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Inside 04 08 10 10 12 13 14 15 19 20 21

Awards Dinner MI Secretary of State Announces Crackdown So You Think You Aren’t a Creditor? You Have the Power White House Moves to Reduce Ethanol Use U.S. Fuel Consumption Falls Sneak Peak at Your Life Text Messages Illegal Debt Collections Scheme New and Renewed Members MIADA Member Application Member Benefits

MIADA Events

• Northern Michigan Chapter Meeting: Contact Dennis Craig at 231-938-2627. • East Michigan Chapter Meeting: January 14, 7pm, American Polish Cultural Center, Troy • West Michigan Chapter Meeting: February 17, 6:30pm, Brann’s Steakhouse, Grand Rapids • MIADA Board Meeting, February 26, 6pm, Crowne Plaza Lansing West, Lansing All events are listed online at: www.miada.org

Advertisers Index

ADESA...........................................Inside Front Cover Ally...............................................................................11 Computerized Vehicle Registration...................12 Greater Kalamazoo Auto Auction......................13 GWC Warranty............................................................5 Indiana Auto Auction.............................................14 Insurance Auto Auctions......................................17 Lakeside Insurance Agency ..Inside Back Cover Manheim.com............................................................9 NextGear Capital........................................................7 United Acceptance.................................................15 VAuto ........................................................ Back Cover

MIADA Office Michigan Independent

Automobile Dealers Association www.miada.org MIADA Contact Address: 55 E Long Lake Rd. PMB 233 Troy MI 48085 Phone: 248-828-7010

NIADA Headquarters National Independent Automobile Dealers Association

www.niada.com • www.niada.tv 2521 Brown Blvd. • Arlington, TX 76006-5203 phone (817) 640-3838

BOARD OF DIRECTORS CHAIRMAN OF THE BOARD Jerry Drouillard Autohaus 4411 Delemere Royal Oak, MI 48073 248-549-3636 gdro999@hotmail.com PRESIDENT Ray Campise Certified Motors 23509 Little Mack St Cl. Shs., MI 48080 586-775-7000 sales.cmotors@gmail.com VICE PRESIDENT Ted Cooper Genesys Systems 360 E Maple Rd Troy, MI 48083 248-597-1003 ted@gensystems.com

TREASURER Joe Kuhta GWC Warranty 8865 Reese Rd Clarkston, MI 48348 248-670-1133 JKuhta@gwcwarranty.com SECRETARY Vacant DIRECTORS Dennis Craig Instant Car Credit PO BOX 146 Acme, MI 49610 231-938-2627 dcintc@gmail.com Rick Rynberg Rynberg’s Car Co. 3880 Holton Rd Muskegon, MI 49445 231-744-1441 rickandwendy1@verizon.ne

Tony LoBretto Alamo Valley A/S 6100 West D Ave Kalamazoo, MI 49009 269-344-8250 alamovalley@gmail.com Bob Vincent MSG Credit Union 4555 Investment Dr Troy, MI 48098 586-477-8282 rvincent@msgcu.org EXECUTIVE DIRECTOR Nancy R. Chapman ADR of Michigan 55 E Long Lake;PMB 233 Troy, MI 48085 248-828-7011 nchapman@miada.org EDITOR Allison E. Chapman ADR of Michigan 55 E Long Lake; PMB 233 Troy, MI 48085 248-828-7011 achapman@aec-mgmt.com

MISSION STATEMENT

The Michigan Independent Automobile Dealers Association is committed to promoting growth and preserving the vitality and integrity of the independent motor vehicle industry through education and legislation as advocates for consumers and dealers.

ASSOCIATION NEWS

VIP Cards for 2014 u

M IADA MEMBERS TO RECEIVE DISCOUNT CARDS

All current members of the Michigan Independent Automobile Dealers Association will receive their 2014 VIP Auction Discount Card upon joining or renewing their membership investment, starting this month. The VIP Auction Discount Card is MIADA’s way of saying “thanks” for your membership commitment to the only professional trade association that represents you, the independent auto dealer. This is the ninth year MIADA has offered this member benefit. We are proud to introduce the following 12 participating auctions for 2014: u ABC Detroit Toledo

ADESA Great Lakes ADESA Lansing u ADESA Northern Ohio u Flint Auto Auction u Grand Rapids Auto Auction u Greater Detroit Auto Auction u Greater Kalamazoo Auto Auction u Interstate-94 Vehicle Auto Auction u Manheim Detroit u Manheim Milwaukee u West Michigan Auto Auction A special “Thank you” to our sponsoring auctions for their generosity and to you, our members, for your continued loyalty to MIADA! u u

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For advertising information contact:

Troy Graff (800) 682-3837 or troy@niada.com. The Driveline is a publication of the Michigan Independent Automobile Dealers Association Inc., but is also mailed to non-member dealers in Michigan in an effort to encourage them to join and support our efforts to improve the profit potential for the industry. The Driveline is published quarterly by Automotive Dealers Resource of Michigan, 55 E Long Lake Rd. PMB 233, Troy, MI and the National Independent Automobile Dealers Association Services Corporation, 2521 Brown Blvd., Arlington, TX 76006. Periodical postage is paid at Arlington TX, and at additional offices. The statements and opinions expressed herein are those of the individual authors and do not necessarily represent the views of the Michigan Independent Automobile Dealers Association Inc., Automotive Dealers Resource of Michigan, or the National Independent Automobile Dealers Association. Likewise, the appearance of advertisers, or their identification as members of the Michigan or National Associations does not constitute an endorsement of the products or services featured. We have worked to represent the independent automobile dealers in Michigan. We need your support.

Publisher/Editor At Large: Nancy R. Chapman

Front Cover by:

Allison E. Chapman

State Magazine MGR./Sales Troy Graff • troy@niada.com

Editors

Allison E. Chapman • achapman@aec-mgmt.com Andy Friedlander • andy@niada.com Jacinda Timmerman • jacinda@niada.com

Magazine Layout & Graphic Artist Chantae Arrington • chantae@niada.com

Art Director

Christy Haynes • christy@niada.com

Printing

Nieman Printing

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ASSOCIATION NEWS

2013 Harold Rettberg Memorial Quality Dealer u

RAY CAMPISE OF CER TIFIED MOTORS RECEIVES AWARD

C ongratulations to Ray Campise of Certified Motors in St. Clair Shores, Mich., who was honored with the 2013 Harold Rettberg Memorial Quality Dealer award. Campise’s career in the auto industry began in franchised dealerships. When Ray was in his mid-50s, he was without a job due to

General Motors’ decision to discontinue their Oldsmobile brand. He decided to branch out and start his own used vehicle business. Ray took over the well-established store of industry veteran Maurice VanCoillie and has since turned the business into his own. The vehicles at Certified Motors all are domestic, have less than 100,000

miles, undergo an inspection and come with a pre-paid service contract. Campise sells about 20 vehicles a month. The Certified Motors staff, along with Ray, participates in local events such as the Harper Classic Car Cruise. C O N T I N U E D O N PA G E 6

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ASSOCIATION NEWS

2013 Harold Rettberg Memorial Quality Dealer C O N T I N U E D F R O M PA G E 4

The annual cruise benefits area children’s charities and takes place on Harper Avenue, right in front of Certified Motors. Ray has been an active member of MIADA since opening his business. He has served as the eastern chapter’s president and currently serves as the

MIADA president. He hopes to encourage younger generations to become involved in the industry and the association. Campise accepted this award with his wife and store coowner, Lori. Thank you for your commitment to our industry and your continued loyalty to MIADA, Ray. Congratulations on this honor!

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Secretary of State Announces Crackdown on Auto Insurance Scams

LEGAL NEWS

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JOHNSON LAUNCHES ANTI-FRAUD TASK FORCE TO PROTECT DRIVERS

In response to new significant evidence of fake and fraudulent auto insurance, secretary of state Ruth Johnson recently announced a new initiative to protect consumers. “We have bad guys who actually set up phony help desks so when our secretary of state office clerks call to verify a policy, they reach a real person who vouches for a bogus auto insurance policy,” said Johnson. “We are going to put the brakes on the criminals who are selling this stuff and are preying on unsuspecting Michigan drivers.” Johnson announced the launch of a joint effort – the Fighting Auto Insurance Ripoffs (FAIR) initiative – that will include the Michigan state police, prosecutors, state officials and insurance industry leaders. She said her office is cracking down on suspected fraud through targeted staff training and aggressive vehicle registration suspensions, but the problem needs to be jointly addressed by the state of Michigan, the law enforcement community and the industry. “The Michigan state police is pleased to partner with the department of state and the insurance industry on the FAIR task force,” said Col. Kriste Kibbey Etue, director of the Michigan state police. “We look forward to the opportunity of helping identify long term solutions to better protect our citizens by reducing auto insurance fraud. Johnson said the severity of the problem became clear after a new law, which she supported and Sen. Bruce Caswell (R-Hillsdale) sponsored, required all insurance companies to send electronic insurance verification to her office twice a month. On July 31, Johnson’s office conducted a one-day snapshot of the 15,000 registration renewals done across all state

branches. When electronic verification was not available, staff members verified about 3,500 paper insurance certificates submitted by customers. More than 16 percent of the certificates checked that day were invalid or fraudulent. “This is not an urban or regional problem,” Johnson said. “We had fakes and forged copies turn up in more than half of Michigan’s 83 counties.” Johnson said auto insurance scammers are arrogant and flagrant in breaking the law. One policy, used by nearly 30 customers, included an official looking QR code. But when scanned, the QR code links to a website that says only, “Llamas are sooo cool.” According to Johnson, it’s clear some drivers knowingly purchase bad insurance but others buy fraudulent policies and believe they are covered until they are in an accident and file a claim. She said every honest Michigan motorist – who follows the law and carries no fault insurance – has to pay the costs of having uninsured motorists on the road and those costs are in the hundreds of millions of dollars. Eaton County prosecutor Douglas Lloyd announced felony charges in a case where the suspect allegedly advertised fake insurance online on Craigslist, with the warning, “use at your own risk ... no refunds.” According to Lloyd, the law enforcement community is committed to going after such scams. “County prosecutors stand ready to ensure charges are brought against people selling or presenting fraudulent insurance certificates,” he said. “We look forward to working together to protect Michigan consumers and to stop people from cheating the system.” Other supporters include R. Kevin Clinton, director of the Michigan Department of Insurance and Financial Services; Peter Kuhnmuench, executive director of the

Insurance Institute of Michigan and Kurt Gallinger, chairman of the Michigan Insurance Coalition. Kuhnmuench said fraud drives up the cost of insurance for everyone. “If someone isn’t paying their fair share, the cost is shifted to everyone else,” he said. Gallinger said the problem has been ignored too long, adding, “Michigan’s insurance industry looks forward to working with Secretary Johnson and the law enforcement community to develop a comprehensive plan to crack down on fraud.” Johnson said her department is training staff on what to look for to stop fakes and working closely with authorities to build strong cases for prosecution. This year, the secretary of state’s office has already suspended 4,300 vehicle registrations compared to 431 suspensions in all of 2011 before electronic verification was instituted. New signs in branch offices will alert customers that presenting fraudulent insurance is a felony. The FAIR task force will explore new means to combat insurance fraud through procedural changes, new investigative efforts and potentially new legislation. It will include representatives from the secretary of state’s office, the Michigan state police, the Prosecuting Attorneys Association of Michigan, the Insurance Institute of Michigan, the Michigan Insurance Coalition, Property Casualty Insurers Association of America and the Michigan Association of Insurance Agents. For more information about secretary of state office locations and services, visit www. michigan.gov/sos. Sign up for the official secretary of state Twitter feed at www. twitter.com/michsos and Facebook updates at www.facebook.com/michigansos.

GM Foundation Grants $400K to Detroit Symphony Orchestra u

GRANT ALLOWS ORCHESTRA TO TOUR SOUTHERN FLORIDA

Thanks to a $400,000 grant from the GM Foundation, the Detroit Symphony Orchestra is headed south for the winter. The orchestra, led by music director Leonard Slatkin, will perform with Grammy Awardwinning violinist Hilary Hahn, and Van Cliburn international piano competition gold medalist Olga Kern during a tour of southern Florida Feb. 25 to March 4. DRIVELINE MI_0114.indd 8

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Over the last decade, the GM Foundation has donated more than $84 million to support Detroit nonprofit organizations and cultural institutions, including nearly $2 million to help the DSO bring its performances to Detroit and to New York’s Carnegie Hall, where the orchestra performed in May 2013. “The GM Foundation is committed to showcasing the

best of Detroit to stakeholders across the country,” said GM Foundation President Vivian Pickard. “The DSO is one of the city’s finest jewels and this tour will build upon Detroit’s national reputation of having the finest musicians and live entertainment.” Tour dates and venues: • Kravis Center for the Performing Arts of West Palm Beach, Feb. 25, 8 p.m., and Feb.

26, 2 p.m. • Adrienne Arsht Center for the Performing Arts of Miami, Feb. 28, 8 p.m. • Indian River Symphonic Association at Vero Beach Community Church, March 2, 7:30 p.m. • Sarasota Concert Association, March 3, 8 p.m. • Philharmonic Center for the Arts of Naples, March 4, 8 p.m. w w w. m i a d a . o r g 12/19/13 11:28 AM


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So You Think You Aren’t a Creditor? Well, Think Again!

F&I

M AT TERS

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THE ECOA LIKELY CONSIDERS YOU A CREDITOR

Simply because your lot doesn’t provide direct financing, don’t rest on your laurels thinking that the consumer protection laws don’t apply to you. They probably do. The dealers who provide direct financing are included as a creditor under the ECOA, but so are dealers who don’t provide direct financing. The ECOA applies to persons “who in the ordinary course of business, regularly refers applicants to creditors or selects creditors to whom requests for credit may be made.” The ECOA prohibits a creditor from discriminating against an applicant on the basis of race, color, religion, national origin, sex, marital status or age, or because the applicant’s income (all or part) is derived from any public assistance program. Lastly, the ECOA prohibits discrimination because the applicant has already exercised any rights under the Consumer Credit Protection Act. This discrimination can be a result of facially neutral policies or practices, but that have a discriminatory effect. To ensure your company is not inadvertently discriminating in the credit process you should avoid any questions regarding the applicant’s race, color, religion, sex or national origin. Also avoid questions on your application regarding the existence of a spouse or former spouse

WATCH

You Have the Power u

NEW RULE EMPOWERS YOU TO SHOP AROUND WHEN WIRING MONE Y

Do you send money to friends or family overseas? Or to a business? If so, as of right now, you have the power. You have the power to shop around, to make informed decisions, to cancel (okay, that power only lasts for 30 minutes, but it’s something) and to know where to complain. That’s because a new rule is now in effect. Now you can shop around. The rule says you can go to a money transmitter and get – in writing – what it will cost you to wire money (fees, taxes, exchange rate), and how much money the person on the other end will get. You can take that amount and compare it with the deal other money transmitters will give you. DRIVELINE MI_0114.indd 10

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When you pick the best deal for you, you’ll get that same information in writing on your receipt, plus more. Be sure to keep your receipt, because it tells you what to do if you run into a problem and where to file a complaint – with the company, with your state regulator and with the federal government. Feel free to learn more about your rights under the new rule, how money wiring works and how to avoid the kinds of money wiring scams we often hear about. In the meantime, enjoy your new powers. Use them wisely.

BY JENNIFER LEACH

CONSUMER EDUCATION SPECIALIST, FTC

they recently entered into a settlement in an enforcement action against US Bank and Dealers Financial Services to return $6.5 million to service members who they claim were not correctly advised of all the contract terms of their auto loan. Rest assured that these institutions, and others, will be reviewing business practices to ensure this doesn’t happen again. Also, the CFPB is looking to expand their authority to cover debt collection. They are currently drafting regulations to cover creditors, which could include your business. The consumer protection business is growing both in regulations and in attorneys who are trying to enforce these regulations. The consumer protection statutes allow for attorney fees, so the business has become quite lucrative. Beware, a perceived minor infraction can be quite costly. If you have any questions on the above or need any assistance in consumer protection and privacy rights, please contact me. NOTE: THIS ARTICLE DOES NOT CONSTITUTE LEGAL ADVICE AND THROUGH ITS PUBLICATION DOES NOT CREATE AN ATTORNEY-CLIENT RELATIONSHIP. THIS ARTICLE DOES NOT NECESSARILY REFLECT THE VIEWS AND OPINIONS OF MIADA AND IS NOT ENDORSED BY THEM.

BY SUZANNE P. BARTOS

ALLEN BROTHERS ATTORNEYS & COUNSELORS, PLLC SBARTOS@ALLENBROTHERSPLLC.COM (313) 962-7777

The NIADA Brings Exclusive UPS Savings to its Membership u

N E W SAVI N G S PROG R AM O F F E R S E XC LU S IVE DI S C O U NT S

NIADA is pleased to announce that we have selected UPS as our preferred member shipping carrier. This decision was based on the needs of NIADA members, as well as the opportunity to offer an enhanced member savings program. The UPS Savings Program offers NIADA members some of the most competitive rates available on shipping services along with more service options, superior ground-delivery coverage and overnight delivery by 10:30 a.m. to more zip codes than any other carrier. Plus, with the convenience of more drop-off locations and innovative UPS technology to help streamline shipment processing, members can receive value that goes beyond cost and on-time delivery. Through the program, NIADA members can now save up to 36 percent on a broad portfolio of UPS shipping services, such as up to 36 percent on UPS Air letters; up to 32 percent on UPS Air packages over one pound; up to 34 percent on UPS International imports and exports and up to 24 percent on UPS Ground shipments. Savings begin at 70 percent on UPS Freight® shipments over 150 lbs. (Discounts exclude UPS Express Critical and UPS Next Day Air Early A.M.) Members interested in enrolling in our new UPS Savings Program can visit savewithups.com/niada to start saving.

PRODUCTS & SERVICES

CONSUMER

unless the spouse is a joint obligor under the note, or the applicant is relying on alimony or child support to obtain the credit. The ECOA may also be violated through the payment of reserves. The dealer has to be careful when charging a higher interest rate than the lender’s buy rate. If you have a policy of charging a higher rate, please ensure that you are not doing so on only a particular group of applicants, such as African-Americans, Hispanics, women, young or old, or this may be found discriminatory. Interest in consumer credit issues will only be increasing now with the formation of the Consumer Financial Protection Bureau, designed to protect the consumer. The CFPB is quite interested in ensuring lawful practices in the auto loan industry. Auto loans are the third largest source of debt after mortgages and student loans, with an estimated value of $783 billion in 2012. Even though the CFPB is concentrating on the larger financial institutions, the effects trickle down. If ABC bank is being more strictly monitored, they will change how they do business and ensure that what the independent dealers are doing will not negatively impact their processes or place them under scrutiny with the CFPB. Simply, the auto loan industry has become a target. As an example of the CFPB’s strength,

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LEGISLATIVE

NEWS

White House Moves to Reduce Use of Ethanol u

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B IOFUEL L AW FALLING SHORT OF E XPECTATIONS – EVEN AS CRITICISM GROWS

It’s been a rare hallmark of bipartisanship in recent years, but the Obama administration is now looking to scale back the once promising biofuel law enacted during the Bush administration. The move recognizes that consumers have shown little interest in filling up on ethanol – even as criticism of the renewable fuel grows, some critics contending the law may actually be doing as much harm as good to the environment. The law passed in 2007 has required a steady increase in the use of ethanol – almost all of it currently being produced from corn. The federal energy information administration reports that last year 13.3 billion gallons were blended into the nation’s gasoline supply, slightly ahead of the 13.2 billion gallon mandate. But the sale of E85 fuel, which uses 85 percent ethanol and just 15 percent gasoline, has lagged behind expectations despite significant

discounting at the pump. Meanwhile, critics have argued that to meet the target Washington regulators are taking risky steps like increasing the amount of ethanol rolled into gasoline – something they contend could damage older vehicles and power tools, though the EPA disputes such claims. Equally concerning, even some environmentalists have begun to question the biofuel push, which former Pres. George W. Bush once described as a way to make America “stronger, cleaner and more secure.” A recent report by the Associated Press cautioned, “As farmers rushed to find new places to plant corn, they wiped out millions of acres of conservation land, destroyed habitat and polluted water supplies.” The AP report itself drew significant fire from biofuel advocates, as has the Obama administration’s proposal to reduce by three billion gallons the amount of ethanol that would

be blended into the nation’s fuel supply next year. “An administration committed to addressing climate change cannot turn its back on biofuels,” argued Bob Dinneen, head of the Renewable Fuels Association, a Washington lobbying group. The proposal – which is still subject to review – is nonetheless a shift for the president who voted for the biofuels law while still a senator from Illinois. For her part, EPA administrator Gina McCarthy said the White House is not walking away from its commitment to clean air and the use of alternative energy sources, insisting “biofuels are a key part” of the administration’s strategy. The shift from proponents to critics by some environmental groups could give the White House cover for cutting back ethanol usage, however. One of the big questions is whether the White House will call for further, longer term changes to the biofuels law. But

Computerized Vehicle

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that, in turn, could depend upon the ongoing push to develop alternative processes to produce ethanol. Currently, the vast majority of the liquid fuel comes from the distillation of corn. That has been blamed not only for the expansion of farmland but for adding cost to consumers’ grocery bills by diverting corn that would normally be used for human or animal feed. Biofuel advocates ask for time to develop alternative processes, such as cellulosic ethanol, which can produce the fuel from farm scraps, wood chips or even old newspapers. But while there are now a number of cellulosic production facilities in operation across the U.S., the AP study cautioned that the technology won’t be ready to handle but a fraction of the ethanol mandate as passed in 2007 — at least not for the rest of this decade.

BY PAUL A. EISENSTEIN

VIA WWW.THEDETROITBUREAU.COM

Congressman Addresses NIADA at Leadership Conference u

JOHN CAR TE R SPE AKS TO NIADA LE ADE RS

Texas Congressman John Carter addressed attendees of the NIADA National Leadership Conference in Washington, D.C. He discussed the CFPB, Affordable Care Act, free enterprise and the entrepreneurial spirit of small business owners, whom he called stalwarts of our economy and country. A video of his presentation is available online at NIADA.tv on the New and Industry Events channels. It can also be viewed via NIADA’s website and YouTube channel.

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US Fuel Consumption Falls 11 Percent u

D  O W N W A R D T R E N D L I K E LY T O C O N T I N U E

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consumption, Sivak examined fuel consumption rates per person, per licensed driver, per household and per registered vehicle. He found that all four rates were 13-to-17 percent lower in 2011 than during the peak year of 2004. Annual fuel consumption rates for 2011 were 398 gallons per person, 585 gallons per licensed driver, 1,033 gallons per household and 530 gallons per registered vehicle. Given that these reductions started to occur several years prior to the onset of the current economic downturn, Sivak thinks that fuel consumption won’t significantly rebound in the years ahead. Sivak’s two earlier studies found that the number of registered light duty vehicles in the U.S. fleet reached a maximum in 2008, while the total distance driven peaked

in 2006. Although economic factors have likely contributed to declining rates of light duty vehicles per person, per licensed driver and per household since the economic downturn of 2008, other societal changes have influenced the need for vehicles. With increased telecommuting and use of public transportation, and with more people living in cities, the number of carless households has dropped. “The combined evidence from this and the previous two studies indicates that — per person, per driver and per household — we now have fewer light duty vehicles, we drive each of them less and we consume less fuel than in the past,” Sivak said. “Fuel consumption rates are now lower than they were in 1984 — the first year of my analysis.”

WATCH

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Over the past decade, new vehicles in every market segment have become steadily more fuel efficient. In addition, the increasing number of hybrids, diesel- and battery-powered vehicles also helps reduce fuel consumption, carmakers have noted. Rising gasoline prices have sparked broader interest in fuel economy and have encouraged motorists to combine chores and take other steps to reduce driving. The findings of the UMTRI study show that 123.9 billion gallons of gasoline were consumed in 2011, compared with a peak of 138.8 billion gallons in 2004. During the five-year period of 2002 through 2006, U.S. drivers used an average of 135.5 billion gallons of gas annually, but from 2007 to 2011, the average dropped to 123 billion gallons. In addition to total fuel

MARKET

Smaller vehicles and new technology — as well as changing driving habits — have combined to reduce the fuel consumption of American drivers of light duty vehicles by 11 percent since 2004, says a University of Michigan researcher. In a follow up to two reports released in 2013, Michael Sivak, a research professor at University of Michigan Transportation Research Institute and director of the Sustainable Worldwide Transportation research consortium, examined recent trends in fuel consumption by cars, pickup trucks, SUVs and vans in the U.S. fleet from 1984 to 2011. “The decline of 11 percent since 2004 reflects the decline in distance driven and the improvement in vehicle fuel economy,” said Sivak.

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BY JOSEPH SZCZESNY

VIA WWW.THEDETROITBUREAU.COM

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DRIVELINE 12/20/13 3:18 PM


How Some Companies Get a Sneak Peek at Your Life… Literally

SAFETY

MATTERS

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S O M E

C O M PAN I E S U S I N G S O F T WARE T O S PY O N C O N S U M E R S

Many of us occasionally get the strange feeling that someone’s watching us. Given how easy it is for companies to gather information these days about where we are, what we’re doing and how we’re doing it, this may well be more than a feeling. Even so, here’s an instance that really takes the cake: The FTC recently took action against Aaron’s for allegedly enabling some of its franchisees to use software that allowed them to spy on and collect personal information from customers. Without consumers’ knowledge or consent (but with Aaron’s knowledge) Aaron’s franchisees gathered personal data, including usernames and passwords for email accounts, social media websites and financial institutions as well as private details of their customers’ lives. The software captured screenshots of medical information, social security numbers and financial statements. Through the computers’ webcams, the software secretly took pictures of anyone within view of the lens. In some

instances, it captured pictures of children, individuals not fully clothed and other highly personal images. What’s more, the software generated fake registration forms that tricked people into providing personal information. Anyone renting these computers was unable to detect, let alone uninstall, the software. Rent-to-own stores had been using this kind of software to shut down computers when customers got behind on their payments. But to activate the spying features of the software, Aaron’s franchisees had to access the software manufacturer’s website – which many franchisees could do only with the help of Aaron’s computer network and technology staff. This case outlines one of the many ways companies can gather even the most intimate details about you – not just from computers, but from mobile devices, the use of savings cards and other things you use day-today. Learn what to do to secure your computer, protect your personal information and fight

identity theft. And, please, file a complaint with the FTC if you suspect a company or individual has violated your privacy or other consumer rights. Update: Aaron’s, Inc., has agreed to settle FTC charges that it knowingly played a direct and vital role in its franchisees’ installation and use of software on rental computers that secretly monitored consumers, including webcam pictures of them in their homes. Under the terms of the proposed consent agreement with the FTC, Aaron’s will be prohibited from using monitoring technology that captures keystrokes or screenshots, or activates the camera or microphone on a consumer’s computer, except to provide technical support requested by the consumer. In addition, Aaron’s will be required to give clear notice and obtain express consent from consumers at the time of rental in order to install technology that allows location tracking of a rented product. For computer rentals, the company will have to give notice to consumers not only

when it initially rents the product, but also at the time the tracking technology is activated, unless the product has been reported by the consumer as lost or stolen. The settlement also prohibits Aaron’s from deceptively gathering consumer information. The agreement will also prevent Aaron’s from using any information it obtained through improper means in connection with the collection of any debt, money or property as part of a rent-to-own transaction. The company must delete or destroy any information it has improperly collected and transmit in an encrypted format any location or tracking data it collects properly. Under the agreement, Aaron’s will also be required to conduct annual monitoring and oversight of its franchisees and hold them to the requirements in the agreement that apply to Aaron’s and its corporate stores and to terminate the franchise agreements of franchises that do not meet those requirements.

BY JAY MAYFIELD

FTC OFFICE OF PUBLIC AFFAIRS

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N E W TOOL ALLOWS LE NDE RS TO ANALY Z E VE HIC LE VALUE S IN RE AL TIME

Black Book recently revealed its newest product — a valuation tool that allows lenders to analyze vehicle values in real time. Collateral Insight Engine compiles historical, current and projected vehicle values and can also analyze collateral performance and create custom views that meet specific lender portfolio needs. “Auto lenders need to make decisions in a more efficient manner for their portfolio, and Collateral Insight Engine is the most innovative service to bring this level of insight at the click of a button,” said Jeff Bunch, vice president of Black Book Lender Solutions. “With this product, lenders can see how adding or reducing a certain vehicle or segment will impact their portfolio in real time, expediting the decision-making process,” he added. Using Black Book’s vehicle values, the company says the new tool helps lenders: • Identify opportunities by helping them find the right vehicles that can deliver higher profitability. • Fine-tune loss forecasting by providing better insight into determining loss rates and loss severity. • Balance portfolios by helping them to determine where a portfolio needs to modify or reduce a certain mix of vehicles. DRIVELINE MI_0114.indd 14

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PRODUCTS & SERVICES

Black Book Reveals New Value Tool for Lenders 

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D  E F E N DA N T S W I L L PAY $1 M I L L I O N T O S E T T L E C H A R G E S

A debt collector based in Glendale, Calif., will pay $1 million to settle Federal Trade Commission charges that the defendants violated federal law. This is the first FTC action against a debt collector who used text messaging to attempt to collect debts in an unlawful manner. The FTC, the nation’s consumer protection agency, alleged that Archie Donovan and two companies he controls – National Attorney Collection Services, Inc. and National Attorney Services LLC – used text messages and phone calls in which they unlawfully failed to disclose that they were debt collectors. The FTC charged the defendants with violating both the Fair Debt Collection Practices Act and the FTC Act. In their text messages, phone calls and mailings, the defendants also falsely portrayed themselves as law firms by using the names National Attorney Services, National Attorney Service, National Attorney and Abogados Nacionales. Building on their

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deceptive company name, the defendants falsely threatened to sue consumers for not paying their debts or to garnish their wages. The FTC also alleged that Donovan and his companies illegally revealed debts to the consumers’ family members, friends and coworkers. Among other tactics, the defendants used mailing envelopes picturing a large arm shaking money from a consumer who is strung upside down. The law does not allow debt collectors to disclose publicly someone’s private debts, because doing so could endanger their jobs and reputations. Mailing envelopes can include only the name and address of the company and cannot indicate that the consumer may owe a debt. “No matter how debt collectors communicate with consumers – by mail, by phone, by text or some other way – they have to follow the law,” said Jessica Rich, director of the FTC. “The FTC has a zero tolerance policy for

deception.” In addition to the $1 million civil penalty, the settlement requires the defendants to stop sending text messages that do not include the disclosures required by law and to obtain a consumer’s express consent before contacting them by text message. The defendants also are barred from falsely claiming to be law firms and from falsely threatening to sue or take any action – such as seizure of property or garnishment – that they do not actually intend to take. The commission vote to authorize the staff to refer the complaint to the Department of Justice and to approve the proposed consent decree was 4-0. The DOJ filed the complaint and proposed consent decree on behalf of the commission in the U.S. district court for the Central District of California on Aug. 23, 2013. The proposed consent decree is subject to court approval. NOTE: The commission authorizes the filing of a complaint

NEWS

FTC Brings First Case Alleging Text Messages Were Used In Illegal Debt Collection Scheme

LEGAL

y

when it has “reason to believe” that the law has been or is being violated and it appears to the commission that a proceeding is in the public interest. Consent decrees have the force of law when signed by the district court judge. The Federal Trade Commission works for consumers to prevent fraudulent, deceptive and unfair business practices and to provide information to help spot, stop and avoid them. To file a complaint, visit the FTC’s online complaint assistant or call 1-877-FTC-HELP (1-877-382-4357). The FTC enters complaints into Consumer Sentinel, a secure, online database available to more than 2,000 civil and criminal law enforcement agencies in the U.S. and abroad. The FTC’s website provides free information on a variety of consumer topics. Like the FTC on Facebook, follow us on Twitter and subscribe to press releases for the latest FTC news and resources.

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BY BETSY LORDAN

OFFICE OF PUBLIC AFFAIRS 212-326-3707

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COMPLIANCE

OVERDRIVE

Preparing for a New Age in Dealer Compliance u

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H  OW D E A L E R S C A N C O P E , E V E N T H R I V E , I N A B R AV E N E W WO R L D O F I N D I R E C T L E N D I N G P R E S S U R E F R O M E VO LV I N G C O M PLI A N C E R E G U L AT I O N , LE N D E R C H A LLE N G E S A N D R E G U L AT O RY S C R U T I N Y.

Failures in the mortgage lending industry played an important role in the recent economic crisis. In response, Congress passed legislation that created the Consumer Financial Protection Bureau and required a number of consumer real estate lending changes. Naturally, the new CFPB has focused an enormous amount of its attention on the mortgage finance industry. It has created numerous new regulations and modified existing ones. As a colleague says, the mortgage industry has experienced a decade’s worth of regulatory change in just a few years. Many of the regulatory changes become effective this month (Jan. 2014). So lend a sympathetic ear to your friends in the mortgage lending industry. They might return the favor in the near future. With a bulk of its mortgage-related efforts launched, the CFPB will now have more time to focus on other industries, such as consumer auto lending. The forecast for regulatory attention in the coming year has its roots in events from 2013. Last year, the CFPB published Bulletin 2013-02 in March on indirect auto lending and compliance with the Equal Credit Opportunity Act. The bulletin didn’t create a new regulation or modify an existing one. Instead, it notified the marketplace of its conclusion that common dealer discretionary rate markup and dealer compensation practices are resulting in credit discrimination violating the ECOA. The CFPB also interpreted common lender-dealer interaction as sufficient to classify lenders as “creditors” under ECOA requirements – which makes lenders responsible with dealers for rate markup ECOA violations. A final point in the bulletin was the CFPB’s suggestion that alternative dealer compensation methods would reduce or eliminate the ECOA compliance risk, such as flat fees. The bulletin sparked concern DRIVELINE

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and debate in the industry. How did the CFPB reach the conclusion that dealer discretionary rate markups plus dealer compensation methods were resulting in credit discrimination? In June and again in October, members of Congress asked the CFPB for an explanation of the data and methods used to conclude that discretionary rate markups and dealer participation are causing ECOA violations. Part of the concern is that dealers are generally not allowed to collect and record a buyer’s gender, age, race and other information about a buyer’s status in groups protected under the ECOA. So how can a dealer, lender or even the CFPB analyze auto loan portfolios to determine if violations are occurring? The CFPB provided information on how it analyzes data for gender and race/ethnicity using U.S. census data in a few presentations, including its November forum on preventing illegal discrimination in auto lending. (Visit www. consumerfinance.gov/blog/ category/auto-loans/ for more detail.) Some of the industry concern and debate has been about the accuracy of the methods described. It is still unclear where the CFPB got the data to analyze and whether the programs analyzed are representative of other rate markup and dealer participation programs. Numerous news sources have reported that the CFPB has requested records from a number of large auto finance sources. If the CFPB is receiving and analyzing their data, there will likely be more discussion about the methods used to analyze and the accuracy of results. Does (or should) the law make lenders responsible for dealer discrimination and how can lenders even know that it is happening? Lenders argue that they are not sufficiently involved in dealer’s rate setting to fairly be considered

“creditors” (and thus possibly responsible for discrimination) in the credit transaction between dealer and buyer. Staff commentary to Regulation B has been fairly clear on this point for a number of years, providing that a creditor “includes all persons participating in the credit decision. This may include an assignee or a potential purchaser of the obligation who influences the credit decision by indicating whether or not it will purchase the obligation if the transaction is consummated.” There are some legal arguments about the commentary, but the focus of recent discussions has been more on the practical side of how a lender can know if a dealer is intentionally discriminating in its rate markup practices. Even more difficult is the idea that a lender can be responsible for a dealer’s practices when the dealer’s discrimination was unintentional. A dealer may not intend to discriminate in its rate markup practices, but if a protected group statistically ends up paying more, the discriminatory impact on that group is an ECOA violation. The CFPB has made it clear that it intends to find and take action on ECOA violations based on intentional discrimination and disparate impact. The debate is whether, and the extent to which, the ECOA prohibits disparate impact. The U.S. Supreme Court seems interested in this issue and has agreed to hear two disparate impact cases in recent years. Most recently, the Mount Holly v. Mount Holly Garden Citizens case was scheduled to be argued before the U.S. Supreme Court in early December, but settled before arguments. It was a housing disparate impact discrimination case, but the auto lending industry was interested to see how the Supreme Court analyzed the issues and if it might shed light on analysis for

consumer credit. The legality and merits of disparate impact discrimination will continue to be debated well into this year and beyond. It is important to remember that regardless of whether discrimination is intentional or unintentional, in theory, a careful statistical analysis should identify whether gender or race/ethnicity (and possibly other categories) discrimination is occurring. Would flat fee dealer compensation reduce or eliminate the risk of discrimination? If yes, would it do so without negatively affecting the availability and cost of consumer credit? Some have criticized the suggestion of paying a flat fee compensation for dealers, saying it would have a negative impact on the cost of credit for low- and moderate-income borrowers in particular. The argument is that it would shift the dynamic between dealers and lenders and would encourage dealers to move away from seeking the lowest interest rates from lenders to seeking lenders offering the most attractive flat fee compensation structure. The result could lead to higher or less competitive consumer interest rates. Last October a bipartisan group of 22 U.S. senators jointly sent the CFPB a letter with their concerns about the CFPB’s guidance in this area and inquiring about the extent to which it had looked at the impacts of the proposed flat fee approach, such as on the cost of credit for consumers. In a response issued in November, Director Richard Cordray conceded that the CFPB has not undertaken a study of “how market-wide adoption of a single non-discretionary compensation program would affect the availability of credit.” During its Nov. 14, 2013, forum, the CFPB also conceded that establishing a flat fee program may not be a perfect solution. The CFPB noted that C O N T I N U E D O N PA G E 1 8

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it is still interested in ideas and suggestions from the marketplace on how to allow reasonable dealer compensation for credit sales transactions without creating an environment for possible discrimination and without negatively affecting consumer credit or the marketplace. Some of the other options that have been discussed include setting a percentage of the amount financed on a car loan as the dealer payment, or even developing a combined approach that would take into account contract duration and amount financed to calculate dealer payment. Clearly, the discussion on flat fees and dealer compensation in general will continue. What can you do to prepare your dealership and adapt, even thrive, in this new reality for your business? The concerns and discussions about discretionary rate markup and dealer compensation from last year will continue in 2014. There is uncertainty on how some of these issues will ultimately be resolved. But there is a lot we do know and a lot that dealers can do to prepare and adapt to

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the increased focus on dealer compliance. Now is the time to respond in a way that may just put your dealership in a position to not only survive, but even thrive in this new reality. During the previously referenced November forum “Preventing Illegal Discrimination in Auto Lending,” Cordray told the audience, “Each lender bears the responsibility for policing its own lending program to avoid unlawful practices…” In spite of the attention to this issue, lenders may be hesitant to provide too much guidance or oversight to dealers on how to comply with ECOA for fear of creating liability for themselves. Part of the issue is that the more lenders get involved the more they look like “creditors” under Regulation B and the stronger the argument that they should be liable for dealers’ credit discrimination. So lenders might not tell you what to do or how to do it, but they will clearly require dealers to have up-to-date policies and procedures in place for ECOA compliance. Dealers should make sure that they have these things in place along with staff training, clear escalation requirements for rate exception decisions and rate

exception documentation. Remember that there are compliance companies and consultants in the marketplace who can help you create or update your ECOA program (Do some research to make sure you find a qualified and experienced one.). Once prepared, you will be able to confidently respond to lender questions on your ECOA compliance. Remember, too, that dealers are required to comply with the ECOA even if they hold their own credit contracts – so your preparation will also allow you to confidently respond if your state or federal regulator asks about your ECOA compliance. A second action item is to participate in the industry discussion on discretionary rate markups and dealer compensation. Consider the issues and ideas for how current practices could be improved to help avoid the risk of credit discrimination and offer your ideas to the NIADA staff. There is still time to influence changes to the industry’s best practices and the CFPB’s views on them. A third action item is to be prepared for possible changes in your lenders’ program requirements on dealer discretionary markup and

dealer compensation. Lenders may set limits on the amount by which you can mark up their buy offers. They may also change whether and how dealers are compensated for any rate markups. Even though we don’t know how those issues may ultimately be resolved, now is the time to evaluate how those pricing elements fit in your dealership’s overall pricing and profit models. Consider how change to those pricing elements will impact your business and how you can respond to various change scenarios. The concern, discussions and uncertainty will continue, but it is still possible to take action on things within your control. Following these three action items will immediately benefit you as a dealer and also your lenders. It will also give you a solid foundation from which to implement any future changes made regarding discretionary rate markups and dealer compensation.

BY CHIP ZYVOLOSKI

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

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NEW AND RENEW NEW

ADESA GREAT LAKES ALL DEALER INVENTORY LLC BIGGER INC CLIO BUDGET LOT INC D & D ALL AMERICAN AUTO SALES INC DANS AUTO SALES INC DOCS USED CARS & TRUCKS DREAM CARS LLC ED’S AUTO INC ERWINE’S AUTO SALES INC EZ WAY USED CARS LLC FIRST CHOICE WHOLESALE LLC GREATER PAW PAW AUTO AUCTION THE AUTO PALACE INC VAN DYKE AUTO CENTER INC

RENEW

A & B AUTOMOTIVE AGELESS AUTOS ALL SEASONS AUTO LLC ANDREWS AUTOMOTIVE AUTOSMART AMERICA B & B CAR CO, INC B & B USED CARS

BEST DEALS AUTO SALES INC BIG THREE AUTO SALES, INC. BIRMINGHAM MOTORS LTD BUCHANAN AUTOMOTIVE INC CARS.COM CHEBOYGAN AUTO BROKERS INC CHOICES AUTOS CITY OF CARS.COM COREPOINTE INSURANCE CO COUNTRYVIEW AUTO SALES L.L.C. DEALS UNLIMITED INC DICKS AUTO SALES DRIVERS CHOICE AUTO & TRUCK LLC FLINT AUTO AUCTION, INC. G & L AUTO SALES INC. GENESYS SYSTEMS INC GOOD MOTOR COMPANY LLC GREAT DEAL AUTO SALES GREAT LAKES SUPERSTORE LLC GWC WARRANTY HANDY CAR CLEAN INTER-CITY AUTO SALES, INC. JOE ROSS USED CARS INC. KADRICH USED CARS KEWEENAW AUTOMOTIVE INC. KOPPINGER MOTORS INC. LAKEVIEW AUTO LLC

LAW AUTO SALES INC. LINDEROTH SALES & SERVICE LOW COST AUTO SALES MARTY HARTS AUTO SALES MARV’S CAR LOT INC. METRO MOTORS INC. MI SCHOOLS & GOVERNMENT CREDIT UNION MICHIGAN CAR & TRUCK INC MIKE WAWEE & SONS AUTO SALES MOORE VEHICLES MT MORRIS AUTO SALES INC NFA FINANCE LLC PETE’S AUTO SALES RANDY MERREN AUTO SALES, INC. RED CEDAR AUTO SALES RICHARDS MOTOR SALES LTD RICK’S MOTOR CAR CO. RITE ON, INC ROAD CANDY AUTO SALES RYAN’S WHEELS & DEALS SCOTTY’S FINE CARS, INC. SELECT MOTORS SOUTHFIELD QUALITY CARS, INC. VAN PAEMEL SALES INC. WHEELZ SALES & LEASING INC WOLVERINE AUTO BROKERS INC

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U.S. Delays Health Care Exchanges for Small Dealers The Obama administration is delaying until November 2014 the launch of the federal government’s online health exchange where smaller businesses can shop for coverage. Small businesses with fewer than 50 employees will still have the option to purchase health insurance coverage for workers through the new marketplace but will not be able to do so online. The exchanges are of great interest among auto dealers because the average U.S. car dealership had 55 employees in 2012. Until next fall, employers with fewer than 50 workers will need to use a broker or agent to buy health care plans for employees. According to the Centers for Medicare & Medicaid Services, “We’ve concluded that we can best serve small employers by continuing this offline process while we concentrate on both creating a smoothly functioning online experience w w w. m i a d a . o r g MI_0114.indd 19

in the SHOP Marketplace, and adding key new features, including an employee choice option and premium aggregation services, by November 2014.” The Small Business Health Options Program -- or SHOP Exchange -- has already experienced delays as the Obama administration focused largely on implementing an insurance marketplace for individual Americans to obtain subsidized health care insurance and coverage. While the health care law is meant to reduce the cost of health insurance, many small business groups have been skeptical, arguing that the law will backfire and lead to increases in insurance costs. For more information on ACA compatible insurance plans customized for small groups, visit www. NIADAHealthPlans.com or call 1-888308-9340. WINTER 2014

DRIVELINE 12/19/13 11:28 AM


MICHIGAN INDEPENDENT AUTOMOBILE DEALERS ASSOCIATION Serving the Industry Since 1981

55 E. Long Lake Rd. PMB 233 Troy, Michigan 48085 (248) 828-7010 Fax: (248) 828-7012 Email: nchapman@miada.org Visit Our Website at www.miada.org

An Association of and for the Michigan Used Car Dealer! This is our personal invitation to join the Michigan Independent Automobile Dealers Professional Association  YES, it is important to me to be recognized as a professional! Enclosed are my annual dues of $250 to make sure that my business has all the advantages MIADA provides to me to put me at the forefront of my profession. By completing this form, I am consenting to and giving MIADA/AEC, Inc., its affiliates and subsidiaries, my permission to (until I give written notice to discontinue) contact me and provide information to me at the mailing and email addresses, telephone and fax number(s) I have provided. I certify that (I am or we are) eligible for membership in MIADA. I agree upon the signing of this application and if accepted as a member, to uphold the Bylaws and the Constitution of the Association, its Code of Ethics, and all Local, State, and Federal Laws pertaining to the Automobile Business.

 Regular

TYPE OF MEMBERSHIP YOU ARE APPLYING FOR (CHOOSE ONE): Dealership

Contact Name(s)

Street Address

Mailing Address

City

City

State

Zip

Telephone ( Dealer in:

State

)

Fax (

20

-

Cell/Pager (

)

 Associate*

Zip

-

)

E-Mail Address

Used

Others

New

License #

Describe

Sponsor ____________________________________________ Applicant’s Signature(s) X Date *Associate membership may be held by a person, firm, or corporation engaged in a business allied with or deriving benefit from the automotive industry.

ANNUAL DUES ARE $250.00 Please Check One Payment Option.

$250 Paid in Full by Check, Money Order, or Credit Card □ Discover □ Visa □ MasterCard □ Amex Card # CSCode Credit Card Billing Address Cardholder’s Signature

Exp. Date

□ Check Amount $250.00

Two (2) Installments of $130.00**, (available only for Credit Card Payments) □ Discover □ Visa □ MasterCard □ Amex Card # CSCode Credit Card Billing Address Cardholder’s Signature

Exp. Date

Amount $

** Credit Card will be charged upon receipt, then again 30 days later. By choosing the installment option you authorize MIADA’s Management Company, AEC, Inc., to debit your credit card for both installments. A $5 administration fee for installment is included.

Mail or Fax to: MIADA, 55 E. Long Lake Rd., #233, Troy, MI 48085 Fax: (248) 828-7012

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DEALER

PRACTICES

Building Compliance Into Your Dealership… It’s Good Business. u

PROVIDE UP-TO - DATE DOCUME NT S FOR CU STOME RS AND LE NDE RS

This time of year many dealerships are thinking of the busy tax return season when customers are flush with cash for down payments. It’s also a time to reflect back on 2013 for a moment and contemplate what we’ve learned over the past year that will influence the way we do business in the future. Regulatory change and government focus on our business is increasing. We now know that others are looking at the industry with deep scrutiny. The public forums and participation by lenders, customer advocates, multiple regulatory agencies and national associations have now given insight into how others view the auto industry and the concerns they have about many common business practices. Before any new regulations, rules or guidance are issued, dealers can take steps to minimize the risk to their dealerships as well as to their customers and vendors. In the past year many regulatory changes have been enacted across the country – some at the federal or state level while others by local governments or agencies. These new regulations and rules affect many parts of the business, but none more directly than in the finance office. Whether the customer is paying cash or acquiring a loan to finance the vehicle purchase, the forms used to close the sale are the same. With loan files containing an average of 25 pages, the risk of noncompliance is always great. One common misconception is that if a lender accepts a contract package and funds a loan, the dealership is now off the hook, but that’s far from true. Many lenders also fall short of adequately managing their accepted forms lists. This list

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may be provided to dealers or to their internal staff, so dealers could actually be using the wrong forms or maximum fees allowed by law. This may go Wunchecked until an audit is performed and a large portfolio of loans has been originated. Since the loans were originated within the dealership, the dealership may share in the responsibility for correcting the loan documentation or financial liability for uncollectible loans. In spite of this risk, many dealers are still pulling forms from a pre-existing stack of forms and completing them in the same manner until they’re all gone. If you think this is an acceptable practice, here are some questions that you may ask yourself: • Are they the most current versions? • Do they provide the customer with the proper disclosures, rights and privileges under the current law? • Are the fees, payment calculations and interest rate calculations being used in the finance office accurate? There are a few more questions that need to be answered of your compliance management process: • Who is tasked with ensuring that the forms used in your dealership are the most current and compliant? • Do you depend on information about proposed and enacted legislation from your forms provider, DMS, legal counsel, finance manager or back office? • How often do you review the forms versions, calculations method, and allowable fees? • Do you understand your liability in providing outdated forms, incorrect fees and incorrect calculations to your customers and lenders? These are just a few questions to consider when setting up a

forms compliance management program within your dealership. The extent of your forms management program may well depend on the types of business you are engaged in. For instance, if you are engaged in primarily cash sales, you may have little exposure. But if you are engaged in in-house financing or financing through multiple indirect lending sources, your risk may be much greater. There are few immediate steps you can take to minimize your risk: • Establish a point person who is responsible for managing forms, fees and calculation methods. • Sign up for compliance notifications from a trusted source. There are many companies who will provide email notifications when regulations change that affect your business. • Audit your dealership. Many dealerships have their own legal counsel. Have your legal counsel or trusted advisor review your completed loan packages for compliance. • Stick to a schedule. A quarterly review of your compliance concerns could drastically reduce the risk to your dealership. If nothing else, the current regulatory environment provides ample motivation for creating a compliance regimen within your dealership. But the fact is it’s just good business to provide up-to-date documents that give your customers and lenders the correct disclosures, rights and privileges under the laws.

BY CHET HEUGHAN

CHET HEUGHAN IS DIRECTOR OF APP ONE RISK MITIGATION SERVICES, INDIRECT LENDING FOR WOLTERS KLUWER FINANCIAL SERVICES. FOR MORE INFORMATION, VISIT WWW.WOLTERSKLUWERFS.COM.

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