There is such a thing as a free lunch. It's on the Internet. There is a tremendous amount of free information available for dealers who may wish to understand the laws which govern them and other related material. You need only provide the Internet connection. (Al Gore would be delighted to know that his invention is helping people solve legal problems for free.) One may scoff at the idea that a government agency — or any other organization — wants to help dealers, but these sites prove to the contrary.
It would be advisable for dealers to have a compliance manual that addresses the legal obligations which all dealers must discharge. If the store doesn't have a compliance manual, it should develop one. This compliance manual should be maintained by the store's compliance officer. If the store doesn't have a compliance officer, it should appoint one as part of its compliance management system (CMS). If the store doesn't have a CMS, it should develop one. The compliance officer should read and understand these materials so they can be applied to the operations of the business.
The compliance manual could be simply a file where everything is kept. This file would serve the same function as a manual. All this information certainly can be maintained electronically. These websites have materials which should be printed or maintained electronically and placed in the compliance manual along with other materials such as consumer complaints and their resolution.
This manual is a legal defense. If a dealer is subject to an investigation, they can demonstrate, by producing the manual, that they are aware of their legal obligations and have attempted to discharge them — even if they got them wrong. This simple act can dissuade regulators from pursuing actions against that dealer as opposed to a dealer who doesn't have such a compliance manual.
A note about these resources: These sites may disappear or be updated without notice. It would be advisable to download or print them for future use. And, of course, they should be consulted on a periodic basis for any updates.
Here are a number of websites which may prove useful:
Unfair and Deceptive Acts and Practices by State
The National Consumer Law Center (NCLC) created this table to identify and analyze each state's Unfair and Deceptive Acts and Practices statute. Since UDAP is the most widely used statute to prosecute dealers, every dealer should be familiar with their state's version of the statute; for example, issues such as dealer preparation, advertising and various required disclosures which dealers must make in their buyer's orders. Attorneys general and class-action attorneys rely heavily on the UDAP statute. (It may be necessary to access this information by going through the master NCLC website. However, the information is available.)
NADA's Regulatory Maze
This National Automobile Dealers Association (NADA) website provides a schematic diagram of the various laws which affect dealers in each department of their stores.
Truth in Lending Act
Whenever dealers finance or lease vehicles, they are employing the Truth in Lending Act (TILA). Retail installment sale contracts and lease contracts must observe the strictures of this significant act.
Equal Credit Opportunity Act
Dealers must recognize that they are creditors and are thus subject to many of the laws which regulate credit. They should also be aware of the Equal Credit Opportunity Act (ECOA), to which documents such as credit applications must adhere.
Federal Reserve Board's Leasing Law
A number of years ago, the Federal Reserve convened a panel of experts and observers, regarding consumer leasing, and the panel produced a superb publication, "Keys to Vehicle Leasing," plus an associated website and training materials. Under the "Guide for Educators" tab on the website, how to advertise leases is portrayed pursuant to TILA and Reg M. Just about any issue regarding leasing is addressed on this website, and it includes the "Keys" publication and all the materials.
Used Car Rule
There are few regulations as draconian as the Used Car Rule. This rule requires a notice to be placed on a used vehicle which the dealer is selling on his lot. The type of paper, color and font size of the lettering and various procedures are mandated. Tedious though it may be, there is no excuse for a dealer not executing this regulation correctly. There has been a longstanding proposal to change this rule which remains pending.
Dealers must observe the odometer law. This website may help.
Federal Reserve Board's Privacy Notices
Several years ago, privacy notices had a major makeover. It is estimated that there are now more than 200 different versions. To assist businesses in drafting their privacy notices, the following website was created for businesses to actually construct their personalized privacy notices. These privacy notices are complex, so dealers who use this website should also have their notices reviewed by legal counsel. Nevertheless, this online builder will acquaint dealers with the parameters of privacy notices.
FTC's Privacy Rule and Auto Dealers
In conjunction with the previous website is the FTC's attempt at explaining the privacy rule.
The CFPB and Consumer Complaints
The Consumer Financial Protection Bureau (and every other government agency which polices consumer law) is keenly interested in consumer complaints. On its website, the CFPB encourages consumers to file their complaints about financing sources. Dealers should be aware of this website.
New York Attorney General – Advertising
Many state attorneys general provide various types of advice to dealers on their websites, and advertising is a common theme. States differ somewhat on what constitutes legal advertising in their respective states. One of the best websites which provides guidance for almost any dealer is the website of the New York Attorney General.
NADA Advertising Manual
The NADA has produced an excellent guide for vehicle advertising replete with numerous examples.
Impact of Federal Regulations
It has already been established that operating a car dealership is one of the most regulated industries in the U.S. The cost of federal compliance is staggering, as indicated in a study commissioned by the NADA entitled "The Impact of Federal Regulations on Franchised Automobile Dealerships."
To paraphrase the adage from "The Godfather": Keep your friends close and your enemies closer. This site identifies practices which plaintiffs' counsel have identified as possible causes of action which can be filed against dealers.
Center for Automotive Research
This website provides information on critical issues facing the automotive industry. The emphasis is on public policy and economic concerns. On the site are posted various articles such as "Contribution of New-Car Dealerships to the Economies of All 50 States and the United States," which is an interesting article.
As with the NADA website, the NIADA also provides helpful information and links to other sites such as state independent dealer associations.
National Association of Attorneys General (NAAG)
This is a helpful portal to identify a state attorney general and their website.
Finally, I should note that this is hardly a comprehensive list. There are, of course, many other helpful websites and sources which dealers may utilize in what should be their constant quest to be informed about the laws which affect them. P&A magazine and its companion magazines are all good sources for helpful information. Websites of state automobile dealer associations, dealer vendors, complaint forums and other federal and state agencies can also be immensely helpful.
None of these websites should be confused with the advice which the dealer's legal counsel provides. But not all laws need an interpreter. And understanding the terms of the law helps dealers better communicate and follow the advice of their legal counsel. Quite significantly, understanding the rudiments of the law can reduce legal costs, since the legal issues can be significantly narrowed.
A little homework by a dealer in researching these issues on the Internet can reduce both cost and liability. And it's free! Govern yourselves accordingly.
As seen on P&A Magazine.