Mid-Atlantic Dealer News - August 2023

The official magazine of the MIDATLANTIC INDEPENDENT AUTO DEALERS ASSOCIATION

PENNSYLVANIA • MARYLAND • DELAWARE

1501 North Front St., Harrisburg, PA 17102 (717) 238-9002 midatlanticautodealersunited.org

Noah Melamed - Chairman Ticket to Ride Auto, Lancaster, PA nmelamed@yourttr.com

Chris Smiley - Advisor Mountville Motor Sales, Columbia, PA rcsmiley@comcast.net

Bert Straub, President 1st Choice Auto LLC, Fairview, PA bertcstraub@gmail.com

Vacant, President - Elect

John DeFilippo - Treasurer DeFilippo Bros. Motorcars, Prospect Park, PA john.m.defilippo@gmail.com

Clint Weaver- Secretary America’s Auto Auction Harrisburg, Mechanicsburg, PA clint.weaver@americasautoauction.com

Tom Hodges, Vice-President Tom Hodges Auto Sales, Hollywood, MD tom@tomhodgesauto.com

Dan Limongelli, Vice-President Jo Dan Motors, Plains, PA jodanmotors@gmail.com

Michael Mansour, Vice-President Car Connection, Inc., New Castle, PA mike@carconnection1.com

Beth Melamed, Vice-President Ticket to Ride Auto, Lancaster, PA bmelamed@yourttr.com

Tom Brandis • tombrandis@netscape.net

Advantage Auto Sales & Credit, Quakertown, PA

Lisa Cohowicz • lisac@nepautoauction.com North East Pennsylvania A/A, Scranton, PA

Jeff Dreier • dreierauto@hotmail.com

Dreier Auto Sales, Shavertown, PA

April Hollobaugh • ajautosalestitusville@gmail.com A&J Auto Sales, Titusville, PA

Kevin Luring • k.luring@yahoo.com ADESA PA, York, PA

James Makia • james@exclusivemotorcarsmd.com Exclusive Motorcars, Randallstown, MD

Dan McNamee • dtlcars@aol.com

Daniel Thomas Auto Sales, Croydon, PA

Gregg Pachik • gregg.pachik@manheim.com Manheim Philadelphia, Hatfield, PA

Kerri Rotunda • kerrir@corryade.com

Corry Auto Dealers Exchange, Corry, PA

George Smouse • gasmouse@zoominternet.net

Smouse Trucks & Vans, Mt. Pleasant, PA

Steve Worley • worleymotors@hotmail.com

Worley Motors, Enola, PA

FEATURES

3 | In Memoriam: C. Grant Miller

6 | MIDATLANTIC CONVENTION & EXPO

Join us in Atlantic City! It’s time to register your entire team for this year’s big event and to make your hotel arrangements!

8 | NIADA Reminds Dealers They are Not Alone

In starting his tenure as NIADA President, Gordon Tormohlen delivered an inspiring message to dealers as they head into what could be a turbulent end of 2023.

9 | Dan Johnson Named National Quality Dealer of Year Winner

Dan Johnson, the owner of LiteHouse Auto, in Lakewood, NY, is the 2023 National Quality Dealer of the Year winner. Johnson was honored in the closing ceremony at the NIADA Accelerate 2023 Convention and Expo.

10 | 9 Ways to Reduce Car Dealership Expenses

When you’re running a dealership, business expenses are always going to be there—but it’s up to you to determine how much you’re willing to spend.

17 | FTC, CFPB Members Answer Questions for NIADA Dealers

How the Federal Trade Commission will enforce the Safeguards Rule, which went into effect June 9, was one of the main topics as independent automobile dealers took advantage of the opportunity to ask members of the FTC and the Consumer Financial Protection Bureau questions about the agencies at NIADA’s Convention.

20 | Elevate Your Dealership’s Content

Consider these actionable and effective ways to elevate your content from ho-hum to engaging.

24 | Manheim Enhances MMR, Opens Access to All Wholesale Marketplaces

The company has broadened the coverage of MMR to include more vehicles while making it more responsive to today’s fast-changing market dynamics.

BERT STRAUB, PRESIDENT MIDATLANTIC IADA MANAGER, 1ST CHOICE AUTO, LLC FAIRVIEW, PA

I hope you’re doing well and staying healthy. I invite you to join us at one of the most anticipated events for independent dealers in the Mid-Atlantic region—the Convention and Expo organized by the Mid-Atlantic Independent Dealers Association.

DATE: MON-TUES, SEPT. 24 - 26, 2023

LOCATION: CAESARS ATLANTIC CITY

This convention and expo provides:

• An exceptional networking opportunity

• Staying up-to-date with industry trends

• Attending cutting-edge workshops

• Receiving regulatory updates

We have put together a diverse range of sessions and events to cater to the needs and interests of independent dealers like you. By attending, you will have the chance to connect with fellow independent dealers from across the region, exchange valuable insights, and forge long-lasting relationships that can positively impact your business. Our workshops will cover various topics, including sales strategies, marketing techniques, customer service enhancement, and operational efficiency.

In addition to the educational aspect, we believe in the importance of enjoying ourselves and celebrating the accomplishments of our community. Therefore, we have arranged social events and entertainment opportunities to ensure a memorable experience for all attendees.

We’d like to encourage you to take advantage of the early bird registration discount to make the most of this convention and expo. Registering early guarantees your spot and helps us plan a seamless event.

For more information about the event and registration process, please visit our website or contact our dedicated event team at (717) 238-9002. We are excited to see you at this remarkable gathering of independent dealers. Let us unite, share our knowledge, and strengthen our community for a brighter future.

Best regards,

Dear Members of the Mid-Atlantic Independent Dealers Association,

C. GRANT MILLER

December 30, 1933 - June 17, 2023 (age 89)

C. Grant Miller, 89, of Mill Hall, passed away Saturday, June 17, 2023 at his home.

Born December 30, 1933 in Lock Haven, he was the son of the late C. Gordon and Grace E. Barner Miller. Grant was a 1951 graduate of Lock Haven High School. In 1954, he enlisted in the United States Army and was assigned to the Military Police in Heidelberg, Germany where he stood in honor of many generals and several presidents until his Honorable Discharge in 1956.

After returning from the military, Grant was given a civil service job for the United States Postal Service, where he served for 11 years.

On June 5, 1969 in Lock Haven, Grant married the love of his life, the former Jeanne M. Johnstonbaugh, who survives.

Grant was first employed in the automobile industry at Foy Spangler Ford, where he worked for 5 years. He then launched his first business, Mor-Car Motors in 1964 before opening the Grant Miller Chrysler Plymouth dealership. During this time, Grant served as President of the National Auto Auction Association and served on the Professional Licensing Board. In 1987, he opened the Central Pennsylvania Auto Auction, where he remained active for the past 36 years.

Through Grant's professional successes, he displayed a tremendous generosity for others and the community at large, always willing to offer help to those in need.

He will be deeply missed by everyone at the MidAtlantic Independent Auto Dealers Association.

JOHN

ODORISIO EXECUTIVE DIRECTOR MIDATLANTIC

IADA

MidAtlantic IADA members,

NIADA WRAP-UP

I would like to begin by congratulating Mike Dorazio from the Platinum Group for being one of the 14 finalists for NIADA’s Quality Dealer of the Year Award. Dan Johnson from New York ultimately won the award, but Mike represented MidAtlantic IADA very well. Congratulations, Mike!

HEALTHCARE FOR MEMBERS

Did you know that MidAtlantic IADA members are now eligible for healthcare? Please visit our website at piada.org and click on “Dealer Benefits” to learn more.

ANNUAL CONVENTION RESUMES

After a five year absence we are resuming our annual convention! We’re meeting at Caesar’s Atlantic City, September 24 –26. Check our website for more details and to register your entire team for this informative and entertaining event.

INDIRECT LENDING

Finally, we are looking for options in the indirect lending space. We know this is an issue for many members and want to be part of the solution. Stay tuned.

Thank you for your support. If you have concerns or questions, please feel free to reach out to us anytime.

MIDATLANTIC IADA ATTENDS NIADA CONVENTION

MidAtlantic members represented the association at NIADA’s Convention held in June in Las Vegas, NV. Pictured above are Noah Melamed, Former President MidAtlantic IADA; John Odorisio, Executive Director of MidAtlantic IADA, Mike Dorazio, PA Quality Dealer of the Year and Bert Straub, MidAtlantic IADA President.

* Garage and Automobile Liability *

* Dealer Physical Damage *

* Garagekeepers *

* Work Comp *

* Quick Quote Turnaround *

Telephone: 215 -860-6510

Website: www.aatins.com

Langhorne, Pennsylvania

Additional Representatives: You may purchase additional attendees for $195 each X $195 (non-member) X $95 (member)

Badge Information: Please enter your attendee badge names. Use additional paper if needed.

NIADA President Reminds Dealers They are Not Alone

In starting his tenure as NIADA President, Gordon Tormohlen delivered an inspiring message to dealers as they head into what could be a turbulent end of 2023.

Tormohlen told dealers during the Welcome General Session at the NIADA Accelerate 2023 Convention and Expo that they are not alone, and that the Board of Directors, NIADA staff and vendors are ready to work for them and “have their back.”

“I look forward to this next year,” Tormohlen said. “We’ll spend more time together, have conversations, and I’ll get to meet all of you. That’s the biggest reward of all. As your president, it’s a high honor for me and I’m grateful to you for it.”

He also reminded dealers they are ready for what is to come because of their courage and grit, which has allowed them to chase their dreams in the first place.

“Look at you now- you’re an entrepreneur,” Tormohlen said. “I hope you don’t mind me saying, ‘I’m proud of you.’”

The dealers are also helping many others from their families to their employees and customers, who are receiving safe and reliable vehicles. “Everyone benefits by you chasing your dream,” he said.

Before Tormohlen addressed the general assembly, the 2022-23 Chairman of the

Board Joe McCloskey reflected on his nine years on the board. “This is the culmination of an extraordinary chapter of my life,” McCloskey said.

During that time, NIADA worked to influence policy and protect the industry in Washington D.C. It also brought dealers together for education. “We’ve worked to keep the heart of the independent industry beating,” McCloskey said. “We’re not only taking care of the customers, but each other.

“Let us continue to be a beacon of integrity, innovation and excellence in the automotive industry. May we always remember that our greatest strength relies in our unity, shared commitment to excellence and our unwavering dedication to the industry we serve.”

NIADA Vice President of Dealer Development Jeremy Beck gave dealers an extensive market report. The average sales price for used vehicles is up to $25,497 in

2023 from $24,965 in 2022. The front-end gross is down from $4,110 to $4,068. But dealers are making up the difference with F&I products, seeing an increase of nearly $200 to $1,603. Reconditioning costs continue to rise, hitting $1,741.

For the buy here, pay here sector, the average reconditioning cost is at $1,267. In BHPH deals, the average financed is up nearly $1,000 to $13,117. “As the costs have gone up, the down payments have not gone up,” Beck said.

Beck also pointed out the delinquency rates are rising.

“All the indicators are pointing to it’s a good time to be a BHPH dealer,” Beck said.

He added dealers need to stay engaged with the market and tighten inventory management.

“Where there’s challenges, there’s opportunities,” Beck said. n

u u

Dan Johnson Named National Quality Dealer of Year Winner

Dan Johnson, the owner of LiteHouse Auto, in Lakewood, NY, is the 2023 National Quality Dealer of the Year winner. Johnson was honored in the closing ceremony at the NIADA Accelerate 2023 Convention and Expo.

“What an absolute honor. I’m humbled. Everyone who was a finalist deserves this award,” Johnson said. “I’m truly humbled to be the recipient.”

Johnson was one of 14 finalists for the award recognized. He is the Vice President of the NYIADA and is Region I VP for the NIADA Board of Directors. He also serves on numerous civic boards and groups. He was named the Volunteer of the Year by the United Way of Southern Chautauqua County in 2021. He is the 2023 NYIADA Quality Dealer of the Year.

“Dan is an inspiration to all the dealers in New York, not only for being a terrific businessman but his integrity,” said Dana Bress, President of the NYIADA.

Johnson, a lifelong New Yorker, traces his entrepreneurial spirit to his parents, who operated a custom countertop and cabinetry business.

While working at a local bank he met Rod Weidner, the owner of LiteHouse Auto, at Bible study. Johnson went to work for Weidner in 2002 and rose to general manger in 2009. After looking to start his own dealership and not being able to land a property, a conversation started with Weidner, who was looking to retire. Johnson bought the dealership in 2013.

The dealership now averages $4.7 million in

retail sales and $2.68 million in wholesale.

“My wife and I, and our entire team, works hard to build a dealership to serve our community and that is transparent to our customers,” Johnson said. “This award is a culmination of all that hard work.” n

9 Ways to Reduce Car Dealership Expenses

BY AUTORAPTOR STAFF

Peter has a reputation around town as a savvy dealership business owner. He’s the top-selling auto dealer in his county, is known for his inventory of high-demand vehicles, and the customer service scores for his employees are off the charts. In addition to that, he spends a pretty penny on all types of advertising and has become a bit of a local legend for his one-of-a-kind television commercials.

From the outside, Peter appears to be doing everything right. He’s the envy of other local dealership owners; they all wonder what he’s doing to make so much money.

The truth? Peter’s profits are abysmal. He wants only the best for his dealership business—the best cars, employees, advertising—and he’s willing to spend big money to make that happen. Unfortunately, he’s spending too much, and his expenses aren’t in sync with his gross profits.

He likes to reason that, “You gotta spend money to make money!” but he has to get a grip on his expenses before his business implodes.

When you’re running a dealership, business expenses are always going to be there—but it’s up to you to determine how much you’re willing to spend.

Your situation may not be as dire as Peter’s, but if you think there’s room to trim your dealership costs, you’re probably right. Even if you think your input versus output is a well-oiled machine, it’s certainly worth your time to look at your books and see where you may be able to reduce your expenses–you could be very surprised.

Where to start making your dealership business more profitable?

“Someone in your organization has to get into the weeds with your expenses…if not, you are clearly leaving as much as 25% on the table day after day, week after week, month after month, and year after year,” writes Doug Austin, founder and President of StrategicSource, Inc.

First, look at a month-by-month income

statement for the last year of business. This spreadsheet will allow you to compare your sales, cost of sales, gross profits, and expenses. Do you notice any trends?

Now, you’re going to want to start digging deep into your expenses. These costs should be separated into two different groups because not all expenses are created equal. You’ll have:

1VARIABLE EXPENSES

Expenses directly related to sales and inventory carrying costs. These should change proportionately to your sales and gross profits.

Types of variable expenses may include floor plan interest, demo expense, delivery expense, advertising, personnel, employee benefits, absentee wages.

2FIXED EXPENSES

These expenses remain pretty consistent month after month. Types of fixed expenses include office and shop supplies, credit card interest, legal, postage, repairs and maintenance, insurance, utilities.

Once you’ve narrowed down your expenses for the last year, don’t just skim over the numbers to see if everything “looks good.” You need to take each category, one by one, and evaluate the money that was spent and why. If you’ve never done this before, you’re probably going to find a lot of areas that you could easily reduce without affecting your normal flow of business.

DEALERSHIP BUSINESS EXPENSE CATEGORIES WITH ROOM TO TRIM

Where you ultimately choose to reduce costs will depend on your individual dealership, but here are some common areas where others may cut back:

1ADVERTISING

Advertising is essential when you’re running a dealership, but it needs strategic management. You can’t just throw money into commercials, print ads, and pay-perclick ads without also measuring results and ROI. You love producing your TV commercials, but you may find that the numbers aren’t adding up and they simply aren’t bringing in the amount of business they need to.

2PERSONNEL

Don’t go firing anyone, but an easy area to save money is by watching how much overtime your employees are clocking. Have management sign off on all overtime before it goes to payroll. Also, be smart about who you hire. Dealerships tend to have a lot of turnover, and that gets expensive–try to minimize that as much as possible by taking the time to hire the right people.

3OFFICE AND SHOP SUPPLIES

How can you reduce the cost of supplies if you need them to do business? Two simple ways are to shop around for discounts and keep supplies locked up at all times–appoint specific employees to be keyholders. Employees can sometimes get sticky fingers, especially when it comes to office supplies–“who’s going to miss an envelope?!”–but the costs add up over time and can impact your bottom line.

4INVENTORY

Those used cars sitting on your lot cost you money every single day. A 60-day rule on your lot could help (though it should preferably be 30 days) so your inventory keeps moving, but your money doesn’t.

You’re going to find that by taking the time to review your expenses and tightening the purse strings a little, your dealership business profits will vastly improve without too much effort.

5REVISING VENDOR CONTRACTS AND STREAMLINING BUSINESS PROCESSES

Another practical avenue to explore for cutting costs is to renegotiate your vendor contracts. Be it the IT support services, janitorial services, or vehicle maintenance equipment, there’s a good chance that you can find a more competitive rate than what you’re currently paying. By leveraging the prospect of a long-term relationship, you may be able to negotiate better terms with your current providers, or switch to a cheaper vendor that can deliver the same quality of services.

Streamlining your business processes is another great way to cut costs. By identifying inefficiencies and redundancies in your operations, you can devise methods to increase productivity while reducing overhead. For example, using dealership management software can automate a lot of tasks, minimizing errors and freeing up valuable time that can be better utilized. Digitalizing your documentation process, for instance, can help save costs on paper and printing, as well as make retrieving and sharing information more efficient.

6REEVALUATING MARKETING STRATEGIES

Digital marketing presents a cost-effective alternative to traditional advertising mediums like television commercials or print ads. According to Google, 95% of car buyers use digital as a source of information. Hence, shifting your marketing efforts towards channels like social media, search engine optimization (SEO), and email marketing could yield substantial savings.

Moreover, digital platforms offer advanced analytics tools, allowing you to track the performance of your campaigns and finetune your marketing strategies based on data-driven insights. By focusing on highperforming channels and eliminating underperforming ones, you can significantly reduce your advertising expenses while still reaching your target audience effectively.

7INVESTING IN EMPLOYEE TRAINING AND DEVELOPMENT

While this might seem counterintuitive, investing in your employees can lead to cost savings in the long run. Properly trained employees are more efficient, make fewer mistakes, and provide better customer service, leading to more sales and less waste. Additionally, providing opportunities for growth and development can increase employee loyalty and reduce turnover, which can save significant costs related to hiring and training new employees.

8 REDUCING ENERGY USAGE

Energy costs are another area where you can potentially save. Implementing energy-saving measures like using energyefficient lighting, insulating your buildings, and encouraging employees to turn off equipment when not in use can lead to substantial savings over time. Investing in renewable energy sources like solar panels can also yield significant returns in the long run, and they’re beneficial for the environment too.

9 IMPLEMENTING PREVENTIVE MAINTENANCE

Preventive maintenance of your dealership’s equipment and infrastructure can save you from costly repairs and replacements in the future. Regular maintenance can prolong the lifespan of your assets and ensure they’re running at optimal efficiency. This can be as simple as regular oil changes and tire rotations for your demo vehicles, or timely servicing of your HVAC systems and other utilities.

DRIVING PROFITABILITY BY STREAMLINING CAR DEALERSHIP EXPENSES

Reducing dealership expenses isn’t just about cutting costs—it’s about optimizing your resources to achieve the best results. With careful analysis and strategic planning, you can significantly reduce your expenses without compromising on the quality of service you provide to your customers. This way, you not only improve your dealership’s profitability but also its sustainability in the long run. Remember, every penny saved is a penny added to your bottom line. n

3rd Annual Summer Slam Car Show

Sunday, August 27 9AM - 1PM

7th Annual Summer Slam Sale

Tuesday, August 29 9:30AM

Hosted by Manheim Baltimore-Washington to benefit Wounded Warriors Day on the Bay

7120 DORSEY RUN ROAD | ELKRIDGE, MD | 21075

FREE & OPEN TO THE PUBLIC • EVENT IS RAIN OR SHINE

Ample parking available at no cost!

VEHICLE REGISTRATION:

$20 Registration Fee | To Pre-Register Visit: https://tinyurl.com/mrxptk6r

A variety of Food Trucks will be on site.

Flag Presentation at 9AM Trophy Ceremony at 12:30 PM

Rules of Show:

All Manheim and Maryland state traffic laws must be obeyed

Speed limit on lot is 15 MPH • No animals allowed

• No alcohol is allowed

The CARLAWYER©

By Eric Johnson, Partner in the law firm of Hudson Cook, LLP, Editor in Chief of CounselorLibrary.com’s Spot Delivery®

Agencies Issue Guidance on Third-Party Relationship Risks.

Here’s our monthly article on selected legal developments we think might interest the auto sales, finance, and leasing world. This month, the developments involve the Consumer Financial Protection Bureau, Federal Trade Commission, Federal Reserve Board, Federal Deposit Insurance Corporation, and Office of the Comptroller of the Currency. As usual, our article features the “Case(s) of the Month” and our “Compliance Tip.” Note that this column does not offer legal advice. Always check with your lawyer to learn how what we report might apply to you or if you have questions.

FEDERAL DEVELOPMENTS

CFPB Reports on Chatbot Technologies in Consumer Financial Services Industry.

On June 6, the CFPB released a report on how chatbot technologies are being used by the consumer financial services industry and the effect of their usage on consumers. The report cites several risks associated with the use of chatbots, including providing inaccurate information about a financial product or service, providing inaccurate payment information, failing to recognize that a consumer is invoking his or her federal rights, failing to protect consumers’ privacy and data, inability to access a human customer service representative, and diminished customer service and trust. The CFPB’s news release states that “[f]inancial institutions should avoid using chatbots as their primary customer service delivery channel when it is reasonably clear that the chatbot is unable to meet customer needs.”

On June 6, the FRB, FDIC, and OCC issued final interagency guidance to help banking organizations manage risks associated with third-party relationships, including relationships with financial technology companies. The final guidance describes the agencies’ views on sound risk management principles for banking organizations when developing and implementing risk management practices for all stages in the life cycle of third-party relationships: planning, due diligence and third-party selection, contract negotiation, ongoing monitoring, and termination. The final guidance states that sound third-party risk management takes into account the level of risk, complexity, and size of the banking organization and the nature of the thirdparty relationship. The final guidance replaces each agency’s existing general guidance on this topic.

FTC Seeks Public Comment on Collaboration with State AGs. On June 7, the FTC requested public comment on ways the agency can more effectively collaborate with state attorneys general to advance consumer protection. The FTC Collaboration Act of 2021, which President Biden signed into law last October, directs the FTC to “conduct a study on facilitating and refining existing efforts with State Attorneys General to prevent, publicize, and penalize frauds and scams being perpetrated on individuals in the United States” and also requires the agency to provide an opportunity for public comment on certain topics that the study will address. Comments are due by August 14, 2023.

CFPB Extends Comment Deadline on Data Broker Industry. The CFPB extended its deadline for comments on the data broker industry until July 15. On March 15, the CFPB issued a request for information seeking public comment, including data, analysis, research, and other

information, on data brokers. The CFPB also requested input from individuals who have interacted with or been affected by data broker business practices. To assist commenters in developing responses, the RFI includes multiple questions that commenters may answer but stresses that the CFPB is interested in receiving any comments relating to data brokers.

CFPB Releases Semi-Annual Report. On June 8, the CFPB released its Fall 2022 Semi-Annual Report. The Report includes a list of significant rules and orders adopted by the CFPB; significant initiatives conducted by the CFPB; the CFPB’s plan for rules, orders, or other initiatives conducted by the CFPB; an analysis of consumer complaints received by the CFPB; a list of public supervisory and enforcement actions; an assessment of significant actions by attorneys general and state regulators relating to federal consumer financial law; and an analysis of the CFPB’s efforts to fulfill its Fair Lending mission.

CFPB Settles FDCPA and FCRA Claims Against Medical Debt Collector. On June 8, the CFPB announced a settlement with Phoenix Financial Services, a third-party collector of primarily medical debts, for allegedly violating the Fair Debt Collection Practices Act by continuing to collect on debts that were not substantiated after consumers disputed the validity of the debts. Phoenix Financial also allegedly violated the Fair Credit Reporting Act and its implementing regulation by not conducting reasonable investigations of consumer disputes or having reasonable written policies and procedures regarding the accuracy and integrity of the information it furnished to consumer reporting agencies. Among other requirements, the settlement compels Phoenix Financial to provide redress to affected consumers and pay an approximately $1.7 million penalty to the CFPB.

CFPB Released Two Reports That Explore Finance Trends for Consumers

Living in Southern U.S. On June 21, the CFPB released two reports that explore trends in the finances of consumers living in the southern region of the U.S. The first report—“Consumer Finances in Rural Areas of the Southern Region”—compares consumer financial experiences in rural communities in the southern states with other regions in the country with respect to credit card lending, auto financing, mortgage lending, and student lending and also examines consumer credit scores, consumer delinquencies, and medical collections. The second report—“Banking and Credit Access in the Southern Region of the U.S.”—explores access to banking and credit, particularly branch presence, bank account access, and access to mortgage and small business loans, in both rural and nonrural communities in the southern states.

CASE(S) OF THE MONTH

Court Allowed Car Buyer to Proceed with Breach of Contract Claim Against Finance Agreement Assignee for Knowingly Collecting and Unlawfully Retaining Unearned GAP Fees: An individual bought a new car. As part of the financing for the purchase, the buyer elected to buy GAP coverage, which was memorialized in a GAP Waiver Addendum Election Form that was appended to his finance agreement. The buyer later traded in the car to a dealership. The assignee of his finance agreement submitted a payoff amount to the dealership that included the remaining amount of GAP fees for the full original term of the finance agreement and received the full payoff amount from the dealership. The buyer filed a class action against the assignee for knowingly collecting and unlawfully retaining unearned GAP fees. The assignee moved to dismiss the complaint, and the U.S. District Court for the Northern District of Indiana granted the motion in part and denied it in part, allowing the buyer to proceed with his breach of contract claim but striking the class allegations.

After finding that the buyer had Article III standing to sue even though he

had relinquished title to the car to the dealership before it made the payoff to the assignee, the court turned to the buyer’s breach of contract claim. The court determined that the assignee did not breach an implied term in the GAP Addendum imposed by Indiana’s automatic refund law because that law was amended after the buyer executed his finance agreement to address refunds upon termination of a GAP agreement or early prepayment of a finance agreement. The court also found that informal guidance pertaining to GAP agreements published by the Indiana Department of Financial Institutions does not “carry ‘the effect of law,’ such that [it] would create an implied term in the parties’ GAP Addendum.” However, the court found that the buyer stated a claim that the assignee breached an express term of their agreements. The court found the finance agreement and the GAP Addendum sufficiently ambiguous with regard to whether a pro-rata refund of unearned GAP charges was required in this case and determined that the buyer should be able to proceed with his breach of contract claim. Because the court allowed the buyer to proceed with his breach of contract claim, it dismissed his money had and received claim, which is an equitable remedy available when there is no express contract between the parties. The court also dismissed the claim for a declaratory judgment that the assignee is obligated to refund the GAP fees, plus interest, finding this claim duplicative of the breach of contract claim. Finally, the court addressed the buyer’s class allegations on behalf of a multi-state class and an Indiana subclass. Both the class and the subclass are defined to include only those individuals who entered into finance agreements with GAP Addenda in one of six automatic refund states and who paid off their finance agreements early during the time period that the applicable automatic refund law was in effect and to exclude any individual whose finance agreement with GAP Addendum was entered into before the applicable automatic refund law went into effect. Because the buyer entered into his finance agreement before

Indiana’s automatic refund law went into effect, the court concluded that “he cannot seek to represent a class based on the theory that [the assignee] violated Automatic Refund Laws that were never incorporated as implied terms of his agreements.” The court, therefore, struck the class allegations but granted the buyer an opportunity to amend his complaint to address the deficiencies in his class allegations. The court also recognized that the buyer may not have standing to assert claims on behalf of customers aggrieved by violations of automatic refund laws in states in which he does not reside and has never purchased a GAP product. See Ratulowski v. PNC Bank, N.A. , 2023 U.S. Dist. LEXIS 82272 (N.D. Ind. May 10, 2023).

COMPLIANCE TIP

The case above illustrates how easy it is to run afoul of GAP refund requirements if you’re not careful. How tightly buttoned up is your GAP refund process? As part of your process, you should know whether state law imposes any refund requirements on you with respect to unearned GAP waiver charges, in the event of full prepayment of the financing contract; in the event of cancellation by the buyer during or after any free look period; or in the event of default or default-related activities (e.g., demand for payment repossession, chargeoff). The refund requirements may lie with the holder of the financing contract, but what may be required of the holder could certainly impact the dealership. Time to investigate further!

So, there’s this month’s roundup! Stay legal, and we’ll see you next month.n

Eric (ejohnson@hudco.com) is a Partner in the law firm of Hudson Cook, LLP, Editor in Chief of CounselorLibrary.com’s Spot Delivery®, a monthly legal newsletter for auto dealers, and a contributing author to the F&I Legal Desk Book. For information, visit counselorlibrary.com. ©CounselorLibrary. com 2023, all rights reserved. Single publication rights only to the Association. HC# 4874-8985-2012.

AUCTION DIRECTORY

PENNSYLVANIA

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758 Franklin Road, Mercer, PA 16137 724.662.4500 / Fax: 724.662.8716

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I-83 Ex. 28 (Old Ex. 12), 30 Industrial Rd. York, PA 17406

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Specialty Sale every 4th Wed 8:30 AM adesa.com

ADESA PITTSBURGH

378 Hunker Waltz Mill Rd. New Stanton, PA 15672

724.925.4700 / Fax: 724.925.4701

Tuesday 9:00 AM pittautoauction.com

AMERICA'S AA - HARRISBURG

1100 S. York St., Mechanicsburg, PA 17055 717.697.2222 / Fax: 717.697.2234

Thursday 8:45 AM harrisburgautoauction.com

AMERICA’S AA - LANCASTER

1040 Commercial Ave., P.O. Box 406 East Petersburg, PA 17520 717.569.5220 / Fax: 717.569.3109

Wednesday 9:00 AM; INOPS 8:30 AM americasautoauction.com

AMERICA’S AA - PITTSBURGH

55 E. Buffalo Church Rd. Washington, PA 15301 724.225.1777 / Fax: 724.225.7223

Thursday 12:30 PM americasautoauction.com

America’s AA – Erie

P.O. Box 317, 12141 Route 6 West Corry, PA 16407 814.664.7721 / Fax: 814.664.7724

Thursday 10:00 AM

3 Lanes Dealer Consign, Fleet/Lease americaserie.com

BLAISE ALEXANDER AUCTION

350 Fairfield Rd., Montoursville, PA 570.435.8391

Mondays: 10:45am blaisealexanderauction.com

BLOOMSBURG AUTO AUCTION

25 Ridge Road, Bloomsburg, PA 17815 570.784.2306

Wednesday 10:00 AM bloomaa.com

CAPITAL AUTO AUCTION

5135 Bleigh Ave., Philadelphia, PA 19136 215.332.2515

Monday thru Friday 9:00 AM - 4:30 PM capitalautoauction.com

CENTRAL PENNSYLVANIA AA

Exit 178 of I-80, Lock Haven, PA 17745 800.248.8026 / Fax: 570.726.7841

Thursday 9:45 AM

Office: MTF 8-5:30 W-Th 8-6:00 cpaautoauction.com

GARDEN SPOT AUTO AUCTION

Robert Rd. & Apple St., Ephrata, PA 17522 717.738.7900 / Fax: 717.738.7930

Tuesday 10:00 AM gardenspotautoauction.com

GREATER ERIE AUTO AUCTION

7700 Avonia Road, (Exit 16 of I-90 & PA Route 98) Fairview, PA 16415-0916 814.474.3900 / 877.474.GEAA

Fax: 814.474.4969

Tuesday 1:45 PM greater-erie.com

LEHIGH VALLEY AUTO AUCTION

3880 Lehigh St., Whitehall, PA 18052 610.435.5554 / Fax: 610.435.5557

Wednesday 5:00 PM lehighvalleyautoauction.com

MANHEIM KEYSTONE

488 Firehouse Road, Grantville PA 17028 717.469.7900 / Fax: 717.469.2842

Every Monday 11:00 AM manheim.com

MANHEIM PENNSYLVANIA

1190 Lancaster Rd., Manheim, PA 17545 717.665.3571 / Fax: 717.665.9265

Exotic Highline Sales every other

Thursday - 9:00 AM

Every Friday Sale 8:30 AM manheim.com

MANHEIM PHILADELPHIA

2280 Bethlehem Pike, Hatfield, PA 19440 215.822.1935 / Fax: 215.822.8140

Tuesday 9:30 AM

TRA Sale - Tuesday 12:30 PM

Office: M-Th 8:30-5:00; F 8:30-1:00 manheim.com

MANHEIM PITTSBURGH AA

21095 Route 19, Cranberry Twp., PA 16066 724.452.5555 / Fax: 724.452.1310

Wednesday 9:00 AM manheim.com

NORTH EAST PENNSYLVANIA AA

860 N. Keyser Ave., Scranton, PA 18504

570.207.CARS / Fax: 570.207.1860

Tuesday 10:00 AM

nepautoauction.com

PERRYOPOLIS AUTO AUCTION

Route 51 S. Perryopolis, PA 15473

724.736.4445 / Fax: 724.736.0466

Friday 9:45 AM

perryautoauction.com

MARYLAND

BSC AMERICA/BEL AIR AUTO AUCTION

4805 Philadelphia Rd., Belcamp, MD 21017 410.879.7950 / Fax: 410.893.1515

Thursday 8:30 AM at Clayton Station

Thursday 8:00 AM at Bel Air in Belcamp bscamerica.com

MANHEIM BALTIMORE-WASHINGTON 7120 Dorsey Run Rd., Elkridge, MD 21075 410.796.8899 / Fax: 410.799.0512

Tuesday Sale, 9:30 AM

Tuesday Frontline Sale, 9:00 AM

TRA/Salvage, 1:00 PM manheim.com

NEW YORK STATE LINE AUTO AUCTION 830 Talmadge Hill Rd. S., Waverly, NY 14892 607.565.8151 / Fax: 607.565.3915

Ally Financial Open Sale –EVERY FRIDAY, 9:20 AM

GM Financial Open Bi-weekly. Simulcast in all lanes. statelineauto.com

WEST VIRGINIA

MOUNTAIN STATE AUTO AUCTION

Route 2, Box 835, Shinnston, WV 26431 304.592.5300 / Fax: 304.592.3510

Monday 10:30 AM; Office: 9:00-5:00 mtstateaa.com

PUBLIC AUCTIONS

CAPITAL AUTO AUCTION 5135 Bleigh Ave., Philadelphia, PA 19136 215.332.2515 / Fax: 215.332.2534

capitalautoauction.com

CAPITAL AUTO AUCTION

5001 Beech Rd, Temple Hills, MD 20748 301.316.4980 / Fax: 301.316.4982

capitalautoauction.com

Carriage Trade Public Auto Auction 1200 W Ridge Pike, Conshohocken, PA 19428 800.441.6717 / Fax: 610.834.8274

Monday Sale Day 3:00 PM

carriagetrade.com

FTC, CFPB members answer questions for NIADA dealers

How the Federal Trade Commission will enforce the Safeguards Rule, which went into effect June 9, was one of the main topics as independent automobile dealers took advantage of the opportunity to ask members of the FTC and the Consumer Financial Protection Bureau questions about the agencies at NIADA’s Convention.

Dan Dwyer, an attorney in the Division of Financial Practices at the FTC, held two sessions with dealers during NIADA Accelerate 2023. Dwyer reminded dealers the intent of the Safeguards Rule and its update is to protect consumer information. “The commission hopes to incorporate technological developments to protect consumer information,” Dwyer said. “The Safeguards Rule revisions are also to push firms to do something affirmative [to protect data] instead of after the fact.”

The updated rules approved in October 2021 require financial institutions to designate a “qualified individual” to oversee their security program, develop a written risk assessment, limit and monitor who can assess customer information, encrypt information, train security personnel, develop a response plan, assess security practices of service providers and implement multi-factor authentication for any individual accessing customer information.

Penalties can range up to $46,517 per violation. There are a few exemptions to some of the rules for small businesses. Dwyer addressed a few of those, reminding dealers even small businesses are not exempt from all the rules. The exemptions also apply to businesses with non-public information on fewer than 5,000 consumers. They also do not have to be customers.

Dwyer also briefly covered a few recent cases handled by the FTC in response to consumer complaints about discriminatory practices with rates and fees.

Chris Kukla, Senior Program Manager for Auto Finance at the CFPB, also answered questions about the agency’s monitoring of the credit market. “Affordability is a key metric we pay attention to,” Kukla said.

Wrongful repossessions have been an issue the agency has looked to address. He pointed out wrongful repossessions have been mentioned in the last five supervisory highlights published by the agency. “It’s incumbent on services to know the

repossession is valid,” Kukla said. “Making sure information is accurate is important. When there’s an invalid repossession there’s usually a failure in the systems, processes and communication.”

Richard Furlong, Communication & Liason Dvision, Senior Stakeholder Liaison at the IRS, addressed questions about tax requirements for the motor vehicle industry and provided the latest details on the most recent changes from the IRS. n

House Passes House Bill 791: Preventing Catalytic Converter Theft

BY ERIK A. ROSS, SENIOR ASSOCIATE, MILLIRON & GOODMAN

On June 28, 2023, the state House of Representatives passed House Bill 791 by a vote of 119 to 841. This legislation will now go to the Senate of Pennsylvania for consideration.

House Bill 7912 (Isaacson-D) amends the Scrap Material Theft Prevention Act, further providing for identification requirements for sale of scrap materials to scrap processors and recycling facility operators. It would also require scrap processors and recycling facilities to collect additional information for transactions that include a catalytic converter such as:

• The year, make, model and vehicle identification number of the vehicle from which the catalytic converter was removed

• A photograph of the catalytic converter

• A photograph of the seller

It would empower the scrap processor or recycling facility to withhold payment to the seller for a period of 48 hours. During those 48 hours, the scrap processor or recycling facility operator shall keep the catalytic converter intact and safe.

In addition, Representative Rob Kauffman (R-Franklin) amended the bill on the House floor to add the requirement that scrap processors and recycling facility operators collect identification information if the scrap material bears a name or mark. The legislation imposes a new penalty for a scrap processor or recycling facility that fails to collect the required information. Specifically, an individual who violates this section would be guilty of a misdemeanor of the third degree. The amendment sets the minimum fine for a conviction at $5,000. A misdemeanor of the third degree is

punishable by imprisonment not to exceed 1 year.

The legislation further makes it an offense for a person that is not affiliated with a commercial account to, without proper justification, intentionally possess a detached catalytic converter. This offense is a misdemeanor of the third degree and is punishable by up to one year in jail or a fine of up to $2,500.

As you may know, John Odorisio, Executive Director of the Pennsylvania Independent Automobile Dealers Association, testified before the House Consumer Protection, Technology & Utilities Committee on June 8, 2023, regarding how the theft of catalytic converters has severe financial repercussions on small automobile dealers. For example, if stolen from an automobile dealer, that dealer is then responsible for covering the large insurance deductible (average $2,500) associated with their policy. Replacing a stolen catalytic converter can cost anywhere from $1,000 to $2,500, accounting for both the part itself and the labor to install it. Small automobile dealers across the state simply cannot afford multiple catalytic converters thefts from their lots.

Moreover, a June 28, 2023, article on AXIOS Philadelphia highlighted this ongoing problem in reporting that “Bucks County District Attorney Matt Weintraub announced charges on [June 27, 2023] against 11 people and Philly-based TDI Towing, described as the ‘main buyer’ of thousands of catalytic converters stolen throughout Delaware Valley.”3 Weintraub said it's the first time that the Bucks County DA has ever criminally charged a corporation, crediting investigators who "worked up the chain" to get the alleged

main players. Our goal is to put them out of business forever," Weintraub added.4

Rep. Isaacson’s House Bill 791 could make the illicit resale of catalytic converters tougher by tightening identification

requirements for scrap materials and making it an offense for a person that is not affiliated with a commercial account to, without proper justification, intentionally possess a detached catalytic converter.

PIADA will be sure to keep you updated as this important legislation moves through the legislative process in Harrisburg. n

1 House Bill 791 PN 1754, Final Passage by House legis.state.pa.us/CFDOCS/Legis/RC/Public/ rc_view_action2.cfm?sess_yr=2023&sess_ind=0&rc_body=H&rc_nbr=397

2 House Bill 791 PN 1754 legis.state.pa.us/cfdocs/billInfo/billInfo.cfm?sYear=2023&sInd=0&body=h&type=b&bn=791

3 “Philly tow company snared in catalytic converter theft ring,” Isaac Avilucea, AXIOS Philadelphia, 6/28/2023

axios.com/local/philadelphia/2023/06/28/phillytow-company-snared-in-catalytic-convertertheft-ring

4 IBID

Elevate Your Dealership’s Content

BY PROFESSIONAL MOJO

ADVANCED ISSUING AGENT TRAINING COURSES

As an independent dealer, you read a lot about creating engaging social media content to reach more buyers and sell more cars. Agencies talk about it. Your in-house marketing coordinator talks about it. Maybe even your sales folks talk about it, too. Talking about what's "engaging" in the industry landscape, though, and creating an actional list of potential content are two very different things. One thing we all can agree on is that engaging content is essential for capturing and retaining the attention of your potential buyers. So, consider these actionable and effective ways to elevate your content from hohum to engaging:

DO MORE WITH YOUR VISUALS

Make the visual component of every post the best it can be. You already know the value of high-quality images of your inventory, but consider including a great visual with every non-inventory post, too. These can include appropriate memes, videos of your staff or parts of the buying process, or infographics sharing interesting consumer stats. Visuals grab attention much more quickly and help convey your message in an easily digestible format. Choose vibrant, on-brand colors and compelling imagery to make your content stand out in the crowded social media landscape. Pro Mojo Tip: Ensure every visual component includes your phone/url and looks like your brand.

USE MORE INTERACTIVE CONTENT

It's time to move beyond the static post. Consider engaging your audience by creating interactive content that encourages participation. Polls, quizzes, contests, and interactive stories are excellent ways to involve your followers and make them feel like an active part of your community.

Encourage them to share their opinions, experiences, or create user-generated content related to your brand.

TELL YOUR STORY TO BUYERS

Leverage the power of storytelling to create emotional connections with your prospects. Any good salesperson knows that a new ride has an emotional impact! Share real-life buyer experiences, success stories, or user testimonials that showcase the impact of your dealership, how you support the community or even highlights your staff/ sales team. Authentic storytelling helps build trust, fosters engagement, and encourages meaningful conversations. Not sure where to start? Consider these types of compelling stories: Asking for action from the reader, Illustrating your dealership's core beliefs or values, and inspirational stories.

STRIVE TO DELIVER VALUE

Valuable content educates, informs, entertains, or solves a problem for your prospects. Your dealership offers solutions to prospects who need or desire a new ride, so build on that. Share tips, tutorials, how-to guides, industry insights, or behind-the-scenes glimpses to provide value to your commun ity. These types of tips, tricks, and hacks are especially impactful on TikTok and other platforms geared to quickly consumable video. Your dealership staff has a lot of knowledge that can be mined for this purpose.

One last Pro Mojo Tip: One size does not fit all. Think through your content and adapt some of these ideas to suit the specific social media platform(s) you are using. Each platform has its own nuances and best practices, so tailor your content accordingly. n

The in-person training courses will be provided by Pennsylvania Association of Notaries, a PennDOT approved instructor. All classes begin at 9:00AM. No refunds and may not be transferred to another class date.

Members: $125; Non-members: $150

Thursday, September 21

Deadline to register: September 6

MANHEIM PHILADELPHIA AA

2280 Bethlehem Pike Hatfield, PA 19440

IN-PERSON COURSES ONLINE COURSES

The online training courses will be provided by Pennsylvania Association of Notaries, a PennDOT approved instructor.

Members/Nonmembers: $169

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CALL

John Odorisio Executive Director

(717) 317-3098 | john@piada.org

t

Nicole Autry Dealer Set-Up Unit

(717) 317-1966 | nicole@piada.org

Cynthia Slemons

Membership Specialist

(717) 238-9002 x16 | cynthia@piada.org

Jessica Barton Title Supervisor

(717) 238-9002 | jessica@piada.org

India Thomas Title Clerk

(717) 238-9002 | india@piada.org

Tammy Farmer Receptionist

(717) 238-9002 x10 receptionist@piada.org

Heather Levesque Accounting

(717) 238-9002 | heather@piada.org

Ashley Bohner Administrative Assistant

Manheim Enhances MMR,

Opens

Access to All Wholesale Marketplaces

The company has broadened the coverage of MMR to include more vehicles while making it more responsive to today’s fast-changing market dynamics.

Manheim recently announced the company has delivered several enhancements to the Manheim Market Report (MMR) to make it easier for wholesale buyers and sellers to make more informed decisions. Notably, the company has broadened the coverage of MMR to include more vehicles while making it more responsive to today’s fast-changing market dynamics. Clients will also enjoy a cleaner interface and more trustworthy estimated retail values. And finally, Manheim will now make MMR available to all wholesale marketplaces.

“The market is shifting faster than ever before, and our team has worked tirelessly to ensure that MMR moves at the same speed to reflect data from the Manheim Marketplace in real time,” said Zach Hallowell, senior vice president of Manheim Digital at Cox Automotive. “We’re very excited to offer clients across the industry a better, more accurate and more responsive tool that delivers the information they can use to make smart decisions.”

MMR is the industry’s most trusted source of wholesale vehicle valuations and is used by tens of thousands of consignors and dealers each month to value millions of used vehicles. In fact, it was used 2.5 billion times in 2022 to value vehicles.

With the latest updates, detailed below, Manheim said it has once again demonstrated its commitment to innovation and its dedication to helping buyer and seller clients succeed in the automotive industry.

• More Coverage: Previously, MMR was able to value 97% of all vehicles listed in the Manheim Marketplace. Today, that number is now 98.5%, covering half of the remaining cars that didn’t previously have an MMR value.

• More Accurate: In normal markets, MMR’s 30-day lookback was a trusted indicator of current vehicle values based on past sales. But today’s market swings faster — and now so does MMR. Today MMR is able to take into account broad marketplace fluctuations as they are happening, so it more closely reflects vehicle values in real time.

• More Insights: Understanding the potential retail value of a vehicle is important when buying and selling. In addition to more informed wholesale values, MMR now offers a new-and-improved retail value as well, based on real transaction data from Cox Automotive.

• Better Experience: Clients now enjoy a simplified interface that puts even more information at their fingertips. Thanks to an improvement in the user experience design, they can make better data-driven decisions, faster.

• More Widely Available: Previously, MMR was available to clients through Manheim. com and syndicated to third-party software providers; however, Manheim is now making it available to all wholesale marketplaces across the industry.

“The depth and breadth of Cox Automotive’s first-party data is truly unparalleled in the industry,” added Dr. Ben Flusberg, senior vice president, Data Solutions, at Cox Automotive. “These enhancements to MMR and increased access to the tool show our commitment to not just continual improvement but to making it easier for buyers and sellers across the industry to make more informed decisions — no matter where they do business.” n

Publisher Names Top Used Cars for Teens

By UsedCarNews

U.S. News & World Report, the global authority in rankings and consumer advice, unveiled the 2023 Best Cars for Teens. These awards recognize cars that score well in factors including dependability, reliability, crash prevention, available features, and are highly recommended.

In the five used-car categories, four of the winners are hybrid vehicles. With two award wins, Hyundai earned more Best Used Cars for Teens awards than any other brand.

The 2023 Best Used Cars

for Teens

• Large Car: 2019 Toyota Avalon Hybrid

• Midsize Car: 2020 Hyundai Sonata Hybrid

• Midsize SUV: 2019 Hyundai Santa Fe

• Small Car: 2018 Chevrolet Volt

• Small SUV: 2019 Subaru Crosstrek Hybrid

To be named a Best Used Car for Teens, a vehicle must be from the 2018 through 2020 model years and have the best combination of dependability and safety ratings, projected ownership costs, positive reviews from critics when it was new, and available tech that can help prevent crashes or lessen their severity. n