How an Inviting Lot can Attract Better Customers

When you think of real estate and businesses, you think of curb appeal. The curb appeal is what the house or business looks like on the outside, from the curb, and as prospective buyers walk up. The same principle applies to used car lots. An inviting car lot, one with a great “curb appeal”, attracts better customers. It shows them that your dealership is a safe and inviting place to shop.

But what makes a more inviting lot? Well, there are a lot of things you can do, and most of them won’t cost you a thing except for a little creativity and some time.

WHAT MAKES AN INVITING LOT? What makes a lot more inviting than another? The most important thing is the visual appeal, and that means some system of organization, no matter what that looks like for your particular lot. For customers to feel welcome, your lot needs to: • Be easy to navigate. It should be simple for them to get to the vehicles on the lot, walk around them, and view all of your inventory. • Your inventory needs to be organized in some kind of system the potential buyer can figure out. • Your lot needs to be clean and free of trash, junk, dirt, and debris of any kind.

These three areas are just the start. You’ll want to take each of them to a new level in order to stand out and attract better customers.

CLEANLINESS The first thing a customer will notice is the cleanliness of your lot. This means from the front sidewalk near the street to the parking lot itself. If you have landscaping, make sure it is free of trash, and bushes and plants are healthy, trimmed, and well maintained. Make sure any grassy areas are mowed and trimmed, as well.

If you have to, hire landscaping services. Also, be sure that the sidewalks and paved areas of the lot are swept or blown free of dirt regularly. Be sure that your office and any other buildings are neat and wellmaintained. These, and the vehicles you sell, are the first things that a potential buyer sees.

They also see the vehicles on your lot. Your vehicles should also be washed regularly and look good on the outside. Be sure the exteriors of vehicles are in good repair, because dents, broken items, or even bad paint jobs can quickly turn customers off. Once the exterior looks neat and clean, it’s time to get creative.

UNIQUE MERCHANDISING Creativity often shows up in good merchandising. For example, if you have several models of the same vehicle in different colors, place them next to each other in a row, showcasing the variety you have in this model.

You can also organize vehicles by make, the gas mileage they get, or even by the type of vehicle: trucks in one section, sedans in another, electric vehicles in another section. Think of how your customers shop for vehicles and arrange them in a way that makes that process as easy as possible. Watch how customers move around the lot, and make changes based on their behavior and the application of your creative ideas.

PROFESSIONAL SIGNAGE While a spray-painted sign on cardboard might do for selling your old truck on Craigslist, it lacks appeal on a professional car lot. Buyers are warier than ever before, and they want to know that you are a dealer that can be trusted.

That trust comes from the signage you use to draw them in. It doesn’t mean you can’t have fun with a pun or a joke of the week. Instead, it means those things should be done with signs that are professionally designed, in good repair, and that use colors that attract attention. Your sign is a part of your curb appeal. Use it wisely.

WAYS TO MAKE YOUR LOT INVITING

WITHOUT SPENDING A FORTUNE When you look over the list above, it is easy to see how you can make most of these changes with little to no expense. Cleaning up and using unique merchandising techniques simply require some thought, and they can even be fun.

And any investment in truly professional signage will last for years to come. While it may cost something now it will pay huge dividends in the long run, as you attract better customers and more sincere buyers, so you sell more cars. NIADA has supported the independent used auto dealer community for more than 75 years. Check out the NIADA and join today (niada. com) to become a part of one of the most professional and established automotive organizations in the country. n

The CARLAWYER©

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

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, the Department of Justice, the Federal Trade Commission, and the Federal Deposit Insurance Corporation. 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 Enters into Consent Order over Credit Cards and Lines of Credits Issued and Accounts Opened Without Consent,

Applications, and Disclosures. On July 28, the CFPB entered into a consent order with U.S. Bank National Association, resolving allegations that the bank issued credit cards and lines of credit to, and opened deposit accounts for, consumers without their knowledge and consent and without required applications and disclosures, in violation of the Consumer Financial Protection Act, the Fair Credit Reporting Act, the Truth in Lending Act, and the Truth in Savings Act. The CFPB contended that the bank’s imposition of sales goals on bank employees as part of their job descriptions and the bank’s implementation of an incentive-based compensation program that rewarded employees for selling these products and services led employees to open these unauthorized accounts. Specifically, the CFPB alleged that U.S. Bank violated the FCRA by using consumers’ credit reports without a permissible purpose and without their permission in connection with unauthorized applications for credit cards and lines of credit, violated the CFPA and TILA by opening deposit accounts and issuing lines of credit and credit cards without consumers’ permission, and violated the TISA by opening deposit accounts without consumers’ permission and without providing the required disclosures. This conduct, as alleged by the CFPB, likely caused substantial injury in the form of fees, negative effects on consumers’ credit profiles, the loss of control over personal identifying information, and the expenditure of consumer time and effort. The terms of the settlement require U.S. Bank to pay a $37.5 million penalty to the CFPB and forfeit and return all unlawfully charged fees and costs to harmed consumers.

DOJ and CFPB Remind Creditors of SCRA Protections for Military Families.

On July 29, the DOJ and the CFPB issued a joint notification letter reminding autosecured creditors and leasing companies of their responsibilities to recognize important legal protections for military families under the Servicemembers Civil Relief Act. The letter is designed to ensure that auto creditors and leasing companies are aware of key provisions in the SCRA, including: (1) prohibiting vehicle repossessions during the servicemember’s military service without a court order, even if the servicemember financed or leased the vehicle prior to entering military service; (2) allowing servicemembers to terminate motor vehicle leases early and without penalty after entering military service or receiving qualifying military orders for a permanent change of station or deployment; and (3) limiting interest rates incurred prior to military service to no more than 6% per year, including most fees. FTC Issues ANPR on Commercial Surveillance and Data Security Practices. On August 11, the FTC issued an advance notice of proposed rulemaking seeking public comment on the prevalence of commercial surveillance and data security practices that harm consumers and whether new rules are needed to protect consumers’ privacy and information. The FTC defines “commercial surveillance” as “the business of collecting, analyzing, and profiting from information about people.” In the FTC’s press release, Commissioner Lina Khan notes that “[f]irms now collect personal data on individuals at a massive scale and in a stunning array of contexts. The growing digitization of our economy—coupled with business models that can incentivize endless hoovering up of sensitive user data and a vast expansion of how this data is used—means that potentially unlawful practices may be prevalent. Our goal … is to begin building a robust public record to inform whether the FTC should issue rules to address commercial surveillance and data security practices and what those rules should potentially look like.” The FTC is seeking comments on numerous concerns stemming from commercial surveillance, including lax data security by companies, potential harm to children, companies requiring consumers to sign up for surveillance as a condition for service, change in companies’ privacy terms after consumers sign up for a product or service without providing the consumers meaningful choice to accept those updated terms, data inaccuracy, bias and discrimination, and dark patterns. Comments on the ANPR are due by October 21, 2022. In addition, there is an opportunity for the public to share input on the ANPR during a virtual public forum on September 8, 2022.

CFPB Issues Circular on Insufficient Data Protection or Information Security. On August 11, the CFPB issued Circular 202204 to confirm that financial companies can violate the prohibition on unfair acts or practices in the Consumer Financial Protection Act when they have insufficient data protection or information security. According to the circular, “[i]n addition to

other federal laws governing data security for financial institutions, including the Safeguards Rules issued under the GrammLeach-Bliley Act, ‘covered persons’ and ‘service providers’ must comply with the prohibition on unfair acts or practices in the CFPA. Inadequate security for the sensitive consumer information collected, processed, maintained, or stored by the company can constitute an unfair practice in violation of 12 U.S.C. 5536(a)(1)(B). While these requirements often overlap, they are not coextensive. Acts or practices are unfair when they cause or are likely to cause substantial injury that is not reasonably avoidable or outweighed by countervailing benefits to consumers or competition. Inadequate authentication, password management, or software update policies or practices are likely to cause substantial injury to consumers that is not reasonably avoidable by consumers, and financial institutions are unlikely to successfully justify weak data security practices based on countervailing benefits to consumers or competition. Inadequate data security can be an unfair practice in the absence of a breach or intrusion.”

FDIC Issues Guidance on Multiple Re-

Presentment NSF Fees. On August 18, the FDIC issued guidance to FDIC-supervised institutions to address potential consumer compliance risks associated with assessing multiple non-sufficient funds fees arising from the re-presentment of the same unpaid transaction. The guidance also lists certain risk mitigation practices that financial institutions have taken to reduce the potential risk of consumer harm and avoid potential violations of law regarding the charging of multiple re-presentment NSF fees. In addition, the FDIC shared its supervisory approach where a violation of law is identified and full corrective action is expected.

FTC Declines to Extend Proposed Dealer

Rule’s Comment Deadline. The FTC recently declined to extend the comment period for its proposed rule addressing purported unfair and deceptive conduct by motor vehicle dealers in connection with the advertising, sale, financing, and leasing of vehicles. The deadline for public comment remains September 12, 2022. Specifically, the proposed rule, which was issued on June 23, 2022, would: (1) prohibit dealers from making certain misrepresentations in the course of selling and leasing, or arranging financing for, vehicles; (2) require dealers to provide accurate disclosures regarding vehicle pricing, including optional add-on fees, and vehicle financing during sales negotiations and in their advertising; (3) require dealers to obtain consumers’ express, informed consent for any fees or charges and require dealers to inform consumers about the price of the vehicle without any optional add-on product or service; (4) prohibit dealers from charging for any add-on product or service that provides no benefit to the consumer; and (5) impose certain recordkeeping requirements on dealers to help ensure compliance with the proposed rule’s disclosure requirements.

FTC Increases DNC Registry Fees. On August 26, the FTC issued a final rule to update the fees charged to entities accessing the National Do Not Call Registry, effective October 1, 2022. The first five area codes are free, and exempt organizations may obtain the entire list for free. The cost of accessing a single area code will increase by $6 to $75. The maximum charge to any single entity for accessing all area codes nationwide will increase by $1,723 to $20,740. The fee for accessing an additional area code for a half year will increase by $3 to $38.

CASE(S) OF THE MONTH

Dealership’s Breach of Arbitration Agreement by Failing to Pay Arbitration Administration Fees Did Not Render Entire Arbitration Agreement, Including

Class Action Waiver, Unenforceable: A woman bought a used vehicle from a car dealership and signed a Motor Vehicle Retail Order containing an arbitration agreement. The arbitration agreement contained a provision that waived the buyer›s right to pursue a class action in an arbitration setting or in court. The buyer made a demand for arbitration with the American Arbitration Association, alleging that the dealership and its owner overcharged her for title and registration fees and sold the vehicle for more than the advertised price. The dealership failed to pay the required fees to AAA to administer the arbitration. Therefore, AAA declined to administer the case. The buyer then filed a class action complaint against the same parties under New Jersey laws and regulations. The trial court denied the defendants’ motion to compel arbitration of the claims pursuant to the arbitration agreement in the MVRO. The trial court also denied the buyer’s motion for class certification, concluding that the class action waiver in the arbitration agreement precluded her class action claims. The Superior Court of New Jersey, Appellate Division, affirmed the trial court’s denial of class certification. The appellate court found that the defendants’ material breach of the arbitration agreement by failing to pay the required fees did not render the entire arbitration agreement unenforceable. Accordingly, because the buyer was clearly informed of the class action waiver that applied in both court and arbitration, the waiver survived the defendants’ breach of the arbitration agreement and remained applicable to the buyer’s claims. See Cerciello v. Salerno Duane, Inc., 2022 N.J. Super. LEXIS 105 (N.J. Super. App. Div. July 20, 2022).

COMPLIANCE TIP Our Case of the Month sheds light on how important it is for a dealer to live up to its end of the bargain and pay the required fees to administer the arbitration, if required by the purchase agreement or retail installment contract. The ultimate decision was pro-dealer, but think how much time, effort and money the dealer had to spend in responding to discovery, filing and answering motions and appealing the trial court’s decision to deny class certification. The dealer would’ve been better off by just having paid the arbitration fees. Make sure you read the terms of your arbitration agreement (you are using an arbitration agreement with a proper waiver of class action clause aren’t you?) and that you’re complying with your responsibilities under the agreement. 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 www.counselorlibrary. com. ©CounselorLibrary.com 2022, all rights reserved. Single publication rights only to the Association. HC# 4877-3260-6256.

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