GUIDE
FOR
LICENSED VEHICLE DEALERS
AND
LESSOR-RETAILERS
A Public Service Agency
LICENSING OPERATIONS SECTION
OL 40 (REV. 12/2009) WWW
TABLE OF CONTENTS
I. Occupational Licenses ................................................................................................................................1
• RequirementsforRenewingaLicense .......................................................................................................1
• PenaltyRenewal .........................................................................................................................................1
• ContinuingEducationProgram ...................................................................................................................1
• RequirementsforRelinquishmentofaLicense ..........................................................................................1
• RequirementsforModificationofaLicense................................................................................................1
• OwnershipChanges ...................................................................................................................................1
• LicensingRequirementsforaSalesperson ................................................................................................1
• Useof“BirdDogs”(IllegalSalespersonActivity) ........................................................................................1
• NoticetoPublic: InspectionofVehicle .......................................................................................................2
• NoticetoPublic: NoCancellationPeriod....................................................................................................2
• UseofSpecialPlates .................................................................................................................................2
• ReportingUnlicensedDealers ....................................................................................................................2
• TableofLicensingFees ..............................................................................................................................2
• NewMotorVehicleBoardFunction .............................................................................................................3
II. Permits/Licenses (Copies required) ...........................................................................................................3
• BoardofEqualizationResale-Permit ..........................................................................................................3
• Cityand/orCountyBusinessLicense.........................................................................................................3
• FictitiousNameStatement .........................................................................................................................3
• BureauofAutomotiveRepair ......................................................................................................................3
III. Assistance and Supplies ............................................................................................................................3
• RegistrationQuestions ...............................................................................................................................3
• Licensing/RegulationQuestions .................................................................................................................3
• OrderingSupplies—Procedure ...................................................................................................................3
• ReportofSaleand/orWholesaleReportofSaleUsage ............................................................................3
IV. Records ........................................................................................................................................................4
• TimelyReportingofSales ..........................................................................................................................4
• UseofReportofSaleand/orWholesaleReportofSaleForms ...................................................................4
• RetentionPeriods(StateandFederal) .......................................................................................................4
• AccessbyDepartmentStaffandPeaceOfficers ........................................................................................4
• LocationofRecords....................................................................................................................................4
V. Principal Laws/Regulations (Definition) ....................................................................................................5
CaliforniaVehicleCode ...................................................................................................................................5
• FalseStatements ........................................................................................................................................5
• DealerDefined ...........................................................................................................................................5
• PlaceofBusiness .......................................................................................................................................5
• NewMotorVehicleDealer ..........................................................................................................................5
• VehicleSalesperson ...................................................................................................................................5
• DeliveryofRegistrationDocuments ...........................................................................................................5
• ReturnofOccupationalLicense .................................................................................................................6
• Lessor-Retailers ..........................................................................................................................................6
• Dealers,LawsAffecting ..............................................................................................................................6
• Salespersons,LawsAffecting .....................................................................................................................6
• Odometers ..................................................................................................................................................6
• AlteringorChangingVehicleNumbers .......................................................................................................6
• FalseAdvertising ........................................................................................................................................6
• MisuseofDealer’sSupplies .......................................................................................................................6
—i—
—ii—
TheDepartmentofMotorVehicles(DMV)providesforthestaggeredrenewalofalldealerandlessor-retailerlicenses
andspecialplates.Arenewalapplicationismailedtoalllicenseddealersandlessor-retailers45dayspriortothe
expirationdateofthelicenses.Renewalofthelicensemustbeaccomplishedonorpriortothelicenseexpirationdate
toavoidpenalties.Toavoidlicenseorstickerdeliverydelays,pleasesendtherenewalapplicationwithappropriate
fees directly to: Department of MotorVehicles, Occupational Licensing Unit, P.O. Box 932342, Sacramento, CA
94232-3420atleasttwoweekspriortotheexpirationdateshownontherenewalapplication.
• Renewal Penalty
Renewalfeesandpenaltyfeescanonlybeacceptedforaperiodof30daysaftertheexpirationdateofthelicense.
Renewalcannotbeacceptedafter30daysfromtheexpirationdateofthelicenseCVCSection11717(d).
• ContinuingEducationProgram
License renewal is done annually; however, after initial licensing, used dealers and dealer-wholesale only must
attendanapprovedcontinuingeducationalprogramofnotlessthanfour(4)hourseverytwoyearsinordertorenew
ormaintaintheirlicense.Thedepartmentwillnotifyalleffecteddealerswiththeirrenewalwhenproofofcontinuing
educationisrequiredCVCSection11704.5(c).
• Requirements for Relinquishment of a License
Whenlicenseddealersorlessor-retailersceasedoingbusiness,orabondiscancelledbytheSuretyCompanyand
isnotreinstatedbythecancellationdate,thelicenseeshallimmediatelysurrenderthebusinesslicense,special
plates,registrationcardsandallreportofsalebookstothelocalDMVInspector.
Wheneveralicenseddealerorlessor-retailerchangesalocation,addsabranchoffice,changesthefirmname,or
makesachangeinthecorporatestructure,thelicenseeshallimmediatelynotifyandsubmittheappropriateforms
andfeestothelocalDMVInspector.
• OwnershipChanges
Whenever a licensed dealer or lessor-retailer changes the ownership of a firm by adding a partner, deleting a
partner,oraddingapartnertoanindividualownership,oralicensedcorporationmergesintoanothercorporation,
anownershipchangehasoccurredrequiringthesurrenderofallsuppliestothedepartment,andthesubmissionof
anoriginalapplicationforlicense.Anoriginalapplicationrequiresthesubmissionororiginalapplicationfeesanda
new$50,000bond.Thebondundertheoldownershipcannotbeusedforthenewownership.
• Licensing Requirements for a Salesperson
Everypersonwhoactsasavehiclesalespersonforalicenseddealermustfirstprocurealicenseortemporary
permitissuedbytheDMV.Thedepartmentprovidesformsusedinfilingsuchapplications.Atthetimeoftheoriginal
orrenewalapplication,thefollowingfeesshallbepaidtothedepartment:
A. Anonrefundableapplicationfeeoffifty-onedollars($51)fortheoriginalissuanceofalicense.
B. Renewalfee(onceeverythreeyears)of$51.00.
• Useof“BirdDogs”(IllegalSalespersonActivity)
Itisunlawfulforanylicenseddealertoemployanypersonasasalesperson,whohasnotbeenlicensedbythe
departmentasoutlinedinCVCSection11800.Thisincludesthepaymentof“referral”or“finders”feetoanyperson
whodirectsapotentialcustomertoadealer.
ItisunlawfulforanylicensedsalespersontoperformthesalesactivitiesoutlinedinCVCSection675atanylocation
otherthantheemployingdealer’slicensedlocation.
—1—
• NoticetoPublic: InspectionofVehicle
Everydealerwhodisplaysoroffersoneormoreusedvehiclesforsaleatretailshallpostanoticenotlessthan8
incheshighand10incheswide,inaplaceconspicuoustothepublic,whichstatesthefollowing:
“Theprospectivepurchaserofavehiclemay,athisorherownexpenseandwiththeapprovalofthedealer,have
thevehicleinspectedbyanindependentthirdpartyeitheronoroffthesepremises.”
Everydealershallconspicuouslydisplayanotice,notlessthan8incheshighand10incheswide,ineachsalesoffice
andsalescubicleofadealer’sestablishedplaceofbusinesswherewrittentermsofspecificsaleorleasetransactions
arediscussedwithprospectivepurchasersorlessees,andineachroomofadealer’sestablishedplaceofbusiness
wheresaleandleasecontractsareregularlyexecuted,whichstatesthefollowing:
“THEREISNOCOOLING-OFFPERIODUNLESSYOUOBTAINACONTRACTCANCELLATIONOPTION”
Californialawdoesnotprovidefora“cooling-off”orothercancellationperiodforvehicleleaseorpurchasecontracts.
Therefore,youcannotlatercancelsuchacontractsimplybecauseyouchangeyourmind,decidethevehiclecosts
toomuch,orwishyouacquiredadifferentvehicle.Afteryousignamotorvehiclepurchaseorleasecontract,itmay
becanceledwiththeagreementofthesellerorlessororforlegalcause,suchasfraud.
However,Californialawdoesrequireadealertooffera2-daycontractcancellationoptiononusedvehicleswith
a purchase price of less than $40,000, subject to certain statutory conditions. This contract cancellation option
requirementdoesnotapplytothesaleofarecreationalvehicle,amotorcycle,oranoff-highwaymotorvehiclesubject
toidentificationunderCalifornialaw.Seethevehiclecontractcancellationoptionagreementfordetails.
Specialplatesissuedtodealersmaybeusedforanypurpose,includingpleasure,providedthevehicleisinthe
dealer’sinventoryforsaleandisusedonlybythefirmownersofthedealershiporisleasedtovehiclesalespersons.
Specialplatesmaynotbeusedonworkorservicevehicles(seeuseofspecialplatesmemoissuedtoalldealers
datedDecember23,1983).Specialplatesarenotprovidedtolessor-retailers.
• ReportingUnlicensedDealers
Whenever a licensed dealer has grounds to suspect that a person or persons are engaged in the buying and
sellingofvehiclesasoutlinedinCVCSection285,withouthavingfirstobtainedalicensefromthedepartment,the
dealerortheirauthorizedrepresentativeshouldfileawrittencomplaintwiththelocalDepartmentofMotorVehicles
InvestigationsDivision.
• Table of Licensing Fees
Thefeeforalicenseissuedtoadealerand/orlessor-retailershallbe:
A. Anonrefundableoriginalapplicationfeeofone-hundredseventy-fivedollars($175).*
B. Alterationcausedbyafirmnamechange,addresschangeortheadditionofabranchlocation—seventydollars
($70).
C. Annualrenewalofeachlicenseheld—one-hundredtwenty-fivedollars($125).**
D. SpecialPlates–fifty-seven($57)foreachautoplateandfifty-nine($59)foreachmotorcyclespecialplate(plus
applicablecountyfees).Basefeeforrenewalswillbe$1.00less.Contactyourlocalinspectorfortotalplatefees
dueinyourlocation.**
*Pleasenotethatnewauto/commercial,motorcycle,all-terrainvehicle,recreationaltrailer,ormotorhomeapplications
willadditionallybeassessedtheNewMotorVehicleBoardfeeoftwo-hundredtwenty-fivedollars($225)forall
originalandrenewalapplicationsforeachlocation.
**Foratwo-yearrenewal,doublethefees.
E. $1.00FamilySupportProgramfee.
—2—
• NewMotorVehicleBoardFunction
TheNewMotorVehicleBoard(NMVB)acceptsandarbitratesprotestssubmittedbydealersonfranchiseterminations,
territory infringements, etc.The NMVB also hears and considers appeals presented by dealers from a decision
renderedbythedepartmentCVCSections507,3052-3058,3060-3063.TheNMVBconsistsofninemembers.Four
oftheappointedmembersarenewmotorvehicledealers,engagedinbusinessforaperiodofnotlessthanfive
yearsprecedingtheirappointment.Theremainingfiveappointivemembersarepublicmembersnotaffiliatedwith
anylicenseddealer.
AlllicenseesarerequiredtofileanapplicationforaSeller’sPermit.ApplicationscanbemadethroughlocalBoardof
Equalizationoffices.PursuanttoCVCSections11617(a)(6)and11721(f),thedepartmentmayautomaticallycancel
yourdealerorlessor-retaillicenseforfailuretomaintainavalidSeller’sPermit.
Licenseesarerequiredtoobtainacityorcountybusinesslicensebythecityorcountylicensingsectioninthearea
wherethelicenseeisdoingbusiness.
• Fictitious Name Statement
AnybusinessthatoperatesunderanamenottheactualnameoftheownerisrequiredtoobtainaFictitiousName
Statementfromthecityorcountyintheareawhereyourbusinessislocated.Iftheresponsibleagencydetermines
thisisnotrequired,alettersupportingsuchfromthatagencyisneeded.
• Bureau of Automotive Repair
DealerswhowillbeprovidingautomobileservicingandrepairarerequiredtofileanapplicationwiththeirlocalBureau
ofAutomotiveRepairoffice.Additionalinformationisavailableontheirwebsiteatwww.bar.ca.gov.
• Registration Questions
Licensees seeking assistance with registration problems should contact their local Department of Motor
Vehicles Field Office, Registration Section or the Handbook of Registration Procedures, available online at
www.dmv.ca.gov/pubs/reg_hbbk_pdf/toc.htm.
Licensees seeking assistance with occupational licensing regulation problems should contact their local DMV
Inspector.
• OrderingSupplies—Procedure
Wheneverthereisaneedforthelicenseetoreordersupplies,suchasReportofSaleBooks,andWholesaleReport
ofSaleBooks,thelicenseemustusetheappropriatesupplyforderformavailableonthedepartment’swebsiteat
www.dmv.ca.gov/vehindustry/Ol/forms/supplyorderforms.htm.Allowatleastsixweeksfordelivery.
Intheeventofanemergency,atokensupplyofbooksareavailableateachoftheInspectoroffices.Thelicensee
shallsubmitarequestinwritingontheappropriatesupplyorderformtothelocaloffice,namingtherepresentative
authorizedtopickuptheorder.Photoidentificationisrequired.
• ReportofSaleand/orWholesaleReportofSaleUsage
When a vehicle is sold, dealers, lessor-retailers and wholesalers shall use numbered report-of-sales and/or
wholesalereport-of-salesformsissuedbythedepartmentCVCSection4456.A“sale”shallbedeemedcompleted
andconsummatedwhenthepurchaserofthevehiclehaspaidthepurchaseprice,or,inlieuthereof,hassigneda
purchasecontractorsecurityagreementandhastakenphysicalpossessionordeliveryofthatvehicleCVCSection
5901(d).
—3—
• TimelyReportingofSales
Whensellingavehicle,dealersandlessor-retailersshall,nolaterthantheendofthefifthcalendarday,notcounting
thedateofsale,givewrittennoticeofthetransferbysendingthestubofthecarboncopy(noticeofsale)totheDMV
headquartersinSacramento.Applicationandfeesareduetothedepartmentwithin20daysofthedateofsalefor
anewvehicleorwithin30daysforausedvehicle.Newvehicleapplicationforregistrationmustbeclearedwithin40
daysofthedateofsaleorwithin20daysofthedatethedepartmentfirstreturnedtheapplication,whicheverislater.
Usedvehicleapplicationforregistrationmustbeclearedwithin50daysofthedateofsaleorwithin30daysofthe
datethedepartmentfirstreturnedtheapplication,whicheverislater.
Adealerorlessor-retailerwhoviolatesanysubdivisionofCVCSection4456shallpayAdministrativeServiceFees
(ASF)onthefollowingschedule:
• Failuretosubmitanoticeofsaletothedepartmentwithin5daysofthedateofsale-$5.00
• Failuretosubmitfeesdueandtheapplicationtothedepartmentwithin20daysofthedateofsaleforanewvehicle
orwithin30daysforausedvehicle-$5.00
• Failuretoclearnewvehicleapplicationswithin40daysfromthedateofsaleor20daysfromthedatethedepartment
firstreturnedtheapplication,orforusedvehicleapplications,50daysfromthedateofsaleor30daysfromthe
datethedepartmentfirstreturnedtheapplication,whicheverislater-$25.00
SeeHandbookofRegistrationProceduresforadditionalinstructionsavailableonlineatwww.dmv.ca.gov/pubs/
reg_hdbk_pdf/toc.htm.
• UseofReportofSaleand/orWholesaleReportofSaleForms
ReportofSaleformswillbeusedinnumericalorder.Thereportformhasfourparts.AllpartsofeachReportofSale
havethesamenumber.Thetoppartoftheoriginalaccompaniestheapplicationforregistration.Thestubofthe
originalisplacedonthelowerright-handcornerofthewindshield.ThestubofthecarboncopyistobesenttoDMV
headquartersnolaterthanthefifthdayfollowingthedateofsale.Thetoppartofthecarboncopyistoremaininthe
dealer’sfileforrecordkeeping.
Wholesale Report of Sale forms are used in reporting sales of used vehicles from dealer to dealer or dealer to
dismantler.TheformhasthreepartsandallpartsoftheWholesaleReportofSalehavethesamenumber.The
originalissenttoDMVheadquarters,Sacramento,within5daysafterthesaleofthevehicletoanotherlicensee.
Thesecondcopyisthebuyer’scopyandthethirdcopyisthebookcopy.ThisWholesaleReportofSaleformshall
besubmittedbylicenseesinlieuoftheNoticeofReleaseofLiabilityformReg.138.
WhenaReportofSaleorWholesaleReportofSaleformmustbevoided,allpartsmustbemarked“VOID.”The
licenseemustmailallparts,exceptthefilecopy,immediatelytotheDMVheadquartersinSacramento.Thelicensee
shouldincludeafullwrittenexplanationconcerningthetransactionandacertificationthatthevehicledidnotleave
hispossessionandprint“wasnotoperated”ontheoperatingcopy.
• RetentionPeriods(StateandFederal)
Allbusinessrecordsrelatingtovehicletransactionsshallberetainedbythedealershipforaperiodofnotlessthan
threeyearsCCR,Title13,Section272.00.
Thefederalgovernmentrequiresthatallbusinessrecordsberetainedbythedealershipforaperiodofnotlessthan
threeyearsnormorethansixyears.
TheDirector,DeputyDirector,ChiefandAssistantChiefs,InvestigativeServices,andInvestigatorsofthedepartment
havethepowersofpeaceofficersandmayinspectanyvehicle,inanyneworuseddealership,forthepurposeof
investigatingthetitleandregistrationofthevehicle,orlocatingstolenvehicles.
• LocationofRecords
Allsuppliesissuedbythedepartmentremainthepropertyofthedepartmentandmaybetakenupatanytimefor
inspection.Allbooksandrecordspertinenttothetypeofbusinessbeingconductedaretobekeptattheestablished
placeofbusinessofthelicenseeandareopentoinspectiontoallpeaceofficersduringnormalworkinghours.
—4—
CaliforniaVehicleCode
Itisunlawfultouseafalseorfictitiousname,ortoknowinglymakeanyfalsestatementsorknowinglyconcealany
materialfactinanydocumentfiledwiththeDMV,e.g.,falseDateofSale,falseCertificateofNonOperation,false
CertificateofCompliance(Smog)CVCSection20.
“Dealer”isapersonnototherwiseexpresslyexcludedbyCVCSection286who:
(a) Forcommission,money,orotherthingofvalue,sells,exchanges,buys,oroffersforsale,negotiatesorattempts
tonegotiate,asaleorexchangeofaninterestinavehiclesubjecttoregistrationoramotorcyclesubjectto
identificationunderthiscode,orinducesorattemptstoinduceanypersontobuyorexchangeaninterestina
vehicleand,whoreceivesorexpectstoreceiveacommission,money,brokeragefees,profit,oranyotherthing
ofvalue,fromeitherthesellerorpurchaserofsaidvehicle;or
(b) Isengagedwhollyorinpartinthebusinessofsellingvehiclesorbuyingortakingintrade,vehiclesforthepurpose
ofresale,selling,orofferingforsale,orconsignedtobesold,orotherwisedealinginvehicles,whetherornot
suchvehiclesareownedbysuchpersonCVCSection285.
• Place of Business
Aplaceofbusinessisaplaceactuallyoccupiedeithercontinuouslyoratregularperiodsbyadealerwherethebooks
andrecordspertinenttothebusinessbeingconductedarekept.
Theplaceofbusinessshallhaveanofficeanddisplayareasituatedonthesamepropertywherethebusinessis
conducted.Adealerwhodoesnotoffervehiclesforsaleatretail,i.e.,adealerwhoisawholesalerinvolvedonlyin
thesaleofvehiclesbetweenlicenseddealers,shallhaveanoffice,butadisplayareaorsignisnotrequiredCVC
Section32;CCRTitle13.Sections270.00through272.00.
Anewmotorvehicledealerisadealerwhoacquiresforresale,newandunregisteredvehiclesfrommanufacturers
ordistributorsofsuchvehiclesCVCSection426.
• VehicleSalesperson
(a) “VehicleSalesperson”isapersonnototherwiseexpresslyexcludedbythissection,whodoesoneoracombination
ofthefollowing:
(1) Is employed as a salesperson by a dealer, as defined in CVC Section 285, or who, under any form of
contract,agreementorarrangementwithadealerforcommission,money,profit,orotherthingofvalue,sells,
exchanges,buysoroffersforsale,negotiates,orattemptstonegotiate,asale,orexchangeofaninterestin
avehiclerequiredtoberegisteredunderthiscode.
(2) Inducesorattemptstoinduceanypersontobuyorexchangeaninterestinavehiclerequiredtoberegistered,
andwhoreceivesorexpectstoreceiveacommission,money,brokeragefees,profit,oranyotherthingof
value,fromeitherthesellerorpurchaserofthevehicle.
(3) Exercises managerial control over the business of a licensed vehicle dealer or who supervises vehicle
salespersonsemployedbyalicenseddealer,whethercompensatedbysalaryorcommission,including,but
notlimitedtoanypersonwhoisemployedbythedealerasageneralmanager,assistantgeneralmanager,
orsalesmanager,oranyemployeeofalicensedvehicledealerwhonegotiateswithorinducesacustomer
toenterintoasecurityagreementorpurchaseagreementorpurchaseorderforthesaleofavehicleon
behalfofthelicensedvehicledealerCVCSection675.
• DeliveryofRegistrationDocuments
A vehicle dealer and/or lessor-retailer shall submit the appropriate documents and fees to the department for
registrationforapurchaserwhoislawfullyentitledtoatransferofregistrationCVCSection5753.
—5—
Wheneverthedepartmentcancels,suspends,orrevokesthelicenseofadealer,thelicenseeshallimmediatelyreturn
thelicense,specialplates,ReportofSalebooks,andallsuppliestothedepartmentCVCSection8803.
• Lessor-Retailers
Beforealessor-retailercanmakearetailsaleofavehicle,eitheradealerlicenseorlessor-retailerlicenseortemporary
permitmustfirstbeobtainedCVCSections11600,11700.
Beforeadealercanmakearetailorwholesalesaleofavehicle,adealer’slicensemustfirstbeobtainedCVCSections
11700,11726.
• Salespersons,LawsAffecting
Beforeapersoncanactasavehiclesalesperson,asalesperson’slicensemustfirstbeobtainedCVCSections
11800,11824.
• Odometers
Itisunlawfulforanypersontodisconnect,turnback,orresettheodometerofanymotorvehiclewiththeintentto
alterthenumberofmilesindicatedontheodometerCVCSections11713(n);28050-28053.
Nopersonshallintentionallydeface,destroy,oraltertheidentificationnumberofavehiclewithoutwrittenauthorization
fromthedepartment,norshallanypersonknowinglybuy,sell,offerforsale,receive,orhaveintheirpossession,any
vehiclefromwhichtheidentificationnumberhasbeenremoved,alteredordestroyedCVCSections10750,10751.
Itisunlawfulforanylicenseetoadvertiseanystatementswhichareuntrueormisleading,ortoadvertiseanystatement
aspartofaplanorschemewiththeintentnottosellanyvehicleorservicesoadvertisedatthepricestatedCVC
Section11713.
• MisuseofDealer’sSupplies
Itisunlawfulforanylicenseetopermittheuseoftheirdealer’slicense,supplies,orbooksbyanyotherpersonfor
thepurposeofpermittingthatpersontoengageinthesaleofvehiclesCVCSection11713(m).
Advertisingreferstoanystatement,representation,actorannouncementintentionallycommunicatedtoanymember
ofthepublicbyanymeanswhatever,whetherorally,inwritingorotherwiseCCRTitle13,Sections255.00-255.04.
• AdvertisingbyLicensee
Anyadvertisingstatements,representations,oroffersmadeinconnectionwithsaleorattemptedsaleofanyvehicle(s)
shallbeclearlysetforth,andbasedonfactsandshallbesubjecttoCCRTitle13,Sections260.00-262.09.
Every automobile repair dealer shall pay the required fee for each place of business operated in this state and
shallregister,withtheDirectorofConsumerAffairsonformsprescribedbythedirectorB&PCodeSections98849884.19.
—6—
• SmogDevices
Anypersonmayinstallamotorvehiclepollutioncontroldevice;however,nopersonwhohasnotbeenlicensedbythe
BureauofAutomotiveRepair,shallinstallsuchadeviceforcompensationB&PCodeSections9889.15-9889.19.
Airpollutionconstitutesasignificantdetrimenttopublichealthandwelfare.Exhaustemissionsfrommotorvehicles
arethemajorsourceofphotochemicalairpollutionintheprincipalpopulationcentersofCalifornia.Therefore,a
demonstrationprograminLosAngeles,Orange,Riverside,SanBernardino,SantaBarbara,andVenturacounties
hasbeenestablishedfortheperiodicinspectionofmotorvehiclesB&PCodeSections9889.50-9889.61.
• SmogDevices
Itisunlawfulforanypersontofalselyrepresentbyadvertisementthequalityofanyarticlesoadvertisedthatwillbe
sold,orwillfullyornegligentlytofailtoincludeintheadvertisementastatementthatanyrestrictionsapply.
Itisalsounlawfulforanyperson,bymeansofsuchfalseornegligentadvertisement,toinduceanyconsumerto
enteranyplaceofbusinessseekingtobuyanyarticlesoadvertisedandthenrefusestosellsuchpersonthearticle
atthepriceadvertisedB&PCodeSection17500.5.
• Song-BeverlyConsumerWarrantyAct
Thischapterexpresslylimitsitselftoanynewproductorpartthereofthatisusedorboughtforuseprimarilyfor
personaluseandanywaiverbythebuyershallbedeemedcontrarytopublicpolicyandshallbeunenforceableand
void,exceptasexpresslyprovidedinthischapterCivilCodeSections1790-1795.7.
• “Lemon”Law
Requiresamanufacturertoreplaceanewmotorvehicleorreimbursethebuyerifthevehicledoesnotconformtothe
warrantyafterareasonablenumberofattemptshavebeenmadetocorrectanonconformity.
ThenewwarrantyprovisionsapplyonlytowarrantednewmotorvehiclespurchasedonorafterJanuary1,1983.
Thenewwarrantyprovisionspresumethatamanufactureroritsagenthasmadeareasonablenumberofattempts
toconformanewmotorvehicletotheapplicableexpresswarrantiesif,withinoneyearfromdeliverytothebuyeror
12,000miles,whicheveroccursfirst,either:
(a) Thesamenonconformityhasbeensubjecttorepairfourormoretimesbythemanufactureroritsagentsand
thebuyerhasatleastoncedirectlynotifiedthemanufactureroftheneedfortherepairofthenonconformity,or
(b) The vehicle is out of service by reason of repair of nonconformities by the manufacturer or its agents for a
cumulativetotalofmorethan30calendardayssincedeliveryofthevehicletothebuyerAB1787–Ch.388,
Statsof1982.
• StandardsofWarrantyWork
Anypersonwhoengagesinthebusinessofinstallingneworusedconsumergoods,orprovidesserviceorrepairs
toneworusedconsumergoods,hasadutytothepurchasertoinstallorperformthoseservicesinagoodand
workmanlikemannerCivilCodeSections1796-1796.5.
• Automobile Sales Finance Act
This chapter specifically defines conditional sales contract, sellers, buyers, cash price, down payments, finance
charges,motorvehicle,simpleinterestbasis,servicecontracts,financingbydealerorlendinginstitution,refunds,
rescissionsandcivilliabilitiesCivilCodeSections2981-2984.4.
• ProhibitedTransactions
Nopersonwhoisaresidentof,oroperatesanestablishedplaceofbusinesswithinthisstate,shallimport,deliver
orpurchaseanewvehicleornewvehicleengine,unlesssuchvehicleorvehicleenginemeetsthisstate’sstringent
emissionsstandardsandtestproceduresH&SCodeSections43150-43156.
—7—
• ManufacturersandDealers
Prohibitsthesaleandregistrationinthisstateofanynewvehiclewhichdoesnothavesecurelyaffixedonaside
windowtotherearofthedriver,adecalonwhichthemanufacturershallendorsethatthenewvehicleclearlymeets
theemissionstandardsadoptedbythisstateH&SCodeSections43200-43213.
• UsedMotorVehicles
AllowstheStateAirResourcesBoardtoadoptandimplementemissionsstandardsforusedmotorvehiclesforthe
controlofemissions.Suchstandardsmaybeapplicabletomotorvehicleengines,ratherthantomotorvehiclesH&S
CodeSections43600-43659.
X. Consumer Protection
• DMV’sRole
ItistheintentoftheLegislaturetoprovideconsumerprotectionincaseswherepersonshaveexpresseddissatisfaction
intheirdealingwiththevehicleindustry.Thedepartmenthasbeendelegatedtoprovidethisconsumerprotectionto
thepublic.Thisprotectionisprovidedthroughthelicensing,education,andregulationofalldealers.
A. Warranty
Dealersfailingtorepairorservicevehiclesproperlywhileunderwarranty.Thedealerhasadutytothepurchaser
toperformthoseservicesinagoodandworkmanlikemannerCivilCodeSection1796.
B. MechanicalCondition
Dealersofferingvehiclesforsalewhichareinpoormechanicalcondition,e.g.,brakes,tires,lights,horn,etc.,in
violationofCVCSection11713(i).
C. FailureToTransferTitle
DealersfailingorneglectingtotransfervehicleswithintheprescribedtimeperiodCVCSection5753.
D. MisleadingAdvertising
Makinganystatement,whetherinwritingororally,whichisuntrueormisleadingCVCSection11713(a).
• AutoCap(AutomotiveConsumerActionProgram)
Isapublicservicethathelpsindividualswithproblemsinvolvingaparticipatingnewcarortruckdealer,ormanufacturer.
AutoCapisagroupcomposedofanequalnumberofnewvehicledealersandconsumermemberswhichmeets
periodically to review unresolved automotive consumer complaints and to recommend fair solutions.Auto Cap’s
decisionisbindingontheparticipatingdealershipormanufacturer,butnottheconsumer,whoisfreetopursueother
remedies.
• ManufacturerConsumerComplaintBoards
Somemanufacturers(Chrysler,Ford)providearbitrationboardswhichhearandrenderdecisionsondisputesbetween
dealersandconsumers.Thearbitrationboards’decisionarebindingonthemanufacturer,butnottheconsumer,who
isfreetopursueotherremedies.
• LocalDistrictAttorneyConsumerFraudUnits
WithinsomeDistrictAttorney’soffices,thereisaConsumerFraudUnitwhichprosecutescriminaland/orcivilcases
offraudand/orintentionalordeliberateillegalactivitywhichresultsinactuallossordamagetotheconsumer.
• DMV’sResponsibility
Thedepartmentischargedwithallinvestigativeandenforcementdutieswithinthedepartment’sjurisdiction.Itisthe
department’sresponsibilitytoensurethatlicenseesarecomplyingwithstatutesandregulations.Thedepartment
alsohastheresponsibilityoftakingdisciplinaryactionagainstalicenseewhohasviolatedanyofthestatutesor
regulationsenforcedbythedepartment.
—8—
• ActionsandPenalties
A. Administrative
Thedepartmentcan,afternoticeandhearing,suspendorrevokethelicenseofadealerorlessor-retailerwhohas
violatedanytermsorconditionsofanystatutesorregulationsenforcedbythedepartment.Mandatorymonetary
penaltiesmayberequiredofalicenseepursuanttoanagreementbetweentheDirectoroftheDepartmentof
MotorVehiclesandthelicenseeCCRTitle13,Section314.00.
B. Civil
TheDistrictAttorneyorCityAttorneymayimposemonetarypenaltiesagainstalicenseewhohaswillfullyviolated
anyofthetermsandconditionsofanystatutesorregulations.
C. Criminal
Alicenseemaybesubjecttoarrest,fineorimprisonmentforwillfullyviolatinganyofthetermsandconditionsof
applicablestatutesorregulations.
—9—