CAR LINES A N A I T D M IDN SUM I R E L A E
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Answers to Eleven Right to Work Questions
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INDIANA DEALER SUMMIT Blue Chip Casino, Hotel & Spa Michigan City, IN Don’t roll the dice with your business - be there!
Monday, May 6, 2013 9:00 a.m. to 4:00 p.m. (CST) WELCOME RECEPTION - Sunday, May 5, 2013 7:00 p.m.
Special Hotel Room Rate of $89-$119/night available under “IIADA block” • CURRENT LEGISLATION • SECRETARY OF STATE DEALER SERVICES • BUREAU OF MOTOR VEHICLES • INDIANA DEPARTMENT OF REVENUE • TITLE, REGISTRATION AND SALES TAX CHANGES • WOULD YOUR DEALERSHIP PASS A DEALER COMPLIANCE TEST • LEARN HOW TO AVOID COSTLY FINES AND PENALTIES Company: ________________________________________
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Contact: ________________________________________________ No. of Guests Attending : ____________________ $45/IIADA member or $145/non-member or $295 (One year IIADA Membership & Registration) Total: $____________ Credit Card Number: __________________________________________________________________ Visa / MasterCard Exp. Date: ___________ 3 Digits (from back of card): ____________ Name on Card: _______________________________ Credit Card Billing Address: ____________________________________________________________________________ ZIP Code: ______________________ Today’s Date: _____________________ Trans Date: ______________________ I authorize the IIADA to charge my credit card for the total shown above. I agree to pay the above according to card issuer agreement. Signature: _______________________________________________________________
Fax To 219.663.5294 or Call 800.310.3112 Mail Registration and payment to: IIADA PO Box 1393, Crown Point, Indiana 46308.
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FCC RULES ON OPT-OUT CONFIRMATIONS
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Indiana Right to Work CarLawyer Proposed Used Car Rule Changes Money Matters New & Renew Members Associate Members Member Application BHPH Perspectives
On November 29, 2012, the Federal Communications Commission (FCC) issued a Declaratory Ruling that sending a one-time text message to confirm a consumer’s request that no further text messages be sent does not violate the Telephone Consumer Protection Act (TCPA) or the FCC’s regulations. The ruling came in response to a February 2012 petition, filed by SoundBite Communications to address what they perceived as a conflict between the TCPA and industry best practices. In the petition, SoundBite indicated that the best practices laid out by the Mobile Marketing Association (MMA) include transmission of a text message to a subscriber confirming receipt of the subscriber’s request to opt-out of receiving future text messages. The petition further stated that these best practices are required by wireless carriers, aggregators, and CITA (“The Wireless Association”) before they will enable and allow text message campaigns. The petition garnered instant support from the MMA, wireless carriers, and others. “We commend SoundBite’s leadership and work with the Mobile Marketing Association to secure this ruling. The entire industry was at risk of litigation or having their messaging shutdown by mobile carriers because of the ambiguity around the legality of confirmatory stop texts. However, with the FCC’s ruling we have achieved clarity and reaffirmed guidelines set by industry authorities,” Michael Becker, Managing Director of the Mobile Marketing Association, told PR Newswire. The FCC limited the scope of the ruling in the following ways: • The ruling applies only when the consumer previously provided the sender with prior express consent to send text messages using an auto-dialer. (Beginning October 16, 2013, prior express written consent will be required for telemarketing texts.) • The ruling only allows one confirmation text to be sent. • The confirmation text must be sent within 5 minutes of the consumer’s opt-out request. • The confirmation text cannot include any marketing or promotional information. Including contact information or instructions as to how the consumer can opt back in are allowed. Texts that include marketing materials or encourage consumers to call or contact the sender (in an attempt to market) are not allowed. • Follow-up confirmation voice calls are not permitted. N O T E : T H I S U P D AT E I S P R O V I D E D F O R I N F O R M AT I O N A L P U R P O S E S O N LY A N D S H O U L D N O T B E CONSTRUED AS LEGAL ADVICE.
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ADVERTISERS INDEX ADESA........................................ Inside Front Cover Ally.....................................................................13 Diversified Vehicle Services.................................. 7 Dyer Auto Auction...............................................18 Indiana Auto Auction...........................................16 Kesler-Schaefer Auto Auction................................ 9 Manheim.com..............................Inside Back Cover NEXTGEAR Capital..........................................5, 15 Protective...........................................................11 United Acceptance.............................................. 17 VAuto.....................................................Back Cover
EXECUTIVE DIRECTOR • DEBBIE ANDERSEN P.O. BOX 1393 • CROWN POINT, IN 46308 PHONE: (800) 310-3112
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.
Car Lines is published 10 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 6006-5203. The statements and opinions expressed herein are those of the individual authors and do not necessarily represent the views of Car Lines or the National Independent Automobile Dealers Association. Likewise, the appearance of advertisers, or their identification as members of NIADA , does not constitute an endorsement of the products or services featured. Copyright © 2013 by NIADA Services, Inc. STATE MAGAZINE MGR./SALES Troy Graff • firstname.lastname@example.org EDITOR Andy Friedlander • email@example.com ART DIRECTOR Christy Haynes • firstname.lastname@example.org PRINTING Nieman Printing
Board of Directors Andy Zay President Zay Leasing & Rentals, Inc. 4957 N. Broadway Huntington, IN 46750 Phone: 260.356.1588 Email: email@example.com Fritz Kreutzinger Chairman of the Board Legislative Chairman Fritz Associates P.O. Box 168 Fishers, IN 46038 317.842.2228 Fax:317.842.7900 firstname.lastname@example.org Tony Del Real Vice President Del Real Automotive Group 1002 Walnut Avenue Frankfort, IN 46041 Phone: 765.446.9204 Email: email@example.com Bruce Norton Treasurer Drive 1 USA Inc. 1512 W. 96th Avenue Suite C Crown Point, IN 46307 Phone: 219.661.1000 Email: firstname.lastname@example.org Sharon Brennan Secretary Fritz in Fishers 8599 E. 116th Street Fishers, IN 46038 Phone: 317.842.2228 Email: email@example.com Tricia Trent Trent Auto Sales 1327 N 6th St. Vincennes, IN 47591 812.882.3772 Fax: 812.882.1986 firstname.lastname@example.org
Jennifer Cotton Dyer Auto Auction 219.865.2361 Fax: 219.322.1761 email@example.com Kim Graham Kim Graham, Inc. 1648 A US 31 S Greenwood, IN 46143 317.888.0100 Fax: 317.888.8900 firstname.lastname@example.org Ed White White’s Auto Sales 1105 McKinley Ave. Rensselaer, IN 47978 219.866.7553 Fax: 219.866.7256 email@example.com John Stumpf Greater Kalamazoo Auto Auction P. O. Box 697 Schoolcraft, MI 49087 269.679.5021 firstname.lastname@example.org Tony Houk Kesler-Schaefer Auto Auction, Inc. 5333 W. 46th Street Indianapolis, IN 46253 317.297.2300 Fax: 317.297.6236 email@example.com Tyler Trent Trent Auto Sales 1327 N 6th St. Vincennes, IN 47591 812.882.3772 Fax: 812.882.1986 firstname.lastname@example.org
Travis Huber The Auto Store 5474 US Hwy. 6, Suite A Portage, IN 46368 219-712.2944 email@example.com Harold Drees H.T.D., Inc. 200 E. Main Street Thorntown, IN 46071 317.402.2312 Fax: 765.436.7222 firstname.lastname@example.org Doug Alvey First Class Auto Sales, Inc. 695 W. 900S Hebron, IN 46341 219.996.2600 Fax: 219.531.4628 email@example.com Andrew J. Inabnitt Approval Auto Credit Inc. 9825 Huggin Hollow Rd. Martinsville, IN 46151 317.422.8001 Fax: 317.422.8020 firstname.lastname@example.org David D. Baldwin II Best Deal Auto Sales, Inc. 1875 SR 8 Auburn, IN 46706 260.357.0099 Fax: 260.357.0090 email@example.com Debbie Andersen Executive Director 128 S. East Street # 1393 Crown Point, IN 46308 800.310.3112 firstname.lastname@example.org
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ANSWERS TO ELEVEN RIGHT TO WORK QUESTIONS WHAT CHANGES UNDER THE RIGHT TO WORK LAW? The fundamental change resulting from Indiana’s Right to Work (RTW) law is that employees can no longer be required to join a union as a condition of employment (“union security clause”), and can no longer be required to authorize the deduction of union dues in order to continue employment, even if they are in the bargaining unit.
WHAT DOESN’T CHANGE UNDER THE LAW? Indiana’s RTW law exists alongside – but does not alter – the National Labor Relations Act (NLRA). It does not change an employer’s obligation to recognize and bargain with a labor union, or any of the employer’s other obligations under the NLRA. The RTW law also does not change federal law concerning the union decertification process, and employers must continue to refrain from undue interference or influence in an employeedriven decertification process. WHICH EMPLOYERS ARE AFFECTED? Section 4 of the new law defines an employer as “a person employing at least one individual in Indiana.” The intent and scope of this definition is not entirely clear. It may have been intended simply to eliminate any question as to whether any employer could be too small to be covered, or it may have been intended to apply to employers from other states that send as few as one employee into Indiana to perform work. Only time and legal developments will tell. WHICH UNION AGREEMENTS ARE AFFECTED? Indiana’s RTW law does not apply to existing collective bargaining agreements (CBAs) that are “in effect on March 14, 2012,” or to any new and/or extended CBAs that are “in effect on March 14, 2012,” until such CBAs are “modified,
renewed, or extended after March 14, 2012.” However, since the law neither explains nor defines “modified, renewed, or extended”, there is significant uncertainty as to how such terms will be interpreted by the courts for resolving disputes under the law. For example, how is a CBA that automatically renews treated?
WHAT ARE THE PENALTIES IF RTW IS VIOLATED? Sections 10, 11 and 12 of the law are the enforcement provisions, and state that “violation of the Right to Work law is a Class A misdemeanor under Indiana law; upon receiving a complaint from an individual that the law is being violated, the Attorney General, the State Department of Labor and local prosecuting attorney of the county in which the complaining individual is employed may investigate and seek compliance with the law.” The law allows for individuals to file their own actions seeking relief for violations of the law. If violations are found, individuals may be awarded damages, injunctive relief, attorney fees, and litigation expenses and costs. WHAT IS THE IMPACT ON NONUNION EMPLOYERS? Indiana’s RTW law does not change any legal obligations for non-union employers. Under the law, if a nonunion employer is organized by a union sometime in the future, the employer would be prohibited from entering into a labor agreement that would require its employees to join a union or pay union dues as a condition of employment. HOW DOES THE LAW ADDRESS “DUES CHECK OFF”? Indiana’s RTW law does not prohibit “dues check off provisions” in which employers agree, by the terms of the labor agreement, to deduct union dues from paychecks of employees who
voluntarily authorize such deductions. So, if an existing union agreement requires an employer to deduct union dues from employee paychecks and submit them to the union, the employer must continue to do so while that agreement remains in effect. If an employee resigns or elects to stop paying dues at a time when no valid union security clause is in effect, the employer may no longer deduct dues pursuant to any previous employee authorization – even if the authorization’s irrevocability period has not expired – unless that authorization explicitly states that the employee has agreed to continue to pay through the period of irrevocability, regardless of ongoing membership. DO EMPLOYEES WHO EXERCISE ALL OF THEIR RTW RIGHTS LOSE ALL BENEFITS OF THE CBA? Regardless of an employee’s personal decision about whether to become/ remain a union member, an employer must continue to treat the employee according to the terms of the union’s CBA. For example, employees will retain the same seniority and bidding rights, regardless of any decision to withdraw from the union. Employees who withdraw from the union, however, won’t be able to participate in internal union matters and, depending on a particular union’s internal organizational rules, may not be able to vote on the ratification and acceptance of any new agreements. HOW DO EMPLOYEES EXERCISE THEIR RTW RIGHTS? There will likely be issues about how dues-paying union members withdraw from the union, and stop deductions for union dues. Prior to the RTW law, written employee authorizations were already required in order for an employer to deduct union dues on behalf of the union member. As contracts expire, employers must evaluate the specific language and effectiveness of those authorizations. C O N T I N U E D O N PA G E 8
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DVS title and registration seminar Join us half day to learn most efficient practices, policies, procedures and more!
u Wednesday, March 20th Radisson Hotel at Star Plaza 800 E. 81st Avenue Merrillville, IN 46410 (219) 757‐3520
u Friday, March 22nd JW Marriott Indianapolis 10 S. West Street Indianapolis, IN 46204 (317) 822-8554
Topics Covered: Current requirements Alternative Documents
u u Company requirements
u u Lien inquiries - Plus more!
A B u r e a u o f M o t o r V e h i c l e s s ta f f m e m b e r w i l l b e p r e s e n t f o r q u e s t i o n s , a n s w e r s , a n d d i s c u s s i o n . Meeting from 9:00am-11:30am. Continental breakfast 8:30am-9:00am. u Lunch will be provided from 11:30am-12:30pm. Parking provided by DVS only at specified lot. u Please ask for a map.
u I plan to attend (Check one): __ Merrillville
__ Indianapolis u
PLEASE COMPLETE THE INFORMATION BELOW TO RESERVE A SEAT.
PAY BY CHECK: (Make payable to DVS-Due to DVS office by 3/12/13)
PAY BY CREDIT CARD ❏ Amex ❏ MasterCard ❏ Visa CARD NUMBER: ______________________________________________________________________________________ EXPIRATION DATE: _______________ CARD HOLDER’S NAME: ____________________________________________ CARD HOLDER’S SIGNATURE: __________________________________NAME(S) OF ATTENDEE(S): ____________
__REGISTRATION fee ONLY. $75.00 __REGISTRATION fee PLUS NADA guide book. $190.00
DVS • 1919B South Post Rd, Indianapolis, IN 46239. (317) 850-9996 • email@example.com IN_0213.indd 7
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For example, it is possible that an oral request or directive to the employer by an employee wanting to stop union dues deductions would not supersede an authorization card that the employee previously signed for such deductions. The process may be further complicated by the fact that employees who are in a union will still be required to pay union dues. ARE EMPLOYERS REQUIRED TO ADVISE THEIR EMPLOYEES OF THE CHANGES? Employers have no affirmative duty under the statute to advise their employees when the RTW law becomes effective with respect to them. Therefore, employers may elect to say nothing to their employees and simply presume that they are aware of the new law. An employer that follows this approach would simply continue to deduct union dues for any employees who do not advise the employer that they have elected to stop paying dues. The employer would continue to remit these dues to the union, pursuant to the dues check off clause of the CBA. Some say such an approach is risky, however. Employees could later claim that they would have stopped paying dues if their employer had advised them accordingly, and therefore allege violation of the RTW law. This could result in the employer being responsible for damages, injunctive relief, attorney fees and litigation expenses and costs. Until the law is settled concerning whether employers are obligated to advise the employees when the law becomes applicable to them, the safer course is likely the proactive one. So, what should employers say? With respect to employers that are subject to a CBA, employers are well advised to be cautious responding to employee inquiries or preparing communication to employees, as the National Labor Relations Board may take the position that discussion of the impact of the new law on the employees is subject to negotiation with the union. In general, however, below is a quick reference list of what employers can and cannot say to applicants/employees under the new RTW law. For employers with a CBA that is in effect as of March 14, 2012: Employers CAN Say: • The company will follow the requirements of RTW. • The company hires through the “union hiring hall.” • The company is a “union signatory
employer.” • In order to work for the company, you have to “go through the union.” • We hire only “union tradesmen.” • The company only hires members of the union, individuals who are willing to become members of the union or who are willing to pay dues or an amount equivalent to dues. • If you are hired and refuse to become a member of the union or pay dues or an amount equivalent to dues, the company will terminate your employment. Employers CANNOT Say: • The company will not comply with RTW. • You do not have to be a member of any union to work for the company. • The company will not terminate your employment if you refuse to join the union. For employers with a CBA that is entered into, modified, or renewed AFTER March 14, 2012: Employers CAN Say: • The company will follow the requirements of RTW. • The company hires through the “union hiring hall.” • The company is a “union signatory employer.” • You do not have to be a member of any union to work for the company. • The company will not terminate your employment if you refuse to join the union. • If you choose not to join the union, you likely will not be able to attend union meetings or vote in union elections. • If you choose not to join the union, the union cannot fine or punish you for crossing or working behind a picket line or violating any other union rules. • Whether you decide to join the union is a matter of personal choice, and the company will not take any type of adverse action against you because of your choice. • If you choose not to become a member of the union, all of the terms and conditions of the company’s contract with the union will still apply to you. As a result, you will have the same wages and benefits as union members. Employers CANNOT Say: • We only hire “union members.” • In order to work with us, you have to “go through the union.” • You have to be a union member to work for us. • The company only hires “union tradesmen.” • The company will not comply with RTW. • If you are hired and refuse to become
a member of the union or pay dues or an amount equivalent to dues, the company will terminate your employment. • If you choose not to join the union, then you will not receive the union contract’s wages and benefits. ARE THERE UNIQUE ISSUES RELATING TO THE BUILDING TRADES? There will likely be unique Building Trades issues, but the extent of those issues depends on how certain aspects of the law become further defined over time (and, likely, through litigation). Consider, for example, the following points: If a contractor signatory to an agreement with a craft in one state travels to another state to perform such work, and agrees to sign or otherwise agrees to observe and be bound by the terms of the CBA with that craft in that other state, it is possible that the contractor will be deemed to have “entered into” that CBA at that time. If this chain of events occurs after March 14, 2012 –even if the CBA itself had been in effect prior to March 14, 2012—the RTW law may apply just to that traveling contractor and its employees. If a contractor from another state comes to Indiana and signs a CBA with a union applying explicitly to work performed in Indiana, such an out-ofstate contractor would be treated the same as any Indiana employer under the new law. Accordingly, subject to the effective date as discussed above, if the contractor employs even one individual in Indiana, the provisions of the RTW law apply. In non-RTW states (there are still 27 of them, including Indiana’s surrounding states of Illinois, Michigan, Ohio and Kentucky), union security clauses will be fully enforceable at all times, and an employee working under CBAs in those states may be required to pay dues or risk being fired for not doing so. If an employee from a non-RTW state is sent to work in Indiana (again subject to the effective date), however, those union security clauses would then be “unenforceable and void.” As a practical matter, very few employees will likely avail themselves of the opportunity to revoke their dues payments for the time spent working in Indiana – but the on/off applicability of union security requirements will be an administrative nightmare if any employee elects to do so.
BY JAMES L. JORGENSEN
ATTORNEY AT LAW HOEPPNER WAGNER & EVANS LLP
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Annual Scholarship Program The National Independent Automobile Dealers Association Foundation was founded in 2006 by the National Independent Automobile Dealers Association, a 66-year-old trade association, to “improve the independent motor vehicle industry by informing and educating consumers of the general public and training individuals associated with our industry.” Historically, the association’s scholarship program was the responsibility of the NIADA’s auxiliary. Now, however, as an IRS-approved 501(c)(3) nonprofit organization, the foundation has assumed the oversight of that scholarship program’s functions. Submit the completed application form with the required attachments in a 10 inch-by-13 inch envelope with adequate postage to:
SCHOLARSHIP SELECTION COMMITTEE NIADA FOUNDATION 2521 BROWN BLVD ARLINGTON, TX 76006 All information MUST be included with the original application. No additional information will be accepted at a later date. Staff will review the applications for completeness and will forward them to the Scholarship Selection Committee within NIADA and at Northwood University in Midland, Mich. They will be reviewed by region. One applicant will be selected from each of the four NIADA regions based on the merit of his or her scholarship application and will be notified by the foundation office no later than mid-May 2013. FIND THE SCHOLARSHIP APPLICATION AT WWW.NIADAFOUNDATION.ORG
EDUCATION FOUR REGIONAL SCHOLARSHIPS ARE AWARDED ANNUALLY AT THE ANNUAL NIADA CONVENTION IN JUNE. REGION I: MAINE, VERMONT, NEW HAMPSHIRE, MASSACHUSETTS, CONNECTICUT, RHODE ISLAND, NEW YORK, PENNSYLVANIA, NEW JERSEY, DELAWARE, MARYLAND, VIRGINIA, WEST VIRGINIA, INDIANA, OHIO AND MICHIGAN. REGION II: KENTUCKY, TENNESSEE, NORTH CAROLINA, SOUTH CAROLINA, GEORGIA, FLORIDA AND ALABAMA. REGION III: NORTH DAKOTA, SOUTH DAKOTA, MINNESOTA, WISCONSIN, ILLINOIS, IOWA, MISSOURI, KANSAS, NEBRASKA, OKLAHOMA, ARKANSAS, LOUISIANA, MISSISSIPPI AND TEXAS. REGION IV: WASHINGTON, OREGON, CALIFORNIA, NEVADA, IDAHO, MONTANA, WYOMING, UTAH, COLORADO, ARIZONA, NEW MEXICO, ALASKA AND HAWAII. The foundation invites you as an eligible student to complete this application in pursuit of scholarship funds to be paid to the college of your choice in the fall of 2013. Applications must be POSTMARKED NO LATER THAN MARCH 1, 2013 AND RECEIVED NO LATER THAN MARCH 11, 2013.
Looking to improve your bottom line, manage more effectively, improve employee retention, and leverage the newest and most effective marketing techniques? NIADA can help!
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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 Inflation Alert! On November 21, 2012, the Consumer Financial Protection Bureau (CFPB) and the Federal Reserve Board published final rules amending Regulation Z (TILA) and Regulation M (Consumer Leasing Act, or CLA) by increasing the dollar threshold for exempt consumer credit and lease transactions. The Dodd-Frank Act provided that the dollar amount thresholds for TILA and the CLA must be adjusted annually by any annual percentage increase in the consumer price index. Based on the adjustments, in 2013 TILA and CLA protections generally will apply to consumer credit transactions and consumer leases of $53,000 or less. Although the Dodd-Frank Act generally transferred rulemaking authority under TILA and the CLA to the CFPB, the Federal Reserve retains authority to issue rules for certain motor vehicle dealers – that’s why they were involved with this. The adjustments to the thresholds took effect on January 1, 2013. CFPB Report Card: The CFPB released its Supervisory Highlights report on October 31, 2012. The CFPB periodically issues a Supervisory Highlights report to inform the public and the financial services industry about its examination program. Between July 2011 and September 2012, the CFPB visited
banks with more than $10 billion in assets, their affiliates, and nonbank lenders. The CFPB reported problems with certain credit and lending disclosures, including creditors who sometimes increased credit card limits without notifying cosigners. In addition, the CFPB highlighted that creditors have reported inaccurate information to credit bureaus. The CFPB also assessed the institutions’ efforts to develop and maintain effective compliance management systems. Dealer Targeted for Privacy Violations: On October 26, 2012, the Federal Trade Commission announced that it accepted a final settlement with Franklin’s Budget Car Sales, Inc., a Georgia car dealership, resolving allegations that it illegally exposed consumers’ sensitive personal information by allowing peerto-peer (P2P) file-sharing software to be installed on its computer network. Installation of the software was in violation of the FTC Act; the Safeguards Rule, which implements Section 501(b) of the GrammLeach-Bliley (GLB) Act; and the Privacy Rule, which implements Section 503 of the GLB Act. Franklin’s also allegedly failed to provide annual privacy notices and failed to provide a mechanism by which consumers could opt out of information sharing with third parties, in violation of the GLB Privacy Rule. The settlement bars misrepresentations about the privacy, security, confidentiality, and integrity of any personal information collected from consumers, and also requires Franklin’s to establish and maintain a comprehensive information security program. STATE DEVELOPMENTS We have only one state development to report this month: The Texas Department of Banking and Securities amended the bulk of the rules in Chapter 84 concerning motor vehicle installment sales to improve consistency, grammar, punctuation, capitalization, and formatting and to provide clarification, more precise legal citations, and improved references to other state agencies. LITIGATION Vehicle Buyer in Ordinary Course of Business Has Priority over Floor Plan Lender: A collector of classic automobiles engaged a company to help him locate, buy, sell, and trade cars. The
collector bought three vehicles, but they were titled in the company’s name for marketing purposes. After the company defaulted on its floor plan agreement with a bank, it transferred title to the three vehicles to the collector for a nominal purchase price, but continued to store the vehicles for the collector. The bank subsequently sued the company, and the three vehicles were seized. The collector sued the bank in the U.S. District Court for the Southern District of Ohio, seeking possession of the vehicles. The collector moved for summary judgment, arguing that he had a superior interest as a “buyer in the ordinary course.” The court noted that a perfected security interest will often prevail over a subsequent motor vehicle purchaser unless the purchaser is a “buyer in the ordinary course of business,” who takes the vehicle free and clear of any lien on the seller’s property. The bank argued that the collector did not fall within the definition of a “buyer in the ordinary course” because he never took possession of the vehicles, and the issuance of the titles occurred only after the company defaulted on its loan obligation. The court disagreed. It found that the statute does not necessarily require that the buyer have possession, so long as the buyer has the right to possession, which the collector had. The court then found that the late titling of the vehicles was insignificant because the collector clearly used his own funds to purchase and insure the vehicles and had complete control over the manner in which they were restored. See Hockensmith v. Fifth Third Bank, 2012 U.S. Dist. LEXIS 154036 (S.D. Ohio October 26, 2012). Car Buyer Must Show Injuries to Recover against Repossessing Lienholder for Violations of Maryland Law: An individual executed a retail installment sale contract in connection with her purchase of a used car from a Maryland dealership. When the buyer defaulted, the assignee of the contract repossessed the car and sent the buyer a notice stating that the car would be sold by a private sale. After the car was sold, the assignee sent the buyer a notice informing her that the car had been sold at a private sale and that a deficiency balance remained. C O N T I N U E D O N PA G E 1 2
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The buyer sued under a number of theories, including that the notices violated state law governing the extension of credit and the Maryland Consumer Protection Act. The U.S. District Court for the District of Maryland dismissed these two counts of the complaint because the buyer did not show any actual injury. While the assignee charged the buyer for the costs of the sale, her payments and proceeds from the sale did not cover the principal of her debt, and the assignee had already promised not to seek a deficiency. The court allowed the buyer to proceed on her breach of contract claim for which no actual damages were required because nominal damages are available for breach of contract. See Epps v. JPMorgan Chase Bank N.A., 2012 U.S. Dist. LEXIS 153549 (D. Md. October 22, 2012). Creditor Liable for Non-Compliant Credit Contract and Notice of Disposition: An individual signed a retail installment contract to buy a used truck, with no finance charge. After she stopped making payments, the creditor repossessed
R U L E S A N D L AW S
KEEPING UP WITH COMPLIANCE
and sold the car. The individual sued for violations of the Truth in Lending Act and Nevada law. The individual claimed that the creditor failed to disclose the Amount Financed and the Finance Charge as required under Regulation Z, which requires that the credit contract include a brief description of the Amount Financed, such as “the amount of credit provided to you or on your behalf,” and a brief description of the Finance Charge, such as “the dollar amount the credit will cost you.” The U.S. District Court for the District of Nevada granted the individual summary judgment on this claim. The court concluded that the contract’s term “unpaid balance – amount financed” did not sufficiently describe that this amount was the amount of credit provided and that the contract’s term “finance charge” did not sufficiently describe that this amount was the dollar amount the credit would cost the individual, even though the contract provided that the individual would pay no finance charge. The individual also claimed that the creditor violated the Nevada version of the
Uniform Commercial Code by failing to use the correct form of notice of disposition. The court granted the individual summary judgment on this claim as well, where it determined that the creditor’s notice of disposition did not include a statement that the individual was entitled to an accounting of the unpaid indebtedness, as required by Nevada law. See Limtiaco v. Auction Cars. com, LLC, 2012 U.S. Dist. LEXIS 148474 (D. Nev. October 15, 2012). So, there’s this month’s roundup! Stay legal, and we’ll see you next month.
BY THOMAS B. HUDSON AND NICOLE FRUSH 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. (8/12) HC# 4842-2522-3440
Have you kept up to date with the rules and laws that could affect your dealership? The start of the New Year is the perfect time for a quick compliance refresher, and the Bureau of Consumer Protection’s Automobiles site is a quick and comprehensive reference source. Designed with dealers in mind, the site has compiled a variety of resources discussing things like the Used Car Rule, labeling guidelines for alternative fueled vehicles, and how the Privacy Rule applies to auto dealers. Examples of dealer resources available on the site include: • A Dealer’s Guide to the Used Car Rule, which provides valuable compliance tips • Copies of the required Buyers Guide, in English and Spanish • Fillable versions of the English and Spanish Buyers Guides. V I S I T H T T P : / / B U S I N ES S .F T C .GOV / S EL EC T ED- I N D U S T R I ES / AU T O M O B I L ES FOR M ORE I N FO R M AT I O N .
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U S E D C A R D E A L E R S , C O N S U M E R G R O U P S , I N D U S T R Y A S S O C I AT I O N S A N D G O V E R N M E N T A G E N C I E S F I L E D C O M M E N T S A B O U T H O W T H E USED CAR RULE IS WORKING.
USED CAR RULE CHANGES: HAVE YOU WEIGHED IN? Dealers are familiar with what it takes to comply with the FTC’s Used Car Rule, but are you aware of the key role you play in drafting the regulations that apply to your industry? Officially known as the Used Motor Vehicle Trade Regulation Rule (though only its mother calls it that), the rule requires dealers to display a Buyers Guide on used cars offered for sale. But FTC regulations aren’t written in stone. To ensure that rules keep up with the times, every 10 years or so the FTC revisits what’s on the books. Is there a continuing need for the rule? Have there been changes to the technological or regulatory landscape that need to be addressed? As part of that ongoing review, the FTC asked for feedback about the future of the Used Car Rule – and boy, did we get an earful. Used car dealers, consumer groups, industry associations and government agencies filed comments about how the Used Car Rule is working. From what we heard, a lot has changed in how people shop for used cars and how you do business. Based on what we heard, the FTC has proposed modifications to the Buyers Guide and is again asking you to weigh in on suggested revisions. What’s under consideration? You’ll want to read the complete document on the Automobiles page of www.business. ftc.gov, but as the FTC explained in a Dec. 4 announcement, it’s proposing four primary changes to the Buyers Guide. Adding a reference to how consumers can get information about a vehicle’s history: There’s more information available these days about a vehicle’s history and the FTC wants to help empower consumers without burdening businesses. Therefore, the agency is proposing to add a statement
to the Buyers Guide encouraging consumers to seek vehicle history information and directing them to a new FTC website for more information. As the FTC notice makes clear, “Dealers would not be required to obtain vehicle histories or to display specific vehicle history information on the proposed revised Buyers Guide. The Buyers Guide would continue to recommend to consumers that they protect themselves by obtaining an independent inspection before making a purchase.” Revising the list of systems on the back of the Buyers Guide: Dealers are familiar with the list of systems included on the Buyers Guide, and the FTC thinks it’s a good idea to keep it. It helps consumers compare warranties on different cars or from different dealers – and it’s a handy checklist for the mechanical and safety systems prospective buyers might want to have inspected. But the FTC wants to revise the list to include catalytic converters and airbags. Adding a reference to the Spanish-language Buyers Guide: The Used Car Rule already requires dealers to display Spanish-language Buyers Guides when they conduct sales in Spanish. But to ensure the Spanish guide reaches its intended audience, the FTC is proposing to add a sentence in Spanish on the face of the English-language Buyers Guide, alerting Spanish-speaking consumers that they can ask for a copy in Spanish. Adding more information about warranties: The FTC is proposing to place boxes on the back of the Buyers Guide where dealers will have the option to say whether the manufacturer’s warranty still applies, the manufacturer’s used vehicle warranty – such as a certified
pre-owned warranty – applies, or some other used vehicle warranty applies. The FTC would like your feedback on those suggested revisions, including your thoughts about the kind of information that should be available on any new FTC site dealing with vehicle histories. But that’s not all the agency is asking for this time around. The FTC also would like to hear what you have to say about Internet sales of used vehicles. Have you spotted deceptive practices? If deceptive practices are prevalent, are there regulatory steps the FTC should consider taking? The deadline for comments is Feb. 11. By the way, the days of submitting documents in triplicate are over. It’s easy to file a comment online. In addition, the FTC announced a final rule that makes some technical corrections to the Spanish translation of the Buyers Guide. That portion of the rule takes effect Feb. 11, so you’ll want to make sure your dealership is using the new version of the Spanish-language Buyers Guide, available on the Automobiles page of www.business.ftc.gov. Editor’s note: NIADA met with the FTC attorneys responsible for oversight of the Used Car Rule in December to discuss the proposed changes, and after soliciting input from its members, the association is preparing comments to submit to the FTC. If you have any additional comments or ideas about the rule, please contact NIADA’s Georgia Brown at 1-800-682-3837 or firstname.lastname@example.org.
BY LESLEY FAIR
LESLEY FAIR IS A SENIOR ATTORNEY WITH THE FEDERAL TRADE COMMISSION’S BUREAU OF CONSUMER PROTECTION AND HAS REPRESENTED THE FTC IN DECEPTIVE ADVERTISING INVESTIGATIONS. SHE NOW SPECIALIZES IN BUSINESS EDUCATION AND COMPLIANCE.
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MONEY MATTERS T H E S E C O N D O F A T H R E E - PA R T S E R I E S O N T H E B A S I C S O F B A N K R U P T C Y P R O C E D U R E S A N D W H AT I T M E A N S T O D E A L E R S / L I E N H O L D E R S .
THE INS AND OUTS OF CHAPTER 7 A chapter 7 bankruptcy case does not involve the filing of a plan of repayment as in chapter 13. Instead, the bankruptcy trustee gathers and sells the debtor’s nonexempt assets and uses the proceeds to pay holders of claims (creditors) in accordance with the provisions of the Bankruptcy Code. To qualify for relief under chapter 7 of the Bankruptcy Code, the debtor can be an individual, a partnership, or a corporation or other business entity. Subject to the means test for individual debtors, relief is available under chapter 7 regardless of the amount of the debtor’s debts or whether the debtor is solvent. The debtor has no liability for discharged debts. In a chapter 7 case, however, a discharge is only available to individual debtors, not to partnerships or
corporations. While an individual chapter 7 case usually results in a discharge of debts, the right to a discharge is not absolute, and some types of debts are not discharged.
How Chapter 7 Works A chapter 7 case begins with the debtor filing a petition with the bankruptcy court serving the area where the individual lives. The debtor must also file schedules of assets and liabilities, a schedule of current income and expenditures, a statement of financial affairs, and a schedule of contracts and unexpired leases. The debtor must also provide: • A list of all creditors and the amount and nature of their claims. • The source, amount and frequency of the debtor’s income. • A list of all of the debtor’s property.
• A detailed list of the debtor’s monthly living expenses – food, clothing, shelter, utilities, taxes, transportation, medicine, etc. Filing a petition under chapter 7 automatically “stays” (stops) most collection actions against the debtor or the debtor’s property. In some situations, the stay is effective only for a short time. The stay requires no judicial action. As long as the stay is in effect, creditors generally cannot initiate or continue lawsuits, wage garnishments or even telephone calls demanding payments. Between 21 and 40 days after the petition is filed, the case trustee will hold a meeting of creditors. The debtor must attend the meeting and answer questions regarding the debtor’s financial affairs and property. C O N T I N U E D O N N E X T PAG E
JUMP-START YOUR COMPLIANCE TRAINING OSHA requirements, workplace diversity, Gramm-Leach-Bliley, Red Flags Rules… Keeping up with all of the compliance demands can be overwhelming for any dealer. And now, with the FTC and the CFPB starting to more closely scrutinize the auto industry, it’s even more vital than ever for your entire staff to help keep your dealership compliant. NIADA wants to help ease the burden. Starting in February 2013, dealers can jumpstart their compliance training with NIADA’s online suite of dealer compliance training materials. Subscribers will have access to videos, checklists, key forms, documents, and more…all at their fingertips, on demand. Don’t worry – for dealers who prefer, content is also available on disc. You’ll even be notified when new training is added, so you can stay ahead of the curve. FOR ADDITIONAL INFORMATION VISIT WWW. NIADA .COM OR CONTACT GEORGIA@NIADA .COM. 16
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Role of Trustee in Chapter 7 When a chapter 7 petition is filed, the U.S. trustee (or the bankruptcy court in Alabama and North Carolina) appoints an impartial case trustee to administer the case and liquidate the debtor’s nonexempt assets. In the typical no-asset chapter 7 case, there is no need for creditors to file proofs of claim because there will be no distribution. If the trustee later recovers assets for distribution to unsecured creditors, the bankruptcy court will provide notice to creditors and will allow additional time to file proofs of claim. The primary role of a chapter 7 trustee in an asset case is to liquidate the debtor’s nonexempt assets in a manner that maximizes the return to the debtor’s unsecured creditors. The trustee accomplishes this by selling the debtor’s property if it is free and clear of liens. Chapter 7 Discharge A discharge releases individual debtors from personal liability for most debts and prevents the creditors owed those debts from taking any collection actions against the
debtor. Because a chapter 7 discharge is subject to many exceptions, debtors should consult competent legal counsel before filing to discuss the scope of the discharge. Generally, excluding cases that are dismissed or converted, individual debtors receive a discharge in more than 99 percent of chapter 7 cases. If a debtor wishes to keep certain secured property, such as an automobile, he or she may decide to “reaffirm” the debt. That’s an agreement that the debtor will remain liable and will pay all or a portion of the money owed, even though the debt would otherwise be discharged in the bankruptcy. In return, the creditor promises not to repossess the automobile or other property so long as the debtor continues to pay the debt. The debtor must reaffirm a debt before the discharge is entered, and must sign a written reaffirmation agreement and file it with the court. An individual receives a discharge for most of his or her debts in a chapter 7 bankruptcy case. A creditor may not
initiate or continue any legal or other action against the debtor to collect a discharged debt. Your customer has three options in a chapter 7 filing: surrender the vehicle, redemption or reaffirm the note. We recommend that when you as the lien holder receive a chapter 7 notice of filing, you call the customer’s attorney and ask the customer’s intention. That conversation will dictate your next move prior to discharge. Next: Your options when a customer files bankruptcy.
Note: The information presented should not be cited or relied upon as “legal authority” and should not be used as a substitute for reference to the U.S. Bankruptcy Code and the Federal Rules of Bankruptcy Procedure.
BY ROD HEASLEY
ROD HEASLEY IS EXECUTIVE VICE PRESIDENT OF PERITUS PORTFOLIO SERVICES , A SOUTHLAKE, TEXAS-BASED SPECIALTY FINANCE COMPANY THAT SPECIALIZES IN THE PURCHASING OF OPEN BANKRUPTCY ACCOUNTS.
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IIADA RECOGNIZES THE FOLLOWING MEMBERS
The following members have joined* or renewed their membership since our last issue of Car Lines. New Life Auto Sales* Tom Mode Noblesville GMG Motors Curtis Sandefer Morgantown CarMax Lauren Packett Richmond Dyer Auto Auction Buzz Cotton Dyer Penn Warranty Corporation Kirk Arnold Wilkes Barre
Thank you for your membership in Indiana’s trade association for INDEPENDENT DEALERS!
Northeast Used Car Supply Tightens While new car sales were strong throughout November, a shortage of trade-ins caused by Hurricane Sandy is expected to result in a tighter supply of used vehicles and higher prices for the near future, Black Book managing editor Ricky Beggs said. New car sales reached 1.14 million in November, an increase of 15 percent, and a handful of carmakers had record months. Beggs said the pace of new car sales combined with the continued replacement of inventory from Hurricane Sandy vehicles impact used cars in a several ways. The jump in new sales to a seasonally adjusted annual rate of as much as 15.6 million, according to some industry estimates, should mean additional trades entering the lots, increased inventory that would ease the supply of used cars and offset prices from the Northeast demand. But the percentage of trade-ins for those vehicles has been unusually low, Beggs said. While usually about 60 percent of all new car sales involve a trade-in, Black Book estimates project the trade-in percentage in the Northeast since Sandy could fall as low as 30 percent, which could cause prices on used cars in the region to continue to rise in the near-term as dealers get fewer used cars from trades and look elsewhere to find inventory.
C O N S U M E R P R O T E C T I O N U P D AT E
CFPB to Share Complaint Data
Buy Here-Pay Here dealers or auto finance companies who have had complaints filed against them with the Consumer Financial Protection Bureau (CFPB) can soon expect state regulatory agencies to be informed of those complaints, as well. At the end of 2012, CFPB announced that it was intensifying its efforts to coordinate with state-level departments and share complaint data. “Our goal in sharing consumer complaints with state agencies is to enhance efficient, transparent, and effective government to better protect American consumers,” Scott Pluta, assistant director for the Office of Consumer Response, noted on the CFPB website. Complaints will be shared over a secure channel, with identifying consumer information removed. While the data will initially only flow from the CFPB to state agencies, in time the agency also plans to accept complaints and information from state agencies, and make that data available to other federal agencies as appropriate.
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IIADA Associate Membership is available to automotive related businesses. Please call 800-310-3112 for more information on Associate Memberships or see our Associate Membership Application in this issue.
Absolute Surety, LLC Blair Ashton P. O. Box 547898 Orlando, FL 32854 Phone: 855.689.5106 Fax: 407.674.7978 bashton@absolutesurety. com absolutesurety.com Affordable Computer Systems Ivan Dale Phone: 800-488-9992 email@example.com www.acsds.com AFC Ryan Lewis 2950 E. Main Street Plainfield, IN 46168 317.453.1172 firstname.lastname@example.org Auction Insurance/Robinson Adams Insurance Tom Adams & Debbie Thompson Phone: 800-239-1327 www.robinsonadams.com Auto Services Co. Inc. Susan Williams/Clayton Morgan Phone: 800-442-7116 Automotive Credit Corporation Tony Stallworth 28261 Evergreen Road Suite 300 Southfield, MI 48037 Phone: 888-268-1400 email@example.com AutoStar Solutions Edward Viator 1300 Summit Ave., Suite 800 Fort Worth, TX 76102 Phone: 817.439.6164 edward.viator@ autostarsolutions.com autostarsolutions.com Auto Zone Kevin Kravig 317.681.4273 BIDZPIN Shawn Foster 1281 Winhenstschel Blvd. West Lafayette, IN 47906 Phone: 765.479.0191 Fax: 765.471.2050 firstname.lastname@example.org bidzpin.com Blackhawk Finance Bill Caan Matt Gleason Phone: 847.824.6912 Briggs Insurance Agency Tim Briggs 4000 W. Lincoln Hwy. Merrillville, IN 46410 Phone: 219.769.4840 email@example.com Cars.com 175 W. Jackson Blvd., 8th Floor Chicago, IL 60604 Phone: 800-298-1460 dealers.cars.com Carsforsale.com Aaron Oestreich P O Box 91537 Sioux Falls, SD 57109 Phone: 605.306.3302 firstname.lastname@example.org carsforsale.com Chase Auto Finance Mike Smith and Don Williams 1 E. Ohio, Suite INI-0126 Indianapolis, IN 46277 Phone: 317.523.4273
ClearGate Merchant Services Lorraine Onesian Excellent Rates Phone: 775.336.6880 email@example.com www.cleargate.com Consolidated Automotive Services of Indiana Chris Walsh 59 E Main Street Suite N Nashville, IN 47448 Phone: 812-988-8300 cwalsh@ consolidatedautoservices. com consolidatedautoservices. com Consumers Insurance Mike Hogan 7830 Edge Manor Ct. Indianapolis, IN 46239 Phone: 317.450.9946 Fax: 615.896.0766 firstname.lastname@example.org CVR-Computerized Vehicle Registration Jordan Vaughn Phone: 636.447.8351 Fax: 800.464.9342 email@example.com Dealer Track Diane Zewalk 115 Pohesanut Drive Suite 201 Groton, CT 06340 Phone: 860-448-3177 Fax: 860-448-3187 Diamond Warranty Corporation James Limongelli 9 N. Main Street Pittston, PA 18640 Phone: 800.384.5023 Diversified Marketing Strategies, Inc. Andrea Pearman 1330 Arrowhead Ct. Crown Point, IN 46307 Phone: 219-226-0300 Fax: 219-226-0303 http://www.3dms.com/ Diversified Vehicle Services 1919 S. Post Road Indianapolis, IN 46239 Ray Ramsey Mike Hockett Phone: 317.862.9100 firstname.lastname@example.org DRIVE 1 USA Bruce Norton 1512 W. 96th Ave., Suite C Crown Point, IN 46307 Phone: 219.661.1000 Fax: 219.661.2950 email@example.com drive1usa.com Envirotest Systems Jennifer Kharchaf 1171 Breuckman Drive Suite B Crown Point, IN 46307 Phone: 888.240.1684 Fax: 219.661.8409 firstname.lastname@example.org Express Motor Vehicle Administration Corporation Kevin Clavert 3960 Southeastern Ave. Indianapolis, IN 46259 Phone: 317.322.0020 Fax: 317.322.0025 email@example.com Frazer Computing Inc. Michael Frazer Phone: 888-963-5369 www.frazercomputing.com
GoldStar GPS Mark Behne 2035 Lakeside Centre Knoxville, TN 37920 Phone: 866-655-8825 Fax: 866-655-8285 firstname.lastname@example.org www.procongps.com GWC Warranty Carmie Fruits - Indiana Dealer Consulant P O Box 7900 Wilkes-Barre, PA 18773 Phone: 317-374-6271 email@example.com www.gwcwarranty.com Heritage-Crystal Clean Jim Skelton 2175 Point Blvd Suite 375 Elgin, IL 60123 Phone: 847-836-5670 Fax: 847-836-6169 jim.skelton@crystal-clean. com www.crystal-clean.com Insurance ProfessionalsDealer Specialists Mike Lee 8509 Zephyr Drive Indianapolis, IN 46217 Phone: 317.432.1092 Fax: 317.300.0501 firstname.lastname@example.org Keystone Insurers Group Lori Simpson Phone: 888-892-5860 lsimpson@keystoneinsgrp. com Kincaid Insurance Group Dan Kincaid 321 Main Street Rockport, IN 47635 Phone: 812.649.5739 Fax: 812.649.5740 email@example.com Lincolnway Insurance Services Greg St. Germain 336 E. Lincoln Hwy Schererville, IN 46375 Phone: 219-865-2227 gregg@lincolnwayinsurance. com Merchant Services Scott Norris Phone: 602.5681471 scott.norris@merchantsvcs. com Nationwide Acceptance Bonnie Herden Phone: 773-777-7600 www.nac-loans.com Penn Warranty Corporation Jude Tuma & Michael Roe 1081 Hanover Street Wilkes Barre, PA 18706 Phone: 800-356-9441 michael.roe@ pennwarrantycorp.com www.pennwarrantycorp.com Preferred Warranties, Inc. Gregg Reidenbach & Guy Loeffler Phone: 800-548-1121 firstname.lastname@example.org www.warrantys.com Reliable Auto Finance Brian Chisholm 954 28th St. SW Grand Rapids, MI 49509 Phone: 616.245.5983 Fax: 616.245.5978 brianc@reliableautofinance. com
RouteOne George Hartman 31500 Northwestern Highway Farmington Hills, MI 48334 email@example.com Russell Kobel Insurance Russell Kobel 100 Tower Dr., Ste. 120 Burr Ridge, IL 60527 Phone: 708.935.6509 Fax: 630.468.1704 firstname.lastname@example.org www.russelkobelinsurance. com Security Auto Loans Joe Ruhland 4900 Hwy 169 N Suite 205 New Hope, MN 55428 Phone: 763-559-5892 Fax: 763-559-7549 email@example.com www.securityal.com Sentry Insurance Mike Donovan Phone: 800-373-6879 firstname.lastname@example.org www.sentry.com Ally-Smart Auction Jeff Kubicki Phone: 812-455-7967 jeffrey.kubicki@ smartauction.biz www.smartauction.biz Somerset CPA’s Rex Collins, CPA 3925 River Crossing Parkway Indianapolis, IN 46240 317.472.2241 email@example.com Stewart & Irwin, P.C. Don Wray, Attorney at Law 251 E. Ohio Street, Suite 100 Indianapolis, IN 46204 Phone: 317-639-5454 firstname.lastname@example.org www.silegal.com SuretyBonds.com Mike Patzius 1200 Roger Street, Suite C Columbia, MO 65202 Phone: 800-308-4358 email@example.com www.suretybond.com Triumph Consulting Services Jack Haworth Phone: 800.875.3137 jackhaworth@ triumphconsulting.net VideoTirekicker.com John Commorato 2413 N. Meridan Street Indianapolis, IN 46208 Phone: 317.466.0321 Fax: 317.826.1964 firstname.lastname@example.org Wingham & Associates Gary Wingham P O Box 1723 Richmond, IN 47375 Phone: 765-977-3902 Fax: 765-966-4157 email@example.com Zurich Insurance Company Phone: 800-728-6049
STUDY: CAR SHOPPERS WHO CHAT ALSO BUY
One in three users of auto website chat bought a vehicle after having an online conversation with a dealer, according to a Polk analysis commissioned by automotive website chat provider Contact At Once! Polk analyzed 10,000 Contact At Once! chat transcripts in which consumers volunteered personally identifiable information, including conversations originating from dealer, OEM and third-party advertising sites. Results were derived by matching people who chatted to households with vehicle sales and registration data over a 60-day period. The analysis also found consumers who started chats on third-party sites such as Cars. com and Edmunds.com were just as likely to purchase as those who initiated chats from dealership websites. “This is the first industry analysis that empirically proves chatters are buyers,” Contact At Once! founder Marc F. Hayes said. “It validates the many anecdotal reports we have received from dealers that chat does help them sell cars.” FOR MORE INFORMATION, CALL 1-866-358-3880.
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COMPLIANCE MOVES TO MAKE IN 2013 With the close of another year, most Buy Here-Pay Here operators will evaluate last year’s performance by comparing their financial results with the past. They will base their goals and strategy for the next year by looking at financial and operating metrics like unit sales, gross sales revenue, the growth of their installment portfolio and their net income. Although these represent the standard benchmarks for planning, they omit a critical element: compliance. The BHPH industry faces some important new legal and regulatory challenges from the newly formed Consumer Financial Protection Bureau (CFPB), the Federal Trade Commission (FTC) and state attorney generals’ offices. All of those regulatory authorities will be monitoring consumer complaints to identify regulatory violations and operators who are violating the rules. The regulators will investigate complaints and have the authority to levy substantial fines for noncompliance. During 2012, regulatory activity and monitoring of subprime auto compliance violations increased significantly, and more scrutiny should be anticipated in the future. Overall BHPH industry compliance will be judged on how each individual operator complies with the rules and regulations. To date, I have noticed operators taking different approaches to complying with the new challenges. Some are waiting to see what 2013 will bring. Others are more proactive in their approach to compliance. A few are ignoring the compliance threats altogether. Given the current circumstances, I recommend all BHPH operators:
• Carefully scrutinize advertising and websites for statements that could be construed as false or misleading. • Determine if their documentation matches their internal policies and practices. •Make written disclosures of all important contractual terms to every consumer. • Update and document internal collection, underwriting and compliance policies and procedures in writing and ask employees to sign a written acknowledgment that they have read and understand them. • Establish written consumer complaint resolution procedures and protocols. In 2012, many operators addressed the first four points and appointed a chief compliance officer, as required. Written consumer complaint resolution procedures and protocols have not been a priority in the past but need to be in the future. Dealers should have a competent attorney review their disclosures and contract documentation and help them develop a compliance management system. It will be money well spent. I also recommend establishing a welcome calling program shortly after each sale to ascertain whether the consumer had a positive buying experience. During that call, all consumer complaints should be taken seriously and addressed by the operator at that time. Consumer complaints are best resolved before they become a compliance issue with regulators. In cases in which the consumer is being unreasonable, an operator’s written policies and procedures can be used
as evidence to show how that operator deals with consumer complaints. On investigation by a regulatory authority, the documented policies and practices will be considered in those circumstances. Complaint resolution is important in building a positive bond between operators and their customers. The old saying, “Treat others as you would like to be treated,” applies here. Both the consumer and the operator must work together over the life of the deal to be successful. In 2013, the regulatory authorities will carefully scrutinize collection procedures. Collectors must be particularly careful to avoid violations of the Fair Debt Collection Practices Act. That will require more individual knowledge and training. Although the year ahead is full of legal and regulatory uncertainty, prudent operators should start the year with a proactive approach to compliance. You can’t control what others do but each operator must be responsible and accountable for his or her own actions. Best wishes for a prosperous New Year! Note: The National Alliance of Buy HerePay Here Dealers (NABD) will host its 15th annual National Conference for Buy Here-Pay Here and Dealer Academy at the Wynn in Las Vegas on May 19-23. For registration and for more information, visit www.bhphinfo.com or call 832-767-4759.
BY KENNETH B. SHILSON
KENNETH B. SHILSON, CPA, IS FOUNDER AND PRESIDENT OF NABD, THE ONLY GROUP EXCLUSIVELY FOR THE SELF-FINANCE INDUSTRY. MEMBERSHIP IS OPEN TO ANYONE IN THE BHPH INDUSTRY AND TO SERVICE PROVIDERS. MEMBERS PAY NO DUES.
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