Issuu

Have you been hearing us all year? See how you stack up when you take our annual Compliance Quiz! (see page 8)

Also In This Issue: – The OCCC 2016 Regulatory Update – Dealer Information from the Texas Comptroller – Maximum Finance Charge Rates for 2017 – TxDMV Enforcement Division Update

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2017 TIADA Board of Directors PRESIDENT Kathrine Tolsch/CICO Auto Sales 11050 Harry Hines Blvd. Dallas, TX 75229 Office: 214.352.9282 / Fax: 214.352.8227 Email: cicoauto@verizon.net PRESIDENT-ELECT Greg Zak/Dixon Motors 7902 North Freeway Houston, TX 77037 Office: 281.931.1300 Email: gzak@windstream.net CHAIRMAN OF THE BOARD Phil Lathrop/VP Auto Sales Inc. 2921 S. Garland Avenue Garland, TX 75041 Office: 972.864.1300 Email: phillipl@vpautosales.com SECRETARY Trey Crouch/Trey Crouch’s Wheels On Credit, Inc. 636 E. Business 83 McAllen, TX 78501 Office: 956.972.0700 Email: trey@wheelsoncredit.com TREASURER Robert Beck/Stop N’Drive Motors 711 N. General McMullen Dr. San Antonio, TX 78228 Office: 210.432.1101 Email: stopdrive@texas.net VICE PRESIDENT, WEST TEXAS (REGION 1) Paul Scott/Fiesta Motors – Lubbock 2599 74th Street Lubbock, TX 79423 Office: 806.765.3640 Email: pscott@gofiestamotors.com VICE PRESIDENT, FORT WORTH (REGION 2) Mark Jones/Mike Carlson Motor Company 264 Exchange Burleson, TX 76028 Office: 817.703.7973 Email: markjones_1@att.net VICE PRESIDENT, DALLAS (REGION 3) Wayne Meagher/M D Auto Sales 2002 W. Main Street Grand Prairie, TX 75050 Office: 972.641.9598 Email: wayne@navchiefs.com VICE PRESIDENT, HOUSTON (REGION 4) Ryan Winkelmann/BJ’s Autohaus 5005 Telephone Road Houston, TX 77087 Office: 713.641.0980 Email: ryan.winkelmann@sbcglobal.net VICE PRESIDENT, CENTRAL TEXAS (REGION 5) Robert Blankenship/Texas Auto Center 6809 N IH-35 Austin, TX 78744 Office: 512.280.5333 Email: bob@texasautocenter.net VICE PRESIDENT, SOUTH TEXAS (REGION 6) Dan Keetch/Keetch Motors 1010 S. Staples Corpus Christi, TX 78404 Office: 361.882.3541 Email: dankeetch51@yahoo.com VICE PRESIDENT AT LARGE Juan Sabillon/Mi Tierra Auto Sales 7935 Gulf Freeway Houston, TX 77017 Office: 713.644.2446 Email: brentfordct@yahoo.com VICE PRESIDENT AT LARGE Greg Reine/Auto Liquidators 39670 LBJ Freeway Dallas, TX 75237 Office: 972.780.0001 Email: greg@autoliquidators.net TIADA EXECUTIVE DIRECTOR Jeff Martin 9951 Anderson Mill Rd., Suite 101 Austin, TX 78750 Office Hours M-F 8:30am - 4:30pm 512.244.6060 • Fax 512.244.6218 jeff.martin@txiada.org

Volume XVI

/ I s s u e 12

/ D e c e m b e r 2 016

texasDealer

4 Officers’ Message

contents

by Greg Zak, TIADA President-Elect

8 On The Cover: 2016 Annual Compliance Quiz 11 Legal Corner: Year-End Compliance Review: Starting 2017 With A Fresh Look by Michael W. Dunagan

13 Upcoming Events 14 Updates from the TxDMV Enforcement Division by Bill Harbeson

20 TIADA Annual Conference and Expo 21 Motor Vehicle Related Finance Companies Policy Changes by Robert Baker

23 OCCC Regulatory Update by Huffman Lewis

29 Legislative Bulletin: Know Your Legislator — The 85th Legislative Session Is About to Convene by Mario Martinez

31 Regulation Matters: Your Compliance Consultation Service: Use It! by Danny Langfield

34 New Process and Handling Fee Rules in 2017 by Creighton Root

37 Maximum Finance Charge Rates for 2017 by Michael W. Dunagan

39 TIADA Member Application 40 2016 VIP Auction Card Directory 44 New Members 45 Behind the Wheel by Jeff Martin

46 Local Chapters What’s happening at w w w . t x i a d a . o r g ?

DID YOU KNOW... TIADA members have access to our professional, expert staff as well as association legal counsel for any and all industry-related legal and compliance questions? Simply go to txiada.org, log in, and visit our Legal and Compliance Page under Resources to find and fill out the online form. One of our experts will reach out to you, typically within 24 hours.

The Editor of the Texas Dealer magazine is Michael Spurlin, Social and Communications Coordinator of TIADA. To change your address for subscription and/or for other TIADA products, call the TIADA state office at 512.244.6060 or fax 512.244.6218. E-mail: info@txiada.org. New Membership/Subscriptions: If you are a member of TIADA, you may receive this magazine free of charge. Membership year runs from Jan 1 to Dec 31. Back issues are available for $20 each subject to availability. Send a check or money order, along with your name and mailing address to TEXAS DEALER, Attn: Back Issues, 9951 Anderson Mill Rd., Suite 101, Austin, TX 78750. Sorry, no billing. Notice to all members concerning services and products: TIADA was established in 1944 to develop professional standards of service and conduct for the independent auto industry. Opinions expressed herein are not necessarily those of the TIADA management, the Board of Directors or the membership. Likewise, the appearance of advertisers or their indemnifications of TIADA does not constitute endorsement of the products or services featured.

officers’ message by Greg

Change is in the Air

s I am writing this article, we have just experienced a historical presidential election. Along with the office of President, numerous other elected offices have changed. We just had the Executive Office, the Senate, and the House of Representatives all go to the Republican Party. We have not experienced a change like this since 2001. Wow, what a change! Well, enough about politics. We have some changes coming to our industry as well, and that is why we are here. It has always been said that change is inevitable and should be embraced. In truth, change is not always fun, easy and enjoyable, and the industry change I would like to share with you is more the latter. Recently, the Financial Accounting Standards Board (FASB) has written a new change in the loan loss reserve calculation which will affect everyone in the automotive industry spectrum. The FASB is the independent, private sector, not-for-profit organization that establishes financial accounting and reporting standards for public and private companies, as well as non-profit organizations that follow generally accepted accounting principals (GAAP). By current accounting rules, if you sell a vehicle and carry the note on your books, you are required to carry a loan loss reserve on your financial statements. Historically, the loan loss reserve (according to FASB) should equal what you expected to charge off as bad debt in a 12-month

Zak

ixon Motors D (Houston) TIADA PRESIDENT-ELECT

period. If you or your CPA has not been doing this, then you are in for a really big change. Going forward, FASB has decided that to accurately present financial statements to investors, lenders, and all other interested parties who look at our financial statements, dealers who carry automotive notes receivable on their books must have a loan loss reserve which equals the historical losses of the portfolio. In other words, if you have historically over time written off 30% of your notes receivables as bad debt over the life of those loans, then you must carry a loan loss reserve equal to 30% of your current outstanding principal balance of your notes receivable. Let’s look at some numbers to see how this will impact a dealer. Outstanding Principal Balance N/R . . . . . $3,000,000 Current Loan Loss Reserve* . . . . . . . . . . . . . <300,000> Net Receivable Balance . . . . . . . . . . . . . . . . . 2,700,000 *What the dealer has historically written off in a 12-month period.

The new FASB change will require the dealer to increase his loan loss reserve to $900,000 (assuming a 30% historical loss on the notes receivable) in the above scenario. Current Outstanding Notes Receivable . . . $3,000,000 Revised FASB Loan Loss Reserve . . . . . . . . <900,000> Net Receivable Balance . . . . . . . . . . . . . . . . $2,100,000 (cont’d on pg. 6)

Can you survive an accounting adjustment of this magnitude, especially if you rely upon outside financial assistance from a lender? 4

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What’s included: Funding for receivables You collect or We collect Floorplan Lines Simplified Insurance tracking

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The accounting entry which needs to be made to accomplish this revised ruling will be a $600,000 charge to the P & L with the offsetting entry to the loan loss reserve on the balance sheet. What this means is that you just took a $600,000 hit to your bottom line. Now have I gotten your attention? For those dealers and CPA firms out there who have been keeping realistic loan loss reserves near the historical losses of the portfolio, then there will be very little, if any, change coming your way. However, for those dealers who have never carried a loan loss reserve on your books, or for those who kept a small loan loss balance, there is about to be a big hole in your ship. And the question will be: Can you survive an accounting adjustment of this magnitude, especially if you rely upon outside financial assistance from a lender? Now, you will suddenly have one big loss to explain to someone and, more than likely, that someone will be your lender. Most lenders have loan agreements whereby you — the dealer — must comply with certain loan covenants. “Why the change,” you ask? Well, it seems that, due to the last several years of frothy subprime lending activity, lenders and investors were concerned that companies were not adequately reserving for loan losses. So in order to conservatively and adequately represent a true financial picture to someone who may be looking at your financial

For those dealers and CPA firms out there who have been keeping realistic loan loss reserves near the historical losses of the portfolio, then there will be very little, if any, change coming your way. statement, FASB has changed the rule to more accurately present the true picture over time. But did I hear you say, “I don’t carry any receivables and I sell all of my vehicles through an outside finance company?” If that is case, then you are off the hook. However, the finance company that buys the contract from you must adhere to the same FASB rules, so be aware that this rule will affect their buying criteria. The lender may now require a bigger discount in order to offset their future losses. Don’t we just love change? If you can find good news in this change, it is that we have until 2020 for your financial statements to be in compliance. A bit of advice: Start gradually making the change this accounting year and have a sit-down with your lender to explain the change to them. The last thing a lender wants is to be caught off-guard by something they haven’t seen coming. It is always a best practice to stay in regular contact with your lender and keep them abreast of your business activity. T e x a s

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l a u n n A e h T

2016 Have you been hearing us all year? See how you stack up!

(Editor’s note: Each of the questions on the following dealer exam was taken from information in Legal Corner and Regulation Matters columns that appeared in Texas Dealer magazine throughout 2016.)

1. On a dealer sale, in order for a vehicle to be registered, it must have been inspected in the ____ day period preceding the sale date. a. 90 b. 120 c. 180 d. Inspection is not required for initial registration

2. If the title is not present at closing, in most cases a dealer may… a. Have the customer sign a VTR 271 (non-secure, or “white” Power of Attorney) b. Have the customer sign a secure dealer reassignment form (VTR 41-A) c. Transfer title without the customer’s signature d. Forge the customer’s signature on the title T e x a s

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3. True or False: The VTR 41 — A secure dealer reassignment form — may be used when title is not present at closing EVEN IF the first box on the back of the title (labeled “Assignment of Title”) has not been completed. 4. True or False: If a vehicle is sold by a dealer, the title must be transferred into the customer’s name or the deal must be unwound. 5. The Compliance education track at the 2016 TIADA Annual Conference included which of these prominent attorneys? a. Tom Hudson b. Mike Dunagan c. Shaun Petersen d. Bill Harbeson e. All of the above 6. True or False: Regarding odometer disclosures at physical wholesale dealer auctions, a window sticker or catalog listing does NOT constitute mileage representation if the vehicle is over 10 years old. 7. As of June 1, 2016, a dealer may charge a “safe harbor” amount up to $____ for a documentary fee, provided appropriate notification is made to the OCCC for each location, and general doc fee requirements are followed. a. $50 b. $75 c. $125 d. $150 8. True or False: There is currently no federal or Texas state law that explicitly prohibits price negotiation on the sale of a vehicle, as long as substantially similar negotiation takes place in both cash and credit sales.

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9. In May of 2016, the CFPB proposed a rule action that would… a. R eplace George Washington with Richard Cordray on the $1 bill b. Prohibit dealers from using mandatory pre-dispute arbitration agreements that contain class action waivers c. A llow President Obama to seek reelection for the next 20 years d. All of the above 10. TIADA’s new online education course, How to Become an Independent Auto Dealer, includes… a. 3 4 sample docs for a deal jacket b. 2 3 additional sample docs c. 3 5 links to external compliance resources d. All of the above 11. Which of the following is a legal basis for making a yes or no credit decision: a. Religion b. Damaged credit c. Gender d. Ethic origin 12. A valid mechanic’s lien is ______________ to a prior recorded mortgage lien on a vehicle. a. Inferior b. Superior 13. A debtor’s personal information can be shared with which of the following without violating the debtor’s privacy rights: a. A repossession agent b. A law enforcement official c. A non-related finance company that is buying dealer paper d. All of the above 14. True or False: A dealer who offers warranties on the vehicles he sells can use the “Buyer’s Guide” to establish the terms of the warranties. 15. True or False: A dealer who holds an OCCC finance license can put a charge for a warranty on a motor vehicle retail installment contract as long as the charge is reasonable and it is described as an “other charge” on the contract.

16. The Consumer Financial Protection Bureau found Herbies Auto Sales committed which of the following violations: a. Illegally discriminating against minorities in the granting of credit b. Misleading debtors by using caller I.D. “hacks” to disguise the identity of collectors c. Charging “hidden interest” by offering cash discounts to potential buyers d. Reporting larger deficiency amounts to credit bureaus than were actually owed 17. In choosing a proper retail installment contract form, a dealer should consider which of the following: a. Whether sales tax will be advanced or deferred b. Whether finance charge is calculated using the “scheduled installment earning” method or the “true daily earnings” method c. Whether contracts are “regular” or “irregular” d. All of the above 18. True or False: A person making a claim on the bond that was filed with a bonded title does not have to first obtain a court judgment to establish the validity of his claim. 19. True or False: A vehicle seller must verify that a buyer has valid liability insurance before delivery of the vehicle. 20. Under Texas law, a BHPH seller of a vehicle _________ liability for the subsequent negligence of an uninsured customer who causes a wreck. a. Has b. Doesn’t have

Answers can be found on page 42. 9

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legal corner

Year-End Compliance Review: Starting 2017 With A Fresh Look

he end of the year offers dealers an excellent opportunity to look back on the highlights of the past 12 months, and an equally good time to look forward on the coming year and the opportunities that will be afforded. Another productive activity for the year’s end is a review of procedures, forms, and business practices that fall under broad definition of “compliance.” Compliance with federal and state laws and regulations is a moving target based on changing laws, regulations, and court interpretations, but also based on the fact that certain procedures implemented to ensure compliance can get forgotten about or altered during the course of the year. I have found over the years that even the most complianceconscious dealers can overlook certain lapses that occur in the crush of day-to-day business. Even items that have been properly established as part of the company’s standard operating procedures can get inadvertently dropped without being noticed. I thus recommend an annual (if not more frequent) review of the steps taken to be compliant. The following is a partial list of some important legal and administrative steps that deserve at least an annual compliance review:

Premises Requirements

What is the first thing a customer — or an auditor/investigator

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by Michael

— sees when calling on a dealership? First impressions matter when it comes to dating, job interviews and government agency visits. When I perform an internal compliance audit for a dealer, one of the first things I do is take on the point of view of a government agent when I arrive at the lot. Some of the things I look for outside include: Do inventory vehicles have Federal Trade Commission Buyers Guides properly posted? Have metal license plates and registration stickers been removed from inventory vehicles? Are non-inventory vehicles (employees’ and customers’ cars, and repossessions, for example) separated from inventory vehicles so it’s clear which vehicles aren’t offered for sale and thus don’t require Buyers Guides?

Dunagan

TIADA GENERAL COUNSEL

Even items that have been properly established as part of the company’s standard operating procedures can get inadvertently dropped without being noticed. I thus recommend an annual (if not more frequent) review of the steps taken to be compliant.

On the inside, I look for such things as: Are licenses and permits properly displayed? These should be posted where they can be readily seen by the public and investigators. Hanging them on the back wall of an interior office is not technically proper. Are there open files with customer’s private information that can be seen

by anyone entering the office? Personal information should be kept out of the vision of those without the need to have access. Has the required documentary fee disclosure statement been posted in areas where closings take place? 11

Are DMV and OCCC Licenses Current and Updated?

Have licenses been properly and timely renewed? Have any remote lots been added that require changes to license status? Has there been a change of ad dress that needs to be reported?

OCCC Documentary Fee Authorization

Any dealer that charges more than $50 for doc fees is required to file an online notification with the OCCC. Up to $150 can be charged without submitting justification documentation if the online request is received by the OCCC. Dealers should make sure they have a verification of the reporting from the OCCC. Failure to prove verification of proper notification has led to some dealers being

forced to refund amounts that were charged above $50. Documentary fees, if charged, must be charged to both cash and finance customers. (An excellent summary of doc fee requirements can be found in an article by Danny Langfield in his July 2016 Regulation Matters column in Texas Dealer.)

Dealer compliance is an on-going process that requires constant vigilance.

Proper Credit Reporting

Anyone who has kept up with the federal Consumer Financial Protection Bureau’s enforcement actions against car creditors knows that credit reporting has been fertile ground for finding violations and obtaining consent agreements involving huge financial penalties.

Each creditor is responsible for accurate reporting, even if a dealer software package is automatically handling reporting duties (see “Dealer Takeaways From Recent CFPB Enforcement Actions” in the January 2016 Texas Dealer). If you are using the strict foreclosure (acceptance of collateral in satisfaction) method for disposing of repossessed units, you must ensure that no deficiencies are being reported to the reporting agencies.

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Unauthorized Charges on Contracts

Despite the regular warnings in TIADA’s Texas Dealer and at TIADA’s educational courses, many Texas dealers continue to improperly add charges to motor vehicle retail installments that are not authorized under the Texas Finance Code. Examples include charges for warranties and insurance policies that don’t exist. Warranties are defined as promises that are included in the price of the product sold (see “Offering Limited Warranties: The Dealer’s Options” in the April 2016 issue of Texas Dealer for a lengthy discussion of warranties). A dealer can add the price of a Service Contract to a contract if there is an actual product issued by a company registered with the Texas Department of Licensing and Regulation. In the famous Herbies Auto Sales case, the CFPB found that Herbies was automatically adding a charge to each financing agreement for a “warranty” that didn’t exist. Herbies’ rationale — and the rationale of many Texas dealers — is that such a fee offsets the cost of repairing customer’s vehicles that break down. The CFPB also found that automatically adding a “warranty” charge to all financing contracts (but not to cash contracts) amounted to a “hidden finance charge” that was not included in the federally-mandated “finance charge” disclosure on the contracts, and thus also caused the annual percentage rate disclosure to be inaccurate (see “The Herbies Case from a Texas Dealer’s Perspective” in the May 2016 Texas Dealer for more detail). Any insurance policies sold by a dealer for which premiums are added to contracts must be issued by companies licensed in Texas to issue such policies. Charges for debt cancellation agreements that meet OCCC approval may be

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added to contracts, but these are deemed by law to not be insurance.

Buyers Guides

Are steps being taken to ensure that Buyers Guides are properly posted on all vehicles offered for sale as required by the Federal Trade Commission Used Car Rule? Are they properly filled out? Are Spanish-language versions available when negotiations take place in Spanish? A dealer in Arkansas recently agreed to a $90,000 civil penalty to settle an FTC enforcement action for failing to display Buyers Guides. Texas DMV also enforces the Buyers Guide requirements.

Repossession Procedures

Do dealership employees understand the legal requirements of repossession? Does the dealer have a procedure in place for sending proper notices, handling personal property found in repossessed vehicles, and handling re-sales? Are deficiencies and surpluses properly calculated and accounted for? Answers can be found in Texas Automobile Repossession: A Lien Holder’s Legal Guide, available from TIADA. Dealer compliance is an ongoing process that requires constant vigilance. Taking the time on a regular basis to stay educated, then to assess and monitor implementation of what is learned are good ways to find and fix problems before they become enforcement actions.

Michael W. Dunagan is an attorney in Dallas, Texas who has represented the Texas Independent Automobile Dealers Association for 40 years. He has written a number of books and hundreds of articles for trade journals and law reviews. His clientele includes dealers, banks, finance companies, auto auctions and credit unions.

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feature Updates from the TxDMV Enforcement Division by Bill Harbeson

Director of Enforcement Division, TxDMV

would be remiss, and possibly perpetuating the myth that I am the reincarnation of Dicken’s famous character, by not wishing you, your staffs and your families happy holidays and a most prosperous New Year. The request to again draft an article for TIADA’s monthly magazine, Texas Dealer, the official publication of the Texas Independent Automobile Dealer Association, was extended to me by a gentleman I have never met in person. It was a pleading voice during a phone call. He may be an employee of TIADA or an independent dealer. I do not know. This gentleman knows something about me, because he has twice sent reminders that I had agreed to write the article and the publication date was quickly approaching. In the past, when Danny or Jeff, both of whom do know me very well, made this request for an article, it was extended to Ray Willoughby, our recently retired managing attorney. Ray always got things done early. With Ray not available,

and Danny and Jeff both being smart, the task of finding an article and an author was assigned to the aforementioned gentleman. I have, of course, procrastinated, and begin my writing this late afternoon in October. I confess I have angered others in the agency by not delivering their assignments to them on schedule claiming your association and this article as a priority and reason for not completing their assignment. I have now consumed 221 words (but who is counting?) and promise to press on enthusiastically with wit and verve to produce an informative piece that my audience may enjoy. I have not completely procrastinated in beginning this article as I have, on several occasions, between meetings made notes on topics I wanted to discuss with you. I do not recommend to others preparing an article in this fashion as finding those notes and trying now to organize those notes is proving problematic. I will press on to my first topic.

TxDMV’s Enforcement Division and Dealing with Complaints

The enforcement division of TxDMV enforces the laws governing the motor vehicle sales and distribution, salvage, and motor carrier industries, including the laws governing oversize and overweight motor carrier operations. The division also administers the state’s Lemon Law program. The division strives to provide effective, efficient, predictable and fair enforcement of the laws as mandated by the state legislature and the Texas

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Department of Motor Vehicle (TxDMV) Board to protect the public and to enhance the business environment in which the department’s licensees operate. Many of you at this point may accuse me of simply cutting and pasting the two paragraphs above from some other publication that I may have written. You are absolutely correct; indeed, these were the opening paragraphs from the document, mentioned above, which I was supposed to have delivered last week. In Fiscal Year 2016, the division opened 5,948 new complaints stemming from the sale and distribution of motor vehicles in the state. In laymen’s terms, we received 5,948 complaints from unhappy car buyers. If I was in business and I was counting how many widgets I sold last year, this would not be welcome news as the number is down from Fiscal Year 2015 (6,433). However, I am in the enforcement business, and this lower number for FY 2016 is good news. We received fewer complaints while the number of car sales increased from FY 15 to FY 16. Digging deeper into the statistics, our staff attorneys, upon review of the investigations that were conducted, found violations in approximately 1500 cases. I am sure this is not news to you, but, on occasion, a customer will be unhappy even though there was no violation of the laws we enforce. I was asked while speaking very early in the morning at

one of your conventions, “Well, Bill, how many dealer transactions were there where a complaint could have been filed?” I promised to find that number as I did not readily have it available (which is why I now discourage any questions during my presentations) and later discovered we were talking about more than 2,000,000 transactions, or .00075. I share these statistics, albeit imprecise, whenever I can. Since starting this article (this morning) I asked for sales numbers and got the following: FY2015 — 5,895,233 total motor vehicle sales and for FY2016 — 6,032,592 total motor vehicle sales. (Please understand the definition of “motor vehicle” is very broad and includes such strange things as “an engine, transmission, rear axle, regardless of whether attached to a vehicle chassis”) So the numbers are even better than I had been giving out as fact to date and I will start using the higher figures. I would be remiss if I did not point out that the car business is not our only responsibility. The enforcement division handled more than 8,000 insurance and licensing cases for the motor carrier industry (trucks and buses running down the highway in front of your dealership without proof of insurance on file with the department and/or no authority to do so), 450 oversize/ overweight violations (trucks running down the highway in front of your dealership with a load too heavy,

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too long or too high) and 450 Lemon Law cases. Can this number of complaints filed against motor vehicle dealers be reduced? Yes. The simple solution, and a phrase used continually in our Dealer Training Seminars and other speaking engagements, is “take care of your customers.” I think most of you who have been successful in this business understand this principle, but it bears repeating. Never has this principle been more important to the success of your business. As a senior and recent inductee into Medicare, I tend to have selective memory of certain facts and conversations. I have shared with you above my frequent use of the complaint-to-sale ratio. Another point of discussion I frequently rely upon is one that I borrowed from our board member and recent inductee into the TIADA Hall of Fame, Blake Ingram. I overheard him discussing the change in the business environment brought about by social media. In today’s business world it takes but one unhappy customer with a nonflammable cell phone to seriously affect your business. While social media can be a plus for your business, it can also be the end. Thank you, Board Member Ingram, for your words of wisdom.

Transferring Titles

During the 55 years I have been involved in this business, failure to transfer title in a timely manner remains the most frequent. I will not recite the legal requirements in this area because you continually hear those requirements in the training you attend or, unfortunately, when one of our investigators or attorneys discuss with you the requirements. While I understand the legal requirement that you have the title to a vehicle before you sell it, I also understand the nature of your business. My advice is to secure at least a copy of the title for the vehicle before you sell it and your customer drives home. If you are having difficulty obtaining a title, document your file on the actions you have taken to secure the title, and contact your customer to secure a temporary permit. I return to documentation because the applicable statute, TEX. TRANSP. CODE 501.0234, provides that the dealer is not in violation of the requirement to timely transfer title, register and remit sales tax if the dealer “is making a good faith effort to comply.” I stated above I had been involved in the business for 55 years in an effort to maintain your attention and, in the words of my millennial son, “gain some cred.” I lied and I apologize for doing so. I have not been involved in the car business for 55 years.

Advertising

Returning to Board member Ingram’s brilliant observation about the changing nature of your business environment, I must comment briefly on advertising. Complaints are on the rise as more and more independent dealers are turning to advertising on the internet. In the pre-electric window days of the business when I joined the agency, advertising complaints dealt exclusively with franchise dealers. They returned to the dealership on Monday, after observing the Blue Law, with the Sunday papers, a box of donuts, and a cup of coffee. They then proceeded to dissect their competitor’s ads in the paper and submit complaints to us. The world has changed with the Internet. No longer is advertising a franchise-only business practice. We have responded to the increased number of complaints with increased staffing and a specially designed “advertising only” training seminar. Unfortunately, business is good for the enforcement division in the area of advertising complaints. How do you avoid becoming a contributor to our ever increasing fine total (fines start at $2,000 per day)? First, look at the rules. Attend a class. Give us a call before publishing your ad. Know the basics. Is the advertisement false, deceptive or misleading? Yes, this is a very broad definition. Am I going to load the kids in my trade-in and travel two hours on the highway with uninsured 18 wheelers and trucks carrying extremely heavy or big loads

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only to be disappointed that reality does not match the creativity of your web designer? If advertising financing ask yourself if you truly will “finance everyone?” Is “no credit” really “not a problem?” When speaking to groups on advertising I have also started reminding dealers that once you have gone on the world-wideweb, you are also in the crosshairs of the Federal Trade Commission. They do not share my sense of humor. Again, please give us a call. Enough, let us move on.

Allegations of Fraud

Another ever-changing area of the law is allegations of fraud. These complaints we struggle with. “Fraud” is a misrepresentation of a material fact made with the intent to deceive another person and the other person relies on that misrepresentation to his detriment. Again, the business world is changing. Do you have a CARFAX pulled on the vehicle? Could you pull a CARFAX on the vehicle? You should assume that the customer either already has a CARFAX or will soon obtain one if all does not go well after taking the car home. Spouses are particularly adept at pulling CARFAX’s and using them to comment on the wisdom of your purchase. I will never admit that I have any personal experience in this area. What flag or notice was assigned to the vehicle when it came

through the auction? Who was the seller at the auction; an insurance company? Some courts in other states have taken a new direction in these cases holding the dealer in a “superior knowledge”, and, therefore, superior bargaining position in the transaction. Further advice in this area might include: Carefully review your advertisement. Instruct your salesmen on the possible dangers of being too complimentary regarding the condition and history of a vehicle. (No “It was owned by my grandmother”, unless Grandma is available and willing to testify.) The term “creampuff ”, if not already removed from your sales presentation, should be used with great caution. Finally, document everything, and better yet, have the customer acknowledge. We spend a lot of time in Dealer Training seminars discussing the Buyer’s Guide. Always use it properly, always have the customer sign it, and always retain a signed copy in your sales folder. Returning to your unhappy customer on social media, even an allegation of fraud may have serious long-term ramifications for your business.

Curbstoning

We hate curbstoners. If I was to list the area of our practice that I consider the most frustrating, it would be curbstoning. Your association in a past session assisted with legislation to allow towing of curbstoned

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vehicles after notice. I thought this would be a gamechanger. Unfortunately, our partners in law enforcement have too many higher priority cases and too few officers. We might console ourselves with the thought that the statute deters curbstoning but this would be a difficult matter to confirm. We are not happy with what we are doing in this area and will continue our efforts to find a solution. One area where we have been active, and I believe successful, is curbstoning by licensed dealers who are offered locations at cheap prices on the edge of civilization with four dealers sharing a temporary building. From the beginning, everyone knows that sales will never occur at this “front” but from residences and streets in your communities. We are moving as fast as we possibly can to close these operations. I encourage you to continue to fight curbstoning on the local level; there have been a few success stories. As you might have gathered, if you are still with me, this article is what is kindly referred to as a “Stream of Consciousness.” I started with the intent to outline the article and maintain a theme, but, as you can surmise, I think I have failed. Resolving myself to that fact, but committed to not disappoint the gentleman who requested this article, I move on.

Tags and Tolls

Dave George, my outstanding Chief Investigator for the Motor Vehicle Program, when asked what topic I should address, responded quickly, “tags and tolls.” We again encounter a new development in our practice caused by a change in our environment. Pre-toll road, we would rarely have complaints regarding misuse of e-tags. Certainly, there would be the occasional multiple buyer’s tag issuance case or the misuse of dealer tags for personal use when your employee was observed waiting in line at the Jack-in-the Box. Today, a week rarely passes when we do not get a call from an upset dealer after they receive a toll authority bill for several hundred dollars based on clear photographs of his or her dealer tag on a vehicle enjoying the benefits of the toll road system. We also frequently receive calls from the toll authorities asking us to identify the dealer behind the unique identifying number on dealer tags. I mention dealer tags because once you have sold a vehicle and affixed the one authorized buyer’s tag to that vehicle, the person enjoying the toll road system should be the person responsible for the unpaid toll road tolls. Alas, it has been the dealer tag that has caused us most of the frantic phone calls. What to do? First, safeguard who has access to your e-tag system that generate these tags. We have had cases where an employee, unbeknown to the dealer, has become a budding entrepreneur offering e-tags on Craigslist. Services included customizing dealer tags and buyer’s

tags for a small fee with the invitation to return for a new tag at the expiration of 60 days. He also would deliver. We have also seen where a single tag, misplaced or stolen but still valid in the system, can be reproduced multiple times to be sold on Craigslist or social media. If you have not recently reviewed your procedures surrounding the issuance and use of e-tags, please do so. As our recent Nobel Laureat sang, “The times they are a’-changin.”

Rebuilt Salvage and E-Licensing

On the horizon are new rules that require the seller of a vehicle that is rebuilt salvage to have the buyer acknowledge in writing this fact. Curiously, we had support from many dealers on this rule that was originally intended to protect consumers, because some wholesale transactions may involve rebuilt salvage and the dealer should also know that fact when buying the vehicle. Also on the horizon is the new E-licensing system which will allow dealers to log into a web-based system and conduct renewals and amendments of their licenses. Applicants will also use this paperless system to obtain new licenses.

Conclusion

As I conclude and start proofing, I detect that I may actually have had a theme throughout this article, although I did not identify it at the outset. This is not how I learned to write and, accordingly, I apologize to Hazel Thompson, my 11th grade English teacher at Bellaire High. Here is my theme: Your business is changing. It is changing fast. We face the same challenge. If not nimble and thinking “outside the box” we will not succeed in doing what the Legislature, our Board, executive director and you expect. We will not be doing what you need us to do to create an environment where the good guys succeed and the bad guys find another line of business. To that end, we need to continue what I consider to be the healthiest of partnerships between government and regulated business. Like any partnership, we will not always agree, but the conversation is most important. You are out there every day and we need to hear from you. We will listen. In consideration of the editor of Texas Dealer, the official publication of the Texas Independent Automobile Dealers Association, I will conclude my remarks and again wish all of you who have remained with me, a very happy holiday season and prosperous New Year. I cannot do so, however, without asking if there is an “unofficial” publication of the Texas Independent Automobile Dealer Association? This is a question that only Jeff and Danny can answer, so I encourage you to call them.

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Motor Vehicle Related Finance Companies Policy Changes by Robert Baker

Tax Policy Division, Texas Comptroller

ffective Jan. 1, 2016, there is no renewal process for related finance company (RFC) registrations, and no yearly fee. Newly qualified companies can register as an RFC for free using Application AP-222, Texas Registration for Motor Vehicle Related Finance Company. All registrations that were active on Dec. 31, 2015, and any registrations with a beginning date after that date, will remain active until the RFC notifies the Comptroller’s office that they are either no longer in business or no longer qualify as an RFC. Any RFC active before the change in policy owes the $600 renewal fee for each year the business was active, going back to 2012.

Example 1: An RFC registers for the first time with a beginning date of May 10, 2015. The applicant must include $600 (the annual fee for 2015) with its Form AP-222. Example 2: A registered RFC that failed to pay the renewal fee for any year from 2012 through 2015 must submit Form 14-206, Renewal Registration for Related Finance Company, with the $600 fee for that year. For questions, please contact us: • online at TaxHelp (comptroller.texas.gov/web-forms/tax-help/); • by phone Monday through Friday at 800-252-1382.

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Office of Consumer Credit Commissioner — Regulatory Update by Huffman Lewis

Financial Examiner, Office of Consumer Credit Commissioner

n Fiscal Year 2016 (September 1, 2015 to August 31, 2016) the Office of Consumer Credit Commissioner (OCCC) conducted examinations covering 2,181 motor vehicle sales finance licenses. This represents an increase of 39% in the number of licenses examined during Fiscal Year 2015. The acceptable level of compliance for motor vehicle sales finance licenses was 75.47% for fiscal year 2016, down from 81.79% at the end of the fourth quarter 2015. Traditionally the EPI-TIADAhalf_Nov2016.pdf

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OCCC has monitored compliance levels of examinations completed in the fiscal year. Recently the OCCC reviewed the entire active motor vehicle sales finance compliance level by looking at the last examination rating regardless of the date. The result was a compliance level of 93.64%. The OCCC completed investigations on 60 motor vehicle sales finance licenses in fiscal year 2016, up from 42 in fiscal year 2015, an increase of 43%. Additionally in

2016, the OCCC processed 1,149 complaints related to motor vehicle sales finance operations, compared to 982 in fiscal year 2015, an increase of 17%. Motor vehicle sales finance complaints represented 53.19% of all complaints processed by the OCCC. The 5 largest complaint/investigation categories are related to: Repossessions, Account Disputes-Payment Postings, Attempts by customer to rescind the transactions,

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Financing conditioned on subse quent assignment of the contract, Ancillary product complaints (CL/A&H, DCA, GAP-Insurance, Extended Service Policies), Unlicensed activity These results are driven by the increased effectiveness of a number of capable newer examiners and investigators who were able to conduct an increased number of examinations and investigations.

Additionally, the OCCC sees an increased number of licensees experiencing their first examinations by the OCCC. First time examinations of newer licenses generally result in lower compliance ratings. As the licenses are reexamined and dealer training and experience improves, the compliance ratings are expected to return to levels above 80%. Fiscal year 2016 ended with 8,444 active motor vehicle sales finance licenses up from 8,096 active licensees at

end of fiscal year 2015. Year over year motor vehicle sales finance licenses are up 4.3%. Licensing activities at the agency reflect the dynamic nature of the industry. As noted above, active licenses increased year over year, but a closer look at the OCCCâ€™s licensing activities shows that active motor vehicle sales finance licenses increased from 7,825 fiscal year end 2014, to 8,096 fiscal year end 2015. Quarterly detail for 2016 show licenses increased to 8,489 1st quarter, 8,795, 2nd quarter, 9,113 3rd quarter and ending at 8,444 fiscal year end 4th quarter. The motor vehicle sales finance industry encompasses high levels of operational complexity. For example, there are three (different) finance charge earnings methods, two (2) different sales tax scenarios, and four (4) different payment streams contemplated under the statutes. Combine this calculation complexity with the overlay of federal and state compliance issues associated not only with consumer finance operations but also motor vehicle sales operations and clearly a high level of specific expertise is required to operate successfully and in a compliant manner. Finally, the industry is very competitive with significant numbers of businesses entering and exiting the industry each year. These factors drive the OCCCâ€™s reported metrics of the current state of the industry. As noted earlier, the OCCC has reviewed the most recent examination scores against each active license. This composite view results in a determination that the acceptable level of compliance for all licensed motor vehicle sales finance entities is 93.64%. This result clearly points to an effective regulatory program which continues its efforts towards creating a fair, lawful and healthy credit environment that grows economic prosperity for all Texans.

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feature New Process and Handling Fee Rules in 2017 by Creighton Root

Government Relations Specialist, TxDMV

n January 1, 2017 new rules adopted by the Texas Department of Motor Vehicles (TxDMV) Board pertaining to the establishment of a processing and handling fee, deputies and other amendments will go into effect. Together, these rules seek to create efficiencies, drive down costs, utilize more modernized processes and, most importantly, provide better service to the motorists of Texas. Two subjects addressed in the rules are especially relevant to the dealer community: the establishment of a processing and handling fee and the creation of a new dealer deputy classification. TxDMV has restructured registration related fees such as the $1 automation fee and the $1 mail-in fee into a single $4.75 processing and handling fee. The intent of the fee is to increase transparency for taxpayers by displaying the true cost government bears in providing registration services. The processing and handling fee will apply to all vehicles sold on or after January 1, 2017.

The TxDMV Board also adopted rules creating a new dealer deputy class that will join full service deputies and limited service deputies in the titling and registration services market place. Dealer deputies must be deputized by their county tax assessor-collector to process initial motor vehicle titling and registration transactions for vehicles they sell. They would not offer these services to the general public; however, they may process registration renewals to the general public. Dealer Deputies are an agent of the county and are issued inventory of license plates and registration stickers to be issued to customers. The dealer must post a bond payable to the county tax assessor-collector in an amount between $100,000 and $5,000,000; utilize the webDEALER application to process the title and registration application; and be approved by the county tax assessor-collector (TAC) to be eligible to serve as a dealer deputy. If a dealer is not deputized by the county they can still use webDEALER to submit title and registration paperwork electronically with TAC approval. Dealer deputies will be entitled to retain $1 of the processing and handling fee for new and renewed registrations. When a title application is also submitted, dealer deputies may charge up to a $10 title convenience fee, which they may retain in its entirety. Prospective dealer deputies will be interested to learn that these new fees are separate from the documentary fee already being assessed. For dealers already using webDEALER, weâ€™ve got good news for you! The webDEALER application has been updated to charge the processing and handling fee and the title convenience fee automatically. As you know, the primary goal of webDEALER is to streamline the title and registration application process and the applicationâ€™s ability to precisely and automatically calculate all fees is just one way we can achieve this goal. If you are not currently using webDEALER but would like to take advantage of its many benefits, including automatic fee assessment, you are encouraged to contact your county tax office today. The creation and adoption of these rules has been a multi-year effort for TxDMV and our stakeholders and we are eager to see them finally go into effect. TxDMV will be carefully monitoring the implementation of the changes to ensure that they are achieving their intended outcomes. As always, TxDMV appreciates your support. T e x a s

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Attac · Burrel Addendum ight 2009 Insurance 09 · © Copyr · 9/1/20

316 bpc #24-4

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feature Maximum Finance Charge Rates for 2017 by Michael W. Dunagan TIADA General Counsel

Dealer Question: What is the maximum finance charge rate I can use on a motor vehicle retail installment contract? Answer: Dealers who hold vehicle finance licenses issued by the Office of Consumer Credit Commissioner (OCCC) are authorized to finance the sale of vehicles, and are allowed to add finance charge or time-price-differential to the amount financed (while the term “interest” is commonly used interchangeably with finance charge and time-pricedifferential, “interest” actually is the amount charged on a loan of money, and should not technically be used in the context of financing the sale of a motor vehicle).

he legislature has established a sliding scale of maximum rates, with higher rates allowed on older cars. The maximum rate that sellers of older vehicles can add to the amount financed is $15 per $100 per annum or, stated another way, 15 per cent add on (see accompanying chart). Depending on such variables as the length of the repayment period, the amount of each payment, and the frequency of payment (weekly, bi-weekly, semi-monthly or monthly), the annual percentage rate on 15 per cent add on can exceed 26 per cent. Chapter 348 of the Texas Finance Code allows sellers of vehicles to finance any unpaid balance at rates that generally exceed the rates of interest that can be legally charged by banks and traditional lenders. For purposes of setting maximum rates of finance charge, Chapter 348 establishes four classes of vehicles based of the vehicle’s model year. The attached chart shows allowable rates for calendar year 2017. These rates are valid on sales that take place between

January 1, 2017, and December 31, 2017. The maximum rates “roll over” on January 1 of each year. The maximum rates of finance charges are stated in the Finance Code as “add-on” rates. For example, for vehicles that fall into the class-four category, sellers can charge fifteen dollars per one hundred dollars financed per annum. These are maximum rates, and any rate lower than the maximum can be charged. “Add-on” rates should not be confused with “annual percentage rates” which are the rates required to be disclosed on loans and retail installment sales by federal law. The Annual Percentage Rate (or APR), which appears in the so-call “Fed Box”, will usually be substantially higher than the add-on rate. All financing sellers, with a few exceptions, are required by federal law to disclose the rate of finance charge as an annual percentage rate, or APR, on their contracts. Since Texas law sets maximum rates as addon rates, it is necessary to first calculate the amount of finance charge the creditor wishes to assess within the legal limit, then determine the APR for disclosure purposes. Federal Truth-In-Lending requires that any finance charge rate be advertised or expressed to a consumer as an APR. It is thus improper to advertise or discuss add-on rates with customers. The process of calculating the APR on contracts that provide for payments other than equal monthly payments is extremely difficult. Most dealers rely on specialized software (often referred to as dealer management software, or DMS) to perform this function. (For a list of reviewed programs, see the OCCC website at http://www.occc.state.tx.us/). Without appropriate software, it is virtually impossible for a creditor who collects weekly, bi-weekly, or semi-monthly payments to accurately calculate an

Maximum Finance Charge Rates for Calendar Year 2017 Class One Two Three Four December 2016

Year Models

2018 and 2017 new Any new note appearing in Class One above; 2017, 2016 and 2015 used 2014 and 2013 2012 and older

T e x a s

D e a l e r

Max. Rate

Alternate Rate

7.5 per cent add on 10 per cent add on

18 per cent APR 18 per cent APR

12.5 per cent add on 15 per cent add on

18 per cent APR 18 per cent APR 37

resource guide The TIADA Website:

www.txiada.org Members can log in with their username/password and access our Dealer Member Directory, Legislative Action Center, Legal Consultation Service and much more. Register for all upcoming TIADA events online at the Calendar of Events; access our online membership application; find contact information for all our Local Chapters, and find many additional resources at our Knowledge Base. Texas Department of Motor Vehicles 888.368.4689 www.txdmv.gov Office of Consumer Credit Commissioner 800.538.1579 www.occc.state.tx.us Texas Comptroller 800.252.1382 www.window.state.tx.us

REPOSSESSIONS

American Recovery Association 972.755.4755 www.repo.org or contact TIADA state office

FORMS

Burrell Printing 800.252.9154 www.burrellprinting.com

NIADA 800.682.3837 www.niada.com

APR and other required disclosures. Dealers should not guess at or estimate an APR as incorrect disclosures are the basis for claims for statutory damages and attorneys fees. Note that the chart also includes a column for what is referred to as an “Alternate Rate.” This rate is 18 per cent APR for all four classes. Many dealers have questioned what the alternate rate is, and how it affects the rates they can charge. The alternate rate is an optional rate. A dealer has the option to use either the standard or alternate rate. As an example, a dealer financing the sale of a 2011 model- year vehicle can charge up to 15 per cent addon (since this year model falls into Class Four) or the alternative rate of 18 per cent A.P.R. Since the 15 per cent add-on rate translates to over 26 per cent A.P.R. on a typical weekly payment contract, a higher legal return can be achieved using the standard rate than the alternative rate. On the other hand, the sale of a class-two vehicle would be subject to a 10 per cent add-on maximum. Since the actual yield on 10 per cent add-on would be lower than 18 per cent, the alternative rate would allow the seller a higher legal return. Remember that the so-called “add-on rate,” which is the rate used to calculate the finance charge added to a contract, can’t be used on the contract documents or in any communication with consumers. In order that credit consumers can shop rates on an “apples to apples” basis, federal law requires all discussions about rates to refer to the chosen universal rate, or the A.P.R. It would be improper to have an add-on rate appear anywhere on a contract.

SALE every THURSDAY @ 10am Early bird Sale @ 9:30am

Simulcast Auto IMS Auction Pipeline 4 Lanes Weekly Over 500 Vehicles Air Conditioned Bays Registration BUY & Online SELL ONLINE with US 956.461.9000 www.bigvalleyaa.com

T e x a s

D e a l e r

December 2016

TIADA Membership Application

2017

Business Name: ____________________________________________ Select one:

Dealer Member

TIADA texas independent automobile dealers association

Associate Member

Contact Person: ____________________________________________ Address: __________________________________________________ City: _________________________________________

2017 TIADA Membership Dues:

State: _______

Zip: __________________ County: _____________________________

$425 (Dues include NIADA membership)

E-mail address: _____________________________________________ Phone: _______________________ Fax: ________________________ Dealer P Number: ___________________________________________ Who referred you to TIADA? __________________________________ Mailing Address (if different from above): __________________________________________________________ City: _________________________ State: _______ Zip: ___________

PLEASE INDICATE PAYMENT METHOD: Check or Money Order payable to TIADA Check # __________ Credit Card Card Number: __________________________________________________ Sec.Code: _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ Expiration Date: ____________ Monthly Payments - $35.42 per month Via Credit Card (Please enter card information above. Authorization Agreement required - contact state office) Via Bank Draft (Authorization Agreement & voided check required - contact state office)

Mail or Fax Application To: TIADA Membership Services, 9951 Anderson Mill Rd., Suite 101, Austin, TX 78750 FAX 512.244.6218

www.txiada.org

512.244.6060

Dues are not deductible as charitable contributions for income tax purposes but may be deductible as miscellaneous itemized deductions, subject to IRS restrictions. It is estimated that 20 percent of your dues dollars is used for lobbying activities and is therefore not deductible.

December 2016

T e x a s

D e a l e r

2016 TIADA VIP Auction Card Directory ABILENE

CORPUS CHRISTI

IAA*

Alliance Auto Auction Abilene

IAA*

6657 US Highway 80 West Abilene, TX 79605 325.698.4391, Fax 325.691.0263 General Manager: Jimmy Compton Friday, 10:00 a.m.

4701 Agnes Street Corpus Christi, TX 78405 361.881.9555, Fax 361.887.8880 General Manager: Adriana Serrano Wednesday, 9:00 a.m.

204 Mars Road, Wilmer, TX 75172 972.525.6401, Fax 972.525.6403 General Manager: Henry Valenzuela Wednesday, 9:00 a.m.

www.allianceautoauction.com

C.M. Company Auctions, Inc. www.cmauctions.com

2258 S. Treadaway, Abilene, TX 79602 325.677.3555, Fax 325.677.2209 General Manager: Gregory Chittum Thursday, 10:00 a.m.

AUSTIN ADESA Austin

www.adesa.com

2108 Ferguson Ln., Austin, TX 78754 512.873.4000, Fax 512.873.4022 General Manager: Steve Swanson Tuesday, 9:00 a.m.

America’s AA Austin / San Antonio www.americasautoauction.com

16611 S. IH-35, Buda, TX 78610 512.268.6600, Fax 512.295.6666 General Manager: John Swofford Tuesday, 1:30 p.m. / Thursday, 2:00 p.m.

IAA*

www.iaai.com

2191 Highway 21 West, Dale, TX 78616 512.385.3126, Fax 512.385.1141 General Manager: Geoffrey Rabb Tuesday, 9:00 a.m.

Metro Austin Auto Auction www.metroautoauction.com

8605 Cullen Ln., Austin, TX 78748 512.282.7900, Fax 512.282.8165 General Manager: Brent Rhodes 3rd Saturday, monthly

BELTON Belton Auto Auction New! www.beltonautoauction.com

212 E Loop 121, Belton, TX 76513 254.899.2886, Fax 254.613.4582 General Manager: Joe Lavigne Thursday, 10:00 a.m.

* VIP card accepted for sell fees only 40

Get up to $200 off a buy or sell fee at these participating auctions using your TIADA VIP Auction Card!

www.iaai.com

Corpus Christi Auto Auction New!

(formerly known as Sparkling City AA Corpus Christi) www.CorpusChristiAutoAuction.com

2149 IH69 Access Rd Robstown, TX 78380 361.767.4100, Fax 361.767.9840 General Manager: Wade Walker Friday, 9:30 a.m.

DALLAS / FT.WORTH METROPLEX ADESA Dallas

www.adesa.com

3501 Lancaster-Hutchins Rd. Hutchins, TX 75141 972.225.6000, Fax 972.284.4799 General Manager: Brad Garrett Thursday, 9:30 a.m.

Alliance Auto Auction Dallas www.allianceautoauction.com

9426 Lakefield Blvd. Dallas, TX 75220 214.646.3136, Fax 469.828.8225 General Manager: Christopher Dean Wednesday, 1:30 p.m.

America Can! Cars for Kids www.carsforkids.com

7100 Marvin D Love Frwy 972.274.5437, Fax 214.944.1950 General Manager: Jennifer Kitchens Saturday, 9:00 a.m.

America’s AA Dallas

www.americasautoauction.com

219 N. Loop 12, Irving, TX 75061 972.445.1044, Fax 972.591.2742 General Manager: Robert Hammonds Tuesday, 1:00 p.m. / Thursday, 1:00 p.m.

IAA*

www.iaai.com

4226 East Main St., Grand Prairie, TX 75050 972.522.5000, Fax 972.522.5090 General Manager: Jennifer Wesner Tuesday, 9:00 a.m.

www.iaai.com

Manheim Dallas

www.manheim.com

5333 W. Kiest Blvd., Dallas, TX 75236 214.330.1800, Fax 214.339.6347 General Manager: Rich Curtis Wednesday, 9:00 a.m.

Manheim Dallas Fort Worth www.manheim.com

12101 Trinity Blvd., Fort Worth, TX 76040 817.399.4000, Fax 817.399.4251 General Manager: Nicole Graham-Ponce Thursday, 9:30 a.m.

Rockwall Auto Auction New! www.rockwallautoauction.com

1810 I-30 Frontage Rd. Rockwall, TX 75087 972.771.9919, Fax 972.722.4827 General Manager: Frank Post Tuesday, 7:00 p.m.

Texas Lone Star Auto Auction www.tlsaa.com

2205 Country Club Drive Carrollton, TX 75006 214.483.3597, Fax 214.483.3814 General Manager: Jeff Dunning Tuesday, 1:00 p.m. / Thursday, 2:00 p.m.

EL PASO El Paso Independent Auto Auction www.epiaa.com

7930 Artcraft Rd, El Paso, TX 79932 915.587.6700, Fax 915.587.6700 General Manager: Luke Pidgeon Wednesday, 9:30 AM In-op Video Sale / 10:00 AM Standard Sale.

IAA*

www.iaai.com

14651 Gateway Blvd. W El Paso, TX 79927 915.852.2489, Fax 915.852.2235 General Manager: Jorge Resendez Friday, 10:30 a.m. T e x a s

D e a l e r

December 2016

IAA*

SAN ANTONIO

16602 East Hardy Rd. Houston, TX 77032 281.443.1300, Fax 281.443.4433 General Manager: Louis Cappi Thursday, 9:00 a.m.

ADESA San Antonio

www.iaai.com

IAA*

www.iaai.com

Manheim El Paso

www.manheim.com

485 Coates Drive, El Paso, TX 79932 915.833.9333, Fax 915.581.9645 General Manager: Brian Walker Thursday, 10:00 a.m.

HARLINGEN / MCALLEN Big Valley Auto Auction www.bigvalleyaa.com

4315 N. Hutto Road, Donna, TX 78537 956.461.9000, Fax 956.461.9005 General Manager: Lisa Franz Thursday, 9:00 a.m.

IAA*

www.iaai.com

900 N. Hutto Road, Donna, TX 78537 956.464.8393, Fax 956.464.8510 General Manager: Ydalia Sandoval Tuesday, 9:00 a.m.

HOUSTON

2535 West. Mt. Houston Houston, TX 77038 281.847.4700, Fax 281.847.4799 General Manager: Michelle Casper Wednesday, 9:00 a.m.

Manheim Houston www.manheim.com

14450 West Road Houston, TX 77041 281.924.5833, Fax 281.890.7953 General Manager: Eddie Pope Tuesday, 9:00 a.m. / Thursday 6:30 p.m.

Manheim Texas Hobby www.manheim.com

8215 Kopman Road Houston, TX 77061 713.649.8233, Fax 713.640.6330 General Manager: Darren Slack Thursday, 9:00 a.m.

www.adesa.com

4526 N. Sam Houston, Houston, TX 77086 281.580.1800, Fax 281.580.8030 General Manager: Mark Lindenmuth Wednesday, 9:00 a.m.

America’s AA Houston New!

200 S. Callaghan Rd. San Antonio, TX 78227 210.434.4999, Fax 210.431.0645 General Manager: Clifton Sprenger Thursday, 9:00 a.m.

IAA*

www.iaai.com

11275 S. Zarzamora San Antonio, TX 78224 210.628.6770, Fax 210.628.6778 General Manager: Brian Sell Monday, 9:00 a.m.

Manheim San Antonio www.manheim.com

2042 Ackerman Road San Antonio, TX 78219 210.661.4200, Fax 210.662.3113 General Manager: Mike Browning Wednesday, 9:00 a.m.

San Antonio Auto Auction New!

(formerly known as Sparkling City AA San Antonio) www.SanAntonioAutoAuction.com

LONGVIEW

13510 Toepperwein Rd San Antonio, TX 78233 210.298.5477, Fax 210.298.5484 General Manager: Brandon Walston Tuesday, 9:30 a.m.; Thursday, 1:30 p.m.

Alliance Auto Auction Longview

TYLER

www.allianceautoauction.com

ADESA Houston

www.adesa.com

6000 East Loop 281 Longview, TX 75602 903.212.2955, Fax 903.212.2556 General Manager: Jeff Loftin Friday, 10:00 a.m.

IAA*

www.iaai.com

Greater Tyler Auto Auction New! www.greatertyleraa.com

11654 Hwy. 64 W, Tyler, TX 75704 903.597.2800, Fax 903.597.3848 General Manager: Wayne Cook Tuesday, 5:00 p.m.

WACO

1826 Almeda Genoa Rd., Houston, TX 77047 281.819.3600, Fax: 281.819.3601 General Manager: Rob Frazier Thursday, 2:00 p.m.

5577 Highway 80 East Longview, TX 75605 903.553.9248, Fax 903.553.0210 General Manager: Robert Dunning Thursday, 9:00 a.m.

America’s AA North Houston

LUBBOCK

15735 I-35 Frontage Road Elm Mott, TX 76640 254.829.0123, Fax 254.829.1298 General Manager: James Barron Friday, 10:00 a.m.

1440 FM 3083, Conroe, TX 77301 936.441.2882, Fax 936.788.2842 General Manager: Buddy Cheney Monday, 6:30 p.m.

IAA*

Heart of Texas Auto Auction

www.americasautoauction.com

Big Texas Auction of Houston New! www.bigtxauctions.com

2000 Cavalcade St. Houston, TX 77009 832.204.7500, Fax 832.204.7499 General Manager: Joe Lavigne Friday, 10:00 a.m. www.houstonautoauction.com

6767 North Freeway, Houston, TX 77076 713.644.5566, Fax 713.644.0889 President: Tim Bowers Tuesday, 1:00 p.m. T e x a s

5311 N. CR 2000 Lubbock, TX 79415 806.747.5458, Fax 806.747.5472 General Manager: Lori Davee Tuesday, 9:30 a.m.

D e a l e r

www.allianceautoauction.com

www.heartoftexasautoauction.com

2508 Old Marlin Hwy. 6 Waco, TX 76705 254.755.7713, Fax 254.755.7746 General Manager: Allan Wichkoski Thursday, 7:00 p.m.

MIDLAND / ODESSA

OKLAHOMA CITY, OK

IAA*

Dealer’s Auto Auction of OKC, Inc.

701 W. 81st Street Odessa, TX 79764 432.550.7277, Fax 432.366.8725 General Manager: Barbara Hallmark Thursday, 11:00 a.m.

1028 South Portland Oklahoma City, OK 73108 405.947.2886, Fax 405.943.8370 General Manager: Gary Smith Thursday, 8:30 a.m.

www.iaai.com

Houston Auto Auction

December 2016

www.iaai.com

Alliance Auto Auction Waco

www.daaokc.com

Answers to the Annual Compliance Quiz 2016 (questions found on pg. 8–9)

1. c. 180. On a public (non-dealer) sale, the time limit is 90 days. (February, 2016; “Single Sticker” Part Deaux)

10. d. All of the above. (November, 2016; How to Become (& Remain!) An Independent Auto Dealer)

2. b. Have the customer sign a secure dealer reassignment form (VTR 41-A). (February, 2016; Seismic Change to Titling)

11. b. All others are prohibited credit decision factors under Regulation B and the federal Equal Credit Opportunity Act. (January, 2016; Dealer Takeaways From Recent CFPB Enforcement Actions)

3. False. The first assignment space must be completed on the title before a reassignment form may be used. (March, 2016; Dealer Reassignment Update) 4. True. If a sale takes place, title must be transferred. (April, 2016; Transfer or Unwind: There is No Try) 5. e. All of the above. A formidable lineup! (May, 2016; Staying on Track) 6. True. (June, 2016; Odometer Disclosures & the Auctions) 7. d. $150. (July, 2016; Doc Fee Increase to $150) 8. True. Many dealers choose not to negotiate price, but there is no explicit prohibition on price negotiation (yet). (September, 2016; A Definite, Unequivocal “Maybe”) 9. b. Prohibit dealers from using mandatory pre-dispute arbitration agreements that contain class action waivers. (October, 2016; Check, Please)

12. b. A valid mechanic’s lien is superior to a prior recorded security interest. The key word here is “valid” and there are a number of defenses and procedural objections than can be made. (February, 2016; Fraudulent Mechanic’s Lien Claims Still Concern Car Creditors) 13. d. All of the listed areas of sharing are exempted from the Gramm-Leach-Bliley Act and the Federal Trade Commission’s Privacy Rule (March, 2016; Change in Law Lessens Privacy Notice Burdens for Some Car Creditors) 14. False. Any dealer offering a warranty must have a separate limited warranty agreement to spell out the terms of the warranty. (April, 2016; Offering Limited Warranties: The Dealer’s Options) 15. False. A warranty, by definition, is a promise by the seller or manufacturer to replace or repair certain items that is included in the price of the product. A charge for a service contract supplied by a licensed company, however, can be added as an “other charge on the contract. (April, 2016; Offering Limited Warranties: The Dealer’s Options) 16. c. The CFPB found that a discount for cash purchases that was not offered to finance purchases amounted to a “hidden finance charge.” (May, 2016; The Herbies Case from a Texas Dealer’s Perspective) 17. d (all of the above). A, b, and c are all items to consider in choosing the appropriate retail installment contract form. (June, 2016; The Importance of the Selection of an Appropriate Retail Installment Contract Form) 18. True. Unlike a claim on a dealer bond (which requires a court judgment) a bonded-title bond does not. (July, 2016; Protecting a Lien Holder’s Rights When a Bonded Title is Applied For) 19. False. A vehicle seller has no requirement to verify liability insurance. (October, 2016; Is a Car Seller Liable for Accidents Caused by His Buyer?) 20. b. Under Texas law, a vehicle seller does not have liability for the accidents caused by the buyer after the sale is complete. (October, 2016; Is a Car Seller Liable for Accidents Caused by His Buyer?)

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America’s Auto Auction

LOCATIONS IN TEXAS!

BUY ONLINE AT www.americasautoauction.com

TUESDAYS & THURSDAYS AT 1PM

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219 N. Loop 12, Irving, Texas 75601 Phone: 972.445.1044

North Houston

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1440 FM 3083,Conroe, Texas 77301 Phone: 936.441.2882

Houston

THURSDAYS AT 1:30PM 1826 Almeda Genoa Rd, Houston, Texas 77047 Phone: 281.819.3600

Austin/San Antonio

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16611 South IH 35, Buda, Texas 78610 Phone: 512.268.6600

America’s Auto Auction Austin, Dallas & Houston Feature Units From:

AuctionCredit is located within each of our Texas facilities for all of your auction financing needs! www.auctioncredit.com

Please Welcome Our Newest TIADA Members DEALER MEMBERS Anchor Motors LLC Alejandro Sierra PO Box 1192 Manchaca, TX 78652 Axel’s Auto Sales Olga Sellers 109B Old Galveston Road Alvin, TX 77511

Berlinetta Motorsports Sonny Brooks 13725 Omega Rd Dallas, TX 75244

J.R Motor Company Cody Ferguson 14878 FM 407 Justin, TX 76247

GP Autogroup LLC Tad Ponpes 2432 Walnut Ridge St Dallas, TX 75229

JB Cars and Trucks Mauricio Jimenez 1323 Barclay Dr Carrollton, TX 75007

Igloo Truck and Trailer Center Raul Bribiescas 17230 IH 35 S Atascosa, TX 78002

Kimo Auto Group Octavio Cepeda 3400 N Amaretto Dr Pharr, TX 78577

Ignorance is no defense. Know the law. Repo and financing issues are among the most common violations found by the OCCC. If you own a previous edition of these books from 2008 or earlier, it is recommended that you upgrade to the current editions.

Dealer Financing of Used Car Sales This comprehensive book covers all aspects of the complicated world of seller-financing in Texas, including Maximum Finance Rates; Retail Installment Contracts; Contract Amendments; VIT; Repair Charges; Federal Disclosures and more.

TIADA Member Price: $125 (non-members $175)

Texas Automobile Repossession: A Lien Holder’s Legal Guide Everything you need to know about repossessions is addressed in this book, including Notification Requirements, Post-Repo Procedures, Private Sale vs. Strict Foreclosure, Bankruptcy, Post-Disposition Accounting, Tracking and Shut-off Devices, the 60% Rule and more. PLUS – includes all required forms.

TIADA Member Price: $125 (non-members $175)

TIADA

Now available for purchase online at www.txiada.org under “Legal Resources” or call 512.244.6060 to order by phone. When ordering online, login with your TIADA username and password to receive the discounted rate. All prices include shipping. Orders are shipped in 3-5 business days. texas independent automobile dealers association

Attorney Michael W. Dunagan is the author of the two must-have books for every Buy-Here, Pay-Here dealer in Texas. Mr. Dunagan has been General Counsel to TIADA for over 40 years. His law firm specializes in the representation of independent Texas car dealers.

TIADA texas independent automobile dealers association

Lowery Brother Motors Inc. Terry Lowery 306 US Highway 431 South Boaz, AL 35957 Mach 1 Motors Louis McClinton 3105 Lomita, Ste 107B Lancaster, TX 75146 NBD Motors LLC. Matthew Fleming 15506 Checotah Dr. Austin, TX 78734 Platinum Motor Sales & Credit John Williams 5357 South FM 908 Rockdale, TX 76567 Quick Buy Motors Mauricio Jimenez 1323 Barclay Dr Carrollton, TX 75007 RS Motors, LLC Jose Fuentes 3101 S 23RD ST McAllen, TX 78503 Strong Automotive Group Inc. Amir Darwish 8710 S Texas 6 Houston, TX 77083 Texas Carco Richard Wagner PO Box 1751 Livingston, TX 77351 ASSOCIATE MEMBERS Fun Express Nikki Porter 4206 S 108th St Omaha, NE 68137

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behind the wheel With Mixed Emotions

en years ago, I placed one of the most important phone calls in YOUR life. I can remember it like it was yesterday. I had spent the evening sifting through resumés looking for the next editor of this magazine. Due to my bullheadedness, in the first two months of my employment I had invited most of the staff to “go be successful somewhere else,” including the magazine editor. That left just me and the parttime accountant in the office... and a looming magazine deadline. So, I found myself pacing around the front yard, bitter about the situation and contemplating how I would get myself and the association out of the tight spot I had created. I knew I needed more than an editor, I needed a lot of things. I needed some more talent, I needed some creativity, I needed someone sharp, confident and aggressive. I needed a team player who was also an independent thinker. I needed someone to lean on, someone who would support and challenge me along the way. I needed someone who would make me better, someone who would make the association better and could do anything. I needed a winner. Most of all, I needed a best friend. I trashed all the applications and called Danny Langfield. After some begging, pleading, fighting and

by Jeff

Martin

TIADA EXECUTIVE DIRECTOR

cussing he agreed to join me in what has been the greatest ten years of my professional career. Danny not only mastered the magazine, he quickly developed a communication strategy for the association. He spearheaded the effort to flip the association from a monthly anniversary renewal system to a fixed annual renewal, allowing us to become more efficient and turn our attention toward growing the membership from 850 to our current record of over 1500. Danny led the way in technology, too. He set up a network with a server that allowed our growing staff to work on shared files, and he took us out of the “spreadsheet” era and oversaw converting all our records to an association membership software system. Danny focused on creating member value and eventually developed the Auction VIP Card that we issue today. During our first legislative session, he immersed himself in understanding the independent auto dealers industry and the legislative process. He spent time at dealerships and attended every education class he could find. Just a few years later he was testifying in front of the Texas Senate Transportation Committee and the DMV Board becoming an invaluable, passionate and persuasive voice for your industry. He built key relationships with Tax Assessors around the state and policymakers at all the

Our loss is the NMEDA’s gain and I hope you will all join me in wishing Danny all the best as he opens this new chapter in his life. December 2016

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Local Chapters VICTORIA Butch Hartman Hartman’s Auto Sales 361.575.1009 hartmanautosales@gmail.com Meeting – 1st Monday (Monthly) FORT WORTH Mark Jones MCMC 817.703.7973 mjones@mcmcauto.com Meeting – 4th Thursday of Jan–May and Sep–Oct DALLAS COUNTY Eddie Hale Neighborhood Autos 940-539-2272 ehale@neighborhoodautos.com Meetings as needed/TBD HOUSTON John Freeman Galena Park Motors 713.675.0559 houiada@houiada.com Meeting – 2nd Tuesday (Monthly) SAN ANTONIO Robert Beck Stop N’ Drive Motors 210.432.1101 stopdrive@texas.net Meetings quarterly (dates announced at www.txiada.org) EL PASO Ricardo Gardea Cars Plus 915.778.8285 cars_plus@att.net Meeting – 3rd Friday (Monthly) 46

state agencies that regulate our industry. He represented you professionally and effectively, barely complaining about wearing a tie. More recently he played a vital role in negotiating the purchase and remodel of our new office, developed a network of attorneys from around the state who will field your legal and compliance questions, built the business partner program as we know it today, redesigned our website and developed an independent dealer education program for you that includes in-person and online education that is second to none. But most of you know Danny for one thing, taking your call. He took call after call, assisting the greenest dealer with the simplest of questions to the most experienced dealer facing a complex issue. He would call dealers back after hours and on weekends. He wanted to know your business better than you. He wanted you to be successful and wanted to help grow your association’s influence.

He has been one of your greatest advocates and a great friend to the industry. And as fate would have it, he outgrew our association. It is with mixed emotions I announce Danny’s last day at TIADA was November 30. He accepted a position as the Executive Director for the National Mobility Equipment Dealers Association in Tampa Bay, FL. As you can see Danny’s contributions over the last ten years have been many and his talents will be sorely missed as we move forward. He will be leaving an extraordinarily positive mark on the association and the industry as a whole. His combination of intellect and hardheadedness matched with his professionalism and creativity has made us a better association. We were lucky to have him for an outstanding ten years. Our loss is the NMEDA’s gain and I hope you will all join me in wishing Danny all the best as he opens this new chapter in his life. I know his new association is getting one hell of a friend.

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