Serving the Dealers of the Vehicle Sales Industry

Transcription

1 Serving the Dealers of the Vehicle Sales Industry In this Issue April 2013 Attorney General News 2013 Legislature Report Free Trip to Las Vegas BHPH Convention What does 10 years old mean? (Cars) Published by the Oregon Vehicle Dealer and Oregon Power Sports Associations. PO Box 4290, Salem, OR , Fax: Articles are not legal advice. If you want legal advice, contact an attorney.

2 April 19 May 3 May 10 Calendar of Events and Education CE Live class and Prelicensing Class, at Enterprise Rent-A-Car office, 8:30 am SW Teton Ave, Tualatin, OR CE Live class and Prelicensing Class, at Enterprise Rent-A-Car office, 8:30 am SW Teton Ave, Tualatin, OR Brasher s Golf Tournament May 17 May May 31 June 14 June 28 Sept 13 MEDFORD CE Live class and Prelicensing Class, at Enterprise Rent-A-Car office, 8:30 am SW Teton Ave, Tualatin, OR Annual Buy Here pay Here Convention in Las Vegas, , members sign up for drawing for free registration, airfare and lodging prize for 1 CE Live class and Prelicensing Class, at Enterprise Rent-A-Car office, 8:30 am SW Teton Ave, Tualatin, OR CE Live class and Prelicensing Class, at Enterprise Rent-A-Car office, 8:30 am SW Teton Ave, Tualatin, OR CE Live class and Prelicensing Class, at Enterprise Rent-A-Car office, 8:30 am SW Teton Ave, Tualatin, OR Dealer 5 hr class, 9 am to 2pm, at Medford at Mellelo Coffee House, 3651 Lear Way, Medford, OR Call to sign up.! Classes are usually held every other week on Fridays. Specially scheduled classes are common though, so call the office for the latest updates ***DIRECTIONS to: Enterprise Rent-a-Car SW Teton Ave, Tualatin. Exit 289, West on Nyberg, stay in left lane, turns into Tualatin-Sherwood Rd, left on SW Teton. CALIFORNIA EMISSIONS (Big Truck) REGULATIONS TAKE EFFECT California continues to implement the nation s toughest emissions standards that began in The new standards will require extensive retrofitting of around a million heavy diesel trucks and buses. Some older models will have to be phased out entirely. On January 13, 2013, the California Truck and Bus Regulation requirements for heavier vehicles - - vehicles over 26,000 pounds gross weight rating, with model year engines took effect. The regulation reduces emissions of toxic diesel exhaust through retrofitting soot filters and/or upgrades to newer cleaner engine technology. The California Air Resources Board (ARB) inspectors will begin checking for compliance with the Truck and Bus requirements at a variety of locations statewide including: California Highway Patrol (CHP) weigh stations, random roadside locations, distribution centers, fleet facilities, truck stops, and other locations where trucks and buses are present. A non-compliant vehicle (including out-of-state vehicles) may not be legally operated in California. Penalties start at a minimum of $1,000 per violation, per month, and will increase significantly over time. Non-compliance can result in a DMV block on your truck and/or your vehicle impounded by it is in compliance. If you own three or fewer trucks, you can take advantage small fleet option that delays compliance until January 1, 2014, reporting your truck information There is no cost for reporting. By 2014, all trucks and have soot filters. By 2023 bus will be allowed to be more years old unless it has special equipment to cut nitrogen oxide. More information on how comply with the Truck and Bus Regulation is available at ARB s website at or April 2013 DEALER Solutions 2

3 John A. Kitzhaber, MD, Governor Department of Transportation DMV Services 1905 Lana Avenue NE Salem, OR DATE: March 1, 2013 TO: FROM: SUBJECT: Oregon Automobile Dealer Association Oregon Independent Auto Dealers Association Oregon Vehicle Dealers Association Stephanie Zellner, DMV Vehicle Policy Odometer Disclosure Requirements and When to Complete Odometer on Application The purpose of this letter is to remind Oregon dealers when the odometer certification should be completed on the Application for Title and Registration, Form Federal and state laws require the seller and buyer of a vehicle to disclose the odometer information on the certificate of title or salvage title for subject vehicles if not available, the disclosure is made on the Secure Odometer Disclosure/Reassignment, Form 403. In the last year, DMV has received a number of transactions, mostly from new car dealerships, where the dealership provided the most recent odometer reading on the front of the application after the true disclosure between the seller and buyer was made on the title or secure odometer form. The reading provided on the front of the application is sometimes slightly different than provided in the true disclosure. If a transaction includes an odometer disclosure on the ownership document or a separate secure form, do not complete the odometer certification boxes on the application. Please feel free to share this information with the dealers you represent. For more information regarding odometer disclosure requirements, you can visit the DMV website at or the DMV Title and Registration Handbook, Chapter H, Odometer Disclosure Requirements at If you have any questions that cannot be answered on our website, please call DMV Customer Assistance (in Salem call , in Portland call , or call the DMV number listed in your local directory).

4 OREGON DEPARTMENT OF JUSTICE HAS ADDED A SECOND ATTORNEY TO WORK ON MOTOR VEHICLE UTPA COMPLAINTS. Oregon s Department of Justice now has added a second attorney to work on motor vehicle consumer fraud cases, Althea Cullen. Althea has been with the AG s office almost 3 ½ years, working first in the consumer protection area, and now working the past year in the Financial Fraud/Consumer protection section. She joins Assistant Attorney General Eva Novick, who has been handling motor vehicle consumer fraud complaints for almost a decade, in enforcing the Unlawful Trade Practices Act (UTPA as applied to dealers and brokers. OVDA/OPSA President Monty King talked with Attorney Cullen recently about a couple of motor vehicle advertising rules and Department of Justice investigations. In the case we had talked about, a complaint had come in anonymously about a dealer advertising as owner instead of dealer on Craigslist. Additionally, the dealer was not disclosing his dealer name, contact information or dealer ID in the internet advertisements. Pretty much any dealer can tell you there are a lot of illegal dealers operating on Craig s List, and it seems some licensed dealers as well. The competition is stiff, and anyone not following the rules is bound to get a complaint, if not from a consumer, then certainly from a dealer who is following the rules and is not happy with a dealer NOT following the advertising rules. (The advertising rules for advertising are found at OAR , among other requirements, the rules state: : The dealer must in all internet ads, prominently put the full name of the dealer, dealer #, ( a dealer may use the word dealer or abbreviation DLR ), address and phone # in their advertising. See OAR (2)(o). As the official commentary to the rule states: Purchasers have an absolute right to know the dealership with which they are doing business with and who is actually conducting the sale. ) Included in the DOJ notice of UTPA Violation to the dealer, was a violation of ORS (1)(b), causing confusion or misunderstanding as to the source of the motor vehicle. By advertising as for sale by owner on Craigslist, the dealer was deceptively misrepresenting the nature of the transaction, suggesting this was a consumer to consumer transaction, when indeed it was a consumer to business transaction. That is a violation of a different type of the first violation, even though both violations are not using the dealer name in the advertisement. Kind of the same violation, in OVDA s opinion. A third violation was that the dealer did not put in a VIN # (or at least the last six characters) to identify the vehicles being sold. This is a rule OVDA thought put in basically for franchise dealers, who have a lot of one type and style of vehicles for sale, to stop bait and switch tactics. Small dealers never have more than one vehicle of a specific type, so the rule really should not apply to them. However, it was clarified in our later conversations with Attorney Cullen that the rule is in effect for ALL DEALERS. According to OAR (2)(h) all dealers, when listing an offering price for a specific vehicle, must clearly and conspicuously identify the vehicle by its vehicle identification number if there are less than six such vehicles advertised. You should identify every vehicle for which you are advertising an offering price using at least a partial VIN number (last 6 digits). All in all, the dealer is still going to have to pay a hefty price for his violations. He forgot these advertising rules are rules, not suggestions. Just because Craig s list is a difficult place to advertise for dealers According to OAR (2)(h) all dealers, when listing an offering price for a specific vehicle, must clearly and conspicuously identify the vehicle by its vehicle identification number if there are less than sex such vehicles advertised.. You should identify every vehicle for which you are advertising an offering price using at least a partial VIN number (last 6 digits). Under the UTPA, should the AG s office file suit, a dealer faces potential penalties from the court up to $ 25,000, per violation. In all cases, however, the AG s office makes settlement offers prior to filing a court action. These settlement offers, in the form of an Assurance of Voluntary Compliance will offer to settle for a lower monetary amount in lieu of filing a complaint with the court. The dealer in question forgot that these are rules, not suggestions. Just because Craigslist is a difficult place to advertise for dealers, with a lot of conflict and people making accusations, and Craigslist itself is not policing anything at all, does not mean Oregon dealers do not have to identify themselves as dealers when advertising. That brings up thoughts that will be covered in the Thoughts from Monty King column elsewhere in this magazine. April 2013 DEALER Solutions 4

5 WHAT IS 10 YEARS OLD AND OLDER? OVDA/OPSA had this question for Oregon DMV as there was some confusion when to change the years needed to be on secure statements for odometer readings. So, here we have the official response. Also see in this issue a letter from DMV on this subject. The exemption part of the federal odometer rule is below, shown in red. Federal Odometer Rule: Exemptions. Notwithstanding the requirements of and 580.7: (a) A transferor or a lessee of any of the following motor vehicles need not disclose the vehicle's odometer mileage: (1) A vehicle having a Gross Vehicle Weight Rating, as defined in of this title, of more than 16,000 pounds; (2) A vehicle that is not self-propelled; (3) A vehicle that was manufactured in a model year beginning at least ten years before January 1 of the calendar year in which the transfer occurs; or (Example to paragraph (a)(3): For vehicle transfers occurring during calendar year 1998, model year 1988 or older vehicles are exempt.) (4) A vehicle sold directly by the manufacturer to any agency of the United States in conformity with contractual specifications. (b) A transferor of a new vehicle prior to its first transfer for purposes other than resale need not disclose the vehicle's odometer mileage. (c) A lessor of any of the vehicles listed in paragraph (a) of this section need not notify the lessee of any of these vehicles of the disclosure requirements of [53 FR 29476, Aug. 5, 1988, as amended at 54 FR 35888, Aug. 30, Redesignated at 62 FR 47765, Sept. 11, 1997; 63 FR 52632, Oct. 1, 1998] The vehicle model year must be at least 10 years old before January 1st of the current year to be exempt from odometer disclosure. A vehicle that is a 2013 model year is not one year old until January 1, Therefore, a 2013 model year vehicle would not be exempt from odometer disclosure until January 1, 2023 (10 years from the model year). DMV rule, OAR , is in line with the federal rule. OVDA NOTE: So, for our purposes in Oregon, a vehicle that is a 2003 vehicle is now 10 years old, so vehicles 2004 and newer odometer readings must be on transfer documents that are secure, which include Oregon or out of state titles, and on Secure Odometer/reassignment forms ( ). Democracy must be something more than two wolves and a sheep voting on what to have for dinner....james Bovard, Civil Libertarian (1994) April 2013 DEALER Solutions 5

6 Members of OVDA & OPSA For the 15th Annual 2013 National Buy Here, Pay Here Conference May 21-23, 2013 at the Wynn Las Vegas Resort Thank you to the following sponsors! *This $1500 value drawing for one (1) person Registration $790 Airfare Lodging $360 (max) $350 (max) *Lodging and transportation payouts are reimbursed AFTER the event, with proper receipts. National Association of Buy Here Pay Here Dealers Oregon vehicle Dealers Association, Inc. Vehicle Acceptance Corporation Oregon Power Sports Association How do I sign up? Must be a current member of OVDA or OPSA Deadline for Entry is April 20, 2013 Winner must consent to their name and dealership published in Dealer Solutions Magazine, be interviewed about the seminars they attend, check in at the VAC Booth at the Trade Show for recognition during Trade Show event. *Lodging and transportation payouts are reimbursed AFTER the event, with proper receipts. I m a current Member of OVDA or OPSA Enter me for the drawing! I WANT TO GO TO VEGAS AND LEARN ABOUT BUY HERE PAY HERE CAR SELLING! Dealership name: Dealer Principal name: DA- Ph # address I currently Do Do Not sell cars with in-house financing. I am a member of Oregon Vehicle Dealer Association or Oregon Power Sports Association Fill out form in Feb or Apr Dealer Solutions Mag and fax or ovda@ordealers.com to OVDA Lodging and transportation payouts are reimbursed AFTER the event, with proper receipts.

7 2013 LEGISLATURE Not all the bills have been printed and released as of Dealer Solutions Publication date. For this issue, some bills may be in the ODAC meeting report, and will be transferred to this list for the April issue. Legislative Bills of interest: (SB=Senate, HB=House) HB 2059 Revises consignment laws, but excludes vehicle consignments. Section 3 contains that exclusion. Placed on watch list to maintain dealer exemption. Passed House, in Senate HB Expands list of documents that dealer may prepare and submit relating to sale or lease of vehicles. Requires that processing fee may not be less than $ 125 if dealer uses an integrator, or $ 75 if not using an integrator. From OADA, work session 4-3 HB 2109 Permits person to operate antique vehicle or vehicle of special interest within 150 miles of person s home during daylight hours. No action HB 2171 Allows person who is cited for a civil penalty of more than $ 2,000 to a trial in circuit court. (Curber penalties are $ 2,500 or $ 5,000 for each vehicle). OVDA met with sponsor, concerns noted. No action. HB2263 Adjusts and increases DMV licensing fees. Passed House Transportation committee, moved to Ways and Means Committee. HB 2276 Increases fuel tax and motor carrier taxes, provides for increases automatically every 5 years. No action HB Makes GAP insurance a non-insurance product, deleting requirement for an insurance license for dealers who sell the product. In House Consumer Protection Committee. No action, may be brought up in 2014 HB 2412 Allows private enterprise DEQ Inspection facilities. House Energy & Environment, and W&M. Scheduled for Public Hearing 4-16 HB 2414 Provides that DMV services may be performed by outside vendors. No action HB Requires DMV issue plates for ATVs, in House Transportation Committee, moved to Ways & Means, work group convened. OVDA President Monty King is on work group. Gut and stuff Amendments drafted, more amendments are possible. HB 2775 Changes UTPA violations that can be subject of claims from willful conduct to knowing conduct. Also see HB In House Judiciary Committee, Hearing HB 2831 New disclosures and requirements for retail Installment Contracts. Effective House Consumer Committee. No action HB 2871 Requires licensees to demonstrate and maintain tax compliance as condition of issuance or renewal of License. Phases in program requirements. House revenue Committee, hearing HB Creates Motorcycle inspector license, who can approve off road motorcycles for registration for on road use, allows DMV to make rules implementing procedures. Transportation Committee. No action HB Requires DMV to record last two odometer statements if provided by owner of vehicle voluntarily, for all vehicles 10 years and older. Requested by OVDA/OPSA, House Transportation and Economic Development. Hearing and work session held, Work session scheduled along with SB 612. SB 12 Prohibits vehicles and off road vehicles and ATVs from banks of certain waterways. Senate Environment & Energy Committee. No action SB 212 Requires Environmental Quality Commission to prepare certain revisions to Oregon's State Implementation Plan under federal Clean Air Act, resets the standards to those of Washington State. Declares emergency. Senate Environment & Energy Committee. Public hearing held SB 238+ Allows child under seven years of age to operate motorcycle on public lands if specified conditions are met. Requires that child under 16 years

8 of age meet rider fit guidelines to operate motorcycle on public lands. Senate Business and Transportation. Passed Senate, referred to House Transportation committee SB 280 Permits Department of Transportation to reissue title to previously totaled vehicle under certain circumstances. Senate Business & Transportation. No action SB 380 Allows owner of motorcycle to use special registration plates. Senate Business & Transportation. No action SB 399- Requires civil penalties in special accounts to be instead transferred to the General Fund. Senate Revenue, then W&M. hearing Held 4-10 SB 429- Directs state agencies to deposit moneys that agencies receive through imposition of fees, fines or civil penalties into General Fund and not into other funds account continuously appropriated to agency. Takes effect on 91st day following adjournment sine die. Senate Revenue, the W&M. Public Hearing 4-10 SB 454- Requires certain percentage of certain funds to be transferred to General Fund at end of biennium, sets standards of minimum balance allowed. Senate Revenue, then W & M. Public Hearing held SB 577 Adds specifications for service contracts and vehicle protection products that are subject to regulation. Senate General Government Committee. Hearing held , Work session held 4-10 SB 612+ SA 613+ SB 614- SB 615+ SB 616+ SB 5545 Requires DMV to allow expedited title processing for increased fees, by OVDA/OPSA, Senate Business & Transportation. Passed Senate 26-2, Now in House Transportation Committee, hearing being set along With HB Changes continuing education to 4 hrs per year, amendments to require ODAC to recertify providers every two years, require students to pass test provided by ODAC, prohibits repetitive continuing education, allows DMV rules, by OVDA/OPSA, Senate General Government, Consumer and Small Business Protection Committee. Hearing, work session 4-10, scheduled to be sent to full Senate 4-17 Deletes all requirements for continuing education for vehicle dealers, by Dismantler association and Northwest Automotive Trades Association. Senate General Government, Consumer and Small Business Protection Committee. Bill is dead in committee. Deletes Notice of Sale ( ) from offenses dealers are subject to civil penalties for not submitting., by OVDA/OPSA, General Government, Consumer and Small Business Protection Committee. Hearing 4-10, possible work session requires DMV to enter into the electronic record odometer readings voluntarily submitted by consumers and dealers on vehicles 10 years and older. Limits to 2 the number of odometer readings DMV must main records for, by OVDA/OPSA, slightly increases VIN inspection fee., General Government, Consumer and Small Business Protection Committee. No action. See HB Approves certain new or increased fees adopted by Department of Transportation. Declares emergency, effective July 1, public hearings Full text of legislative measures can be obtained at BILLS and LAWS online. Members may send comments on legislation to OVDA@ORdealers.com, or call our office at Non-member members can send comments also.

9 The CARLAWYER By Thomas B. Hudson and Nicole Frush Munro Here s our monthly collection of selected legislative and regulatory highlights, and a recap of some of the many auto sale and financing lawsuits we follow each month. Remember - what we report here does not capture every recent development. We select those we think should be important or interesting to car dealers. Note that this column does not offer legal advice. You should consult your dealership lawyer with any legal questions. We include items from other states. Why? We want you to be able to see new legal developments and trends. Also, another state s laws might be a lot like your state s laws if AGs or plaintiffs lawyers are pursuing particular types of claims, those laws and claims might soon appear in your state. As always, though, there is no substitute for checking with your own lawyer before you rely on anything we report or if you have any questions. Federal Law FTC Fires Buyers Guide Warning Shots. On January 25, the Federal Trade Commission announced that its Southwest Region Office sent warning letters to 11 used car dealerships in Jonesboro, Arkansas, stating that their failure to properly display a Buyers Guide in a clear and conspicuous location on all the used cars they sell violates the FTC s Used Car Rule. The inspections were part of the FTC s ongoing efforts to enforce the Used Car Rule, in conjunction with state and local officials. Protections for Servicemembers. On January 2, President Obama signed the National Defense Authorization Act for Fiscal Year The Act would provide the CFPB with enforcement authority under the Military Lending Act, add a civil liability section to the MLA to permit private actions to obtain actual and punitive damages, and conform the definition of dependent for purposes of consumer credit extended to service members and their dependents with the definition used to establish eligibility for military medical care. F&I Income in Peril? On March 21, the Consumer Financial Protection Bureau issued its long-awaited guidance about compliance with the fair lending requirements of the Equal Credit Opportunity Act and Regulation B for indirect auto lenders (that s the CFPB s inaccurate term used to describe companies that buy retail installment contracts from dealers). The guidance, for the most part, applies to companies that permit dealers to increase consumer interest rates above the companies buy rates and that compensate dealers with a share of the increased interest revenues. The guidance, CFPB Bulletin , applies to all indirect auto lenders within the jurisdiction of the CFPB, including both depository and nonbank institutions. The CFPB notes that a lender s dealer markup and compensation policies may increase the risk of pricing disparities among consumers based on race, national origin, and other prohibited bases. In order to ensure that indirect auto lenders are operating in compliance with fair lending laws, the CFPB recommends that these lenders, among other things, impose controls on dealer markup or otherwise revise dealer markup policies, monitor and address the effects of markup policies as part of a robust fair lending compliance program, or eliminate dealer discretion to mark up buy rates and instead fairly compensate dealers using a different mechanism that does not result in discrimination, such as a flat fee per transaction. If you are involved in a rate participation program, you can expect that you ll be hearing from your finance sources on this topic soon. Litigation Dealership Liable for Delivery of Services under Extended Service Contracts: Two individuals bought extended service contracts in connection with their purchases of used cars from a dealership. After the service contract company went bankrupt, the individuals brought their cars to the dealership for repairs. The dealership refused to perform the repairs under the contracts, and the individuals filed complaints with the Rhode Island License and Hearing Board. The Board found that the dealership engaged in unconscionable business practices by willfully failing to perform under written agreements with the individuals. The Rhode Island Department of Administration affirmed the Board s decision, as did the Superior Court of Rhode Island. The court found there was sufficient support for the Board s conclusion that the dealership was a party to the contracts. The dealership signed the contracts, retained a substantial part of the contracts price as commissions, and had its address listed on the front of the contracts. Further, the contracts included a provision requiring the buyers to contact the dealership for repairs. The court also upheld the Board s finding that the dealership did not sufficiently disclose an agency relationship where the service contract company did not sign the contracts, the dealership representative who signed was not designated as an agent in the contracts, all references to the bankrupt company were in fine print, and there was no oral disclosure of an agency relationship. See Simon

10 Chevrolet-Buick, Ltd. v. Rhode Island Department of Administration, 2013 R.I. Super. LEXIS 8 (R.I. Super. January 7, 2013). Floor Plan Lender Entitled to Accelerate Demand Notes Without Reason to Believe Dealer Would Default: A dealership signed cognovit (or confessed judgment ) demand notes in connection with loans it received from a bank. Later, the bank accelerated the loans and sued the dealership on the notes. The dealership claimed that the bank breached its duty to act in good faith by improperly accelerating the loans without a good faith belief that the prospect of repayment was impaired. The dealership also claimed that the bank exercised total domination over its auto sales business and, through its misuse of that control, caused the business to become insolvent. The trial court granted the bank s motion for summary judgment, and the Court of Appeals of Ohio affirmed. With regard to the breach of duty claim, the appellate court found that the Uniform Commercial Code commentary states that a lender s authority to accelerate at will only where it deems the borrower unable to repay does not apply to demand instruments, or obligations whose very nature permits call at any time with or without reason, as was the case here. Second, Ohio courts have repeatedly found that a lender does not act in bad faith when it decides to enforce its contractual rights, as the bank did in this case. Third, the UCC commentary makes clear that a lender s duty to act in good faith does not give rise to an independent cause of action. With regard to the claim brought under the instrumentality theory, the appellate court found that the theory does not create an independent cause of action. See The Union Bank Co. v. Car Mart Auto Group, Inc., 2012 Ohio App. LEXIS 5137 (Ohio App. December 17, 2012). Court in Car Buyer s State Lacks Jurisdiction over Out-of-State Seller that Sold Car through Online Auction: A Pennsylvania dealership advertised a car for sale on an online auction website. An Ohio resident won the auction. The parties entered into a bill of sale. As a precondition of the sale, the individual required the dealership to inspect the vehicle. The dealership hired a company to inspect the car, which graded the car as OK, except for a few minor faults. The individual paid for the car and had it shipped to Ohio. The car did not work when it arrived. Further inspections revealed that it was nonfunctional and unsafe to drive. The individual sued in Ohio state court. One of the defendants moved to dismiss the case for lack of personal jurisdiction. The trial court dismissed the case against both defendants, and the Ohio Court of Appeals affirmed. The appellate court stated that in order for an Ohio court to have personal jurisdiction over a nonresident defendant, the defendant must have minimum contacts with Ohio such that the maintenance of the suit does not offend traditional notions of fair play and substantial justice. The appellate court found that the complaint alleged just a single transaction and did not allege that either of the defendants maintained or operated the website containing the advertisement for the vehicle. Further, there was no evidence that the defendants ever entered Ohio during the transaction. Therefore, the appellate court concluded that the defendants contacts with Ohio were too random and attenuated to create a substantial connection with Ohio to make personal jurisdiction reasonable. See Shoptaw v. I & A Auto Sales, Inc., 2012 Ohio App. LEXIS 5407 (Ohio App. December 31, 2012). Buyer Not Entitled to Revoke Acceptance of 16-Year-Old Car Bought As Is : An individual bought a 16-year-old car from a dealership. The contract stated that the car was sold "as is." The car broke down on the way home from the dealership, and, after replacing the battery, the individual drove it back to the dealership and demanded her money back. When the dealership refused, the individual sued, claiming that she was entitled to revoke her acceptance of the car. The trial court granted a directed verdict for the dealership, the intermediate appellate court rejected the individual s appeal, and the Supreme Court of Montana affirmed. The high court stated that, under the Montana Uniform Commercial Code, the individual could revoke acceptance of the car if she proved that the vehicle was nonconforming and that the nonconformity substantially impaired the value. According to the high court, the fact that the car broke down was not sufficient to prove nonconformity when the car was 16 years old and was bought "as is." The high court also noted that the individual did not have the car checked by a mechanic for proof of nonconformity or to determine the actual condition of the vehicle. The high court stated that she should have expected that the car needed repairs. See Castro v. Ernie's Auto, 2012 Mont. LEXIS 373 (Mont. December 24, 2012). Seller Not Liable for Fraud Where Sale Was As-Is and Car Was Merely Worth Less than Anticipated: An individual bought a car from a dealership. The contract stated that the vehicle was to be sold as is. After the individual learned that the vehicle had been in a previous accident, he sued, claiming the dealership violated the Kentucky Consumer Protection Act and committed fraud by omitting, suppressing, and concealing the vehicle's prior damage and accident history. The trial court found that

11 the sold as is clause in the contract precluded the claim of fraud and dismissed his claims. The Court of Appeals of Kentucky affirmed. The appellate court noted that the effect of the sold as is clause was to shift the assumption of risk regarding the vehicle s value or condition to the buyer, despite any express or implied warranties made by the dealership. Therefore, because the individual s alleged injury was only that the car was worth less than anticipated, the individual could not show that the dealership s representations caused the injury. See Roberts v. Lanigan Auto Sales, 2013 Ky. App. LEXIS 4 (Ky. App. January 4, 2013). From April Newsletter: Odometer Law Exemption for Cars More than 10 Years Old at Time of Sale Not Applicable to Tampering Provisions: An individual bought a car from a dealer based on an ad on the dealer s website stating that the car s mileage was 56,537. After leaving the dealership, the individual discovered that the odometer was stuck at that mileage and tried to return the car for a refund. When the dealership refused, the individual sued, alleging that the dealership violated the federal Odometer Law. First, the individual claimed that the dealership s false disclosure of the mileage of the car violated the Odometer Law. In its defense, the dealership argued that since the car was more than 10 years old at the time of sale, it was exempt from the disclosure provisions of the Odometer Law. The court agreed and dismissed the claim, citing an express exemption in the federal regulations. Second, the individual claimed the dealership had tampered with the odometer of the car with the intent to defraud him, in violation of the Odometer Law. The court held that the exemption for cars more than 10 years old at the time of sale applied only to the disclosure provisions of the Odometer Law and not to the tampering provisions, and denied the motion to dismiss the tampering claims. See Beam v. Domani Motor Cars, Inc., 2013 U.S. Dist. LEXIS (S.D. Fla. February 11, 2013). Tom (thudson@hudco.com) and Nikki (nmunro@hudco.com) are partners in the law firm of Hudson Cook, LLC. Tom is the author of several books, available at Tom is also the publisher of Spot Delivery, a monthly legal newsletter for auto dealers, and the Editor in Chief of CARLAW, a monthly report of legal developments in all states for the auto finance and leasing industry. Nikki is a contributing author to the F&I Legal Desk Book and frequently writes for Spot Delivery. Spot Delivery, CARLAW and the books are produced by CounselorLibrary.com LLC. For information, call or visit Copyright CounselorLibrary.com 2012, all rights reserved. Single publication rights only, to the Association. (2/13) HC#

12 Cash for BHPH Dealers Jonathan Neubauer, CEO, Vehicle Acceptance Corporation Welcome to a refreshing alternative to your Buy-Here-Pay-Here financing needs. Vehicle Acceptance Corporation is a dealer oriented finance company with more than 23 years of experience and one that understands your business. We know that you do not want to work for a finance company, which is why you are an Independent Dealer. Rather than booking notes in a Special Finance company s portfolio for them, we want to see you build your own portfolio that you own, with customers that you want to do business with. VAC has the resources and services that are simple and easy to use to help you replenish your inventory, reduce your overhead and help you make more money. VAC helps dealers succeed while allowing them to retain ownership of their BHPH contracts. Use our capital to grow your BHPH portfolio, and rely on VAC servicing for collections so you can spend more time buying cars and working new deals. VAC will not only assist you in restocking your inventory, but also alleviate the burden of collections by offering highly successful methods, skilled staff and credit reporting to all 3 bureaus at no additional cost. With our program you retain ownership of your notes, you decide the terms and finance charges, and you qualify your customers. You do all of the deals that you really want to do. The Vehicle Acceptance program is specifically designed for Buy-Here-Pay-Here dealers, and will provide you with the tools you need to run and grow your business. VAC understands your business and will strive to help you succeed. Financing Simplified. Note: VAC is a member of the Oregon Vehicle Dealer Association. You can obtain a brochure with information about their programs by ing the association at ovda@ordealers.com. February 2013 DEALER Solutions 12

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14 THOUGHTS FROM MONTY KING OVDA & OPSA PRESIDENT Dealer Bonds are different on renewals now. For dealers renewing their dealer licenses from now on, you don t have to have a bond form anymore, as long as your bond continues to be the same company you ve had, and you are paid up with them. Bonds now have no expiration date like before, so only die if you don t pay your bond company for the continuing coverage. Some bonds are paid for at 1 year, 2 years or 3 years at a time, which is up to your company. Advertising: the DOJ has stated dealers should put the last 6 characters of the VIN # on all advertising of vehicles (unless you are advertising 6 or more of the same type). This does not make sense to me. Independent dealers rarely have more than one of a type of vehicle. If they do, then they should use the VIN # to make sure buyers know which vehicle is being advertised. There are hundreds of thousands of vehicles advertised each year, and relatively few are duplicates form the same lot at the same time. This is an expensive government mandate, for little practical value to the consumers. We are going to take a look at the numbers of complaints generated by bait and switching but that may not be fully possible, given the way DOJ files their complaints and the cost of wading through them. So far, I ve reviewed over 1200 complaints, and have asked for freedom of information copies on 26 of them. We ll work on this. Legislation: We continue working on legislation for the 2013 legislature. -Revise continuing education, reduce to 4 hours a year, prevent educational fraud, require testing of all programs, moves education reviews to the Oregon Dealer Advisory Committee, requires providers to recertify every two years. Ability to use management employee instead of dealer principle did not survive negotiations. -Allow DMV to provide expedited title processing for additional fees. Passed Senate, moving in House of Representatives. -Weight Mile exemption for Big Truck dealers for test drive purposes. Stuck on o. We ll try this one for the 2014 legislature. - Notice of Sale form exemption from civil penalties. Hearing in Senate expected. -Allow odometer readings to be placed in DMV electronic files if voluntarily provided by consumers and dealers for older vehicles, moving forward in House of Representatives, good chance of passage. Monty King OVDA and OPSA President. April 2013 DEALER Solutions 14

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18 QUESTION FROM A DEALER 1 Question: Can a dealer have a public auction and sell vehicles to consumers and disclaim DEQ requirements? Answer: No. The dealer still has the same requirements as a sale back on the dealer lot. The only way to disclaim DEQ is when selling a vehicle for parts and the vehicle is towed or hauled away, not driven. Take a picture of it as it leaves so you can prove how it was sold. QUESTION FROM A DEALER 2 Question: Does DMV have online reporting for dealer notice of vehicle purchase form 165? Answer: Yes. You have to sign up first. Call and ask them to sign you up for the internet site where dealers can do online 165s and 6890s. If you get signed up, start a binder for the reports that will be generated each time you go to the site. You no longer will have to put the 165s and 6890s in the deal jackets if they are being stored in the binder. Advertising Question: Question: I have 6 motorcycles, all of the same year and model. When I am advertising them, do I have to do anything special? Answer: Yes. Generally, vehicle dealers (of whatever type) do not have more than one of anything, but there is a need to differentiate between the different vehicles. You should also include at least 6 digits of the VIN to identify the individual units being sold. Same thing for franchise dealers, really, as they have many of the same model and year. Don t forget to put the advertised price on each vehicle if there is one at the dealership so there is no confusion. This is also a requirement of the DOJ Advertising rules. QUESTION FROM A DEALER 3- : Question: When selling vehicles we are thinking of offering a limited warranty. The way we thought of working it is they would pay us a premium either in a lump sum or monthly added to the payment. We would want to require the customer to have all the repairs done at our shop. Is that legal or can the customer go anywhere they want with a warranty? Answer: Wow, what a question! The full answer would take a page and a half to explain every detail of this complex question. Lets take the short answer first, and members can call in for a longer explanation if they want. No. You can put a limited warranty on vehicles you sell, with an in-house parts and labor limitation, but we don t think you can add a monthly price to the car s payments or charge extra at the time of delivery. That would really make it a service contract, and the customer could get their service anywhere. April 2013 DEALER Solutions 18

19 QUESTION FROM A DEALER 4: Question: A friend bought a car in Nevada for his wife. She doesn't like it and he wants me to consign it. Trouble is he never put it in his name and he lives in Idaho and didn't want to pay sales tax. Can I legally consign it? Answer: No. A consignment from a non-dealer has to be registered in the consumer s name. They can prove this by a title, or by a notice of transaction submitted that shows they have paid DMV for a new title in their name, but they just have not received it yet. A dealer may take a consignment from another dealer, with proof they own the vehicle, and a copy of their dealer license. From Auto Remarketing QUESTION FROM A DEALER 5- Question: Is there a law against selling vehicles to people under the age of 18? Answer: We re not lawyers, so if you want legal advice, you know what to do. But, from everything we ve been told, and most industry forms use this as a standard, the person is asked or must state they are 18 years old or older before they sign a purchase order. We do know of times where dealers have had to buy vehicles back when minors (less than 18 years old) have paid cash for vehicles and then the parents find out and demand the money back. We think the idea is they are not of legal age to make a buying decision (unless they have emancipation papers). How do you deal with this? Call the office.. QUESTION FROM A DEALER 6- Question: Was hoping you could shed some light on my options for recourse (if any) regarding a default on payment by a customer that purchased a vehicle from me. Here's the situation; - The loan was done on a "hand shake" agreement and I have the signed document in my possession. - I did not have the customer fill out the Finance agreement documents that you have always suggested that we do. - The customer has paid only $310 of the original $1800 owed during this 10 month period. - The customer has title of the vehicle - Customer is now not returning calls This customer purchased two vehicles from me in the past, thus my willingness to "help" him when he totaled one of the vehicles he purchased. Other than possible small claims court, was wondering if you have any suggestions for me. Answer: I m not an attorney, so this cannot be considered legal advice. I think you would have to go to small claims court to get anything. I think he knows that and knows it would be a lot of trouble for you. You did everything wrong on this one. But, you knew that. No good news on this unfortunately. Maybe you should check in with an attorney as well? April 2013 DEALER Solutions 19

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