not saying to avoid any car that’s had bodywork. A vehicle that’s been properly and professionally repaired after a minor fender-bender could be a terri�c bargain. We are saying to watch for disparities between what a seller says and what his or her vehicle shows.

Of course, no one can catch all the bad cars. That’s why an inspection by a trusted, experienced mechanic, along with a

vehicle history report form a service like AutoCheck, are absolutely vital steps to take before payingmoney for any used car from a private party.

However, here are some quick, simple things you can watch for when you’reout looking at cars. One element on your side is simple greed: curbstoners want to maximize their pro�ts. After all, they only need to fool a buyer long enough to collect the cash. So, curbstoned cars rarely get top-notch repair treatment.

At A GlanceA walk around the vehicle in good light will often disclose whether or not a body panel has been replaced or repainted. Look at thecar from several angles to make sure the color matches across all the body panels.

Look also at the re�ections in the paint – factory paintwork is mirror-smooth, even when dirty or dinged up. Signs of repair often reveal themselves in a slightly rippled re�ection, or a re�ection that doesn’t exactly line up across two body panels. Be sure to look at re�ections from several angles.

If the car is so dirty that you can’t see re�ections, you might need to ask for the car to be washed. While you’re sighting down the sides of the car, check to make sure the body panels all �t �ush, and that the gaps between the panels are even from top-to-bottom and side-to-side.

Good places to look for paint overspray or excess paint include:

Around electrical conduits in door jambs

Near door, hood, and trunk hinges

On window and door seals

Around seals and �ttings in the engine compartment �rewall

Along the trim pieces inside wheel wells

Sun damage typically affects large body surfaces like hoods and roofs. When you see small patches of peeling clear-coat, especially in corners and other hard-to-reach areas, they may indicate a poorly prepped paint job.

At the same time, beware of too-perfect paint. Even a garaged, well-cared-for used vehicle will have small paint chips and even minor dings. If the chin fascia beneath the front bumper is pristine, it may have been recently replaced or repainted.

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Join OIADA And See

More Profit In Your Pocket!

Join OIADA and trade with these vendors, and they will more than cover the cost of

your membership.That leaves

More Profit In Your Pocket!When When you join or renew your membership in

OIADA, you receive a full set of Dealer Discount VIP Cards.

These cards are available ONLY to OIADA MEMBERS and are DEALER EXCLUSIVE.

Call (405) 232-2947 or visithttp://www.e-oiada.com/join

to to Join OIADA Today!

Join OIADA and Receive Your 2011 VIP Discount Cards!Your Dealer Discount VIP Cards are just one of the many benefits of OIADA membership. Their

value alone is over four times greater than the $295 annual membership fee. Join OIADA today to get started saving with your own Member-Exclusive Dealer Discount VIP Cards.

I-40 Auto Auction, Muldrow Thursday @ 7:00pm: One Buy Fee.

165 Auto Auction, MuskogeeWednesday @ 7:00pm: One Buy Fee.

Dealers Auto Auction of OKC TThursday @ 8:30am: One Sell Fee up to $50. One Buy Fee up to $50.

ADESA Tulsa Friday @ 9:00 am: One Sell Fee up to $50. One Buy Fee up to $50.

CarMax Auctions, Oklahoma City location. One Buy Fee up to $50.

AmericaAmerica’s Auto Auction, Inc. of TulsaWednesday @ 2:00pm: Dealers only or Saturday @ 11:00 am: Dealers & Public. One Buy Fee up to $50.

I-35 Auto Auction, Pauls Valley Tuesday @ 7:00 pm: One Buy or Sell Fee up to $75.

I-40 Auto Auction, Inc., Del City Tuesday @ 6:30pm: One Buy Fee up to $50. One Sell Fee up to $50.

Central Auto Auction - Hwy 37, Tuttle 1st Saturd1st Saturday of each month 10 am: One Free Sell Fee

Manheim Missouri - Springfield Thursday @ 9:00am One Sell Fee up to $100. One Buy Fee up to $70.

Manheim Dallas/Ft. Worth Thursday @ 9:30 am: (Trinity Blvd location) Free Buy Fee. Only available at Thursday sale.

Manheim Metro DallasManheim Metro Dallas Tuesday @ 9:00 pm: Free Buy Fee.

Manheim Dallas Wednesday @ 9:00 am or Friday @ 10:00 amFree Buy Fee

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1

OIADA/ADR ORDER FORM

Date of Order:___________________ Residential Delivery? yes_____ no_____

Requested By: ____________________________________________________

Visa Master Card Discover Amex 3 or 4 digit code # ________________

Credit Card Billing Address:_______________________________________________________________

Expiration Date:________/_________ Signature:______________________________________________

Ship To: ___________________________________________________________________________________ _____Ph.__________________________ Name ________________________________________________________________________ _______________ Fax:_________________________ Physical Address (no P.O. Boxes) _____________________________________________________________________________________________________________________ City, State, Zip Code

Item # Item Description Price No. Total All Items in packs of 100 unless otherwise noted $ $

F01 Dealer Warranty Disclaimer 10.00 F02 Odometer Disclosure Statements (3 part) 11.00 F03 30 Day Notice (Title Receipt – (1 part perforated)) 7.00

F04 Buyers Guides – FTC AS IS (2part) 15.00 F04 A Buyers Guides – FTC AS IS 4 seal (2 part) 50.00

F 04 B Buyers Guides – FTC AS IS Spanish (2 part) 18.00 F04.1 Vehicle Inventory Record (bound book per each) 14.00 F05 Retail Purchase Agreement (3 part) 25.00

A 127 Wholesale Buyers Order (50) 13.00 F05.0 Vehicle Inspection Form (2 part) 17.00

F05.1 Privacy Notice – Special Order Required – email [email protected] F05.3 Repo Notice of Sale (2 part) 17.00

F05.4 Repo Calculation of Return (2 part) 17.00 F06 Multiform (Retail Buyers Order – Bill of Sale – 3 part) (short form) 25.00

F06.1 Multiform (Retail Buyers Order – Bill of Sale – 2 part) (short form) 18.00 F06.2 Retail Purchase Agreement – Multiform – 3 part (long form) 60.00

F07.1 Poly Stock Window Stickers (per 250) 30.00 F08 Retail Installment Contract (4 part) 50.00 F08.3 Simple Interest Contract – Legal size (5 part) 65.00

F09 Lien Entry Form MVD-21-A (pad of 100) 10.00 F09.0 Agreement to Provide Insurance 40.00

F10.3 We Owe Forms (2 part) 17.00 F11 Used Car Sales Envelope – Deal Jacket (9”X12” Tan – Printed on both sides) 25.00 F11.1 Used Car Sales Envelope – Deal Jacket (9”X12” Green) 25.00

F13 Credit Application 23.00 F13.2 Personal Loan Applications 23.00

F13.1 Spot Delivery Form 18.00 F14.6 Consignment Forms 15.00 F14.4 Certificate of Ownership 25.00

F14.5 Dismantler’s Forms 25.00

F07 B Stock Window Stickers – Blue___; Blue Blank___; Green___; Red___; Red Blank___ 11.00 F10 Rigidene Key Tags – (Bag 125) White or Yellow 11.00

F10.0 Rigidene Key Tags – (Box 500) White or Yellow 40.00 F10.1 Top Stripe Key Tags – (Box 250) Black, Green, Orange, Red Blue, or Pink 20.00 F10.2 Protek Key Tags (Box 250) Blue, Red, White, or Yellow 23.00

F10.3B EIT (Service Department) Key Tags (Pack of 1,000) 23.00

F14 Plastic Folders for FTC AS IS (Pack of 25) 21.00 F14.1 Plastic Folder Kits for FTC AS IS (Box of 100) 58.00

S15 Dealer Tag Magnets (per each) 7.00

S15.1 Pan Head Tag Screws (Box of 100) 10.00 S15.2 Hex Head Tag Screws ( Box of 100) 10.00

(Continued next page)

Order on line at www.buyadr.com

Prices subject to change without notice

Rev 04/26/11

Phone 800-346-4232 Fax 405-799-3367

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2

Item # Item Description $ Price No. $Total S15.3 Hex Head Tag Screws (Metric – Box of 100) 10.00

S15.4 Nylon Tag Screw Inserts (Box of 100) 7.00 S15.5 Tag Thumb Screws (Box of 50) 10.00

S15.7 Rubber Tag Holder with Magnet (per each) 16.00 S16 Rubber Dealer Tag Holder (per each) 12.00

S17 Uni Posca Marker (Small – each) White__, Pink__, Yellow__, Red__, Blue__, or Green__ 4.00 S17.1 Uni Posca Marker (Medium – each) Green__, Orange__, Red__, Pink__, or Yellow___ 5.00

S17.2 Uni Posca Marker (Jumbo - each) Pink___, Red___, White___, or Yellow___ 7.00 S17.6 Uni Posca Marker ( Wide – each) Wht.___; Yel.___; Red___; Or.___; Gr.___; Pink___ 9.50

S17.3 Lettering Paint Pot w/brush (each) Green__,Blue__, White__, Yel__, Pink__, Red__, Or__ 9.95 S17.4 Solid Marker Paint Stick – Solidified Paint (each) Red___, Yellow___, White___, Blue___ 4.00 S18 Key Board – 32 peg (per each) 45.00

S18.1 Key Board – 55 peg (per each) 65.00 S18.2 Key Board – 105 peg (per each) 105.00

S18.3 Key Board – 38 peg (per each) 50.00 S18.4 Key Board – 75 peg (per each) 88.00

S20 Floor Mats – Plastic/paper (Box of 500) 69.00 S21 Rear View Mirror Signs – Various imprints (Packs of 50) 14.00

S21.1 Windshield Signs – Various model years (Packs of 12) 6.95 S21.2 Windshield Message Signs – Various 3 ½ X14” (Packs of 12) 3.50

S21.4 Windshield Number Signs – 7 ½” (Packs of 12) 3.50 S21.5 Windshield Number Signs – 9 ½” (Packs of 12) 3.50 S21.6 Windshield “Bubble” Number Signs – 3”X4” (Packs of 12) 2.00

S21.7 Arched Slogan Signs (Mates with year signs) (Packs of 12) 4.50 (list desired imprints here)

FEX (formely DOX

TM – DealerCap

TM ) Forms (Dealership protection):

A 100 Customer Proposal 23.00

A 101 Trade-in Vehicle Appraisal 23.00 A 102 Test Drive Agreement 23.00

A 116 Used Vehicle Limited Warranty 23.00 A 119 Authorization to Release Payoff Information 23.00 A 120 Notice to Co-Signer 23.00

A 121 Insurance Coverage Acknowledgement 23.00 A 123 Delivery Confirmation and Acknowledgement (also covers “We Owe” Items) 23.00

A 123 S Delivery Confirmation (Spanish) 23.00 A 123 F Delivery Confirmation (for sales in language other than English or Spanish) 23.00

A 124 Customer Delivery Checklist 23.00 A 125 Acknowledgement of AS IS Sale 23.00 A 126 Good Will Repair Acknowledgement 23.00

A 130 Retail Purchase Agreement 32.00 A 140 Interpreter’s Acknowledgement of Confirmation 23.00

A 141 Service Loaner Agreement 23.00 A 144 Agreement to Arbitrate 23.00 A 145 Retail Lease Agreement 32.00

A 214 Carbonless Receipt Books (meets federal requirements) (200 numbered receipts) 24.00

B 50.1 NADA Used Car Guide (Annual Subscription $90.00) (per each) 8.00 B 50.2 NADA Older Car Guide (Annual Subscription $72.00) (per each) 27.00 B 52 Black Book Weekly Guide (Annual Sub. $121.00) (per each) 8.00

B 54 Black Book Truck & Van (Annual Sub. $101.00) (per each) 10.00 B 55 Black Book Old Car Monthly Guide (Annual Sub. $86.00) (per each) 10.00

B 53 Black Book CPI Collectible Vehicle Value Guide (per each) 10.00 Weatherproof Temporary Tags – To help you to comply with the new law on Temporary

Tags, OIADA now supplies weatherproof tags that comply with the UMV&PC Rules.

See temporary tag order form elsewhere in this document OTHER

Notes: Member Discount is 10% Order on line at www.buyadr.com Shipping is by UPS Ground - Place your order by 2:00 pm and it will be shipped that day to arrive at your door the next business day. Make checks payable to OIADA. Payment due upon receipt - Net 10 days - 2% per month late payment OIADA managed by ADR of Oklahoma

ORDER TOTAL

MBR DISCOUNT 10%

SUB-TOTAL

SALES TAX

SHIPPING

C.O.D. CHARGE

TOTAL DUE OIADA

Shipping & Handling Chart Order Value Amount $ 1.00 $ 30.00 $ 9.50 $ 30.01 $ 50.00 $ 10.50 $ 50.01 $100.00 $ 12.50 $100.01 $130.00 $14.50 $130.01 $150.00 $15.50 $150.01 $200.00 $16.50

Add $6.00 for residential addr.

CASH CHARGE Check #_________

Visit our Web Page: www.buyadr.com

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34


In Oklahoma, all used dealer bonds and licenses expire Dec. 31 of each year. This includes used dealer licenses, salesman licenses, dealership bonds and salesman bonds. Your dealer plates (issued by

the Oklahoma Tax Commission) also expire on Dec. 31. And, unlike public vehicle license plates, there is no grace period for dealer plates. You cannot do business without proper bonding and licensing, so it’s to your benefit to submit your completed renewal applications in a timely manner and then follow-up on the status of each until you receive ap-proval. The following is a schedule of steps that will help guide you through the bond and license renewal process.

September• You may contact Rose Morgan at 405-232-2947 or 800-346-4232 to

start the bond renewal process. This is a critical first step to getting your license(s) renewed, as dealer bonds and insurance MUST ac-company your license renewal applications.

• Ensure you don’t have any outstanding tax liabilities with the Okla-homa Tax Commission. Outstanding tax liabilities may prevent re-newal of your license.

October• First week: If you have not already contacted Rose Morgan at 405-

232-2947 or 800-346-4232 or some other supplier to start the bond renewal process, please do so now. The bond renewal process takes time and you cannot submit your license renewal application(s) without bonding and insurance documents.

• Dealer and Salesman License Renewal Applications will be sent out by the Used Motor Vehicle & Parts Commission during October. Watch for them. As soon as you receive them, inspect them and be sure the information is correct.

• You should have received your license renewal application(s) before the end of October. If not, contact the commission at 405-521-3600 immediately.

• Mail your license renewal application(s) to the commission by the end of October. Before mailing, review the application(s); be sure all information requested has been provided and is complete and accurate. Incomplete and inaccurate applications will delay renew-al. We suggest you include a letter asking them to contact you in the event your application is not complete. Include an email address and/or fax number where you can be reached.

November• All applications for license renewal should be submitted by Nov. 1

of each year, and licenses shall be issued by Jan. 10. If application has not been made for renewal of license, such license shall expire on Dec. 31, and it shall be illegal for any person to represent himself and act as a dealer thereafter.

December• Renewal licenses for the coming year will be issued during the

month of December. • Upon receipt of your 2012 dealer license, promptly submit applica-

tion to the Oklahoma Tax Commission for your dealer plates and decals for the coming year. Applications are available online at the commission website. Applications (with payment) must be received by the commission not later than Dec. 31. Be aware that the Tax Commission will not issue plates and decals until after the Used Motor Vehicle & Parts Commission has issued your renewal license.

• Your current year licenses, bonding, insurance, and dealer plates all expire at midnight on Dec. 31.

For more information on bonds, contact Rose Morgan at 405-232-2947 or 800-346-4232. For li-cense renewals, contact the Used Motor Vehicle & Parts Commission at 405-521-3600. For dealer plates and decals, contact the Oklahoma Tax Commission at 800-522-8165 or www.tax.ok.gov.

Bond and License Renewal ScheduleFREE

DEALER EDUCATION ONLY ON NIADA.TV24/7

Watch where you

want......when you want

Sales • Operations • F&I • Remarketing •

Compliance • Legal/Regulatory

• Special Features • Industry Events

PLUS: Automotive Industry News &

Special Monthly Programs

www.niada.tv

B Y A D R S TA F F

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