SEPTEMBER 2018
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Information and Insight for Florida Used Car Dealers
Requirements for the new Hope Scholarship program for bullied students go into effect October 1. Car Dealers need to be ready for the important sales tax reporting changes it will bring. Find out what it means for you on Page 12.
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September 2018 — Independent Dealer — 1
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Dealer Independent
MAILING ADDRESS 1840 Fiddler Court Tallahassee, FL 32308 TELEPHONE (850) 385-2712 (800) 237-0448 FAX (850) 385-3251 WEBSITE www.FIADA.com EXECUTIVE COMMITTEE Scott Lanier, CMD President Brad Joel Senior Vice President Lisa Compagno Chairman of the Board Jenay Rhoads Secretary Phil Risley Treasurer Frank Fuzy Regional Vice President George Hickey Regional Vice President Steve Marbais, CMD Regional Vice President Brandi Noegel Regional Vice President Jim Winterick, Sr Regional Vice President FIADA STAFF Lisette Mariner, CAE Executive Director Terry Myers Educational Instructor Jason Berthiaume Education and Events Manager Christy Taylor Editorial/Advertising
POSTMASTER:
Send address changes to
FIADA • 1840 Fiddler Court Tallahassee, FL 32308 (850) 385-2712 • Call/Text: (800) 237-0448 Fax (850) 385-3251 • www.FIADA.com The Independent Dealer is a publication of: Florida Independent Automobile Dealers Association, 1840 Fiddler Court, Tallahassee, FL 32308 The magazine is published every month in Tallahassee and distributed to Florida new, used, wholesale and lease/retail car dealers. Advertising rates are available upon request. The statements and opinions expressed herein are those of the individual authors and do not necessarily represent the views of Independent Dealer or the Association. Likewise, the appearance of advertisers, or their identification as members of FIADA, does not constitute an endorsement of the products or services featured.
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Contents September 2018
For members of the Florida Independent Automobile Dealers Association
C O L U M N S & F E AT U R E S 4
President’s Message Scott Lanier, CMD
6
Executive Director’s Message Lisette Mariner, CAE
8
Membership News
10
Hurricane Season Is Here and It's No Joke Preparing for a storm is serious. Use these tips to make sure you are ready.
12
Back to Basics The new Hope Scholarship will be in effect starting October 1, which means there will be new mandatory sales tax reporting requirements for your dealership to follow.
18
Quality Photos Can Lead to Better Sales Put your best foot forward when posting inventory listings online by providing quality photos and the right mix of shots and features.
20 Industry News News and headlines of interest to the Florida Used Car Industry and beyond. 22
The Artful Balance of Segmenting Leads Using your website to generate leads is a given, but the real key is understanding what to do with them once they are captured.
26
How Scary Is Your Customer Service? The hot costume this halloween should be dressing up like your customers. Walk through your approach and make sure it is all treats, and no tricks.
30
A Look At Current Legal Issues Attorneys Tom Hudson and Nicole Munro's monthly collection of legislative and regulatory highlights to keep you in compliance.
September 2018 — Independent Dealer — 3
FROM THE PRESIDENT
You're Not Just a Car Dealer BY SCOT T LANIER, CMD, FIADA PRESIDENT
S
o, you just sell cars for a living? I’m sure we have all heard this statement from friends or new acquaintances. I think many people think that selling vehicles is simple: you go to the auction, buy a vehicle, sell the vehicle and put a wad of money in the bank! Don’t we all wish it was that simple.
Being a dealer is complex and you should stop and take a moment to pat yourself on the back and congratulate yourself for being able to accomplish all the tasks that you have on your plate any given day. Let’s think about this for a moment. One of the first things a dealer must do is obtain a dealer’s license. Do you remember how difficult it was to walk through the process? The filing of forms, the inspection for DMV, the classes you had to attend, the bonding process, the fees, the certificate of occupancy? And now the annual maintenance on continuing to own the license. Even before that you had to understand real estate contracts for purchase or real property rental agreements, zoning laws, signage restrictions, permitting, renovation and construction on the property you were considering occupying. Not to mention the size of the property, how many vehicles were you planning to sell, and what were your budget constraints, and how many vehicles could you afford to sell. How about the floor planning of the vehicles? Understanding the contracts and the fee process that are associated with having a floor plan, and the difficulty in obtaining a floor plan? Most BHPH dealers have lines of credit with contingencies, covenants, capital requirements, gross borrowing bases, limitations on reserves, borrowing ratios, the list goes on and on. You are expected/required to know all the ins and outs of these documents. Not only do you have to understand them for the financial well-being of you and your family, but you must understand these complex documents well enough to negotiate with the professional creditors issuing these financial vehicles. Even with all the tools at our disposal one must still have ongoing quick-thinking, radar-type skills for purchasing inventory. It’s not just a matter of attending an auction 4 — Independent Dealer — September 2018
and raising your hand or winking your eye. You must know your market, your customer, the value of the vehicles you are purchasing, the condition of the vehicle, if it has been wrecked, and if so, how bad? Has it had paint work? Was it underwater? Is it green light or red light? Does it have an inspection period? Are the catalytic converters intact? Why is the check engine light on? Is there a noise in the motor? Does the transmission shift properly? How bad is the rust on the undercarriage? The questions go on and on and on. So you bought some cars, after negotiating transportation back to your facility, it’s time to start the reconditioning process. Now you must have some technician skills or you’re going to get hosed. More negotiating skills to purchase parts, tires, PDR, touchup work, mechanical repairs, and details. Finally, you are ready to sell some vehicles! Do you understand your application, contract, odometer statements, window documents, buyers guides, purchase agreements, insurance requirements, credit bureaus, funding payoffs, and warranties if applicable? Now that you sold some vehicles, you must now all about titling, sales tax, documentary stamps, county surtaxes, timeframes, collection and rebating of fees, electronic titles, paper titles, compliance issues, red flag rules, risk-based pricing, privacy policies, safety issues, recalls, notice of adverse action……….and the list of knowledge a dealer needs to have could go on and on and on. Just fill in your personal list that you accomplish weekly. Here’s my point, you’re not just a car dealer, you are a professional! You possess the knowledge of a real estate agent, an attorney, a CPA, a buyer, a negotiator, a compliance officer, a banker, a technician, an administrator, an IT professional, an owner, the principle, and the dealer. So, take a moment and applaud yourself for your achievements, you deserve it! Even if everyone else thinks you…. just sell cars. Scott Lanier, CMD FIADA President www.fiada.com
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September 2018 — Independent Dealer — 5
EXECUTIVE DIREC TOR’S MESSAGE
Ready, Set, Go BY LISET TE MARINER, CAE, EXECUTIVE DIRECTOR
I
can’t believe that another year is almost gone. As we head into the final quarter of 2018 and adjust our year-end goals, we must think about next year too.
What are you going to do to make next year better? Did you achieve your set goals, or did you fall short? Do you have time to make up any shortfall? The last quarter of the year is always exciting for FIADA. We will have installed a new board, we get to know legislators (both before and after the elections), we formulate strategies, and develop the budget for the upcoming year. It is also time to figure out what we could have done better. Here’s where you can help me. I’m looking for feedback from you. Do you have a few minutes to answer these 3 questions for me?
1. What keeps you up at night? 2. What product/service would you like FIADA to pursue? 3. What’s the one thing you do that make you more profitable? You can send your responses to me via email at lmariner@fiada.com, by fax to 850-385-3251, or call me at 800-237-0448 ext. 100. Your feedback helps us improve and provide you what you want. It’s only through your feedback that we can improve. If you don't tell us what you need, we do not know you need it! Thank you for the time and effort you put into helping us improve! I mentioned earlier that we will be installing a new board in October. I'm excited to welcome the following 6 — Independent Dealer — September 2018
members to the 2018-19 Executive Committee: Brad Joel, President Lisa Compagno, Senior Vice President Jenay Rhoads, Treasurer Frank Fuzy, Secretary Luis Giraldo, Regional Vice President Trevor Varney, Regional Vice President Brandi Noegel, Regional Vice President Jim Winterick, Sr., Regional Vice President Steve Marbais, Regional Vice President With a mix of old and new faces on the Executive Committee, I am confident that next year will be even better than this one. Thank you to these members for stepping up and serving your Association. I would also like to take a moment to thank Scott Lanier, our current President who will be transitioning to Chairman of the Board in October. It has been such a pleasure getting to know Scott and working with him this year. He is a prime example of professionalism, pride of industry and business success. With his rigorous schedule, leading the FIADA has not been easy, but he did it well. I'm sure he is ready to "pass the gavel" as his term nears its end, but it really has been a great year thanks to Scott's leadership. Thank you to all of you, as well, for being the best members an association could ask for. Whether you attended a Town Hall meeting, donated to the PAC fund, read the Independent Dealer magazine, used an auction coupon or just renewed your dues, you played a big part in the FIADA story of 2018. We would not be here without you. Thank you for your commitment to the used car industry and your faith in the FIADA. www.fiada.com
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September 2018 — Independent Dealer — 7
MEMBERSHIP NEWS
New Members
AUGUST 2018
2KS AUTO SALES Crestview, FL Kenneth Murphy Sponsor: Terry Myers
EXTREME BOUNCE HOLDINGS, LLC Lake City, FL Timothy Murphy Sponsor: VEMO Auto Auctions
ALPHA ONE MOTORSPORTS LLC Apopka, FL Jose Hernandez Sponsor: Terry Myers
FT ACCEPTANCE CORP Miami, FL Roberto Soto Sponsor: Jason Berthiaume
BROOKS AUTOMOTIVE SALES & REPAIR Saint Petersburg, FL Desmond Brooks Sponsor: Terry Myers
INTEGRATED DEALER SOLUTIONS Miami Springs, FL Ramiro Rouco Sponsor: Independent Dealer
COASTAL CREDIT, LLC Indianapolis, IN Kevin Garrett Sponsor: Jason Berthiaume
JEFF MARTIN AUCTIONEERS, INC Hattiesburg, MS Jami Rogers Sponsor: FIADA.com
Renewing Members
AUGUST 2018
20+ Year Members Auto Brokers of Orlando Maxx Motors Williams & Stazzone Insurance Agency, Inc.
Orlando, FL Princeton, FL Melbourne, FL
10+ Year Members American Recovery Association Auto Express Enterprises, Inc. Firehouse Auto Sales Inc. Sun Financial Holding LLC
Irving, TX Orlando FL Sebastian, FL Hollywood, FL
Under 10 Year Members Alley's Auto Wholesale Ally SmartAuction Automotive Financial of America, Inc.
Jacksonville, FL Detroit, MI Orlando, FL
JERRY & ROCK AUTO EXCHANGE, LLC Ocala, FL Ricky Link Sponsor: VEMO Auto Auctions MICHAEL FUTRELL Tallahassee, FL Sponsor: Terry Myers
SKYCARS GULF BREEZE, FL GREGORY SIGLER Sponsor: FIADA ZAG MOTORS, LLC Sarasota, FL Jim Langbert Sponsor: FIADA
KEEN AUTO MALL LLC Pompano Beach, FL Kevin Keen Sponsor: The Service Bureau MUSCLE CARS FOR SALE, INC. Fort Myers, FL Thomas King Sponsor: Jason Berthiaume
E & M Plus, LLC ETS Autos Evans Auto Sales Fleet Liquidators of Central Florida LLC Floorplan Xpress LLC-OK Harbor City Auto Sales, Inc Lazydays Mengar Automotive Finance Solutions Ralphs Place Start Auto Finance Strategic Dealer Services Sunbelt Dealers Assistance Inc. VCFS VIP Auto Group Inc
Ocala, FL Sanford, FL South Daytona, FL Debary, FL Moore, OK W Melbourne, FL Seffner, FL Miami, FL Fort Pierce, FL Holywood, FL Irving, TX Atlanta, GA Rockleigh, NJ Clearwater, FL
Networking at FIADA.com Did you know you can easily connect with other members on FIADA.com? Start by logging in with your username and password, then updating your member profile and settings. Find other members near you, groups to join and more! 8 — Independent Dealer — September 2018
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September 2018 — Independent Dealer — 9
G E T T I N G P R E PA R E D
Hurricane Season Is Here and It's No Joke Hurricane preparation should be taken seriously. As the season and the ocean waters heat up, now is the time to get your dealership ready.
A
s Florida watches the aftermath that Hurricane Florence had on the Carolinas, it is a good time to review a few hurricane season tips that could keep your dealership afloat in the middle of a disaster. In the event of a storm, protecting your dealership and your employees will become one of your top priorities. Here are some things to keep in mind:
•
•
•
•
Do all that you can to preserve your customer files to the extent possible in the event that water or wind enters your premises.
•
Flying debris caused huge damage – minimize this by removing all debris around the dealership premises.
•
Get cell phone numbers and a complete list of all employees so that you can check on them following a storm. Since communication systems may be totally destroyed, have a plan for your employees to assemble at your dealership at a certain date and time after a hurricane. This will give you an opportunity to access damage to your employee’s homes and determine which employees will be available for clean up at your dealership. Most insurers will pay for employees who perform debris removal following a storm.
First and foremost, all dealers should know where their insurance policies are located. More importantly, you should review your insurance coverage to determine if you have any specific exclusions related to hurricanes. It is vitally important to review your building values in the event that you have to replace or repair structural damage. Since water can enter your buildings in a variety of ways, care should be taken to protect all dealership documents. Water damage from past hurricanes caused extensive damage to the interior of many dealerships as most lay-in ceiling tiles fell to the floor throughout all of the offices. Cover all office equipment and machinery and remove computer units from the floor in all offices. Perform a BACK-UP on disk of all your data on computers and store it off-site.
•
Be aware of your responsibility to mitigate damages following a storm – your insurers require you to be able to secure your premises and prevent further damage from wind and rain following a major storm.
•
As much as possible, have all vehicles picked up by customers.
•
In order to minimize your down time and provide a safe haven for your employees, develop a source list for the following products
10 — Independent Dealer — September 2018
and services: Water and ice – think of the large 7-11 style ice machines. You will need ice & water and a way to store it. Generators – a life saver – so that you can restore power at your dealership. Finding generators after a storm is difficult, so plan ahead and have them before the storm hits. Gas & Chainsaws - gas will be hard to find after the storm hits. Keep a few cans on hand. Chainsaws are essential during the cleanup process. Portable bathrooms - Locate a source for portable bathrooms for your staff who will be involved in clean up, as there may be no electricity or water for extended periods. Repairs - Speak with area contractors who would be able to provide some patchwork for damaged roof areas and contact an electrician who can connect a generator into your regular dealership service. Food - Designate someone in charge to feed your employees daily if you take a direct hit Trailers - Locate a source for mobile trailers in the event that your showroom is damaged to serve as headquarters for clean up and useful in the event that your sales operations need to continue from mobile units. www.fiada.com
•
•
•
Have a plan for securing your premises after a storm. You may wish to contact local security firms to prevent individuals from entering your premises during non-working hours. Insure that you have a contractor available who can also help you dry out your facilities. Contractors with drying equipment and dehumidifiers are extremely helpful. Talk to the people that handle your trash dumpsters and be sure that you can get additional dumpster facilities for clean up after the storm.
•
Contact area firms for bobcat and front – end loaders for debris removal.
•
Have a team of handy/strong employees who can help your employees at their homes if necessary.
•
If you utilize bottle water dispensers have plenty of fresh water on hand and a small generator so that you can continue to dispense cold water.
•
Develop a plan for your replacement inventory; several dealers noted that it was important to remove their damaged vehicles before the new inventory can be brought in. It is important to have a plan because there will be a delay and when you decide to return to sales, you may have insufficient inventory available.
•
Take digital photos of the damage done to your dealership. You may wish to take digital photos throughout your office so that you can reconstruct your losses for your insurance company.
•
Follow a storm carefully with
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your floor planners and take particular care to work closely with all adjusters, as they can be tremendously helpful in finalizing your losses. •
•
•
Have cash available at a secure location as banks may be down and all ATM’s will be unavailable. Whenever possible, have gasoline reserves on hand for generators and so that you can travel to remote areas to locate certain services or dealership necessities. Most dealerships encounter problems locating skilled labor
to help with damaged roofs and other structural work. For those with steel buildings, the need to contact contractors in advance is even more important as these supplies may or may not be available. Remember, in the event of a hurricane or any other natural disaster, FIADA is ready to assist you in any way possible. Special thanks to the Florida Automobile Dealers Association for compiling this list of tips.
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September 2018 — Independent Dealer — 11
BACK TO BASICS
New Mandatory Sales Tax Reporting Requirement BY TERRY MYERS
Starting October 1 dealers will have a new sales tax reporting requirement to meet, thanks to the new Hope Scholarship program.
T
he purpose of the new Hope Scholarship program is to generate funds to help children trapped in a bullying situation. Funds will be used to help relocate bullied children to a different school. Funding comes from the sales tax applied on sale of qualified vehicles.
Rule 12AER18-07, F.A.C. Effective 08/18 Page 1 of 1
The Hope Scholarship Program (Program) provides a public-school student who was subjected to an incident of violence or bullying at school the opportunity to apply for a scholarship to attend an eligible private school rather than remain in an unsafe school environment. Beginning on or after October 1, 2018, when you purchase or register a motor vehicle qualifying for the Program in Florida, you may designate $105 per vehicle to an eligible nonprofit scholarship-funding organization participating in the Program. If the state sales tax due is less than $105, you may designate the amount of state sales tax due. Your motor vehicle dealer, county tax collector, or private tag agent will remit your contribution to the organization and remit the remaining state sales tax and surtax to the Florida Department of Revenue.
The Department of Revenue was tasked with overseeing the program in addition to creating and implementing the new process. Stay alert for upcoming TIPS, Taxpayer Information Publications. If you are not on the update list with the DOR, go online and register now, http:// floridarevenue.com/Pages/subscribe. aspx.
To make your contribution to the Program, complete the following. Sign and date. Eligible Nonprofit Scholarship-Funding Organization:
Step Up for Students, Inc.
Contribution Amount (Lesser of $105, or state sales tax due):
Vehicle Owner’s Name: Mailing Address: City:
State:
ZIP:
State:
ZIP:
Vehicle Co-Owner’s Name: Mailing Address: City: Vehicle Year:
How might the dealer approach and fulfill these obligations? FIRST: DR-HS1 (Fig. 1) Dealerships must offer (as in not optional) customers the opportunity to redirect some of their sales tax dollars on aqualified vehicle, to a special account that will manage Hope Scholarship funds. Should the total sales tax due a qualified vehicle exceed $105.00, the dealer must offer the customer the option to redirect $105.00 only, to the Hope Scholarship fund. If the sales tax amount on a qualified vehicle is less
DR-HS1 N. 08/18
Hope Scholarship Program Contribution Election
Vehicle Manufacturer:
Vehicle Identification Number:
Signature of Owner:
Date:
Signature of Co-Owner*:
Date:
*For vehicles owned by more than one person, the signature of the owner and the co-owner is required. For use by motor vehicle dealer, county tax collector, or private tag agency.
Fig. 1 - Form DR-HS1 than $105.00, the lesser amount may be redirected. This is done on FORM DR-HS1 Hope Scholarship Program - Contribution Election. The dealer will file this completed form in the deal jacket.
12 — Independent Dealer — September 2018
NOTE: There is no requirement to obtain or keep form DR-HS1 if the customer elects to NOT redirect funds. We will address a potential pitfall about this toward the end of this article. www.fiada.com
DR-15 R. 08/18 Page 2 of 2
File and Pay Online to Receive a Collection Allowance. When you electronically file your tax return and pay timely, you are entitled to deduct a collection allowance of 2.5% (.025) of the first $1,200 of tax due, not to exceed $30. To pay timely, you must initiate payments no later than 5:00 p.m., ET, on the business day prior to the 20th. More information on filing and paying electronically, including a Florida e-Services Calendar of Due Dates (Form DR-659), is available at floridarevenue.com.
SECOND: Form DR-15R (Fig. 2) The dealer must enter the chosen amount into Line 6 Less Lawful Deductions. This amount must also be entered in Line 16 Hope Scholarship Credits (Included in Line 6). THIRD: Form DR-HS2 In addition to current reporting requirements, the dealer must also complete DR-HS2 Hope Scholarship Program - Dealer Collection Report. DR-HS2 is a three-part form for reporting the reallocated amounts for each collection period. It is the dealer’s responsibility to send funds with Copy A to the chosen Eligible Nonprofit Scholarship-Funding Organization. Copy B is to go to the Department of Revenue. Copy C is for the dealer’s records. Let us take a closer look at a couple more items:
Due Dates. Returns and payments are due on the 1st and late after the 20th day of the month following each reporting period. A return must be filed for each reporting period, even if no tax is due. If the 20th falls on a Saturday, Sunday, or a state or federal holiday, returns are timely if postmarked or hand delivered on the first business day following the 20th. Penalty. If you file your return or pay tax late, a late penalty of 10% of the amount of tax owed, but not less than $50, may be charged. The $50 minimum penalty applies even if no tax is due. A floating rate of interest also applies to late payments and underpayments of tax.
10 5 00
Lawful deductions (Line 6 ) cannot be more than tax due (Line 5).
Under penalties of perjury, I declare that I have read this return and the facts stated in it are true.
Signature of Taxpayer
Date
Signature of Preparer
( ___________ ) ______________________________________ Telephone Number
Date
( ___________ ) _______________________________________ Telephone Number
Discretionary Sales Surtax - Lines 15(a) through 15(d) 15(a). Exempt Amount of Items Over $5,000 (included in Column 3) ...................................................................................15(a). ______________________________ 15(b). Other Taxable Amounts NOT Subject to Surtax (included in Column 3) .....................................................................15(b). ______________________________ 15(c). Amounts Subject to Surtax at a Rate Different Than Your County Surtax Rate (included in Column 3) .....................15(c). ______________________________ 15(d). Total Amount of Discretionary Sales Surtax Due (included in Column 4) ...............................................................15(d). ______________________________
10 5 00
16.
Hope Scholarship Credits (included in Line 6) .............................................................................................................. 16. ______________________________
17.
Taxable Sales/Untaxed Purchases or Uses of Electricity (included in Line A) ............................................................... 17. ______________________________
18.
Taxable Sales/Untaxed Purchases of Dyed Diesel Fuel (included in Line A) ................................................................. 18. ______________________________
19.
Taxable Sales from Amusement Machines (included in Line A) ................................................................................... 19. ______________________________
20.
Rural or Urban High Crime Area Job Tax Credits ............................................................................................................ 20. ______________________________
21.
Other Authorized Credits ................................................................................................................................................. 21. ______________________________
Under penalties of perjury, I declare that I have read this return and the facts stated in it are true.
Signature of Taxpayer
Date
Signature of Preparer
( ___________ ) ______________________________________ Telephone Number
Date
( ___________ ) _______________________________________ Telephone Number
Fig. 2 - Form DR-15R Discretionary Sales Surtax - Lines 15(a) through 15(d)
15(a). Exempt Amount of Items Over $5,000 (included in Column 3) ...................................................................................15(a). ______________________________ 15(b). Other Taxable Amounts NOT Subject to Surtax (included in Column 3) .....................................................................15(b). ______________________________
15(c). Amounts Subject to Surtax at a Rate Different Than Your County Surtax Rate (included in Column 3) .....................15(c). ______________________________
HD/PM Date: ______________________________ DR-HS2 15(d). Total Amount of Discretionary Sales Surtax Due (included in Column 4) ...............................................................15(d). Florida Department of Revenue
18. 19.
20. 21.
N. 08/18
____/_____/_____
Hope Scholarship Credits (included in LineHope 6) .............................................................................................................. 16. ______________________________ Rule 12AER18-07, F.A.C. Scholarship Program Dealer Effective 08/18 Taxable Sales/Untaxed Purchases or Uses of Electricity (included in Line A) ............................................................... 17. ______________________________
Contribution Collection Report
Taxable Sales/Untaxed Purchases of Dyed Diesel Fuel (included in Line A) ................................................................. 18. ______________________________
Dealer Type Reporting Period: M M / D A)D................................................................................... /Y Y - M M/D D/Y Y Taxable Sales from Amusement Machines (included in Line 19. ______________________________ Motor Vehicle Dealer Beginning Date Ending Date Rural or Urban High Crime Area Job Tax Credits ............................................................................................................ FEIN 20. ______________________________ -
Private Tag Agent
Amended Return Other Authorized Credits ................................................................................................................................................. 21. ______________________________ or Tax Collector Sales Tax Certificate # Print Information Below Business Eligible Nonprofit Name Scholarship-Funding Step Up For Students, Inc. Name Organization Address
US Dollars
City/St ZIP
Total Contributions
,
Under penalties of perjury, I declare that I have read this report and the facts stated in it are true. Signature:
Date:
HD/PM Date: ____/_____/_____
Florida Department of Revenue
Dealer Type Motor Vehicle Dealer
Reporting Period: M M
/
D D
/
Y
Y
Beginning Date
Private Tag Agent
-
M M
/D
/Y
Name Address
DR-HS2 N. 08/18
Rule 12AER18-07, F.A.C. Effective 08/18
-
FEIN
ZIP
Total Contributions
,
Under penalties of perjury, I declare that I have read this report and the facts stated in it are true. Date:
Tax Collector
Reporting Period: M M
/
D D
/
Y
Y
Beginning Date
-
M M
/D
D
Ending Date
/Y
FEIN
Sales Tax Certificate # Eligible Nonprofit Scholarship-Funding Organization
Name Address
DR-HS2 N. 08/18
Rule 12AER18-07, F.A.C. Effective 08/18
-
ZIP
Total Contributions Under penalties of perjury, I declare that I have read this report and the facts stated in it are true. Date:
,
or
-
Step Up For Students, Inc. US Dollars
City/St
Signature:
Cents
5. 0 0
Y
Amended Return Print Information Below
Business Name
,1 0
HD/PM Date: ____/_____/_____
Florida Department of Revenue
Private Tag Agent
-
Telephone Number: ( ___________ ) _______________________________________
Hope Scholarship Program Dealer Contribution Collection Report Dealer Type Motor Vehicle Dealer
or
Step Up For Students, Inc. US Dollars
City/St
Signature:
Cents
5. 0 0
Y
Sales Tax Certificate # Eligible Nonprofit Scholarship-Funding Organization
Print Information Below
Business Name
D
Ending Date
Amended Return
Tax Collector
,1 0
Telephone Number: ( ___________ ) _______________________________________
Hope Scholarship Program Dealer Contribution Collection Report
Copy B - File with Florida Department of Revenue
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17.
Copy C - For your Records
Continued on page 14.
16.
Copy A - Organization Report
Qualified vehicle: 12AER18-07 Hope Scholarship Program. (1) Definitions. For purpose of this rule, the following terms mean: (d) “Motor vehicle” means any automobile, truck with a net vehicle weight of 5,000 pounds or less and any other vehicle operated on the roads of Florida, used to transport persons or property, and propelled by power other than muscular power. Heavy trucks, truck tractors, trailers, motorcycles, and mopeds are not “motor vehicles” for purposes of the Program. (2) Contributing to the Program. (d) A contribution may not be made for any of the following: 1. Any tax other than the state sales tax imposed by s. 212.05, F.S. 2. Any tax due on a warranty or other taxable item sold in conjunction with a motor vehicle. 3. Any tax due on the lease or rental of a motor vehicle.
,1 0
Cents
5.0 0
Telephone Number: ( ___________ ) _______________________________________
Fig. 3 - Form DR-HS2 September 2018 — Independent Dealer — 13
Hope Scholarship Sales Tax Reporting continued from Page 13.
CAUTION: Funds may only come from the sale of a qualified motor vehicle. DO NOT REDIRECT SALES TAX FUNDS FROM ANY OTHER TYPE OF TRANSACTION, such as Warranty, etc. If misdirected funds are discovered in an audit, the dealer must reimburse the DOR. There are currently no refunding processes in place to reimburse the dealer. Also, there is no DR-95B Repossession credit allowance. POTENTIAL PITFALL: To err on the side of caution, the dealer might be best advised to establish a Vehicle Check List to review with the customer as part of the closing process. Features and benefits available to the customer would be offered in list fashion with a Yes or No checkbox choice to help minimize a future charge of discrimination by a customer claiming they were not offered an option due to discrimination. The Hope Scholarship choice
would be my first option where they may choose to participate or not. Additional choices would follow. This allows the customer to acknowledge they had the opportunity to say yes or no, and/or ask for clarification. This also creates additional sales opportunities while building a trust relationship. Be certain to have competent legal counsel review such a form. Many questions are currently being asked and answers are coming, as they become available. Expect future articles in a Q&A format, to help with the ongoing, fine-tuning, learning process. HOPE_ing this proves helpful. Expect to see updates from the Department of Revenue and future FIADA articles.
Articles are the opinion of the author and are not intended to be legal or accounting advice. The intent is to share thoughts and concepts that help the business owner(s) find new and perhaps revisit, ways to be as successful as they are capable of being. Terry can be reached at (727) 804-7375. Email: tmyers@ floridaautodealerschool.com. Feedback is appreciated and encouraged. Terry LB Myers, author, lecturer, FIADA instructor, FADS owner/instructor.
Join FIADA for a Town Hall about the Hope Scholarship Requirements October 12, 2018 Hard Rock Hotel | Daytona Beach, FL Sessions Include: • Legal Update, Rob Sickles, Nelson Mullins Broad and Cassel • Learn More About Dealer Requirements Under the New Hope Scholarship Program
Hard Rock Hotel Daytona Beach 918 North Atlantic Avenue Daytona Beach, Florida 32118
• Installation of 2018-19 Officers Town Hall Meetings are FREE to attend. Don't miss this great opportunity to network with colleagues and ask your burning questions to the experts. Lunch will be provided, courtesy of Auto Data Direct. President's Reception to follow from 2:00-3:30pm, with complimentary beer, wine, sodas and snacks. Stick around and join us for the FIADA Board of Directors Meeting on October 13.
Register to attend online at www.fiada.com 14 — Independent Dealer — September 2018
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September 2018 — Independentwww.fiada.com Dealer — 15
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SALES & MARKE TING
Quality Photos Can Lead to Better Sales BY CHRIST Y TAYLOR
Photos can make or break a car deal even before it begins. Make sure shoppers have a clear picture of your inventory and are left wanting to see more.
H
umans are visual creatures. Our fascination with the way things look is instinctual. The sense of sight signals our brains to tell us whether we like something or not. The quality of a photograph, especially when it relates to advertising, has the same power. Good photos can get us interested in the product, bad photos turn us off. This is particularly true for online photos of used cars. A potential customer has no problems scrolling past an online ad if the pictures are poor quality and uninviting. According to the "Power of Pictures" study by Cox Automotive, 40 percent of consumers are likely to purchase a vehcile based on the images they view online without seeing the car in person. So, the importance of having the right photos that show your car well are crucial to closing the deal. The case can easily be made for investing in a professional photographer to maximize advertising of your inventory, but that's not in the budget for everyone. With the right equipment, a few pointers and a little practice, you can DIY a winning pictoral portfolio for every car you put online. Here a few tips to help out:
Equipment
Remember the days when you had to buy a high-end camera to take good photos? Thanks to technology that doesn't have to be the case anymore. Most smartphones on the market today are able to produce photos that are just as good, if not better, than point-and-shoot cameras. Some professional photographers even use an iPhone or a Samsung Galaxy at 18 — Independent Dealer — September 2018
times. If a smartphone is your camera of choice, here are a few important tips to maximize your photos: • Hold the phone in landsacpe mode. • Don't use digital zoom as very few phones have optical zoom. • Make sure your camera lens is clean and working properly. • Avoid shooting in low-light scenarios that could cause bluriness and loss of detail. • Don't use the flash. Always use natural light. • Use a camera app rather than your phone's built-in version. Apps like Camera FV-5 and Camera MX for Android, and VSCO and Camera 2+ for iphone, have the ability to fine-tune settings for more of a DSLR feel. • Don't use filters or effects. Although they look cool on social media sites, they do not help represent your vehcile's true color or condition. If you are able to purchase a DSLR camera or a high-quality point-and-shoot, remember this: • Auto white balance can be a blessing and a curse. Choose an appropriate white balance setting for more consistent color. • JPEG is the most common file type for digital cameras. However, not all JPEGs are created equal. Always choose the highest quality setting for JPEGs and the largest resolution possible. • If you have a DSLR and have a 105mm or 200mm lens, use it! This will compress the background and focus on the car. If you use a point-and-shoot ceamera, turn off the digital zoom. You want to capture what the camera lens sees, not what a computer chip thinks it sees. • Avoid wide-angles lenses. For the interior and engine www.fiada.com
shots you may have to resort to a wide-angle lens, but for the front, rear and profile angles, a wide-angle lens will change the porportions of the car and even cause distortion.
Lighting
This is one of the trickiest, and most common mistakes made when photographing automobiles. A photographer's rule of thumb is to remember the best time to shoot is a few minutes after sunset, or a few minutes before sunrise. Taking photos in the middle of the day can result in a glare that is too intense and the harsh sunlight can make your photo look washed out. Similarly, don't take photos at night because a camera's flash is a poor substitute for the sun. If you have no choice but to take your pictures in bright, sunny conditions, then position the vehicle to minimize deep shadows caused by the direct sunlight above. Take the photos from the sunny side of the car, and not the side that is in the shadows. When photographing upholstery, it works very well to find a nice, shaded spot with good natural light. Photographing upholstery in sunlight typically results in lots of shadows that make it very hard to see the condition of the upholstery. Be very careful of what reflects in the car. Take a look around and look closely at all angles of the car to see what is reflecting on its surface. A car, especially a shiny one, is like a mirror. Make sure not to have your own reflection in the photo. If you can't avoid it, try putting the camera on a tripod, setting the timer and moving out of the shot.
Composition
Buyers want to see lots of details, so www.fiada.com
shoot every angle of the car that you can: straight on, from the side, and from each corner. If you are selling a truck, shoot photos from above so buyers can see into the bed. Frame each shot so that the entire vehicle is in the picture, unless you are focusing on a particular aspect of the car. Try to work your way around the car taking pictures as you go. The height from where you take your picture is the primary factor that will accentuate the attitude of the photo. Most shots are taken from four to five feet in height, looking down on the car. If you take the same shot from a lower angle, say two to three feet off the ground, you are now on the same level as the car's center and will reduce the amount of distortion. The angle is key in showing off the proportions of your vehicle. Every vehicle is different, but a go-to rule for most vehicles involves the right rear tire; if it is visible behind the front left tire in your image then you've got the angle right. If your car has any imperfections, don't try to angle the shots to hid them. In fact, you hould take a photo of any dents or scratches on the car. Be up front about them. A buyer is going to see the car eventually, so be honest from the start. Be prepared to move your car in order to find a good background for your photos. You don't want distracting clutter in the photo to take away from the main fcous. As you take photos of different angles of the car, be prepared to move it to make sure you get the best background and lighting. There's another piece to the photograph puzzle though, besides just good-looking photos. The quantity of images and their content are just as important. That same Cox Automotive study suggests that 40+ images is the sweet spot when it
comes to keeping shoppers engaged and looking at your vehicles and there are certain shots that they want to see. Here are examples of the top ten photos used car shoppers ranked in order of importance: 1. Mileage
2. Engine
3. Dash Control Panel
4. Cockpit
5. Interior Front Seats
Continued on page 20. September 2018 — Independent Dealer — 19
Taking Quality Photos continued from Page 19.
6. Entertainment System
7. Front Corners of Vehicle
9. Front of Vehicle
8. Side View
10. Trunk Cargo Space
INDUSTRY NEWS
News and headlines of interest to the Florida Used Car Industry and beyond
Technical Advisory
Self-Driving Cars Hit a Speedbump
Secure Forms HSMV 82994 & HSMV 82995 Must be Printed on Secure Paper
Interest In Autonomous Vehicle Technology Slows Down
HSMV Forms 82994, Title Reassignment, and 82995, Motor Vehicle Power of Attorney and Odometer Disclosure are SECURE forms, meaning they must be printed on secure paper, which has a faint “rainbow” background color.
We (DHSMV) have found cases where dealers have printed these forms on plain paper, obtained signatures and submitted them for processing. This paperwork is not valid and must NOT be processed. Return the paperwork to the customer and inform them these forms must be printed on secure paper, which is only available from vendors who have been approved by the Department. If you need additional information, please contact your next level of management or the Field Support Center. 20 — Independent Dealer — September 2018
Less than half of Americans (43 percent) are interested in utilizing self-driving cars, down from 53 percent last year, according to the fourth annual Sharing Economy Index* released by Allianz Global Assistance. The lack of interest is primarily attributed to safety concerns (71 percent in 2018, compared to 65 percent in 2017), while other reasons include cost/budget, lack of familiarity and bad publicity. Recent high-profile crashes involving selfdriving cars have dampened America's confidence and excitement over auto-piloted vehicles. In March, two selfdriving vehicles were involved in fatal accidents.
Even more indicative of Americans' sentiment on self-driving vehicles, only 52 percent of Americans (down 12 points from 2017) say they are confident that the technology will develop safely enough to consider trading their conventional vehicles for selfdriving ones.
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Go to www.FIADA.com to sign up for a Committee. 2017-2018 FIADA EXECUTIVE COMMITTEE:
SCOTT LANIER, CMD
BRAD JOEL
LISA COMPAGNO
JENAY RHOADS
PHIL RISLEY
President Credit Cars Orlando, FL 32808 (407) 295-6211
Senior Vice President Splish Splash Auto Sales Princeton, FL 33032 (305) 258-1191
Chairman of the Board Palm Tree Auto Sales Stuart, FL (772) 288-2099
Secretary Florida Auto Exchange Co., Inc Dunedin, FL (727)-796-2886
Treasurer Cars & Credit of Jacksonville Jacksonville, FL (904) 616-4074
FRANK FUZY
GEORGE HICKEY
STEVE MARBAIS, CMD
BRANDI NOEGEL
JIM WINTERICK, SR.
Regional Vice President Century Motors of S. Fla., Inc. Pompano Beach, FL 33064 (954) 785-0369
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Regional Vice President Bond Auto Sales, Inc. Tampa, FL 33604 (813) 238-7478
Regional Vice President Marbais Enterprises, Inc. Ocoee, FL (407) 877-7422
Regional Vice President Noegel’s Auto Sales Starke, FL (904) 964-6461
Chairman of the Board Gulfstream Motor Credit Miami, FL (305) 253-2335
September 2018 — Independent Dealer — 21
D E A L E R O P E R AT I O N S
The Artful Balance of Segmenting Leads BY KRISTY ESCH
Are all leads created equal? Not at all. The ability to funnel leads that allow for proper customer communication will help you build rapport and make more conversions.
N
ot every person who visits your auto dealership website is ready to buy, even if they share their contact information in a static lead form. Know when a helpful, less-aggressive approach works better and decide how segmenting auto leads based on a customer’s shopping behavior can help your dealership. Some car salesmen and auto dealerships get a bad wrap for being too pushy about making a sale, especially when a customer simply fills out an online form on a dealer’s website to request more information and their phone suddenly blows up. What those curious online consumers don’t know is that many auto dealerships treat every auto lead (including requests for information) as “ready to purchase” instead of segmenting auto leads, because they have little to no information about the customer’s shopping journey or where they might be in the process. “When you submit the request, whether you’re just casually shopping or if you’re aggressively ready to buy, the dealer doesn’t have that transparency,” says David Kain, an automotive internet marketing professional and president of Kain Automotive in Lexington, Kentucky.
“Most dealers are handling those leads blind, so they present everybody as ready to buy right away.”
funnel buyers, providing helpful information about its products to move those customers closer to a purchase.
When an auto dealership follows up with every online customer the same way, it inadvertently ends up sending away two-thirds of its potential sales leads to third-party websites or other sites that offer research tools for consumers. Collect better leads by adding some of those helpful tools on your own dealership website, then decide how to segment auto leads and respond appropriately to convert more leads to sales.
“No matter what stage of the buying journey they’re in, it’s all about communicating with the customer on the customer’s terms,” says Lopes, vice president of FB Digital and Forrest & Blake Marketing & Advertising in New Jersey. “What you want to do is always try to convert them to the next level of engagement. You always want to make the engagement as personal as possible.”
Segmenting auto leads who are ready to buy
Kain also teaches his auto clients to focus on genuine interactions, remembering to treat auto buyers as human beings instead of red meat. “I think the first thing to do is recognize they are living, breathing human beings. The nicer you are and the more respectful you are, the better your opportunity is to maintain an ongoing relationship,” Kain says.
Auto dealerships typically define potential customers as falling into one of two buying-stage funnels: low funnel, or people who know which vehicle they want and it’s just a matter of where they prefer to buy it; and mid-funnel customers, who just began searching online and don’t know which vehicle they want. Auto marketing professional Frank Lopes advises his auto clients to focus on the low-funnel customers first because those online visitors are more likely to make a decision and convert to a sale. Then an auto dealer should focus on the mid-
22 — Independent Dealer — September 2018
When to nurture an auto lead
Nurturing auto leads takes a bit more finesse and work by the auto dealer to come across as helpful to the customer, instead of the stereotypical pushy car salesman. “There is a scumbag effect, or scumbag Continued on page 24. www.fiada.com
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Segmenting Leads continued from Page 22.
syndrome, in the automotive space. Every dealer is a scumbag right out of the gate,” Lopes says. “Do everything you possibly can to eliminate the scumbag syndrome by being of service.” One way to do that, Lopes says, is to build website lead forms upside down. As opposed to auto dealerships that force customers to share personal contact information first, Lopes’ lead forms start by asking the customer to enter any questions they have regarding a vehicle search. “How can I help you? How can I be of service to you?” he explains. “If we’re trying to build a ‘why buy?’ message, we need to show we’re here to help, we’re low pressure. The lead form should go hand-in-hand with that.” The key to making the right sales approach lies in knowing the customer’s intentions, which often dictates whether the auto dealer responds aggressively to those ready to buy now or more gently with helpful information, Kain says. The current environment in the automotive industry pushes sales teams to pounce on potential customers immediately to get them to visit the dealership. “Even if the customer is asking about equipment, availability or colors, it’s all really, ‘OK, yeah, yeah, we’ll get to that, but when can you come in?’” Kain says. “That’s so frustrating to hear, when at the end of the day if they were just really nice … If they would just say, ‘I would love to help you buy a car when you’re ready,’ a lot of people would say, ‘Hey, that’s exactly what I’m looking for — help!’” Help is exactly what most online customers seek when they search
an auto dealership’s website, Lopes says, adding that most people would rather go to the dentist and get a hole drilled inside their mouth than go through the hassle of buying a car. “Nobody is going to a dealership’s website for fun,” he says. “There’s no free food, no beer, no pretty girls, no handsome guys, no cat videos, no pony rides, no carnival games … there’s nothing there besides cars. If you give customers more control over the interaction, they’ll be less hesitant or less resistant to actually engage.”
When to equity mine auto leads
To equity mine an auto lead, the dealership must maintain a detailed database of all potential car buyers and know who might be in an equity position, or when their trade-in vehicle is worth more than they owe on it. Then, the salesperson can approach that customer with incentives or deals to upgrade to a new car using that equity. Another great way to equity mine, Lopes says, is to approach a customer who comes in for service on their vehicle and show them an upgrade offer that includes no cost for repairing their existing vehicle, if they buy a new one. “The chances of selling a car increase … if the customer is physically at the dealership,” he says.
What's the magic formula for converting sales? All car leads are not the same, so to be successful auto dealers must develop a strategy to gain more quality leads.
Lopes says there are three pain points in any car deal: 1) vehicle availability 2) financing and 3) trade. Selection is a luck of the draw, financing depends
24 — Independent Dealer — September 2018
on the customer’s credit history, and a vehicle’s trade value is fairly easily to determine. But having that information about a customer before they even come into the dealership, along with other important details gained through interactive website quizzes, such as how the vehicle might be used and when they intend to buy, makes a difference when segmenting auto leads and following up. It builds rapport and trust with a consumer, and saves everyone some time. You’re helping them do research and making the buying process easier by gathering information as they move along the sales funnel. “I think it’s extremely important that the dealer puts out a message that conveys they are not a typical car dealer,” Lopes says. “This transaction is going to be easy and it’s going to be transparent. Everybody is going to be upfront, and there won’t be any hidden games and no bait and switch.” Kain thinks the magic formula to selling more cars includes speed, transparency and kindness. “If you are nice and you give them the information they’re looking for, people are so grateful that you’re not like every other car salesperson that they’ll say yes,” he says. “I’d like to encourage more sales people to behave the way they would want to be treated.” Kristy Esch is the Senior Content Marketing Manager at PERQ Marketing. PERQ boosts website conversion through its online guided shopping solution. Find out more at www.perq.com.
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September 2018 — Independent Dealer — 25
D E A L E R O P E R AT I O N S
How Scary is Your Customer Service? BY KENNY ATCHESON
Get in character as one of your customers for an eye-opening review of all your dealership's tricks or treats.
ids, adults, and pets got dressed up last year for Halloween to the tune of $9 billion. Hot costumes included characters from Stranger Things and Wonder Woman.
K
4.5 or more? When the customer looks at your “can’t miss” online reviews and review rating, is it at least 4.5? If not, there is room for improvement.
This year, characters from The Incredibles will likely be hot costumes after a $180 million opening weekend for the animated movie.
If your company rating is a 4.5 or more, the customer may still click to read reviews about your dealership. If they do, is the latest review—or the one showing at the top— positive?
The hot costume for you and your employees this year should be to “dress up” as your customer. Pretend to be your customer and get into character. Forget everything you know about your business and look at it from an outsider’s perspective. Customers do not know that your business offers the best service or products just because you say so. Your competitors say the same thing. Everything your customer has to go through to purchase from you is a direct reflection of your products and services. Therefore, their experience influences whether or not they buy from you the first time, a second time—and it influences whether or not they send referrals. Start from the beginning of the process as if you were a customer. Do not assume anything. What do you see? Type the same words into Google that your customer does when beginning a search for a car, such as “bad credit car dealer.” Take note of what you see. Does your website show up in the top four? Do you have a Google Ad in the top two? Is your ad a good reflection of your business? Does your ad display information that makes your dealership stand out as uniquely better than the competition? 26 — Independent Dealer — September 2018
The customer hasn’t made it to your actual website yet, but they are already making a judgment about your dealership. Does your business look like one of many choices, a good choice, the best choice, or The Obvious ChoiceSM? Is anything broken? The customer finally makes it to your website. Your company website may be up and running—but does it do its job? Your website’s job is to generate leads. If it is not generating enough leads it is likely not building trust with potential customers. How many trust factors are at play? Are there happy customer testimonials continuously populating on your site? Are there testimonial videos? Are there pictures of friendly people—NOT just cars? Are there any broken links? Your organization should have a regularly scheduled check-up of your website. Click around and make sure everything works. I’ve visited dealer websites in which everything looks fine. I’ve filled out the beginning of a finance application only to be sent to an error page. The lead was never captured. Continued on page 28. www.fiada.com
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PARTNERS: Joseph C. Moffa, CPA, Esq. | James H. Sutton, Jr., CPA, Esq., LLM Gerald J. Donnini II, Esq., LLM | JerryDonnini@FloridaSalesTax.com OFFICES: Fort Lauderdale, Tampa, Tallahassee September 2018 — Independent Dealer — 27
Customer Service Review continued from Page 26 .
Big, national companies are not immune to this problem either. While planning my travel to deliver The Obvious Choice training to a buy-here pay-here dealer a few states over, I was looking for a rental car. I clicked on an advertisement for National Car rental. The ad took me to a webpage that was under construction. Two weeks later I checked to see if National was still paying for advertisements that sent people to a broken webpage. Yep, the ads were still running. Become Sherlock Holmes Create an alias email and/or phone number, or hire someone to check on the follow-up processes of your dealership. Find out if your salespeople are following up with leads in a timely manner. Do they use the communications and processes that you have created? I have a number of horror stories and examples of zero or putrid follow up. I won’t go into all of them here because that’s not the point. The point is that whatever you do, improve your customer experience and continue to monitor their experience and processes; you will earn more business, more referrals and repeat business. This article doesn’t even discuss customer service. Think about how many other touches there are to get a customer to buy. • •
Is the person who answers the phone pleasant? Does the salesperson connect with the customer and build trust?
•
Does the salesperson follow up after a purchase and non-purchases?
There are so many places to make a mistake. If you don’t keep an eye on it, customers may feel like they are going through a haunted house, but not in a fun way. Your profits or lack thereof will be scary. The only thing that should be scary this Halloween are costumes.
Kenny Atcheson is the founder of Dealer Profit Pros and author of Marketing Battleground: How to Deploy Under-the-Radar Strategies to Explode Your Profits. Kenny offers private consulting and he teaches workshops and speaks at conventions and 20 Groups. His company offers several marketing and advertising programs which include Private Consulting, a Referral Results Training Program, a Newsletter Program, a Feedback & Review & Complaint Management System, Google Pay-Per-Click Management, Facebook Pay-Per-Click Management, Direct Mail Campaigns, Copywriting, and more. His website can be found at www.DealerProfitPros.com
GOT A TECHNICAL QUESTION AND NEED SOME ADVICE?
Use the R.E.D. Phone!
FIADA is your number one source for advice and information. Technical questions, legal questions, regulatory questions...bring them on! Our network of industry veterans, professionals and consultants can help you find the answers you are looking for. Members can call or text us anytime at (800) 2370448 or access our online resources 24/7 at www.FIADA.com.
REPRESENTATION | EDUCATION | DEDICATION—FIADA! 28 — Independent Dealer — September 2018
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September 2018 — Independent Dealer — 29
LEGAL ROUND-UP
A Look At Current Legal Issues BY THOMAS B. HUDSON AND NICOLE FRUSH MUNRO, HUDSON COOK, LLC
A monthly collection of selected legislative and regulatory highlights, and a recap of some of the many auto sale and financing lawsuits followed each month. COMPLIANCE TIP Timing can be important. Really important. For example, federal Truth in Lending disclosures must be provided to the consumer “prior to consummation” (a term the meaning of which can vary by state, but will likely be the point at which the buyer becomes bound to proceed with the transaction). Federal disclosures, then, must be provided before the buyer signs on the dotted line. Does your state also have timing and/or presentation requirements? If so, do you know what they are, and are they and the federal requirement baked into your deal closing process? FEDERAL DEVELOPMENTS FTC Challenges Dealer Income Falsification and Other Practices On August 1, the FTC announced that it had sued four affiliated dealerships operating in Arizona and New Mexico, near the Navajo Nation border, alleging that they falsified consumers' income and down payment information on credit applications and used deceptive advertisements offering vehicles for sale, financing, and/or lease. This is the FTC's first action alleging income falsification by auto dealerships. The four dealerships are Tate's Auto Center of Winslow, Tate's Automotive, Tate Ford-Lincoln-Mercury, and Tate's Auto Center of Gallup ("Tate's Auto"). The complaint also named the dealerships' owner and corporate general manager, Richard Berry, as a defendant and the dealerships' owner and president, Linda Tate, as a relief defendant.
The FTC alleged that, during the sales process, Tate's Auto representatives asked consumers to provide personal information, such as their names, addresses, and monthly incomes, and told consumers they would submit the information to finance companies. However, instead of using consumers' actual information, the FTC alleged that, in many cases, Tate's Auto inflated the numbers, making it appear that consumers had higher monthly incomes or made higher down payments than they did. The FTC also alleged that Tate's Auto representatives prevented consumers from reviewing the income and down payment information on the forms, by, for example, rushing consumers through the process of reviewing and signing credit applications, having consumers complete the forms over the phone, and/or failing to give consumers the income and down payment portions of their credit applications before they signed them. The FTC also claimed that Tate's Auto allegedly altered financing documents after consumers signed them, without their knowledge. As a result, finance companies extended credit to consumers who defaulted at a higher rate than qualified buyers. Many of the affected consumers are members of the Navajo Nation. The complaint further alleged that Tate's Auto engaged in deceptive advertising. For example, Tate's Auto allegedly advertised discounts and incentives to consumers without
30 — Independent Dealer — September 2018
adequately disclosing material limitations or restrictions that would prevent many consumers from qualifying for them. Finally, the FTC alleged that Tate's Auto's YouTube and social media ads violated federal law by failing to disclose required terms. The complaint charged Tate's Auto with violating the FTC Act, the Truth in Lending Act/Regulation Z, and the Consumer Leasing Act/Regulation M. The FTC is seeking an injunction barring the defendants from such practices in the future. Annual Privacy Notices Made Easier Buy-here, pay-here dealers listen up! The Bureau has revised Regulation P, effective September 17, 2018, allowing you to forego your annual privacy notice obligations in certain circumstances. The revision tracks 2015 amendments to the Gramm-Leach-Bliley Act. Under the amendments, financial institutions would not be required to provide annual privacy notices to consumers, provided they did not engage in information sharing with nonaffiliates that was subject to an opt-out right and provided their information sharing policies and practices had not changed since the last privacy notice provided to consumers. In its 2016 proposed rule and 2018 final rule, the Bureau explained that the FAST Act amendments to GLB took effect upon enactment. The Bureau was not required to amend Regulation P in order for the 2015 amendments to take effect. However, www.fiada.com
the new amendments to Regulation P and the Bureau's explanation of them offer helpful guidance for financial institutions. CASE OF THE MONTH Consumer lawyers are always on the alert for reasons to challenge the enforceability of arbitration clauses. How about arguing that the clause was unenforceable because the buyer’s signature on the retail installment contract had been forged? A judge would have to buy that one. Right? Maybe not. Fotein Balasiori bought a vehicle from Darcars of Auth Way, Inc. She financed the purchase through a retail installment contract, which Darcars assigned to Santander Consumer USA. Balasiori signed a buyer’s order and the RIC at the time of sale. However, she alleged that Darcars forged her signature on a “second” RIC that it sent to Santander, which she claimed contained terms materially less favorable than those to which she had agreed. Balasiori sued Darcars and Santander for fraud and violation of the Maryland Consumer Protection Act based on the allegedly forged RIC. The buyer’s order and both RICs contained arbitration clauses. The defendants moved to compel arbitration, and the trial court granted the motion. Balasiori appealed to the Court of Special Appeals of Maryland, which affirmed. Balasiori argued that inconsistencies in the arbitration provisions in the buyer’s order and the RIC precluded treating them as part of a single transaction. She further argued that the RIC superseded the buyer’s order and that the forgery of the second RIC invalidated all the documents related to the transaction. The buyer’s order mandated arbitration while the RIC required arbitration www.fiada.com
at the election of one of the parties. Although the buyer's order mediation provisions did not bind assignees, there was no language excepting assignees from the arbitration provisions. The appellate court held that the arbitration provisions in the buyer’s order and in both RICs were not materially inconsistent, and noted that Maryland common law permits multiple documents to be read together as part of a single transaction. The appellate court determined that the buyer's order and the original RIC were signed by the parties to reflect a single transaction. The buyer's order provided the terms of sale, and the RIC provided the financing terms. The appellate court noted that the
buyer's order was conditioned on approved financing. Accordingly, the appellate court held that the instruments should be read together. While the appellate court acknowledged that the alleged forgery would have negated the arbitration provision in the second RIC, it determined that arbitration was still appropriate based on the arbitration provision in the buyer’s order and the first RIC, which Balasiori signed. The appellate court held that the arbitration provision in the buyer’s order could be enforced between Santander and Balasiori even if the RIC that Santander received was invalid as a forgery. Balasiori v. Darcars of Auth Way, Inc., 2018 Md. App. LEXIS 782 (Md. App. August 9, 2018)
Tom (thudson@hudco.com) and Nikki (nmunro@hudco.com) are partners in the
law firm of Hudson Cook, LLP. For information, visit www.counselorlibrary.com. Copyright CounselorLibrary.com 2017, all rights reserved.
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