Better Compliance Starts with Education

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Better Compliance Starts with Education

by TIADA Staff

“ R equired Pre-Licensing dealer education has been a long-debated issue at the association, some looking at it as governmental interference and some to lift the standards of the industry.” This was Phil Lathrop’s first response when asked about the new law that will require anyone looking to obtain an independent automobile dealers license in Texas to take at least six hours of online education prior to receiving their license.

Lathrop should know. He has owned and operated VP Auto Sales in Garland for the last 34 years, participated as an active board member of TIADA and served as its president in 2016. Lathrop also served as the association’s legislative chair for a number of years and has been a voice of reason on this issue giving both sides ample opportunities to vet concerns and tout attributes of a required education course.

As for the final bill that passed last year, Lathrop said this: “The version of the bill the association contributed input to, and the law now in place, is an easily accomplished way to make sure dealers have a uniform understanding of the increasing complex rules and regulations our industry faces. This will be another step forward in demonstrating we are professionals, and not

only want to do the right things, but know what those right things are.”

The new law Lathrop is referring to is Senate Bill 604. The bill required the TxDMV to set up rules regarding mandatory education requirements for all original applicants for an independent dealer general distinguishing number, and a one-time education requirement for a renewal applicant. Dealers who have held a license for 10 or more years as of September 1, 2019 are exempt from the mandatory education upon renewal. New applicants will be required to take a six-hour online course; for renewing applicants, the course will be three hours.

Vanessa Hughes of Dura Motors in Houston knows firsthand some of the frustrations a new dealer can face. She and her husband started their dealership a little less than two years ago. “In addition to being a dealer, I am a public-school teacher and feel that I have a natural skill for finding knowledge. Before starting our dealership, I did my best to self-educate by seeking out the various resources available with the different government agencies that regulate dealers. I was shocked to see how many agencies regulate this business at the state and federal level.”

License Renewal Education Course FAQs

If your dealer license is up for renewal and you have been licensed for less than 10 years as of September 1, 2019 then you may want to read the following Q&As and then visit TexasDealerEducation.com to complete the required course before renewal time.

Is this online dealer education course approved by the state of Texas?

Yes. Both the pre-licensing and licensing renewal courses are approved by the Texas Department of Motor Vehicles.

Which dealers must take the new pre-licensing training?

The pre-licensing training requirement applies only to independent motor vehicle dealers. These dealers are licensed to buy, sell, or exchange used cars, trucks, motor homes, neighborhood vehicles, recreational offroad vehicles (ROV), all-terrain vehicles (ATV), or utility vehicles (UTV).

All applicants for new licenses and renewal applicants licensed less than 10 years on September 1, 2019 will be required to complete the one-time training.

How will applicants show that they have completed the required training when the new pre-licensing training requirement is implemented later this year?

After the training requirement goes into effect, the eLICENSING system will prompt affected applicants to upload their certificate of course completion as part of the regular application process.

Is every employee of the dealership required to take the course?

No, only one owner and/or operating manager for the business is required to take the course. The individual who completes the course must be one of the owners or managers for the business listed on the application.

What if the individual who completes the course is no longer with the business?

A new owner and/or operating manager for the business must complete the course prior to the next license renewal.

I have 15 years experience as a license holder, but changed legal entities four years ago so the license date in eLICENSING doesn’t reflect my total experience. When I renew my license will I have to take the course?

No, you will not need to take the course. When eLICENSING prompts you to upload a certificate of course completion, you should upload a statement listing the dates, license holder names, and license numbers you have been associated with over the years. Once your license specialist verifies you were licensed for more than 10 years on September 1, 2019, you will not be required to take the course.

How long does the dealer renewal licensing education course take?

The dealer renewal licensing education course takes about 3 hours, depending on your individual learning style.

Hughes made it clear she has an entrepreneurial spirit and has no problem digging into the laws and rules, but she emphasized wanting to be compliant and understand the various regulations. “Having gone through my own experience, I would have welcomed a class that touches on the many requirements and regulations.”

“It’s estimated one third of independents go out of business in the first year and almost another third don’t make it in the second year,” said Keith Hagler of Taylor Auto Credit in Taylor. “When a dealer goes out of business, it hurts the customers and the industry. It seems like new regulations always come from dealers going out of business.” Hagler, a past TIADA and NIADA president, has been in business for over 30 years and he is excited about the new law. “This is a good thing for all the dealers and everybody in the industry. It’s going to make the industry stronger.” Over the years, Hagler has mentored several new dealers and puts an emphasis on compliance, adding “those fines and penalties can put you out of business.”

Denton County Tax AssessorCollector Michelle French worked closely with TIADA throughout the legislative process and has had a big hand in helping to review the new education course. “County tax assessor-collectors are very supportive of pre-licensing education. We believe it will provide numerous benefits to both the dealerships as well as to our mutual customers to ensure transactions are completed accurately, effectively, and timely. The pre-licensing education will help dealerships experience success in navigating the various requirements of titling and registration.”

Al Gharatappeh with Thrifty Motors in Houston and Armando Villarreal who owns McAllen Auto Sales both see benefits. “I see the courses as an opportunity,” said

Gharatappeh. “It is a small amount of time and money that will save dealers from potential fines and customers from unnecessary headaches. When I first started taking education courses, it made me look at my business and the industry as a profession.” Villarreal has been in business for 25 years, but he admits navigating the various state and federal requirements was not easy when he got in business and he sees this new required education as a plus. “DMV, OCCC, Sales Tax, FTC, Consumer Federal Protection Bureau, there are too many to list but a course that covers all the basics to be in business will help the new dealers.” Villarreal added, “it is a plus that this course will also be available in Spanish soon.”

Jeff Syrinek with Shop 609 in Flatonia has only been in business for two months. He took the course before it was required, “I came across the course… signed up and it was a great decision… even if the course wasn’t mandatory just a couple of months ago. That course is my baseline to get me started and I imagine a similar pre-license education course will be the same for other dealers.”

TIADA built an online education course for both new and current dealers. The course met all the statutory and rule requirements and was approved by the Texas Department of Motor Vehicles last month. “We see this as an important responsibility for the association,” said

TIADA Executive Director Jeff Martin. “We have been in the dealer education space for years so it was natural for us to try and build something the state was looking for. You will find statements about industry reputation, compliance, and education in both our mission statement and code of ethics. This is just a natural fit for the association and one we take very seriously.”

Martin said the association did a lot of listening throughout this process. They tapped into the tax assessors, new and experienced dealers, TxDMV, OCCC, the Comptroller and many others to build a course that wouldn’t burden dealers, but help them overcome some of those initial hurdles and provide protection for the buying public. “There are so many people who worked on this, it’s hard to point out just a few, but the leadership of Governor Abbott, Senator Nichols, Representative Paddie, Representative Canales, TxDMV Executive Director Whitney Brewster, as well as the Director of Motor Vehicle Division Daniel Avitia, cannot be overstated.”

Phil Lathrop summed it up best: “One thing is certain. If we as an association and industry, state fair and honest treatment of consumers and adherence to the law as our goals, we must know how these goals are defined and what it takes to reach them. In short, be educated.”