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• LEMON LAW INFORMATION • REFRESHER: DEALER 101 • THE CARLAWYER

DALLAS, TEXAS Permit No. 2079

PAID

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INDUSTRY RESOURCES

RETAIL INSTALLMENT CONTRACTS

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MAGAZINE CONTENTS 06 10 14 22

Refresher: Dealer 101 The CarLawyer Compliance: How Do I Start? Compliance Overdrive

WHAT’S NEW

Sirius XM Satellite Radio is America’s

satellite radio company. Independent dealerships can now offer a free SiriusXM three-month trial on all pr e-owned vehicles with factory-equipped satellite radio. In addition to selling your customers a quality vehicle, you’ll be giving them the opportunity to enjoy satellite radio. And there’s no cost to your customer. Visit www.siriusxm.com/niadaprogram to enroll your dealership today!

IIADA has two distributors who will provide the Wolters Kluwer Financial Services retail installment contracts for Iowa dealers. These retail installment contracts have a compliance warranty. In some cases, you will need to have your software provider reprogram for you. You may order by phone or online and these will be shipped directly to the dealership. Thank you for working with these distributors.

PLEASE CONTACT:

WILSON DISTRIBUTOR SERVICE • 1-800-634-0974 • WWW.WDS-USA.COM ADG - AUTOMOTIVE DEVELOPMENT GROUP • 952·937·9222 WWW AUTOMOTIVEDEVELOPMENTGROUP.COM

KNOW WHERE TO LOOK FOR RECALL INFORMATION ON VEHICLES

Vehicle dealers needing information on factory recalls can visit www.recalls.gov or find manufacturer toll-free numbers by going to www.autopedia.com/html/HotLinks.html and making contact with the respective automaker. Know what recalls are pending on vehicles before you purchase them and give your customers peace of mind by checking out possible recalls before you retail the vehicle.

FOR FURTHER INFO PLEASE VISIT WWW.SAFERCAR.GOV.

NIADA Member Health Plans, administered by JLBG Health, bring you choice and flexibility when designing your personal health plan while providing potential savings of thousands of dollars annually. To review the plan details and receive an instant online rate, visit www. NIADAHealthPlans.com or call 1-888-308-9340.

ADVERTISERS INDEX ADESA ...................................... Inside Front Cover Ally.....................................................................13 AutoTrader.com......................................Back Cover Kelley Blue Book................................................... 5 Manheim.com.....................................................11 Manheim Minneapolis..................Inside Back Cover Manheim Northstar......................Inside Back Cover NIADA Certified...................................................18 Nowcom...............................................................9 Protective............................................................. 7 QRP Central........................................................15 Voisys.................................................................22

Investigations Information Line

TOLL FREE: 1-866-908-4636

THIS TELEPHONE LINE RECEIVES NUMEROUS CALLS DURING THE DAY, SO AN EMAIL ADDRESS HAS BEEN ESTABLISHED WHERE QUESTIONS CAN BE SENT. THE EMAIL ADDRESS IS: invmve@dot.iowa.gov.

The Motor Vehicle investigations information Line provides a way for the public to request information, ask questions, or file a complaint related to investigative duties and responsibilities. This line is the primary point of contact to reach an investigator who is responsible for investigations in a specific area of the state of Iowa. To ensure accurate information is provided, the Motor Vehicle Investigations information line is answered by a motor vehicle enforcement investigator. The hours of operation are Monday through Friday 8:30 a.m. to 3:30 p.m. As this line receives numerous calls during the day, please leave a message if the line is busy and your call will be returned promptly.

BOARD OF DIRECTORS

OFFICE FOR INFORMATION ON HOW TO BECOME A MEMBER PLEASE CONTACT JUDY WILSON IIADA • 409 EAST MARKET • PANORA, IA 50216 (641) 755-4177 • IIADA@NETINS.NET

NATIONAL INDEPENDENT AUTOMOBILE DEALERS ASSOCIATION WWW.NIADA.COM • WWW.NIADA.TV NIADA HEADQUARTERS: 2521 BROWN BLVD. • ARLINGTON, TX 76006-5203 PHONE (817) 640-3838 FOR ADVERTISING INFORMATION CONTACT: TROY GRAFF (800) 682-3837 OR TROY@NIADA.COM.

Street Smart is published 6 times per year by the National Independent Automobile Dealers Association Services Corporation, 2521 Brown Blvd., Arlington, TX 76006-5203; phone 817-640-3838. Periodicals postage paid at Dallas, TX and at additional offices. POSTMASTER: Send address changes to NIADA State Publications, 2521 Brown Blvd., Arlington, TX 76006-5203. The statements and opinions expressed herein are those of the individual authors and do not necessarily represent the views of Street Smart or the National Independent Automobile Dealers Association. Likewise, the appearance of advertisers, or their identification as members of NIADA, does not constitute an edorsement of the products or services featured. Copyright© 2012 by NIADA Services, Inc. All rights reserved. STATE MAGAZINE MGR./SALES Troy Graff • troy@niada.com EDITOR Andy Friedlander • andy@niada.com ART/PRODUCTION MGR. Christy Haynes • christy@niada.com PRINTING Nieman Printing

PRESIDENT Douglas Livy, Jr. Quality Motors of Ames, Ltd. 705 S. Duff Avenue Ames, Iowa 50010 Ph: 515-232-1780 CHAIRMAN OF THE BOARD Louise Cordes Jim Cordes Motors, Inc. 104 E. Main St., P.O. Box 68 New London, Iowa 52645 1-319-367-2271 VICE PRESIDENT David A. Farmer David A. Farmer, Inc. 1613 Franklin Center Point, Iowa 52213 1-319-849-2432

TREASURER Judy Wilson 409 E. Market Street P.O.Box 337 Panora, Ia. 50216 Ph: 641-755-4177 REGIONAL REPRESENTATIVES Merrill Hitchcock Merrill’s Garage 317 N. 8th Street Winterset, Ia. 50273 Ph: 515-462-1683 Roger Poulsen The Car Guys 1301 S.W. 7th Street Atlantic, Ia. 50022 Ph: 712-243-6915 Robert Pippert Pippert Cars & Trucks 2047 Highway T-47 P.O. Box B Gladbrook, Iowa 50635 641-473-3121

Clay Winterboer Carroll Car Credit Co. 409 E. 6th St., Box 805 Carroll, Ia. 51401 Ph: 712-792-0140 Jim Harbach J’s Auto 945 E. Main Manchester, Ia. 52057 Ph: 563-927-2811 Doug Wilson Lake Country Auto 409 East Market St. P.O. Box 341 Panora, Iowa 50216 641-755-3048

Jeff Schneider Pocahontas Sales & Service 205 E. Elm Ave. P.O. Box 66 Pocahontas, IA 50574 712-335-4470 Kim Nelson Nelson Automotive LLC 300 Sandpiper Court P.O. Box 466 Polk City, IA 50226 515-984-9600

Administrative Offices 409 East Market Street P.O. Box 337 Panora, Iowa 50216 Linda Kilgore Ph: 641-755-4177 Kilgore’s Enterprises Inc. Fax: 641-755-3247 501 E. Townline Email: iiada@netins.net Creston, IA 50801 Toll Free: 866-962-9202 641-782-5512

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T H E R E A R E A L O T O F PAT H S T O F I N D I N G T H E R I G H T V E H I C L E S F O R YO U R L O T .

Letter from the President Hello dealers, Are you having a hard time finding the right inventory? Do like your customers do – go through the newspaper and trade magazines, check online, go to the auctions, and/or put a sign up in your front yard that says you buy cars. There are a lot of paths to finding the right vehicles for your lot. You also might try trading some aged inventory

with your fellow dealers’ aged inventory. It will be a new unit for both of you. Since we put up a sign in our front yard that says we buy cars, traffic is way up. We have been buying one or two vehicles every week out of the 10 or so people who stop in. It is just another place to find inventory for the lot. Sometimes you can just buy a vehicle and wholesale it for a

profit. Every little bit helps. If you have an idea that worked for you, let me know about it and we will get it published in an upcoming magazine. By sharing your ideas with your fellow dealers, everybody comes out ahead. Good selling, Doug Livy President, IIADA

F O R M O R E I N F O R M AT I O N , V I S I T W W W. I O WA D O T . G O V / R U L E S / R U L E S O F T H E R O A D . H T M .

‘Move Over’ Law Changes Now in Effect Beginning July 1, motorists in Iowa ticketed and convicted of a violation of Iowa’s “move over” law began facing increased penalties. House File 2228, signed into law by Gov. Terry Branstad on April 12, took effect July 1. It includes a provision requiring mandatory suspension of a person’s driver’s license/operating privileges if convicted of a violation of the move over law that results in property damage, injury or death. Iowa’s move over law, enacted in 2009, prescribes the rules of the road when it comes to driving on an Iowa roadway where there is a stationary, authorized emergency, tow or maintenance vehicle displaying flashing yellow, amber, white, red, or red and blue lights. By following these two simple rules, you can help save lives, avoid receiving a traffic ticket and prevent the potential loss of your driver’s license. Iowa law requires motorists to: • Change lanes or slow down when approaching a stationary emergency, tow or maintenance vehicle that has its flashing lights activated. • Yield the right of way to an emergency vehicle displaying flashing lights or giving an audible signal by moving over to the right, stopping and waiting until the vehicle has passed before proceeding. The scheduled fine for a conviction for violating Iowa Code 321.323A or 321.324 is $100, plus any surcharge and court costs.

On receiving a record of a person’s conviction for a violation of the move over law that resulted in a crash causing damage to the property of another person or bodily injury to or death of another person, the Iowa Department of Transportation shall suspend the person’s driver’s license/operating privileges, on 30 days’ notice and without preliminary hearing, as follows: • For a violation causing damage to the property of another person, but not resulting in bodily injury or death to another person, the Iowa DOT shall suspend the violator’s driver’s license or operating privileges for 90 days. • For a violation causing bodily injury to another person, the Iowa DOT shall suspend the violator’s driver’s license or operating privileges for 180 days. • For a violation causing death, the Iowa DOT shall suspend the violator’s driver’s license or operating privileges for one year. A person convicted of a violation that resulted in a crash causing bodily injury to or the death of another person may be subject to an additional fine, beyond the scheduled fine for a violation of the move over law and any other penalties allowed by law. The additional fine is $500 for a violation causing bodily injury to another person and $1,000 for a violation causing death. These laws are designed to protect motorists, persons being transported

in emergency vehicles and personnel at high risk while performing their duties on Iowa’s roadways. A good rule of the road is to change lanes or slow down anytime you are approaching a vehicle that is slow-moving, stopped or stranded on the shoulder, if you can safely do so. Iowa’s road workers, Highway Helpers, law enforcement personnel, emergency personnel and tow truck operators urge drivers to provide them the room they need to safely perform their jobs. For more information, visit www. iowadot.gov/rules/rulesoftheroad.htm.

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REFRESHER: DEALER 101

I’m Glad You Reminded Me Spot Delivery This is a procedure used in the automotive industry for many years and it comes under scrutiny quite often from regulators because of consumer abuse. Spot delivery means allowing a customer to drive off with the vehicle without securing financing for the customer and the vehicle he wishes to purchase. While the Iowa attorney general has not prohibited spot deliveries, recent Federal Trade Commission roundtables discussed the practice of spot delivering vehicles – which can lead to a problem known as “yo-yo sales” – and many attorneys general feel the FTC needs to regulate spot deliveries to prohibit abusive practices. While we do not advocate one way or other on this issue, we do want to stress to dealers that it is imperative that the consumer understand what a spot delivery is, what his responsibilities are and what the dealer’s responsibilities are as well. If a dealer makes a spot delivery it is important to have a signed spot delivery agreement between the dealer and the customer. Otherwise, no one has a leg to stand on should financing for the customer fail or if the customer wrecks the vehicle or the dealer jumps the gun and sells the customer’s trade too soon. Dealers are in the business of selling vehicles, not giving them away. Failure to have written disclosure to a consumer with all parties’ responsibilities clearly defined can result and has resulted in lawsuits that require dealers to finance a vehicle themselves when financing can not be obtained through any source for the consumer. Do not complete a retail installment contract until financing is secured because contract terms might change. Titles Must Be Present It is very important for dealers to recognize the importance of having the titles present when a retail sale is made. Once a retail sale is made, the

buyer and/or the dealer have 30 days to make the transfer. If you perform a sale without the title being present you could be subjecting yourself and/or your customer to penalties at the courthouse because you can’t get the title to the treasurer’s office within that 30-day timeframe – then you are in hot water. Some lienholders don’t release the title as rapidly as dealers might like on trade-in vehicles. Titles to vehicles sold at wholesale auctions don’t always get turned in to the auction in a timely fashion. Sometimes the seller hasn’t received the title from his customer or a bank or credit union. Best policy – don’t retail a vehicle until the title is present at the dealership and you know it is not branded or if it has an odometer discrepancy or has not been filled in correctly. It is your responsibility to make sure your paperwork is correct, always. You cannot blame the guy who mows your grass or your parts delivery driver. You are responsible. Report of Cash Payments More Than $10,000 (Form 8300) It is important to use the most current Form 8300 when reporting the receipt of cash payments of more than $10,000. The forms can be obtained at www.irs. gov – enter “Form 8300” in the search box – or go to www.fincen.gov/forms/ bsa_forms and enter “Form 8300” in the search box. Sometime during 2013 we will probably have to do these electronically. FinCen is the Financial Crimes Enforcement Network, U.S. Department of Treasury. The IRS and Fincen work together in their efforts to combat money laundering. Failure to file Form 8300 can result in huge fines. This is serious – for businesses that have gross receipts exceeding $5 million, fines have increased from $250,000 to up to $1.5 million. Gross receipts of $5 million and less can be hit with fines from $100,000 to $500,000.

Airbag Problems If a vehicle has blown airbags, no airbags, replaced airbags or blown and repaired airbags, disclosure must be made on such problems with vehicle airbags. If you need language on how to disclose this information, please contact IIADA. Title Branding Dealers who have titles that might say “lemon law buyback” must continue this disclosure. Retail or wholesale buyers must be informed of such a designation. Then the buyer and/or the seller must forever disclose that information – disclosure continues for the life of the vehicle. If you need language on how to disclose this information please contact IIADA. Consumer Financial Protection Bureau Consumers can now file complaints online with the Consumer Financial Protection Bureau in the areas of mortgages, credit cards, bank accounts/ service, vehicle loans or consumer loans and student loans at www.consumerfinance.gov. The CFPB will notify a company should a complaint be filed about it. Buy Here-Pay Here dealers should take note of this new service, and if you receive a complaint notice, please respond to it promptly. Labor Law Posters Businesses are required to post various labor law posters. They can be found online at the U.S. Department of Labor (www.dol.gov – enter “labor law posters” in the search box); the National Labor Relations Board (www.nlrb.gov/poster) and at the Iowa Workforce Development websit (www.iowaworkforce.org and enter “posters” in the search box). Retail Installment Contracts The Iowa Automobile Dealers Association has revised its retail installment contracts. Dealers should use the most current version of this form – call 1-800-869-1900 for the IADA contract.

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F O R M O R E I N F O , V I S I T W W W. S TAT E . I A . U S / G O V E R N M E N T / A G .

Lemon Law Information - Consumer Tips While the Consumer Protection Division generally oversees manufacturer compliance with the Lemon Law, the division does not handle individual Lemon Law complaints. However, we hope this informational packet will answer your questions regarding Iowa’s Lemon Law. For independent legal advice, you should consider contacting a private attorney. Your vehicle may qualify under the Lemon Law if one or more of the following conditions have been met: 1. T  he vehicle has been in the shop three or more times for the same problem and the problem still exists 2. T  he vehicle has been in the shop one time by reason of a defect likely to cause death or substantial bodily injury and the problem still exists 3. T  he vehicle has been out of service for any number of problems 20 or more days, and a problem still exists. The days out of service do not need to be consecutive. To qualify under the Lemon Law, the problem or defect has to render the vehicle unfit, unreliable or unsafe for ordinary use or significantly diminish the value of the vehicle, and has to have occurred during the Lemon Law rights period. The Lemon Law rights period is defined by the Lemon Law as the term of the manufacturer’s written warranty, the period ending two years after the date of the original delivery of a motor vehicle to the consumer or the first 24,000 miles of operation attributed to a consumer, whichever expires first. If you meet the qualifications above, you must notify the manufacturer by certified, registered or overnight mail and give the manufacturer one more chance to fix the problem. Your notice must go

directly to the manufacturer. Contact the manufacturer if you are unsure of the correct address. The Motor Vehicle Defect Notification form (available online at www.state. ia.us/government/ag/protecting_ consumers/motor_vehicle_defect. html) can be used as your notification to the manufacturer. Keep a copy of the completed form and any other materials mailed to the manufacturer. In order to support your allegations, keep copies of all repair orders for each time the vehicle has been in the repair facility for repair or diagnosis. For warranty repairs, repair facilities are required to provide you with a fully itemized, legible statement or repair order indicating any diagnosis made and all work performed on the motor vehicle, including a general description of the problem reported by the consumer, the date and the odometer reading when the motor vehicle was submitted for examination or repair, and the date the repair or examination was completed. You should include copies of these documents with your letter to the manufacturer, and a statement of what you want done to resolve your complaint. Tell the manufacturer you want a reply within 10 days of receipt of your letter. The manufacturer should then contact you with the name and address of a repair facility that is accessible to you, where a final attempt will be made to repair your vehicle. If the manufacturer does not contact you within 10 days, you are not required to give the manufacturer another chance to fix the vehicle. If the manufacturer fails to respond within 10 days, or the repair facility chosen by the manufacturer is unable to fix the problem during the final repair attempt, you can request that the manufacturer replace the vehicle

or refund the purchase price, less a reasonable offset for your use of the vehicle. If, after taking these steps, your complaint remains unsatisfied, you may file a lawsuit against the manufacturer under the Lemon Law. However, if the manufacturer has a certified dispute program, you must proceed through the program before filing suit. If the manufacturer’s program is not certified, you may still choose to submit your claim to the program and, possibly, avoid costly litigation. A list of addresses and telephone numbers of the manufacturer’s national offices and dispute resolution programs and a statement of whether the programs are currently certified is available at www.state.ia.us/ government/ag/protecting_consumers/ manufacturers_national.pdf. You must file a lawsuit under the Lemon Law within one year following the expiration of the manufacturer’s express warranty, or within one year following the first 24,000 miles attributed to a consumer, or within one year following the first 24 months of ownership, whichever occurs first. To file a Lemon Law lawsuit, contact a private attorney. You may have other legal recourse against the manufacturer, even if your vehicle does not qualify under the Lemon Law. Contact a private attorney for further information. You may wish to contact the National Auto Safety Hotline at 1-800-424-9393 or www.nhtsa.gov, or contact the Center for Auto Safety at 202-328-7700 or www. autosafety.org, to inquire if they have information about your particular type of vehicle. We hope this information is helpful. For additional information, visit the Iowa attorney general’s website at www. state.ia.us/government/ag.

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The CarLawyer Here’s our monthly collection of selected legislative and regulatory highlights, and a recap of some of the many auto sale and financing lawsuits we follow each month. Remember, what we report here is not even close to being every recent development. We select those we think are 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 own state’s laws – if AGs or plaintiffs’ lawyers are pursuing particular types of claims, those laws and claims might soon appear in your state. As always, though, there is no substitute for checking with your own lawyer before you rely on anything we report or if you have any questions. FEDERAL LAW The federal news this month comes from the Federal Trade Commission and the Consumer Financial Protection Bureau. Nonbank Supervision On May 24, the CFPB proposed a rule establishing procedures for its supervision of “nonbanks” engaged in activities that pose risks to consumers. Under the Dodd-Frank Act, the CFPB has the authority to supervise any nonbank – a term that includes car dealers ) it has reasonable cause to determine is posing a risk to consumers based on complaints or other information it receives. Thas authority is in addition to overseeing nonbanks, regardless of size, in certain specific markets (mortgage companies, payday lender, and private education lenders) and in addition to the CFPB’s authority to supervise “larger participants” in other markets. The proposed rule sets out procedures to notify a nonbank it is being considered for supervision, gives the nonbank a reasonable opportunity to respond and creates a mechanism for nonbanks to file a petition to terminate supervision authority after two years. Comments on the proposed rule ware due by July 22 Holder Rule advisory opinion On May 10, the FTC released an advisory opinion affirming consumers’ rights under the FTC’s Trade Regulation Rule Concerning Preservation of Consumers’ Claims and Defenses,(commonly called the“Holder Rule). The Holder Rule requires the notice in your retail installment contract that says, “Notice: any holder of this consumer credit contract is subject to all claims and defenses which the debtor could assert against the seller of goods or services obtained pursuant hereto or with the proceeds hereof. Recovery hereunder by the debtor shall not exceed amounts paid by the debtor hereunder.” The advisory opinion was in response

to a letter from consumer advocacy groups that requested the FTC to affirm the Holder Rule does not limit a consumer’s right to seek an affirmative recovery against assignees in certain situations. The FTC affirmed the Holder Rule does not limit a consumer’s right to recover money he or she has already paid under a contract to circumstances in which the consumer can legally rescind the transaction oe the goods or services sold to the consumer are worthless. The FTC states the Rule’s language is unambiguous and the Rule places no limits on a consumer’s right to an affirmative recovery of payments already made. The FTC addressed the matter because some courts have imposed limitations on a consumer’s ability to obtain an affirmative recovery under the Holder Rule. Advertising Online? Check This out The FTC hosted a public workshop on May 30 to consider the need for new guidance on advertising and privacy disclosures in today’s online and mobile environments. The workshop addressed disclosure challenges in social media and mobile marketing that have emerged since the FTC first issued its online advertising disclosure guidelines, known as “Dot Com Disclosures,” 12 years ago. The workshop also addressed mobile privacy disclosures and how they can be short, effective, and accessible to consumers on small screens. The workshop was webcast and no doubt will be available on the FTC’s website If you are into social media marketing, you will want to check it out. STATE ENFORCEMENT ACTIONS On May 11, Massachusetts Attorney General Martha Coakley’s office announced a consent judgment with a family of car dealerships to resolve allegations that the dealerships used deceptive marketing tactics by placing advertisements online and in print publications that misrepresented the actual vehicle prices. The AG also alleged that dealership employees asked consumers to sign incomplete documents with the understanding that they would be completed using the negotiated vehicle price, but later entered information that called for a higher price. Employees also allegedly charged consumers fees for unwanted or undisclosed warranties and services. The consent judgment orders the dealership to pay $125,000 in consumer restitution, $85,000 in civil penaltie, and $15,000 for attorneys’ fees and costs! Litigation Attorney’s fees not available to prevailing party under Rees-Levering Act where suit’s alleged violation of unfair competition law based on Rees-Levering Violation: An individual sued the holder of his retail installment sale contract for a violation of California’s unfair competition law based on a violation of the state’s Rees-Levering Automobile Sales Finance Act. The U.S. District

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Court for the Southern District of California granted summary judgment for the creditor, and the creditor moved for an award of attorney’s fees pursuant to the RISC or, alternatively, pursuant to Rees-Levering. The court denied the motion. The court found attorney’s fees were not warranted under the RISC because the attorney’s fee provision in the RISC was not legible in the record. The court added that attorney’s fees under Rees-Levering were not allowed in this case, where the “‘Rees-Levering violation is merely a predicate to a UCL claim [because] the public policy underlying the UCL must prevail over the reciprocal fee provision of Rees-Levering.’” See Wright v. General Motors Acceptance Corporation, 2012 U.S. Dist. LEXIS 57363 (S.D. Cal. April 23, 2012). Court certifies class in action challenging practice of estimating repossession fee in notice of intent to sell collateral: A motorcycle buyer voluntarily surrendered the motorcycle to the secured creditor after he noticed various mechanical problems. The creditor sent the buyer a “Notice of Intent to Dispose of Repossessed Collateral,” which contained a balance owed, including an “Estimated Repossession Fee.” After the motorcycle was sold, the creditor sent the buyer a statement informing him of the deficiency balance due. The buyer entered into a payment plan but then defaulted. The buyer filed a class action lawsuit against the creditor for violations of California’s ReesLevering Automobile Sales Finance Act and California’s unfair competition law. He alleged that the notice of intent he and the putative class members received failed to provide required information, resulting in forfeiture of the creditor’s right to recover a deficiency balance. The U.S. District Court for the Eastern District of California certified a class. The court found that numerosity existed, noting that the size of the class was not affected by whether each class member’s vehicle was voluntarily surrendered as opposed to being repossessed because the notice of intent requirements applied to both circumstances. The court found commonality was established over the questions of whether Rees-Levering applies to the creditor’s conduct and whether providing an “estimated value” for repossession services complies with that law. The court held the typicality element was also met because each of the putative class members received an “estimated” cost of repossession and the failure to provide a specific amount of the repossession fee was the identical type of injury suffered by all class members, no matter how close the estimate was to the actual value of those services. Finally, the court held that the class plaintiff and his counsel would fairly and adequately protect the interests of the class. The court found that questions of law or fact common to the members of the class

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predominated over any questions affecting only individual members, even though some class members’ loan documents contained an arbitration clause and class waiver and other class members’ documents did not. The court found class litigation of common issues would reduce litigation costs and promote efficiency. See Mora v. Harley-Davidson Credit Corp., 2012 U.S. Dist. LEXIS 49636 (E.D. Cal. April 9, 2012). Assignee of risc entitled to repossess vehicle where repair shop intended to place lien on vehicle for debtor’s share of repair costs authorized by insurer: An individual bought a car that was later severely damaged in an accident. Her insurance company had the car repaired, but she did not pick up the car after the repairs due to a dispute with her insurer. The assignee of the car owner’s retail installment sales contract repossessed the car when it learned the repair shop was threatening to place a lien on the title for the unpaid portion of the repairs and the owner refused to pay because of the insurance dispute. After the repossession, both the car owner and the assignee filed complaints for declaratory judgment. The trial court found in favor of the assignee, explaining the car owner’s failure to recover the vehicle from the repair shop allowed a lien to attach to the car, in violation of her contract. The Appellate Court of Illinois affirmed. The car owner argued that because she did not consent to the repairs, a lien could not attach to the car. The appellate court disagreed, noting Illinois law provides that a lien attaches when work is commenced at the request of the reputed owner, authorized agent of the owner, or lawful possessor of the car. Because the car owner’s insurer arranged for the repairs and no one

disputed it was in lawful possession of the car, the appellate court fount the car owner’s consent was not necessary for the lien to attach. See Ries v. Fifth Third Bank, 2012 Ill. App. Unpub. LEXIS 897 (Ill. App. April 18, 2012). Dealer liable under Vermont Consumer Fraud Act for deficiencies in title and odometer statement despite lack of knowledge: A car dealership bought a used car at auction and received a clean document of title and odometer disclosure form to which the previous owner attested. The previous owner had also bought the car at auction, where he received a salvage title to the car with unknown mileage. When the Vermont Department of Motor Vehicles issued the previous owner a new title, it erroneously issued a title that omitted information that the car had been salvaged and rebuilt. The dealership resold the car at auction. At resale, the odometer reading did not accurately reflect the car’s actual mileage, and the title did not reflect the fact the car had been salvaged and rebuilt. When the buyer discovered this, he sued the dealership for violation of the Vermont Consumer Fraud Act. The trial court granted summary judgment for the buyer, and the Supreme Court of Vermont affirmed, holding that the VCFA does not require any degree of knowledge by the seller of the misrepresentation or omission in order to be held liable. The high court further held the trial court did not abuse its discretion in refusing to consider the dealership’s evidence that the buyer bought the car “as is” where the dealership failed to include the relevant documents in its pleadings. See Gregory v. Poulin Auto Sales, Inc., 2012 Vt. LEXIS 28 (Vt. April 12, 2012).

Repossessing creditor must establish sale was commercially reasonable to obtain deficiency: After a creditor repossessed a vehicle for nonpayment and sold the vehicle, it sued the debtor for the deficiency balance. The trial court entered judgment in the creditor’s favor, but the Superior Court of New Jersey, Appellate Division, reversed. The appellate court found a repossessing creditor must establish with evidence that the sale of the vehicle was commercially reasonable in order to obtain a deficiency. In this case, the creditor failed to present any such evidence and, thus, could not recover a deficiency. See Hann Financial Services Corp. v. DiPietro, 2012 N.J. Super. Unpub. LEXIS 844 (N.J. Super. App. Div. April 17, 2012). So there you have it Stay legal, and we’ll see you next month

BY THOMAS B. HUDSON AND NIKKI MUNRO 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 WWW.COUNSELORLIBRARY.COM TOM IS ALSO THE PUBLISHER OF SPOT DELIVERY®, A MONTHLY LEGAL NEWSLETTER FOR AUTO DEALERS, AND THE EDITOR IN CHIEF OF CARLAW®, A MONTHLY REPORT OF LEGAL DEVELOPMENTS IN ALL STATES FOR THE AUTO FINANCE AND LEASING INDUSTRY NIKKI IS A CONTRIBUTING AUTHOR TO THE F&I LEGAL DESK BOOK AND FREQUENTLY WRITES FOR SPOT DELIVERY SPOT DELIVERY, CARLAW AND THE BOOKS ARE PRODUCED BY COUNSELORLIBRARY.COM LLC FOR INFORMATION, CALL 410-865-5411 OR VISIT WWW.COUNSELORLIBRARY.COM COPYRIGHT COUNSELORLIBRARY.COM 2011, ALL RIGHTS RESERVED SINGLE PUBLICATION RIGHTS ONLY, TO THE ASSOCIATION. (6/12) HC# 4828-7585-3839.

I O WA N E W S

IOWA DOT ENHANCES FORMS WEBSITE The Iowa DOT. Vehicle Services Division, has revised their forms website Go to: http://www.iowadot.gov/mvd/ovs/default. htm. – then go to the left side of this website, scroll down and click on vehicle services forms. This will take you to a site where you can click on the form number and it puts all the forms in numerical order or click on the title of the form. Please note that some of the forms, i.e. application for certificate of title, can be filled out online and printed off. Forms for the other divisions of the Iowa DOT – Driver Services, Motor Vehicle Enforcement and Motor Carrier Services can also be found in the same manner. The Iowa Dot website is full of information for dealers as well as the public. www.iowadot.gov

DOT CLARIFIES EXISTING RULES On June 12 the DOT submitted proposed changes to the Administrative Rules Committee which clarifies “Regular Business Hours” for motor vehicle dealers under the Iowa Administrative Code pertaining to Iowa Code Chapter 322. Effective 7/4/2012 the Administrative Code now reads under definitions – “regular business hours” means to be consistently open to the public on a weekly basis at hours reported to the office of vehicle services. Except as provided in Iowa Code section 322.36, regular business hours for a motor vehicle or travel trailer dealer shall include a minimum of 32 posted hours between 7 a.m. and 9 p.m Monday through Friday. (underscored emphasis designates the change). The same change was made to the Vehicle Recyclers section of the Iowa Administrative Code, Chapter 431, pertaining to Iowa Code Chapter 321 H.

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A F E W F I R S T S T E P S YO U C A N M A K E T O WA R D E S TA B L I S H I N G A S E R I O U S C O M P L I A N C E P R O G R A M

Compliance: How Do I Get Started? I just returned from a Buy Here-Pay Here dealer conference where I was called on to give several legal presentations. Many of the presentations dealt with the Consumer Financial Protection Bureau – the new federal cop for BHPH dealers – and several recent CFPB enforcement actions. In years past, dealers had not believed the new bureau was going to make a difference in their lives. This year seemed different. As the conference came to a close, several dealers asked me essentially the same question: “Can you give me a basic playbook to help me set up a compliance program that will keep the Consumer Financial Protection Bureau from flogging me in the public square and throwing me in jail?” They actually seemed to have taken the compliance message to heart. Let’s say you have decided 2012 is the year you, too, are finally going to take all this compliance noise seriously. How should you go about it? I’m asked that question a lot, and it’s always accompanied by a warning that the compliance program needs to be one that won’t break the bank. So I’ll outline a few first steps you can make toward establishing a serious compliance program and take a stab at estimating the “hard costs” each one will involve – not including management time, implementation time and the time your employees spend studying, training and researching. Here goes.

Step 1: Make the decision to become a squeaky-clean operation. Without this step, none of the rest of the stuff we recommend will work. The decision needs to come from the top of the organization, and if your organization has had compliance problems, all hands need to understand it is a real sea change and not just window dressing. Your people need to be told that anyone who does not treat customers honestly and ethically will be fired. Anyone who doesn’t buy in to the new compliance culture should be told to hit the road. Cost: $0. Step 2: Appoint a privacy officer. While you’re at it, make that same person your compliance officer and the administrator of your Red Flags program. If your organization is large enough, that person might need help in the form of a small committee. The privacy/compliance officer should report to the highest-ranking person in the organization. Have signs made up for your dealership showroom identifying that person. Cost: $5 for the signs.

Step 3: Give your privacy/compliance officer a real budget so he or she can actually get some stuff done. No money budgeted for privacy and compliance will assure you won’t have a privacy/compliance program that’s worth a hoot. Several of the tools the privacy/compliance officer will need, such as copies of the federal Truth in Lending Act and Federal Reserve Board Regulation Z, the federal Consumer Leasing Act and FRB Regulation M, the Equal Credit Opportunity Act and FRB Regulation B, the federal Gramm-Leach-Bliley Act, the Federal Trade Commission’s privacy regulation, the FTC’s Used Car Rule, the Red Flags Rule, and the RiskBased Pricing Rule, can be found online, though your privacy/compliance officer might need some training to access them. As part of that privacy/compliance budget, allocate enough money to send everyone you can possibly afford to through a compliance certification course. Your mechanics are trained – your F&I people need training, too. One such program is offered by the Association of Finance and Insurance Professionals. It isn’t expensive – the last time I checked, it was $595 to $915 per person – and it will pay compliance dividends. Have your privacy/compliance officer obtain and read all the books on F&I compliance he or she can find. We have several good ones, including one that is used in the AFIP certification course, but I’m sure there are others out there if you don’t like our stuff. Likewise, have the compliance/privacy officer subscribe to online legal compliance services. Again, we have those, but there are other good ones in the marketplace, as well. Cost: Start with at least $10,000. You easily can spend a lot more. Step 4: Train, train, train. Dealers tend to have high turnover of sales and finance personnel, and this compliance stuff can be less than riveting. So you need to train your revolving sales and finance force, and periodically re-train the ones who stay with you. There are third-party trainers, some of whom are quite good, but if your compliance/privacy officer turns out to be a crackerjack, he or she might well be able to handle the training. Cost: $0 in-house, $10,000 for outside training twice a year. Step 5: Download and print copies of “Understanding Vehicle Finance.” This consumer education pamphlet is free on the National Auto Dealers Association website (www.nada.org/ Advocacy+Outreach/Auto+Financing+Resources/ UnderstandingVehicleFinancing/), and is available in English and Spanish. It provides an overview

of how car financing at dealerships works, and bears the seal of approval of the Federal Trade Commission. Everyone in your organization will benefit from reading it. Make copies and display them around your dealership, and put a copy into the customer’s packet of papers as you close each deal. Cost: The download is free, plan on $1,000 for printing. Step 6: Download and print copies of “Keys to Vehicle Leasing.” Another consumer education pamphlet, this one from the Federal Reserve Board, and it’s a good overview of closed-end auto leasing. It also is available in English or Spanish, and you should use it just like you use “Understanding Vehicle Finance.” Cost: The download is free, plan on $1,000 for printing. Step 7: Require everyone in the sales and financing process to read carefully your buyers order, your retail installment sales agreements and leases, your privacy policy, your arbitration agreement and all other documents you ask the customer to sign or give to the customer. That should include credit life and accident policies and certificates, GAP addenda, service contracts, “etch” agreements and anything else the customer sees. Make up a test to determine how much of what he has read each employee understands. Cost: $0. Step 8: Adopt a true, transparent “menu” process for the sale of additional products through the F&I office. Work with your lawyer to prepare the menu and the script. Dealers who use a menu say the transparent sales process costs them some sales they might otherwise make, but offering every product to every customer every time through a menu results in more sales. Follow up with your employees to make sure they’re actually using the menus you’ve adopted in the way they are supposed to be used. Cost: $0. Step 9: Appoint a person to help customers if they have complaints. Sometimes referred to (using a 10-dollar word) as an “ombudsman,” this person helps customers work through complaints with the dealership. You don’t want customers resolving complaints with the dealer representatives they originally dealt with – and who might have caused the complaint – and get defensive as a result. You want someone who did not take part in the sales and financing process who can look at customers’ complaints dispassionately. Having a formalized complaint resolution process might deter some customers from taking their gripes to

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a lawyer or to the Better Business Bureau. Cost: $0. Step 10: Have your privacy/compliance officer periodically search the web. He or she should check the site of your state’s attorney general so you’ll know what the AG’s current hot buttons are. Another site to check is that of your state’s motor vehicle dealer regulatory body. Also check the CFPB and FTC’s websites, the NIADA and NADA website, your state ADA or IADA website and any other sites you’ve discovered that are useful, on a regular basis. Use your Outlook program to set up a weekly or monthly reminder to do the searches (confession: I stole the Outlook tip from Gil Van Over). Cost: $0. Step 11: If your dealership isn’t using a mandatory arbitration agreement in its sales, leasing and financing transactions, consider doing so. The CFPB has announced it is studying the use of arbitration agreements in consumer transactions, and the bureau could eventually ban their use. Until that happens, using an arbitration agreement can be an effective defense against those predatory class-action lawyers. Some state association-produced buyers orders contain arbitration language, or you can buy freestanding arbitration agreements off the shelf from vendors like Reynolds and Reynolds – but make sure your state permits the use of additional documents and doesn’t have a socalled “single document rule.” Regardless of which way you go, have a lawyer who is really knowledgeable about consumer arbitration agreements look over the agreement you intend to use. Cost: $2,000 plus any ongoing printing costs.

Step 12: Have a forms and procedures review and a have a written compliance program. All of your sales and F&I forms and procedures, underwriting procedures and servicing and collections procedures should reviewed by a lawyer who is knowledgeable about compliance law. All of these procedures should be documented and maintained in a compliance manual. You and your lawyer should periodically review your manual – laws and regulations change. Use the Outlook feature to schedule a review at least every six months. Cost: $10,000 - $20,000. So there you are. If you implement those 12 steps, you’ll spend about $34,000-$44,000. You still won’t have a first-class compliance program, but you’ll be miles ahead of where most dealers are. Once you get those measures in place, we can start talking about how to bring the program to the next level. Not willing to invest serious money in compliance? Maybe it’s time to think about closing the dealership and opening a bait shop. BY THOMAS B. HUDSON TOM HUDSON (THUDSON@HUDCO.COM) IS THE AUTHOR OF SEVERAL BOOKS ON VEHICLE SALES FINANCE AND LEASING LAWS, AVAILABLE AT WWW.COUNSELORLIBRARY.COM. HE 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. HE IS A PARTNER IN THE MARYLAND OFFICE OF HUDSON COOK, LLP. SPOT DELIVERY AND CARLAW AND THE BOOKS ARE PRODUCED BY COUNSELORLIBRARY.COM LLC. FOR INFORMATION, CALL 410865-5411 OR VISIT WWW.COUNSELORLIBRARY.COM. COPYRIGHT COUNSELORLIBRARY.COM 2012, ALL RIGHTS RESERVED. BASED ON AN ARTICLE FROM SPOT DELIVERY. SINGLE PUBLICATION RIGHTS ONLY, TO DEALER BUSINESS JOURNAL. HC# 4821-85028879 (6/12).

AFC Offers Expanded Financing for RV Dealers Floorplan provider Automotive Finance Corporation (AFC) has expanded its inventory finance product offerings to include more options for recreational vehicle dealers. AFC said its RV inventory financing includes no restrictions on the type of RV unit a dealer can purchase – no make, model or year constraints. “Many providers only finance a dealer’s new RV inventory,” AFC director of business development Neill Waters said, “and we consequently saw many RV dealers seeking financing that better met their used RV purchasing needs.” AFC will advance 100 percent of an RV dealer’s auction purchases at more than 1,000 AFC-approved auctions, and the company’s financing gives dealers have an extended time to pay off their units on floorplan for used inventory purchased from auction or taken in on trade. AFC’s RV financing applies to used motorhomes, travel trailers, fifth-wheel campers and other towable units.

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

During 2012, the five-hour dealer continuing education classes will again be held at community colleges throughout Iowa. The following is an overview of the specialty classes dealers may select from: PAPERWORK, PAPERWORK, PAPERWORK This class is an excellent refresher for the veteran dealer, and beginning dealers will become familiar with every facet of the paperwork required for operating a dealership in Iowa. Attendees will learn how to properly complete titles and related documents as well as developing compliant procedures for cash sales, financed sales and wholesale sales that everyone at your dealership can follow to help ensure adherence, consistency and correctness. You will discover how to set up your dealership to meet compliance requirements at the state and federal level. Updates from the Iowa Department of Transportation, the Consumer Protection Division of the Iowa Attorney General’s office and other state and federal agencies will be reviewed. COMPLIANCE TOOLS FOR BUY HERE-PAY HERE DEALERS Participants will learn how to avoid fines and penalties. This class will provide an in-depth discussion of policies and procedures that must be followed by BHPH dealers and those considering a Buy Here-Pay Here dealership in Iowa. Advertising rules for dealerships will also be shared. Updates from the Iowa Department of Transportation, the Consumer Protection Division of the Iowa Attorney General’s office, the new Federal Consumer Financial Protection Bureau and other state and federal agencies will be reviewed. CARKNOWLOGY: FINANCING REGULATIONS AND RESPONSIBILITIES Dealers who offer consumer financing and those considering making financing available should take this course to understand fully how to conduct business legally, ethically and in compliance with state and federal law. Discover what lenders expect from you and your customers regarding compliance with sales, consumer finance rules, regulations and law. The course will include a review of the legal requirements of selling service contracts, warranties and insurance products, plus the importance of working with reputable providers. You will take part in a hands-on review of all legal requirements and document preparation for the sales of motor vehicles when lenders are involved. Updates from the Iowa Department of Transportation , the Consumer Protection Division of the Iowa Attorney General’s office, the new Federal Consumer Financial Protection Bureau and other state and federal agencies will be reviewed. ENVIRONMENTAL AND SAFETY COMPLIANCE DNR, EPA AND OSHA Requirements: If you think you are exempt, think again. This course will be beneficial to dealers who have service departments, body shops and those who have a used motor vehicle dealer license coupled with a recycler’s license. If you have employees, you

will want to become better aware of these state and federal compliance issues. Updates from the Iowa Department of Transportation, the Consumer Protection Division of the Iowa Attorney General’s office and other state and federal agencies will be reviewed. Class locations, times and course numbers will be posted on the IIADA website (www.iowaiada.com) and will be included in Street Smart magazine throughout 2012. Weather could be a factor, so please listen to local radio stations to insure the class will be held. If you arrive more than 15 minutes late, the community college may ask that you register for a future class. If you have any special needs, please let the community college know when you register for a class. You may bring an interpreter to class, but please let the college know you will be doing so. Registration: Dealers will be asked to provide the following information: the class name and section number, and the participant’s social security number, date of birth, name, address, phone number, email address and credit card information. Prepayment is required. Most colleges accept VISA, Mastercard, Discover and American Express. Fees: The five-hour continuing education class cost is $159, which includes an updated manual. CLASS LOCATIONS AND DATES Thursday, Aug. 16, 2012, noon-5 p.m.: Scott Community College, Urban Center, 306 West River Drive, Davenport, Iowa. Please arrive at 11:45 a.m. To register, call 563-441-4100 or 888-336-3907. Course offered: Paperwork, Paperwork, Paperwork (Course No. 106166), Room 204 Friday, Aug. 17, 2012, 8 a.m.-1 p.m.: Scott Community College, Urban Center, 306 West River Drive, Davenport, Iowa. Please arrive at 7:45 a.m. To register, call 563-441-4100 or 888336-3907. Courses offered: Environmental and Safety Compliance (Course No. 106172), Room 212; Carknowlogy: Financing Regulations and Responsibilities (Course No. 106168), Room 206; Compliance Tools for Buy Here-Pay Here Dealers (Course No. 106170), Room 210 Friday, Aug. 24, 2012, 8 a.m.-1 p.m.: Western Iowa Tech Community College, 4647 Stone Avenue, Sioux City, Iowa. Please arrive at 7:45 a.m. To register, call 712-274-6404. Courses offered: Carknowlogy: Financing Regulations and Responsibilities (Course No. 13/FY CPCE 1117-01), Room L-416, Advanced Sciences Building; Environmental and Safety Compliance (Course No. 13/FY CPCE 1115-01), Room B-221, Corporate College Building; Paperwork, Paperwork, Paperwork (Course No. 13/FY CPCE 1116-01), Room L-417, Advanced Sciences Building

Thursday, Sept. 6, 2012, noon-5 p.m.: Iowa Valley Community College District, 3702 South Center Street, Marshalltown, Iowa. Please arrive at 11:45 a.m. To register, call 641-752-4645 or 800284-4823. Course offered: Paperwork, Paperwork, Paperwork, Course No. BUP 2278- 013 room, Room 608 Friday, Sept. 7, 2012, 8 a.m.-1 p.m.: Iowa Valley Community College District, 3702 South Center Street, Marshalltown, Iowa. Please arrive at 7:45 a.m. To register, call 641-752-4645 or 800-2844823. Courses offered: Carknowlogy: Financing Regulations and Responsibilities; Course No. BUP 2278-014, Room 608. Compliance Tools for Buy Here Pay Here Dealers; Course No. BUP 2278-015, Room 610; Environmental and Safety Compliance; Course No. BUP 2278-016, Room 612 Thursday, Sept. 13, 2012, noon-5 p.m.: Indian Hills Community College, Bennett Student Services Center, 623 Indian Hills Drive, Ottumwa, Iowa. Please arrive at 11:45 a.m. To register, call 641-683-5249 or 800-346-4413. Course offered: Paperwork, Paperwork, Paperwork (Course No. 13/YR*REL*2906*501), Room 100 Friday, Sept. 14, 2012, 8 a.m.-1 p.m.: Indian Hills Community College, Advanced Technology Center, 626 Indian Hills Drive, Ottumwa, Iowa. Please arrive at 7:45 a.m. To register, call 641-683-5249 or 800-346-4413. Courses offered: Carknowlogy: Financing Regulations and Responsibilities (Course No. 13/YR*REL*2904*501), Room 132; Compliance Tools for Buy Here-Pay Here Dealers (Course No. 13/YR*REL*2902*501), Room 134; Environmental and Safety Compliance (Course No. 13/YR*REL*2903*501), Room 132 Thursday, Sept. 20, 2012, noon-5 p.m.: Iowa Central Community College, Career Education Building, One Triton Circle, Fort Dodge, Iowa. Please arrive at 11:45 a.m. To register, call 515574-1293 or 800-362-2793, Ext. 1293. Courses offered: Paperwork, Paperwork, Paperwork (Course No. ZSR-101-FD04), Room 110; Compliance Tools for Buy Here-Pay Here Dealers (Course No. ZSR-101-FD02), Room 108 Friday, Sept. 21, 2012, 8 a.m.-1 p.m.: Iowa Central Community College, Career Education Building, One Triton Circle, Fort Dodge, Iowa. Please arrive at 7:45 a.m. To register, call 515574-1293 or 800-362-2793, Ext. 1293. Courses offered: Carknowlogy: Financing Regulations and Responsibilities (Course No. ZSR-101-FD01), Room 108; Environmental and Safety Compliance (Course No. ZSR-101-FD03), Room 110 Friday, Sept. 28, 2012, 8 a.m.-1 p.m.: Northeast Iowa Community College, Dairy Center, 1527 Highway 150 South, Calmar, Iowa. Please arrive at 7:45 a.m. To register, call 800-728-2256, Ext. 399. Courses offered: Carknowlogy: Financing Regulations and Responsibilities (Course No. 13282), Room 115; Environmental and Safety Compliance (Course No. 13283), Room 113; Paperwork, Paperwork, Paperwork (Course No. 13284), Room 112

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DEALER EDUCATION CLASSES Thursday, Oct. 4, 2012, noon-5 p.m. Iowa Lakes Community College, Emmetsburg, Iowa. Please arrive at 11:45 a.m. Course offered: Compliance Tools for BHPH Dealers, Course No. 45889, Room 130. To Register Call: 800-252-5664 Friday, Oct. 5, 2012, 8 a.m.-1 p.m.: Iowa Lakes Community College, Emmetsburg, Iowa. Please arrive at 7:45 a.m. Courses offered: Carknowlogy:Financing Regulations and Responsibilities, Course No. 45890 Room No. 120; Environmental and Safety Compliance, Course No. 45891, Room 130; Paperwork, Course No. 45892, Room 140. to Register Call: 800-252-5664 Thursday, Oct. 11, 2012, noon-5 p.m.: Hawkeye Community College, Center for Business and Industry, 5330 Nordic Drive, Cedar Falls, Iowa. Please arrive at 11:45 a.m. To register, call 319-277-2490. Course offered: Paperwork, Paperwork, Paperwork, Course No. 1001, Room C-104. Friday, Oct. 12, 2012, 8 a.m.-1 p.m.: Hawkeye Community College, Center for Business and Industry, 5330 Nordic Drive, Cedar Falls, Iowa. Please arrive at 7:45 a.m. To register, call 319277-2490. Courses offered: Environmental and Safety Compliance, Course No. 1002, Room C-101. Carknowlogy, Financing Regulations and Responsibilities, Course No. 1003, Room L-108. Compliance Tools for BHPH Dealers, Course No. 1004, Room C-104. Thursday, Oct. 18, 2012, noon-5 p.m.: Southwestern Community College, 1501 W. Townline Street, Creston, Iowa. Please arrive at 11:45 a.m. To register, call 641-782-1441 or 641-782-1449. Courses offered: Paperwork, Paperwork, Paperwork; Tech Center 1, Room 103. Carknowlogy: Financing Regulations and Responsibilities. Multi-purpose Room, Performing Arts Center Friday, Oct. 19, 2012, 8 a.m.-1 p.m.: Southwestern Community College, 1501 W. Townline Street, Creston, Iowa. Please arrive at 7:45 a.m. To register, call 641-782-1441 or 641782-1449. Courses offered: Environmental and Safety Compliance, Tech Center 1, Room 103. Compliance Tools for Buy Here-Pay Here Dealers. Multi-purpose Room, Performing Arts Center. Friday, Oct. 26, 2012, 8 a.m.-1 p.m.: Northwest Community College, 603 W. Park Street, Sheldon, Iowa. Please arrive at 7:45 a.m. To register, call 800-352-4907, Ext. 193, ask for Continuing Education. Courses offered: Carknowlogy: Financing Regulations and Responsibilities (Course No. 28915), Room 305, Building C; Environmental and Safety Compliance (Course No. 28916), Room 341, Building C; Paperwork, Paperwork, Paperwork (Course No. 28914), Auditorium, Building C Thursday Nov. 1, 2012, noon.-5 p.m.: North Iowa Area Community College, Muse-Norris Conference Center, 500 College Drive, Mason City, Iowa. Please arrive at 11:45 a.m. To register, call 888-466-4222, ext. 4358, or 641-4224358. Course offered: Paperwork, Paperwork, Paperwork (Course No. 89057), Room NC 180

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Friday, Nov. 2, 2012, 8 a.m.-1 p.m.: North Iowa Area Community College, Muse-Norris Conference Center, 500 College Drive, Mason City, Iowa. Please arrive at 7:45 a.m. To register, call 888-466-4222, ext. 4358, or 641-422-4358. Courses offered: Carknowlogy: Financing Regulations and Responsibilities (Course No. 80959), Room NC 180; Compliance Tools for Buy Here-Pay Here Dealers (Course No. 80960), Room NC 180; Environmental and Safety Compliance (Course No. 80964), Room NC 180 Thursday, Nov. 8, 2012, noon-5 p.m.: Southeastern Community College, Center for Business-River Park Place, 610 North 4th Street, Burlington, Iowa. Please arrive at 11:45 a.m. To register, call 319-208-5375 or 866-722-4692, Ext. 5375. Courses offered: Paperwork, Paperwork, Paperwork (Course No. 32683), Room 103; Carknowlogy: Financing Regulations and Responsibilities (Course No. 32684), Room 111 Friday, Nov. 9, 2012, 8 a.m.-1 p.m.: Southeastern Community College, Center for Business-River Park Place, 610 North 4th Street, Burlington, Iowa. Please arrive at 7:45 a.m. To register, call 319-208-5375 or 866-722-4692, Ext. 5375. Courses offered: Compliance Tools for Buy Here-Pay Here Dealers (Course No. 32686), Room 111; Environmental and Safety Compliance (Course No. 32685), Room 103 Friday, Nov. 16, 2012, 8 a.m.-1 p.m.: Western Iowa Tech Community College, 4647 Stone Avenue, Sioux City, Iowa. Please arrive at 7:45 a.m. To register, call 712-274-6404. Courses offered: Carknowlogy: Financing Regulations and Responsibilities (Course No. 13/FY CPCE 111702), Room L-416, Advanced Sciences Building; Compliance Tools for Buy Here-Pay Here Dealers (Course No. 13/FY CPCE 1118-01), Room L-417, Advanced Sciences Building; Environmental and Safety Compliance (Course No. 13/FY CPCE 1115-02), Room B-221, Corporate College Building Friday, Nov. 30, 2012, 8 a.m.-1 p.m.: Northeast Iowa Community College, Town Clock Center, Suite 1, 700 Main Street, Dubuque, Iowa. Please arrive at 7:45 a.m. To register, call 563-557-8271, ext. 380. Courses offered: Environmental and Safety Compliance (Course No. 13299), Room 106-C; Carknowlogy: Financing Regulations and Responsibilities (Course No. 13297), Room 106-A; Compliance Tools for Buy Here-Pay Here Dealers (Course No. 13304), Room 106-B Monday, Dec. 3, 2012, noon-5 p.m.: Iowa Western Community College, Looft Hall, 2700 College Road, Council Bluffs, Iowa. Please arrive at 11:45 a.m. To register, call 712-3253255. Courses offered: Carknowlogy: Financing Regulations and Responsibilities (Course No. Trade 99*06), Room 016, Looft Hall; Compliance Tools for Buy Here-Pay Here Dealers (Course No. Trade 99*04), Room 023, Looft Hall; Environmental and Safety Compliance (Course No. Trade 99*05), Room 018, Looft Hall.

Tuesday, Dec. 4, 2012, 8 a.m.-1 p.m.: Des Moines Area Community College, FFA Building, 2006 S. Ankeny Blvd., Ankeny, Iowa. Please arrive at 7:45 a.m. To register, call 515-964-6800 or 800-342-0033. Course offered: Environmental and Safety Compliance (PROF 978 Course No. 16170), Rooms 114 and 115, FFA Building Thursday, Dec. 6, 2012, noon-5 p.m.: Scott Community College, Urban Center, 306 West River Drive, Davenport, Iowa. Please arrive at 11:45 a.m. To register, call 563-441-4100 or 888-336-3907. Course offered: Paperwork, Paperwork, Paperwork (Course No. 106167), Room 204 Friday, Dec. 7, 2012, 8 a.m.-1 p.m.: Scott Community College, Urban Center, 306 West River Drive, Davenport, Iowa. Please arrive at 7:45 a.m. To register, call 563-441-4100 or 888336-3907. Courses offered: Environmental and Safety Compliance (Course No. 106173), Room 210; Carknowlogy: Financing Regulations and Responsibilities (Prof978 Course No. 106169), Room 206; Compliance Tools for Buy Here-Pay Here Dealers (Course No. 106171), Room 212 Monday, Dec. 10, 2012, 8 a.m.-1 p.m.: Des Moines Area Community College, FFA Building, 2006 S. Ankeny Blvd., Ankeny, Iowa. Please arrive at 7:45 a.m. To register call: 515964-6800 or 800-342-0033. Courses offered: Paperwork, Paperwork, Paperwork (Course No. Prof 979 Course No. 16168 – Room 108; Compliance Tools for Buy Here Pay Here Dealers (Prof No. 976 Course No. 16169, Room 109. Carknowlogy: Financing Regulations and Responsiblities (Prof No 977 Course No. 16167 – Room 112 and 113 Thursday, Dec. 13, 2012, noon-5 p.m.: Kirkwood Community College, The Kirkwood Center, 7725 Kirkwood Blvd. SW, Cedar Rapids, Iowa. Please arrive at 11:45 a.m. To register, call 319-398-1022 or 800-332-8833. Course offered: Paperwork, Paperwork, Paperwork (Course No. CBBC-205025427), Room 123 Friday, Dec. 14, 2012, 8 a.m.-1 p.m.: Kirkwood Community College, The Kirkwood Center, 7725 Kirkwood Blvd. SW, Cedar Rapids, Iowa. Please arrive at 7:45 a.m. To register, call 319-398-1022 or 800-332-8833. Courses offered: Carknowlogy: Financing Regulations and Responsibilities (Course No. CBBC-2060-25429), Room 122; Compliance Tools for Buy Here-Pay Here Dealers (Course No. CBBC-2040-25431), Room 123 Tuesday, Dec. 18, 2012, 8 a.m.-1 p.m.: Kirkwood Community College, The Kirkwood Center, 7725 Kirkwood Blvd. SW, Cedar Rapids, Iowa. Please arrive at 7:45 a.m. To register, call 319-398-1022 or 800-332-8833. Course offered: Environmental and Safety Compliance (Course No. CBBC-201525433), Room 124

Tuesday, Dec. 4, 2012, noon-5 p.m.: Iowa Western Community College, Looft Hall, 2700 College Road, Council Bluffs, Iowa. Please arrive at 11:45 a.m. To register, call 712-3253255. Course offered: Paperwork, Paperwork, Paperwork (Course No. Trade 99*07), Room 023, Looft Hall AUGUST/SEPTEMBER 2012

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G I V I N G B A C K T O T H E C O M M U N I T Y H A S A LWAY S B E E N O N T H E T O P O F H I S L I S T

NIADA Names 2012 Quality Dealer of the Year Former Ohio State football player Michael T. D’Andrea of Columbus, Ohio was named 2012 National Quality Dealer of the Year by the National Independent Automobile Dealers Association during NIADA’s 66th Annual Convention and Expo in Las Vegas. In a ceremony televised live from Caesars Palace to an online audience of 150,000 viewers, D’Andrea was chosen from the 21 State Quality Dealers nominated for highest honor given to one of the NIADA’s 20,000 dealer members. D’Andrea is co-owner of Miracle Motor Mart in Columbus, a dealership he founded in 1989 with 40 cars and $150,000 worth of inventory. Miracle Motor Mart now has two locations and 46 employees, and has a combined inventory of more than 400 vehicles. NIADA National Quality Dealer candidates are judged on a variety of factors, including contributions to the automotive industry and community involvement. A panel of judges from Northwood University selects the

annual winner. NIADA chief executive officer Michael Linn said D’Andrea “has provided a superior level of service for his customers, his community and his industry that is beyond reproach. He says his goal each and every day is, ‘God first, others second and myself last.’ “Giving back to the community has always been on the top of his list – supporting youth summer camps, working for his church, distributing food, clothing, toys, medical supplies and prayer to more than 700 families each year. It is an honor and a privilege to bestow this great award to a well deserving dealer, member and automotive professional.” D’Andrea, who played linebacker for Ohio State from 1979-81, and his partner, Mark Meadows, are heavily involved in charity projects in Columbus, including the Run the Race Club, St. Paul’s Outreach, Catholic Youth Summer Camp and St. Patrick’s Youth Ministry. D’Andrea said his business prides itself on “teamwork, loyalty, ethics and honesty,”

and said as the dealership has grown, “in that growth you’re almost forced to do more. You’re almost required to do more. “I’m proud of NIADA’s commitment to encourage dealers to make a difference in their community. We have all been given a great gift of self-employment and being in a free country. … We have a great responsibility with all these gifts we have been given. Let us share them with our friends, our families and our community.”

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T H E I O WA D E PA R T M E N T O F R E V E N U E I S P R O V I D I N G G U I D A N C E I N A D VA N C E O F T H E R U L E S

New Sales Tax Exemption for Items Used by Car Washes Senate File 2342, effective May 25, 2012, created a new sales and use tax exemption for “the sales price from the sales of water, electricity, chemicals, solvents, sorbents or reagents to a retailer to be used in providing a service that includes a vehicle wash and wax, which vehicle wash and wax service is subject to section 423.2, subsection 6.” Because this exemption became effective on enactment, the department is providing the following guidance for retailers and utilities in advance of actual rulemaking: What Items Are Exempt? Chemicals, solvents, sorbents or reagents: Examples of items that could qualify are soaps, waxes, sealants and drying agents. We will work with industry groups to develop a more comprehensive list for the administrative rules.

Water and electricity: For stand-alone vehicle wash and wax facilities (“car washes”), the department’s presumption is that 100 percent of the electricity and water purchased will be used for the exempt vehicle wash and wax service. For other businesses that provide vehicle wash and wax services (convenience stores, gas stations, automobile dealerships, etc.), the department’s presumption is that less than 100 percent of the water and electricity purchased will be used in the vehicle wash and wax service. The best solution would be to have separate meters for the water and electricity used in the vehicle wash and wax service. If that is not possible, the retailer should determine and document a reasonable basis for the exempt percentage of water and electricity. That amount should be affirmatively communicated to the local water

and electricity carriers so they may bill appropriately. The exemption for water and electricity is effective for billing dates on or after May 25, 2012.

Claiming the Exemption To claim the exemption, retailers should submit to their suppliers and water and electricity providers a completed Iowa Sales Tax Exemption Certificate, available at www.iowa.gov/tax/forms/31014.pdf. The Exemption Certificate should indicate the purchaser is doing business as a “Retailer.” For the “reason purchaser is claiming exemption,” retailers should check the “Other” box and indicate “Car Wash Exemption.”

BY IOWA DEPARTMENT OF REVENUE

MIDWEST AUTO AUCTION DIRECTORY ADESA DES MOINES 1800 Gateway Drive Grimes, IA 50111 (515) 986-1200 Fax: (515) 986-1201 www.adesa.com General Manager: Jeff Lisle Fleet/Lease Manager: Kevin Parmenter Consignment Sale every Tuesday at 9:30 a.m. Fleet/Lease Sale Tuesday 10:30 a.m.

ADESA KANSAS CITY 101 S.W. Oldham Road Lee’s Summit, MO 64081 (816) 525-1100 (800) 950-2350 Fax: (816) 525-4714 General Manager: Harold Chapman Dealer Sales Manager: Tamara Kunkel Tuesday 9:30 a.m. ADESA MINNEAPOLIS 18270 Territorial Road Dayton, MN 55369 763-428-8777 763-428-8701 Sale: Tuesday, 10 a.m. www.adesa.com ADESA SIOUX FALLS 46893 271st Street P.O. Box 218 Tea, SD 57064 (605) 368-5364 Fax: (605) 368-2808 General Manager: Bob Holm Wednesday Sale 10:00 a.m. IAAI SALVAGE SALE EVERY OTHER WEDNESDAY – 8:30 A.M. ADESA ST.LOUIS 7858 Highway 61-67 Barnhart, Missouri 63012 636-475-9311 ADESA WISCONSIN W 10415 State Road 33 Portage, WI 53901 608-742-8245 608-742-4415 (f) Tony Manwarren, general manager Sale: Thursday, 9:30 a.m. www.adesa.com

AMERICAS AUTO AUCTION 14001 S. Karlov Crestwood, Il 60445 (708) 389-4488 Fax: (708) 389-4558 General Manage/Owner: Larry Hero Wednesday 10 a.m. DEALERS CHOICE AUTO AUCTION, INC. 503 South Wapello Road Mediapolis, Iowa 52637 319-394-3510 (888) 771-6810 319-394-3511 (fax) www.dcaa.com President: Monte Delzell Nationwide Transportation: EZ Auto Shippers Steve Miller: 866-310-5936 Sale Every Tuesday – 6:00 p.m.

DES MOINES AUTO AUCTION 1530 S.E. McKinley Road Des Moines, Iowa 50320 (515) 285-8911 Fax: (515)256-9161 FRIDAY AT 9:30 A.M. Todd Givant, General Manager GREATER QUAD CITY AUTO AUCTION 4015 78th Avenue Milan, Il 61264 (309) 787-6300 Fax: (309) 787-4541 Tuesday 10 a.m. – Thursday – 6 p.m. General Manager: Larry Anderson GREATER ROCKFORD AUTO AUCTION 5937 Sandy Hollow Road Rockford, Il 61109 (815) 874-7800 (800) 830-4722 Fax: (815) 874-1325 General Manager: Mark Capriola Wednesday 10 a.m. KCI AUTO AUCTION 11101 N. Congress Kansas City, MO 816-502-3318 816-801-8565 (f) Doug Doll Consignment Sale: Thursday, 9:30 a.m. www.kciaa.com

MANHEIM ARENA ILLINOIS 200 West Old Chicago Drive Bolingbrook, Il 60440 (630) 759-3800 (630) 759-9668 General Manager: John Olejniczak Dealer Sales Manager: Louis Palermo Tuesday 9 a.m. MANHEIM CHICAGO 20401 COX AVENUE MATTESON, ILLINOIS 60443 815-806-4222 Mike Cesta, General Manager MANHEIM KANSAS CITY 3901 North Skiles Road Kansas City, MO 64161 (800) 247-7163 Fax: (816) 452-2393 General Manager: Peggy Sprenger Dealer Sales Manager: ­­­Kevin Rhoads Wednesday 9:30 a.m. MANHEIM MINNEAPOLIS 8001 Jefferson Highway Maple Grove, MN 55369-4924 (763) 425-7653 (800) 622-7653 Fax: (763) 493-0310 www.manheim.com General Manager: Jerry Aman Auction Manager: Carter Theissen Assistant General Manager: Jon Eisenmann Fleet Manager: Commercial Accounts MGR: Candice Crockett Sale every Wednesday; 9am Ford Credit, 9:30am TD Auto Finance, Select Lane and Fleet/Lease/ Rental Groups, 9:45am Dealer Consignment. Ford Factory Sale bi-weekly Wednesdays at 12 Noon. TRA Sale weekly, Tuesdays at 1:00pm. Specialty Sale (Heavy Trucks/Equipment/Powersports) biweekly, Wednesdays at 12:30pm. MANHEIM MILWAUKEE 561 South Highway 41 - 27th Street Caledonia, WI 53108 (262) 835-4436 (800) 662-2947 Fax: (262) 835-2684 General Manager: Dennis Worthy Dealer Sales Manager: Kimberly Schure Wednesay 9 a.m.

MANHEIM NORTHSTAR MINNESOTA 4908 Valley Industrial Blvd. North Shakopee, MN 55379 (952) 445-5544 (888) 445-2277 Fax: (952) 445-6773 General Manager: Jerry Aman Thursday 9 a.m. MANHEIM OMAHA 9201 S. 144th Street Exit 440 off of I-80 Omaha, NE 68138 (402) 896-8000 (800) 218-4192 Fax: (402) 896-6758 General Manager: Todd Pfeifer Assist. Gen Manager: Korey Grell Thursday 9:30am. MID-STATE AUTO AUCTION 100 Bach Ave. New York Mills, MN 218-385-3777 218-385-3232 (f) Rob Thompson, president Sale: Friday, 10 a.m. www.msaanym.com MISSOURI AUTO DEALERS EXCHANGE 5912 Mitchell Ave. St. Joseph, MO 64507 816-232-7653 816-232-3019 (f) Pam and Scott Wall Consignment Sale: Wednesday, 5:45 p.m. www.moautoexchange.com

PLAZA AUTO AUCTION, INC. 320 Highway 30 West P.O. Box 147 Mt. Vernon, IA 52314 (319) 895-6232 Fax: (319) 895-6727 www.plazaaa.com Owner: Mark Greb Office Manager: Debbie Welsh Becky Thuerauf: Fleet/Lease Administration Connie Van Ginkel: Consignment Manager Consignment Sale every Wednesday at 6:30pm. Fleet/Lease/Repo Sale Wednesday at 7pm. MANHEIM ST. LOUIS 13813 St Charles Rock Road Bridgeton, MO 63044 (314) 739-1300 (800) 533-5414 Fax: (314) 298-3347 General Manager: Victor Ferlaino TRI-STATE AUTO AUCTION Jct. Highway 11 & 80 P.O. Box 735 Cuba City, WI 53807 (608) 744-2020 (608) 744-3418 (800) 356-0625 Fax: (608) 744-7425 Owners/Managers: Gerald and Helen Brogley Thursday 6:30 p.m.

NEBRASKA AUTO AUCTION 7500 N. 56TH St. Lincoln, NE 68514 402-466-8477 402-466-7932 (f) www.nebraskaautoauction.com Dave LaFleur Consignment Sale: Tuesday, 10:30 a.m.

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APPROVED MEMBER BENEFIT PROVIDERS ADVANCED BUSINESS PRODUCTS, INC.

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

ASHTON BONDING AGENCY

7505 NE Ambassador Place, Suite A Portland, OR 97220 800-452-2663 503-253-1353 (fax) dave@ashtonportland.com

ASSOCIATIONS MARKETING GROUP INC Health Insurance Jesse Patton 1112 Maple Street West Des Moines, Iowa 50265 Toll Free: 800-798-6772 Phone: 515-270-8178 Fax: 515-270-0398 E-mail: lpatton@amgi-dsm.com

AUTO OWNERS INSURANCE

10% DISCOUNT TO ALL IIADA MEMBERS Corcoran & Associates, Inc. Mick and Teresa Corcoran 2525 E. Euclid, Suite 102 Des Moines, Iowa 50317 Phone: 515-262-3141 Fax: 515-262-3086 Toll Free: 877-518-4051 E-mail: teresa@corcoranandassoc.com

AUTO OWNERS INSURANCE EASTERN BORDER OF IOWA Amy Goodnight LOHMAN COMPANIES 3901 15TH STREET D MOLINE, IL 61265 800-747-8431 309-764-5967 (fax) amy@lohman-companies.com

CYCLONE AUTOMOTIVE TRAINING INC.

F&I Training, Sales Training, Service Contracts, Rob Miller and Chris Hochstein 515 N Jefferson Way Ste H Indianola IA 50125 Phone: 515-962-0099 or 515-962-0100 Fax: 515-961-8400 Rob: 515-205-5900 cell Chris: 515-205-5800 cell E-mail: cycloneautomotive@ cycloneautomotive.com

FOLLOW-UP PLUS

“Customers for Life” Repeat Sales, Referrals & Customer Loyalty Contact: Terry & Sue Newell P.O. Box 294 Carthage IL 62321 Ph: 888-353-2668 Fax: 217-357-9076 E-mail: tlnewell@frontienet.net

FRAZER COMPUTING, INC.

2564 W. Main St., P.O. Box 569 Canton, New York 13617 Phone: 888-963-5369 Fax: 888-963-3366 E-mail: ucd@FrazerComputing.com National Rep: Mike Frazer Dealer Management Software for Used Car Dealers

FRAZER COMPUTING, INC.

Contact: Scott Erikson, Iowa Rep 100 Prairie Center Drive, Suite 200 Eden Prairie, Minnesota 55344 Scott Erikson: 402-639-0664 serikson@adgtoday.com

GLOBE ACCEPTANCE INC

Sub-prime Lender Contact: Sarah Grisham P.O. Box 65400 West Des Moines, Iowa 50265 Phone: 515-225-9067 globeaccepts@globeacceptance.com Website: www.GlobeAcceptance.com

Websites for Dealers Contact: Syed Azam 310 Main Street Ste 201 Ames IA 50010 Phone: 515-232-2024 E-mail: syed@octadyne.com

AUTOMOTIVE DEVELOPMENT GROUP, LLC

Dealer Compliance Education, F & I Compliance and Training, Service Contracts, GAP and Protective Coatings Contact: Scott Erikson 100 Prairie Center Drive, Suite 200 Eden Prairie, Minnesota 55344 Scott: (402) 639-0664 serikson@adgtoday.com

CITIZENS COMMUNITY CREDIT UNION

2012-1ST AVENUE SOUTH FORT DODGE, IOWA 50501 Phone: 515-955-5524, Ext. 202 Fax: 515-955-8241

CORCORAN & ASSOCIATES INC.

Various Types of Insurance Contact: Teresa Corcoran 18-2nd St., N.E. Mason City, Iowa 50401 Phone: 877-518-4051 Phone: 515-262-3141 Fax: 515-262-3086 Email: teresa@corcoranandassoc.com

3126 1044th Street Urbandale, Iowa 50322 Jeff Rubino 515-491-6051 jrubino.pdfs@gmail.com

RELIABLE AUTO FINANCE INC. 954 28th St. SW P.O. Box 9700 Grand Rapids, MI 49509 800-814-9294 Brian Chisholm brianc@reliableautofinance.com

REYNOLDS & REYNOLDS INC.

Dealer Bonds Long Term Care Insurance Various types of insurance Contact: Dean M Clark 300 Walnut Street Ste 200 Des Moines IA 50309 Phone: 515-243-1724 Toll Free: 800-767-1724 Fax: 515-243-6664 E-mail: d.m.clark@reynolds-reynolds.com

S & C AUTOMOTIVE, INC.

Service Contracts, GAP, Aftermarket Products Sales & F & I Training thru Star Training Group 3828-70th Street Urbandale, Iowa 50322 515-276-9622 800-776-9622 515-276-8472 (fax) e-mail: dougeckhart1@yahoo.com website: www.scautoia.com Contact: Doug Eckhart

SECURITY AUTO LOANS (SAL)

2093 20th Ave. S.E. DYERSVILLE, IOWA 52040 PHONE: 866-655-8825 Ext. 120 Fax: 866-655-8285 Contact: Mark VanDyke e-mail: markv@goldstargps.com Website: www.goldstargps.com

Sub-prime Lender Contact: Scott Erikson/Joe Ruhland 4900 Highway 169 N., Suite 205 New Hope, Minnesota 55428 P: 763-559-5892 F: 763-559-7549 website: www.securityal.com Scott: 402-639-0664 e-mail:serikson@adgtoday.com Joe: 612-804-0720 e-mail: joe@autofaqs.biz

GREATER IOWA CREDIT UNION

SMARTAUCTION

GOLDSTAR GPS

AUTOJINI.COM

PROSOURCE FINANCE, LLC

1630 – 22nd Street West Des Moines, Iowa 50266-1407 Gene Holtorf, Dealer Direct Manager Ph: 515-954-1666 F: 515-956-6966 gholtorf@greateriowacu.org

INNOVATIVE DEALER SERVICES, INC.

Dealer Software Management Systems P.O. Box 23189 Shawnee, Kansas 66283 913-312-7344 – Ext. 11 Fax: 810-821-1718 Website: innovativedealer.com Contact: Deems Peterson, Sales Manager dpeterson@innovativedealer.com

JR 5 TRANSPORTATION Transport Services John Robinson, President 1109 S.W. 63rd Street Des Moines, Iowa 50312 515-822-3447

NADA BOOKS

Official Used Car Guides, Subscription Discounts, Annual Subscription through IIADA, Save $$ Contact IIADA at Phone: 641-755-4177 E-mail: iiada@netins.net

Matthew Mohler 4300 SW Cambridge Avenue Topeka, Kansas 66610 785-249-4166 matthew.mohler@ally.com Iowa Rep: Seth Fair seth.fair@ally.com 515-777-4592

WILSON DISTRIBUTOR SERVICE IIADA DEALER CAP FORMS Car Brite Products Forms, Detail Supplies, Equipment & More Jason & Lisa Goody 105 N McCoy Mt. Pleasant IA 52641 Phone: 800-634-0974 Fax: 319-385-2927 E-mail: jasonwds@lisco.com Website: www.wds-usa.com

ZURICH

Garage Keepers, Property, Garage Liability Dealer Bonds 7045 College Blvd. Overland Park, Kansas 66211 Michael Novak – Western Iowa Rep michael.novak@zurichna.com 800-344-4917, Ext. 3909 Scot Smith – Eastern Iowa Rep. scot.smith@zurichna.com Toll Free: 800-840-8842, Ext. 3944

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Benefits with the Iowa Independent Automobile Dealers Association  IIADA NIADA Membership  Protect your business through IIADA and NIADA’s     

legislative programs that monitors and protect used motor vehicle dealers with Congress, FTC, and others FREE NIADA publications - Street Smart & Used Car Dealer magazine Certified Master Dealer program through the NIADA/Northwood University Garage insurance; health and other types of insurance Retirement program; prescription drug savings Conventions, trade shows and dealer training programs

 Discounts on NADA used car guides - monthly, older,        

RV, marine, motorcycle Discounts on credit card processing Discounts on accounting & investment services Dealer Awards Scholarships - for your children/grandchildren and employee children $2,000 in discount coupons from mid-west auctions Choice hotel discounts; Hertz rental car discounts NIADA-TV - 24/7 Telephone assistance to IIADA members and updates on laws and regulations

Membership Application Name _______________________________________________ Title ___________________________________________ Business Name _________________________________________ State Dealer License # _________________________ Street Address __________________________ City ____________________ State ________ Zip Code _____________ County Where Dealership is Located _______________________________ (Iowa) Phone _______________________ Fax _______________________ E-Mail ______________________________________ Recommended by __________________________________________________________ Years in Business __________ How would you like to receive your newsletter: Mail _____ Fax _____ E-Mail __________________________________ Amount Enclosed ___________________ Date Received ___________________ By signing this application, you certify that you are engaged in the used automobile business or affiliated with the auto industry. You agree upon the signing of the application and, if accepted as a member, you pledge to uphold the by-laws and the constitution of the association, its code of ethics, and all local, state and federal laws pertaining to the automobile business.

Signature ___________________________________________________________________________________________ Annual Dues $250

IIADA is an affiliate of NIADA. NIADA membership included. Please make checks payable to:

IIADA 409 E. Market St., PO Box 337 Panora, Iowa 50216 641-755-4177 21

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COMPLIANCE OVERDRIVE

Look Before You Lease When I attend industry events, I enjoy meeting dealers and hearing their takes on current challenges and trends facing the industry. One topic that has come up recently is leasing. I have heard a number of dealers comment on how they would like to expand their dealership and start leasing vehicles. While that might sound like a natural step in growing a business, dealers must consider the differences between selling and leasing. To be clear, by “lease,” I mean a contract allowing a customer to use your vehicle for a period of time (minimum: four months). At the end of the lease, the customer returns the vehicle and doesn’t owe you any more money as long as the vehicle has only reasonable wear and tear and was driven no more than the agreed mileage. If there is an option to purchase, the option price bears some relation to the vehicle’s expected market value at the time the option is exercised. In other words, the lessee doesn’t have the option to purchase for $1 because that would really be a sale, disguised as a lease.

Adding leasing to an independent dealership might sound simple. You’re already arranging loans and payments for the vehicles you sell, so why not expand your in-house financing to offer customers another option? But it’s not as easy as it looks. Here are key areas to consider when making your decision. Licensing: Make sure your license for selling vehicles also allows you to lease vehicles. Your current license might not be broad enough to authorize leasing. Insurance: When you sell a car, the title is transferred to the buyer. You focus on receiving timely payments and confirming the buyer has sufficient insurance to protect your security interest in the vehicle. You probably have property and liability insurance to protect your inventory and sales. However, when a dealer leases a car, he still owns it. If the vehicle is involved in an accident, you might be subject to liability as the owner. As part of researching a leasing operation, meet with your legal counsel and insurance carrier to make sure you protect against liability exposure with appropriate insurance coverage. Pricing: Determining the sales price of a vehicle is pretty straightforward. You know your costs to purchase and prepare the vehicle for sale, sales costs and profit margins, and sell the vehicle for more than your costs. You know at the time of sale whether you are making money on the deal. With a lease, the calculations are more complicated. It might be easy to determine what the vehicle is worth today, but how do you know what it will be worth when the lease is up, say, two or three years from now? That depends on factors such as how many miles it will be driven and how well it is maintained. There are also unknown variables. What if gas prices rise drastically and the vehicle is a gas-guzzler? That could impact the market value at the end of the lease (residual value). In most consumer leases, the dealer is on the hook if the residual value is less than predicted. You won’t really know if you’re making money on a lease until you find out how well you predicted the residual value. You might be two or three years into the lease program before you realize you’ve set your residual values too high – and by then it’s too late. Documentation and disclosures: You can’t just modify a retail sales contract to make it a lease. If you are planning to include leasing, you must make sure

your documents meet state and federal consumer lease requirements. The federal Consumer Leasing Act and its implementing Regulation M are the lease disclosure equivalents of the Truth in Lending Act and Regulation Z for consumer lending. Reg M requires dealers to provide a great deal of specific pricing information in lease contracts. Many states require additional disclosures and consumer protections. As part of your leasing startup, you will need to create a unique document set of disclosures and contracts. Taxes: In a lease you retain ownership, so you might roll your sales taxes to purchase the vehicle into your costs and lease calculations, but you might also need to collect use or other taxes on the payments throughout the lease term. Contact your accountant and/or the state to understand your tax obligations and how they differ for leases. Collections: If a buyer doesn’t make timely retail contract payments, you can repossess the car. Fear of losing the car can help motivate a buyer into making past due payments. In a lease, the lessee doesn’t own the car and may expect to return it and walk away at the end. That might make it a little easier for the lessee to emotionally handle repossession, but it might mean the lessee isn’t afraid of having the car repossessed and isn’t as motivated to make past due payments. As with a financed sale, once you repossess a vehicle, the lessee has even less motivation to pay any balance still due. If a car is returned with wear or damage beyond what’s agreed on in the lease, it can be difficult to collect money to cover those costs. You can use the lessee’s damage deposit, so make sure you set it at a practical amount – it might be the only money you end up recovering for excess wear and tear. These are only some issues to consider when starting a lease program. You can identify more by simply reading a motor vehicle lease contract. The differences between selling and leasing are dramatic and can’t be overlooked. Your operations and compliance can be affected by the type of transaction, the vehicle and the state in which you are doing business.

BY CHIP ZYVOLOSKI

CHIP ZYVOLOSKI IS A SENIOR ATTORNEY FOR INDIRECT LENDING AT WOLTERS KLUWER FINANCIAL SERVICES. FOR MORE INFORMATION, VISIT WWW.WOLTERSKLUWERFS. COM/INDIRECT.

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Street Smart Aug/Sept 2012  

Iowa Independent Automobile Dealers Association

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