1. automotive and vehicles
2. certified pre-owned

See page 5
Serving the Dealers of the Vehicle Sales Industry
August 2013
503-399-9199 / 1-877-541-2277 (Cars)
www.ORdealers.com
Published by the Oregon Vehicle Dealer and Oregon Power Sports Associations. PO Box 4290, Salem, OR 97302
503-399-9199, Fax: 503-763-1233 Articles are not legal advice. If you want legal advice, contact an attorney.
Calendar of Events and Education
Aug 19-20
Brasher’s 64th Anniversary Sale, Salt Lake City 800-425-4817
Aug 20-21
Brasher’s NW Auto Auction 9th Annual Checkered Flag event, Eugene, OR 541-689-3901
Aug 23
CE Live class and Prelicensing Class, at Enterprise Rent-A-Car office, 8:30 am. 20400 SW Teton Ave,
Tualatin, OR 97062
Sept 6
CE Live class and Prelicensing Class, at Enterprise Rent-A-Car office, 8:30 am. 20400 SW Teton Ave,
Tualatin, OR 97062
Sept 13
Dealer 5 hr class, 9 am to 2pm, at Medford at Mellelo Coffee House, 3651 Lear Way,
Medford, OR 97504. Call 503-399-9199 to sign up.
MEDFORD
Sept 20
CE Live class and Prelicensing Class, at Enterprise Rent-A-Car office, 8:30 am. 20400 SW Teton Ave,
Tualatin, OR 97062
Sept 27
Dealer 5 hr class, Pendleton Red Lion 9am to 2pm. Call 503-399-9199 to sign up.
PENDLETON
Oct 4
CE Live class and Prelicensing Class, at Enterprise Rent-A-Car office, 8:30 am. 20400 SW Teton Ave,
Tualatin, OR 97062
Oct 18
CE Live class and Prelicensing Class, at Enterprise Rent-A-Car office, 8:30 am. 20400 SW Teton Ave,
Tualatin, OR 97062
!
Classes are usually held every other week on Fridays. Specially scheduled classes are
common though, so call the office for the latest updates. 503-399-9199
***DIRECTIONS to: Enterprise Rent-a-Car — 20400 SW Teton Ave, Tualatin. Exit 289, West on Nyberg,
stay in left lane, turns into Tualatin-Sherwood Rd, left on SW Teton.
August 2013
DEALER Solutions
2
FTC 'RED FLAGS' RULE
The Red Flags Rule is an anti-fraud regulation, requiring “creditors” and “financial institutions” (which
includes dealers) with covered accounts to implement programs to identify, detect, and respond to the warning signs, or “red flags,” that could indicate identity theft. The financial regulatory agencies, including the
FTC, developed the Rule, which was mandated by the Fair and Accurate Credit Transactions Act of 2003
(FACTA). FACTA’s definition of “creditor” includes any entity that regularly extends or renews credit – or arranges for others to do so – and includes all entities that regularly permit deferred payments for goods or
services. Accepting credit cards as a form of payment does not, by itself, make an entity a creditor.
OVDA note: The Red Flag Rule is operative, and every dealer should have one in effect. For most
dealers, it is easy. Just download the file, print it out, fill in the blanks and review it every year. Members can call the office for more information at 503-399-9199 or to get an electronic copy of the file.
Thanks to the OADA for allowing all of Oregon’s dealers to use their format for compliance of the Red
Flags rule.
“Financial institutions” include entities that offer accounts that enable consumers to write checks or make
payments to third parties through other means, such as other negotiable instruments or telephone transfers.
The FTC’s Red Flags Web site, www.ftc.gov/redflagsrule, offers resources to help entities determine if they
are covered and, if they are, how to comply with the Rule. It includes an online compliance template that
enables companies to design their own Identity Theft Prevention Program through an easy-to-do form, as
well as articles directed to specific businesses and industries, guidance manuals, and Frequently Asked
Questions to help companies navigate the Rule.
Although many covered entities have already developed and implemented appropriate, risk-based programs, some – particularly small businesses and entities with a low risk of identity theft – remain uncertain
about their obligations. The additional compliance guidance that the Commission will make available shortly
is designed to help them. Among other things, Commission staff will create a special link for small and lowrisk entities on the Red Flags Rule Web site with materials that provide guidance and direction regarding the
Rule. The Commission has already posted FAQs that address how the FTC intends to enforce the Rule and
other topics –
www.ftc.gov/bcp/edu/microsites/redflagsrule/faqs.shtm. The enforcement FAQ states that Commission staff
would be unlikely to recommend bringing a law enforcement action if entities know their customers or clients
individually, or if they perform services in or around their customers’ homes, or if they operate in sectors
where identity theft is rare and they have not themselves been the target of identity theft.
August 2013
DEALER Solutions
3
CPO VEHICLES TARGETED BY BILL DEBATED IN CALIFORNIA ASSEMBLY
Mon, 07/15/2013 - 04:00 | SACRAMENTO, Calif.
By SubPrime Auto Finance News Editor Nick Zulovich
The same state that passed a pair of laws last year that intensified regulation of buy-here, pay-here dealers now is
taking up a measure that would modify how a certified pre-owned vehicle can be sold. A bill that currently is in the California
Assembly would include manufacturer’s safety recalls on the list of prohibited conditions for certified vehicles.
The measure, AB 964, would also add a required pre-sale disclosure for all used vehicles (including non-certified units) regarding manufacturer’s recalls and the other safety and warranty issues.
The bill’s author, Assemblyman Rob Bonta who represents Oakland, said these disclosures parallel the safety and
warranty conditions applicable to certified used vehicles.
California law already states used vehicles may be advertised and sold only if certain criteria apply regarding the condition of
the vehicle. Examples of those criteria include that the odometer has not been altered or replaced to show fewer miles and that
the vehicle has not been salvaged or have other specified safety problems. Measure supporters — including the Latin Business Association, the California Hispanic Chambers of Commerce and the California Urban Partnership — argue that the bill
will improve consumer awareness and safety.
Opponents — including the California New Car Dealers Association, the Independent Automobile Dealers Association
of California and the California Financial Services Association — contend that the bill is unnecessary, burdensome and difficult
“if not impossible” for dealers to remain compliant.
The measure initially received support when it was discussed and voted to have additional readings and amendments
made by the Assembly’s Appropriations Committee. However, Assemblywoman Toni Atkins asked that it be put in the chamber’s inactive file where it can still be resuscitated and eventually moved through the Assembly and on to the California Senate
before the end of August. The state’s legislature is currently on its summer recess until Aug. 5. In analysis of the bill posted on
the legislature’s website, Bonta made his case for why he authored AB 946.
“Purchasing a car is a major investment for most hard-working Californians and we must have laws in place that will
best protect consumers from potentially unsafe vehicles,” Bonta said. “Currently, the 2006 Car Buyers Bill of Rights helped protect millions of Californians from purchasing a lemon or a potentially unsafe car. Unfortunately, the current protections do not
apply to all used cars.
“Essentially, the law right now does not allow car dealers to ‘certify’ a used vehicle if they know it has certain damage,
such as any open recalls, previous flood or fire damage, frame damage or an odometer rollback,” he continued. “The problem
is this: A car dealer does not have any obligation to inform consumers about a used car’s history that is not certified.
“Many working families cannot afford a certified used car and so they are placed at risk when purchasing a used car that may
have costly and potentially life threatening such as an open recall, flood, fire or frame damage, or odometer fraud,” Bonta went
on to say “Open recalls are something that dealers not only should disclose but also can easily have fixed by the manufacturer.”
Bonta pointed to a study that showed nearly 100,000 used vehicles with open recalls were for sale online in California.
The study indicated open recalls could include problems with the brakes, steering wheels, airbags, or the electrical system that
could cause a fire.
“In addition to open recalls, other issues that are not disclosed for used cars like flood or frame damage not only could
be dangerous, but could cost hard-working Californians thousands of dollars that they may not have available to fix the car,”
Bonta said. “This is all critical information that consumers should know prior to purchasing a used car — regardless if it is certified or not.
“I am authoring AB 964 to improve consumer protection,” he added. “All Californians — regardless of whether they can
afford a certified car or not — have a right to know all of the information available on the used car they are purchasing, any
reported damage or defects. Without such safeguards, hundreds of thousands of California consumers are at risk every day.”
CNCDA Outlines Opposition to AB 964
In formulating its argument against the measure, the CNCDA stated that laws already in place “struck a balance” between setting minimum standards for which vehicles cannot be certified, and dictating the precise terms of dealer certification
programs.
“AB 964 takes the certification statutory scheme, deletes the inspection report requirement and adds to the list of prohibitions whether a dealer ‘knows or should have known’ that the vehicle is subject to an ‘open and unaddressed recall,’”
CNCDA officials said according to the bill analysis on the state’s website.
“While we appreciate the author's desire to ensure that ‘certified’ vehicles do not contain certain flaws, we fail to understand the meaning of ‘open and unaddressed recall’ and how dealers are expected to comply when there are serious notice
and compliance issues with recalls,” they continued.
CNCDA emphasized that AB 964 wrongly targets all dealers for a problem that has been brought about by what the
associated believes stemmed from issues facing rental companies.
“The rental car industry has faced scrutiny in recent years for renting defective to consumers despite being informed of open
safety recalls,” CNCDA officials said. “Bills were introduced in Sacramento and then in Congress to require rental car companies to remove recalled vehicles from their rental fleets until repaired. These bills failed passage
Continued on page 5
August 2013
DEALER Solutions
4
Continued form page 4
“Rather than focusing on rental car companies, AB 964 targets every dealer seeking to ‘certify’ a vehicle — regardless
of how minor the recall is, or whether the dealer has access to information about the recall,” they added.
CNCDA told the Assembly that changing the focus of regulation from rental car to dealers creates “more, not less,” compliance
issues.
The association explained to lawmakers that while a rental car company is notified directly by the manufacturer when
a vehicle it owns is recalled, dealers don’t receive such notification unless they are a franchised dealer with a relationship with
the OEM.
In recognition of these concerns, CNCDA reminded California lawmakers that Congress passed last year requiring the creation
of a free Internet database — searchable by make, model and VIN — containing information about each recall and whether it
has been completed for each individual vehicle.
“Unless and until this database is operational, compliance with AB 984 would be impossible,” association officials
said. “CNCDA opposes AB 964 because it would require dealers to determine whether vehicles are subject to recall, and the
federal database necessary to do so has not been created. California should not enact legislation that guarantees noncompliance and needless litigation.”
CNCDA also pointed out that it believes AB 964 goes further than adding to the list of “certification” standards by also
requiring an “ill-defined disclosure” to consumers about what the dealer “knows or should know” about same list of items that
would prevent a dealer from certifying the vehicle.
“It is unclear whether purchasing a third party vehicle history report is ‘required’ to meet the ‘should have known’ standard that
the bill seeks to impose,” the association said. “The problem with such reports is that their accuracy varies considerably by
vendor, the level of information contained in any report can be vastly different and the information in such reports can be added after the dealer has run a report and sold the car to a consumer, creating a huge risk of liability for the unsuspecting and
unprotected dealer.”
CNCDA went on to tell lawmakers that it contends AB 964 would curtail or prohibit the sale of a previously flood damaged vehicle-even if repaired. The association stressed the bill would also expand “as is” disclosure requirements, even
though such information is available on the Used Car Buyers Guide.
The association pointed out the legislature just addressed the scope of “as is” just last year in restricting their use for
BHPH dealers with AB 1447, one of two measures passed by both chambers and signed into law by Gov. Jerry Brown.
More Opposition to AB 964
CNCDA wasn’t the only Golden State organization to give several reasons for why this measure should not pass. The
California Financial Services Association representing consumer finance lenders also opposes the bill.
CFSA officials said AB 964, “would establish multiple private rights of action against the of a vehicle if the vehicle has
a defect that is subject to a manufacturer’s recall and the repairs required to correct the defect have not been performed.”
The association explained Federal Trade Commission Rule No. 433, related to Holder in Due Course, to California
lawmakers. CFSA noted that the rule states consumers a right to seek redress against the holder of a contract, regardless of
whether or not the contract was originated by another party.
“Therefore, your bill would effectively establish a private right of action against a financial institution that holds the note
on said vehicle,” CFSA officials told the Assembly. “Financial institutions have no way to protect themselves from the strict liability called for in this measure and this could have a chilling effect on the auto lending industry.”
CFSA then asked lawmakers to consider, “How can financial institutions loan money, either directly or indirectly, knowing that
they could be liable for recalls that weren't addressed by a previous owner?
“This measure would essentially prohibit the sale of tens of thousands of used vehicles on the road that have been
subject to recalls, or significantly devalue them as a result of the new liability,” the association concluded.
Nick Zulovich can be reached at [email protected] [3]. Continue the conversation with Auto Remarketing on
both LinkedIn [4] and Twitter [5].
Cover Page
There is a rule in Oregon that a dealer may display a vehicle at a location other than their primary licensed location
without having a ‘supplemental’ location, and it does not have to be a ‘show’ location. The Display location rule is
known as the ‘Costco’ rule, as they precipitated the rule coming into being.
The cover photo is such a display vehicle, at the parking lot of the Salem Costco location on Mission boulevard, by the
gas station. It has all the required items, such as dealer name, number, contact information. There are no sale persons there, and the dealer has a contract with the owner of the property to display that vehicle for 30 days or less.
For information about this rule, call the OVDA office, 503-399-9199
August 2013
DEALER Solutions
5
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Bill gives cities and counties authority to regulate predatory towing
HB 3159C gives local governments the ability to set maximum rates and set up a complaint process
SALEM—the Oregon legislature voted to give more authority to cities and counties to regulate predatory towing. House Bill
3159C, which was signed by the Governor, allows local governments to set maximum towing rates and establish a complaint-driven process to solicit public input and feedback.
“This bill is for anyone who has felt that terrible sinking feeling of going out to the parking lot and finding their car missing,”
said Senator Mark Hass (D-Beaverton). “Predator towing companies pay their employees on commission, which gives
them a perverse incentive to tow as many cars as possible—sometimes illegally.”
Patrol towing generally involves an agreement between a property owner and tower to allow any unauthorized vehicle on
the property to be towed without notice to the owner. To recover the car, the owner must track down the lot where the car
was towed and pay outrageous fees to the towing company to recover it.
House Bill 3159C allows cities with a population of over 15,000 to regulate towing companies by requiring these companies
to obtain an annual license and to establish caps on the amounts that towing companies can charge car owners to recover
their vehicle. The bill also allows cities to set up a process to receive and respond to complaints from car owners regarding
towing companies. Under HB 3159C, areas outside of these larger cities may also regulate towing companies, either
through the jurisdiction of the county or the city.
“Towing companies charge obscene fees to people just trying to get their car back. A hook up fee, a gate fee, a storage
fee, a parking brake fee—it’s outrageous and just plain wrong,” said Senator Jackie Dingfelder (D-Portland). “Drivers who
make the simple mistake of parking in the wrong place shouldn’t have to pay a sizeable ransom just to recover their car.
This bill gives car owners an avenue to seek justice if they’ve been the victim of predatory towing.”
In 2009, the Oregon Legislature voted to crack down on predatory towing practices by requiring a tower to take a photographic evidence of a parking violation and to contact a property owner or tenant before towing the car. The authority for
local governments to regulate towing as provided in HB 3159C will provide car owners with additional protections against
predatory towing.
“This bill addresses an important issue in my district by allowing cities like Medford and Ashland to set some ground rules
for towing companies,” said Senator Alan Bates (D-Medford). “We have to give drivers more protections against having to
pay hundreds of dollars to reclaim their own car.”
TOYOTA TO RECALL 342K TOYOTA TACOMA ACCESS CAB VEHICLES
Thu, 08/08/2013 - 01:55 | TORRANCE, Calif.
By Auto Remarketing Staff
Toyota Motor Sales, USA Inc. revealed Wednesday (8-7-2013) it will conduct a voluntary
safety recall involving approximately 342,000 Toyota Tacoma Access Cab vehicles.
The involved vehicles — produced from 2004 to 2011 — contain screws that attach the seat
belt pre-tensioner to the seat belt retractor within the seat belt assembly for the driver and front
passenger which can become loose over time due to repeatedly and forcefully closing the access
door, the company explained.
Toyota went on to report that “if the screws loosen completely, the seat belt pre-tensioner
and the retractor spring cover could detach from the seat belt retractor, which can affect retractor
and pre-tensioner performance.”
Owners of vehicles subject to this recall will receive a notification by first class mail, officials
said.
Customers can access more information at www.toyota.com/recall and at the Toyota
Customer Experience Center at (800) 331-4331.
August 2013
DEALER Solutions
7
DAA Seattle is a member of the McConkey Auction Group
253.737.2200
daaseattle.com
facebook.com/daanwseattle
EXPERTS TELL HOW TO SPOT, STOP BAD PEOPLE AT DEALERSHIPS Aug. 5, 2013 Jim Leman | WardsAuto
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Dealerships can be scenes of violence, but more often they are hurt by the actions of toxic employees.
Bullies, backstabbers can mar work environment.
Crime can occur anywhere, including dealerships.
Consider these recent headlines of violence:
“Cleveland Police Investigating Multiple Shooting at East Side Used Auto Dealership”
“One Dead, Two Hurt in Attack Outside Gurnee Car Dealership”
“Car Salesman Arrested in Shooting of Boss”
Dealerships and other businesses have little control over random violence and its perpetrators. However, sales personnel by their nature
sometimes can potentially detect a perilous situation.
“Salesmen who already know how to read a visitor’s ‘buy’ intention should also use this skill to read an approaching individual’s ‘harm’
intentions,” says Buddy Riddle, a former terrorism investigator and now a deputy sheriff in Texas.
Dealerships are not immune from criminal violence, but they are unlikely spots for rampaging gunmen intending to wreak a maximum
amount of havoc.
“Car dealerships are not good targets for a mass shooter, because people there are not concentrated like in a classroom or movie theater
where a shooter can do the most harm in the shortest amount of time,” Riddle says.
In general, most workplace shootings are committed by a disgruntled employee or someone who goes to a place of employment to harm a
spouse, ex-spouse or former lover.
For this reason, a salesperson’s ability to read faces and body language can serve as an early warning system, Riddle says.
Workplace gun violence still is relatively rare, but businesses of all types, dealerships included, are susceptible to staff-on-staff bullying and
abuse.
Bullets may not fly, but words, behaviors and actions of bullies and abusers threaten co-workers, undermine morale and damage business
reputations.
Managers may not be able to stop random acts of violence. But they can thwart workplace abusers and bullies by hiring effectively, training
on conduct expectations and implementing zero-tolerance policies, says Terry Dortch, CEO of Automotive Compliance Consultants.
Because negativity can quickly spread in a workplace, employers need to spot the traits of what business-management author Marilee B.
Sprenger calls “toxic workers.”
Their characteristics include unbridled gossip, unconstructive criticism, high drama, bitterness, constant complaining and blaming others.
To avoid hiring someone like that, Dortch says job-candidate screeners should be on the lookout for transient work histories, signs of
substance abuse, a sense of entitlement and narcissism.
Problem employees also are prone to explosive, manipulative, caustic, dishonest and passive-aggressive behaviors, he says.
These individuals fixate on what they get rather than what they can contribute. Most co-workers of people with toxic personalities seek to avoid them
and fear them and will often be manipulated by them. But at times they can be strangely engaging.
People continually exposed to such individuals lose time from work due to stress and perform poorly on the job. Often the toxic personality
is a high performer, making it difficult for management to know how to handle the situation.
No one should agonize, Dortch says. “Don’t allow any one employee to get away with unacceptable behavior just because they produce.”
That means toxic individuals must go, even if they are the dealership’s highest producers. Otherwise, the long-term backlash of their
behavior can harm the profitability and reputation of the store.
Dealers lacking firm hiring guidelines can be too easily enthralled with a job candidate’s game face and behavior, only to be unpleasantly
surprised once the person is on the payroll.
Dortch, whose firm conducts hiring and human-resources compliance training, cites the following to help dealers and managers avoid hiring
troublemakers:
Screen all candidates: That ranges from senior managers to porters. Do you want a porter with a history of drug abuse driving your vehicles?
Look for red flags: Those include credit and debt issues that could lead to theft, especially by someone in a position of handing money and
accounts.
Trust your eyes and gut: Assess candidates visually when interviewing. Consider the appropriateness of their dress and language skills. Do they
make or avoid eye contact? Are they fidgety? Listen for a tendency to avoid answering specific questions about previous positions. Look for workrecord gaps and short job tenures.
Train everyone: That will not solve everything, but it can eliminate the possibility of being held legally responsible for toxic individuals’ behavior if a
matter ends up in court. Training demonstrates a proactive concern for the workplace.
The auto dealership is more likely the target of bullies and abusers than it is of gun violence. But in their own way, toxic individuals can
hold dealerships and its employees hostage.
The damage they do might not be fatal, but it is serious enough to take action.
Jim Leman writes about automotive retail operations from Grayslake, IL, where he also works on keeping a ’46 Plymouth Business Coupe on the
road.
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OREGON DEALER ADVISORY COMMITTEE MEETS JULY 25, 2013
The statutory advisory committee for DMV, comprised of representatives of the auto industry, met for two
hours to discuss the industry, at the main DMV office in Salem, This is an open meeting, and anybody can attend.
Attending were members from the Used Car Industry, new car dealers, consumer groups, dismantlers, RV dealers,
Office management, auctions and others. The others include Monty King, OVDA and OPSA president, representatives from OIADA, Enterprise Rent-a-Car, Dismantlers and DMV staff, including Barbara Cane, Portland Investigator, Chief investigator Ron Kramer, and others. The DMV administrator was not there, although this is the first
meeting he has missed in many meetings.
The meeting started out with Business regulation Manager Chris Ratliff thanking the industry for supporting
the fee bill that goes into effect January 1, 2014. The last time there was a raise was 12 years ago. All fees are going
up, but the most dramatic fee increase was that for the Dismantler group. Their 3 year license went from $ 450 to $
800, and their supplemental locations went from $ 90 to $ 800. Dealer licenses went form $ 1,000 to $ 1,175 for a 3
year license (plus plate registrations). A dealer supplemental location will go from $ 230 to $ 350 for years. Vehicle
appraiser licenses will go from $ 75 to $ 100 for a 3 year license.
DMV announced it is starting a process to upgrade the DMV computer network, and expects it will take about
10 years of planning and funding to redo their system. The system they are using right now was originally started in
the 70’s, and efforts to upgrade it have been unsuccessful. DMV says they will design the new system with the National Motor Vehicle Titling Information system in mind, as well as records for driving, business regulation, insurance
reports, vehicle records and all the other aspects of regulation they manage. It is a very complex system.
The committee reviewed, briefly, the statute in Oregon law that created the Oregon Dealer Advisory Committee. Monty King, of OVDA and OPSA asked the committee to review the membership, based on how many businesses
were being regulated in each category. His point was that although independent dealers are at about 1,600, they only
have 2 representatives, while dismantlers have two but only about 280 businesses. New car dealers are about 330
strong, but also have 2 representatives. No action taken.
Ron Irving, Chief Investigator, noted several investigations were ongoing concerning dealers who sold their
inventory and disappeared, leaving consumers and other dealers hanging. The bond does not begin to cover what
some of the losses have been.. General discussion about bonding levels, but agreement that higher bonding levels
would not solve the problem. Warning signs are late submissions to DMV of paperwork, and late payoffs. Possible
criminal actions will be taken against those dealers, not just dealer fines. Irving also said that Hurricane Sandy vehicles are here and being sold, some without proper disclosures. One dealer has bought over 75 of them, and 39 were
branded with the wrong brands by DMV, that is being fixed. Dealers should check dates on vehicles that have been
issued salvage titles. Anything near Oct 29, 2012 might be a ‘flood’ car. That is worse than totaled.
There was a legislative report by industry lobbyists, including Darrell Fuller and Monty King. New car dealers had a successful franchise bill pas, and OVDA/OPSA had two bills pass. The odometer bill funding has been approved in a grant from the Federal Government, but now DMV says there are ‘continuing’ expenses that need to be
financed. More on this later. The dealer Education bill, also passed, making changes to prevent fraud in the education process. More testing will be done , and yearly hours have been trimmed back to 4 per year, for dealers renewing
January 31, 2014 and after.
OVDA’s bill on expedited titles passed the Senate, and was approved by the House Transportation Committee, but died in the Ways & Means committee at the end of the regular session. OVDA President Monty King asked
the ODAC as a group if anybody was opposed to the bill. No one raised their hand except one DMV manager. The bill
will be pursued in the 2014 short legislative session, and in the regular 2015 session if necessary. Meetings are being
arranged with legislative leaders about the bill.
Several industry representatives talked about consignment practices being reviewed in the future. A bill was
passed about real estate industry consignment funds regulations, but that bill did not include vehicle dealers.
August 2013
DEALER Solutions 11
The Car Lawyer
The CARLAWYER© By Thomas B. Hudson and Nicole Frush Munro
Here’s our monthly collection of selected legislative and regulatory highlights, and a recap of some of the many auto sale and financing lawsuits we follow each month. Remember - what we report here does not capture every recent development. We select
those we think should be important or interesting to car dealers. Note that this column does not offer legal advice.
We include items from other states. Why? We want you to be able to see new legal developments and trends. Also, another
state’s laws might be a lot like your state’s laws – if Attorneys General or plaintiffs’ lawyers are pursuing particular types of claims
in other states, those laws and claims might soon appear in your state.
As always, though, there is no substitute for checking with your own lawyer to learn how what we report might apply to you, or if
you have any questions.
This Month’s CARLAWYER© Compliance Tip
Do you know what your state’s Attorney General is up to? What actions is the AG pursuing against dealers that you need to know
about? An easy (and free) way to find out is to create a monthly reminder in your Outlook program to “Check AG.” Then, each
month when that reminder pops up, go to the AG’s web site and review recent enforcement actions and press releases. If the AG
has just hammered a dealer for using an ad just like one you were planning to use, you might just want to know about it, right?
Federal Law
Are You Behaving Nicely? The Bureau has issued a bulletin informing entities subject to its enforcement authority about the
types of activities that constitute “responsible conduct” in enforcement investigations. The CFPB noted that it considers many factors when exercising its enforcement discretion, and this bulletin provides guidance about the activities businesses can engage in
that the CFPB may favorably consider in exercising such discretion. Specifically, the CFPB noted that “a party may proactively self
-police for potential violations, promptly self-report to the Bureau when it identifies potential violations, quickly and completely remediate the harm resulting from violations, and affirmatively cooperate with any Bureau investigation above and beyond what is
required.” If the party engages in this type of “responsible conduct,” the CFPB will take that activity into account when conducting
its enforcement investigation.
Waving the Flag, Again. On June 12, the Federal Trade Commission issued revised guidance on its Red Flags Rule, which requires financial institutions and certain other businesses to have a written identity theft prevention program. The guidance outlines
which businesses are covered by the rule, provides frequently asked questions, and includes a detailed 4-step process on how to
comply with the rule.
Buy-here, pay-here dealers should pay particular attention to recent federal efforts to curb abuses in the debt collection arena.
The Feds’ enforcement actions signal the sorts of collection practices they find objectionable.
Payday Lenders Sanctioned. On July 22, the Federal Trade Commission announced that it reached a partial settlement with the
principal defendants in its case against a payday lending operation, AMG Services, Inc., which alleged that the defendants violated
federal law by threatening borrowers during collection calls, requiring borrowers to agree in advance to electronic withdrawals from
their bank accounts as a condition of obtaining credit, and deceiving borrowers about the cost of their loans by charging undisclosed and inflated fees.
Third-Party Debt Collectors Penalized. On July 9, the FTC announced that it settled charges against Texas-based Expert Global Solutions and its subsidiaries for allegedly harassing consumers by placing debt collection calls that violated the Fair Debt Collection Practices Act and the FTC Act. The defendants also allegedly continued collection efforts after consumers disputed the
validity or the amount of the debt without verifying the debt. The $3.2 million settlement is the largest civil penalty ever obtained by
the FTC against a third-party debt collector.
Litigation
Illinois Court Lacked Jurisdiction over Out-of-State Dealership that Sold Car Advertised on AutoTrader.com to Illinois
Purchaser: An Illinois company bought a car that was located in Florida and advertised on AutoTrader.com. The negotiations
were conducted by e-mail. The bill of sale was prepared in Florida and sent by e-mail to the buyer in Illinois. The buyer then wired
money to Florida from an Illinois bank. The buyer instructed the defendants to send the title for the car to a company in New York
and prepare to send the car to Japan via air freight from a New York airport.
Continued on next page
August 2013
DEALER Solutions 12
Continued from page 12
The CARLAWYER© By Thomas B. Hudson and Nicole Frush Munro
The buyer sued the New Jersey car dealership that sold the car and its CEO, who was a resident of New Jersey and a licensed car
dealer in both New Jersey and Florida, claiming that the car did not work and needed major engine repairs. The court dismissed the
case for lack of personal jurisdiction. The court explained that it could not assert personal jurisdiction over the defendants because
they did not purposefully avail themselves of the privilege of conducting business in Illinois, nor did the alleged injury arise from the
defendants' activities relating to Illinois. The court rejected the plaintiff’s argument that its claims arose out of the defendants’ contacts with Illinois because the defendants advertised on the nationwide website AutoTrader.com. The court explained that merely
using the AutoTrader.com website did not establish that the defendants targeted buyers in Illinois. The court also found that exchanging e-mails with the buyer located in Illinois did not establish that the defendants targeted an Illinois buyer. The court explained that the defendants would not have foreseen that they would be sued in Illinois court. The parties did not anticipate that the
car would enter Illinois, and the car never did enter Illinois. See The Yokohama Trading, Inc. v. C&K Auto Imports, Inc., 2013 U.S.
Dist. LEXIS 87409 (N.D. Ill. June 21, 2013).
Arbitration Provision Not Signed by Dealer Is Enforceable: Individuals entered into a contract to buy a 2008 GMC from a dealership via the Internet. The contract provided that the buyers bought the GMC "as is," along with the rest of the limited factory warranty, and that the contract was not binding unless signed by the seller’s officer or manager. The buyers signed the contract, but the
seller did not. The contract contained an arbitration agreement. The buyers had significant problems with the vehicle and were unsuccessful in getting it repaired. They sued, and the defendants moved to compel arbitration. The buyers argued, among other
things, that the arbitration agreement was not enforceable because the contract had not been signed by the seller’s officer or manager. The trial court denied the request for arbitration on the grounds that the contract lacked mutuality because the dealership
failed to sign it. The defendants appealed. The Court of Appeals of Arkansas reversed, finding that the seller’s signature was not
needed to establish mutuality since assent was otherwise established by the buyers’ acceptance of benefits under the contract and
partial performance of the contract. See Asbury Automotive Group, Inc. v. Floyd, 2013 Ark. App. LEXIS 359 (Ark. App. May 22,
2013).
Creditor Not Required to Release Lien on Vehicle After Debtor Completed Plan and Received Discharge Where Co-Debtor
Was Responsible for Balance: When a debtor filed her Chapter 13 bankruptcy plan, she proposed to pay the lienholder on her
2002 Chevrolet Trailblazer its secured claim in full, with interest, and to treat the remaining amount owed as unsecured. After the
debtor completed her plan payments and received a discharge, she requested that the creditor release its lien on her vehicle in accordance with the terms of her plan, which provided that creditors would retain their liens upon their collateral until they had been
paid the value of the collateral. The creditor refused, claiming that it should not be required to release its lien until the remaining
amount of its unsecured claim, plus interest, is paid by the co-debtor on the account. The debtor sued, claiming that the creditor’s
refusal to release its lien violated the discharge injunction. The U.S. Bankruptcy Court for the Central District of Illinois entered judgment for the creditor. It found that, despite the plan’s lien release provision, the discharge of a debtor’s debt does not affect the liability of any other entity for the debt. Therefore, the lien can remain in place after the debtor received her discharge and can be enforced against the co-debtor and the co-debtor’s interest in the vehicle until the creditor receives payment in full of its claim at the
contract rate. See In re Faulkner, 2013 Bankr. LEXIS 2018 (Bankr. C.D. Ill. May 17, 2013).
RISC Enforceable Against Debtors who Ratified Contract by Conduct after Sale: Individuals bought a 2004 Chrysler Pacifica
from a dealership. The retail installment contract documenting the transaction was purchased by a credit union. When the individuals stopped making payments on the contract, the vehicle was repossessed. The individuals sued, alleging that the dealership had
sent documents to the credit union without permission and without their valid signature. The trial court found for the dealership, and
the Court of Appeals of North Carolina affirmed. The appellate court held that even if the individuals had not signed the appropriate
document, their conduct ratified its contents. They had accepted and retained the benefits of the contract by accepting the financing, making payments, and putting approximately 20,500 miles on the car prior to its repossession. See Huff v. CBS Quality Cars,
Inc., 2013 N.C. App. LEXIS 557 (N.C. App. June 4, 2013).
Creditor Required to Send Notice of Disposition but Need Not Prove Notice Was Received: A finance company sued car buyers for a deficiency judgment on amounts due under a retail installment contract. The trial court entered judgment for the buyers,
finding that a deficiency judgment was not warranted because the buyers claimed they did not receive a notice of disposition of collateral by certified mail and the finance company did not prove receipt through a copy of a return receipt card signed by the buyers.
The Car Lawyer
August 2013
DEALER Solutions 13
THOUGHTS FROM MONTY KING
OVDA & OPSA PRESIDENT
Dealer Scams are always around. Last month, a member in southern Oregon emailed in a fax they had
received about ‘required training’ for the dealership, and that they should sign up online immediately because
they were non-compliant with the federal Department of Transportation rules. It does not take a lot to ferret
out these kinds of things, and we do, with the help of members and other organizations. We got involved with
one nationwide trainer and consultant, and the Oregon Department of Justice on this one. See more information in Points to Ponder.
Things are not always Black and White in this industry. Lately, we had a dealer who is working through a
complaint that really made us think about the financing rules. There is a rule that says if financing terms are
changed, after the customer initially signs a retail installment contract, they have the right to undo the deal
and not continue, and the dealer needs to make sure they know they have the right. Last month, though, we
came across a situation where the lender involved brought the consumer into their office, sold them more
products (service contract and GAP insurance) and signed a new RIC with the same interest rate and term,
but at a higher per month payment.
The question is, does the rule above apply? What we think: The dealer is not involved in the final contract.
The lender gives the dealer a check for the vehicle. There is not a need to start over on the sale of the vehicle. However, things could possibly change if the dealer is participating in the profits of the additional products.
.41,000,000 SALES IN U.S. THIS YEAR
That’s right, used car/truck sales in the US are expected to hit 41.5 million this year, and edge up a little for
the next few years. What does that mean for Oregon? We have about 1 percent of the population, but our
citizens drive a bit more than people back east, so we’re looking at over 400,000 used cars being sold this
year. The reality of the industry is there are sales to be made, it is just getting the right vehicles to the right
people at the right time and price. Easy.
HIJACKING OF CELL PHONES IN OREGON?
We are hearing of a company in Eugene who is saying they can send advertising to people driving by with
their cell phones on. This is a new one on us, and we’re not sure if this is even legal. What about the ‘no
call’ list? Besides, do you want to make your potential customers mad by sending them text messages and
phone calls while they are driving by your lot? Are you liable for accidents caused by your messages
Monty King
OVDA and OPSA President.
August 2013
DEALER Solutions 14
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Sales every Tuesday starting at 8:30 a.m.
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CLAIMS PAYMENTS
Claims paid by VISA.
WEB ENTRY
Easy to use online entering system.
800-442-7116
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www.ascwarranty.com
QUESTION FROM A DEALER 1 -.I sold a car on a retail installment contract
with one of my lenders, and then the lender changed the terms of the contract at their office. The buyer wants to return the car because of some unrelated factors. Do I have a
problem?
Answer: Maybe. It is a rule that if financing is modified from what was originally signed for
on a retail installment contract, the buyer has the right to refuse the changes and return the
vehicle. Were they offered this right at the time of the changes? What was their documentation of the offer? You might be stepping into a conflict not of your own making on this
QUESTION FROM A DEALER 2 – Question: I’ve received a fax from a company named ‘Compliance Educators’ saying I am not in compliance with federal DOT rules for education on alcohol misuse and controlled substances abuse, if I
have employees. What is this about?
Answer: A Scam. We have this from Trans-com a company that does do compliance and newsletters about the transportation industry nationwide. Their website has the following warning about this letter being mailed and faxed out to
businesses in Oregon.
BEWARE OF NEWEST SCAM LETTER
A notice has gone out from "Compliance Educators" advising all persons designated to supervise employees in safety
sensitive positions to receive certification regarding 60 minutes of training on alcohol misuse and 60 minutes on controlled substance abuse. It then advertises a discounted rate for registering with them and states that if you do not
complete this training, "YOU ARE NOT IN COMPLIANCE!" This is a fraudulent notice and should be disregarded. Feel
free to contact us with any questions you may have: (631) 277-3456
MEDFORD AND PENDLETON
CLASS DATES SET.
Please call and reserve space for you
and your staff for the live classes in
Pendleton and Medford. Medford class
is Sept 13, a Friday, at Mellelo Coffee
off of Crater Lake Hwy. 9 am to 2 pm.
The Pendleton Class is at the Red Lion
QUESTION FROM A DEALER 3- : I've sold a motorcycle to a buyer who
is living in Oregon but currently has an Iowa driver license and has not yet
got his Oregon license. I know I have to scrape the tags because they are
still good. How do I do the registration?
Answer:’ You do NOT have to scrape the tags on a motorcycle plate
that is still valid if you do not process the title. It is not considered a
‘passenger vehicle’ by DMV, therefore the rule does not apply
(shortsighted thinking) . He must fill out a domicile certification form and
satisfy all the conditions on it to be able to register the motorcycle in Oregon. You can still sell the motorcycle and let them take care of the
registration problems.
SNO-PARK PERMIT FEES
Notice of proposed rulemaking:
Summary: In order to keep up with increasing costs and to provide service to the recreation community, an increase in the permit fees was recommended by the Winter Recreation Advisory Committee. The fees will go
from $3 to $4 for a one-day permit; from $7 to $9 for a three-day permit; and from $20 to $25 for an annual permit. The new amounts are were legislatively approved through ODOT's budget bill, SB 5544.
August 2013
DEALER Solutions 17
QUESTION FROM A DEALER 4: Question: When making
application for title for an off road
motorcycle, is the body style
MC?
Answer: This has changed recently. The 8-1-2013 Title and
Registration book has this
change in Chapter L, Vehicle
Types: The body style code for
all classes of ATVs is VT. An offroad motorcycle is defined in
statute as a Class III ATV and
therefore applications must show
the body style of VT, not MC.
QUESTION FROM A DEALER 5- Question: How do I know
when forms change?
Answer: Keep reading the Dealer Solutions is one answer.
Whenever we know about a form change, we let you know. For
instance, the POA form 735-500 has just changed, and an electronic version can be requested from the OVDA office to be
emailed to you, or downloaded from the DMV site. We asked DMV
about the new form, and got this response. “When the Form 500,
Power of Attorney, was reviewed this year there was a request to
bold the line "SIGNATURE OF OWNER" by our Processing Services Group. These forms were being submitted to DMV with that
line left blank, or the wrong person signing on that line. Using a
bold font may draw the attention of the customer to that line so that
it will not be left blank.
Dealers can continue using the old form until they run out, and then
the new form will be provided as you order more.
GOOGLE WALLET VEHICLE PURCHASE SCAM
Much has been written about email scams by apparently private sellers, supposedly offering their vehicles for
sale and wanting to be paid through PayPal. Now, we’re hearing of a similar scam, using Google’s payment service,
‘Google Wallet’.
Heres what Google has to say about it… You find a cheap car online and the seller claims that for your protection the
purchase will be completed via Google Wallet.
The car price is ‘too good to be true’ and the seller claims a need to sell the car quickly because he or she is
moving, moving out of the country, being called for miliatry service, getting a divorce, etc.
The reality is that there is no car, and you won’t be using google Wallet. Instead the seller will send you an invoice that appears to be from Google Wallet, but will instruct you to make the payment via Western Union, MoneyGram
or bank transfer.
A legitimate Google Wallet transaction will require that you sign in to your Google Account and execute he payment using the Google Wallet interface. Google Wallet does not accept wire transfers, bank transfers or payments via
Western Union, Money Gram, nor does it use any escrow type of payment.
Whether it be PayPal, Google Wallet, wire transfers or any sort of payment that is out of the ordinary, don’t fall
for these scams! They are everywhere out there. Never buy a vehicle from anyone online, unless you are familiar with
the seller or auction site on which it is being offered. From UCDA, Toronto.
INSURANCE COMPANIES RECEIVE RATING
The Northwest Automotive Trades Association (NATA) has once again provided ratings for insurance
companies and how they treat their customers. Repair shops are often involved with customers who have
claims, and see what effects the insurance companies have on the consumer and their vendors.
The worst were Geico, Allstate and Farmers insurance companies, all receiving an ‘F’ on their ratings.
The best were State Farm, Oregon Mutual and Mutual of Enumclaw. Oregon Mutual and Mutual of
Enumclaw are smaller companies.
Source: Parts & People 8-13 issue.
August 2013
DEALER Solutions 18
INDUSTRY
SERVICES
ADVERTISING
The Oregonian
503-221-8428 (Ryan Lynch)
Equipment Mart
1-800-822-9932
Credit Bureaus
Skywerks.com
866-534-3194
DEALER AUCTIONS–OREGON
ABS Auto Auctions Medford
800-378-0227 Ext 185
Portland Auto Auction (Manheim)
503-286-3000
Off I-5
Brasher’s Portland Auto Auction
800-300-3200
Off I-84
Cross Point NW Auto Auction
503-594-2800
Portland
Northwest Auto Auction
800-905-3901
Eugene
DEALER AUCTIONS–Northwest
ADESA Seattle
253-735-1600
Brasher’s Idaho AA
800-346-7938
Brasher’s Reno AA
775-828-2437
Brasher’s Sacramento AA
916-991-5555
Brasher’s San Jose AA
408-890-2990
Dealer’s Northwest AA Spokane
509-244-4500
Dealer’s AA Seattle
253-737-2200
National Powersport Auctions
888-292-5339 (Motorcycle)
Open Lane Auction (Internet)
866-969-0321
South Seattle Auto Auction
206-762-1600 Manheim
PUBLIC AUCTIONS
A-1 Auction Company LLC
541-472-0952
Auction Company of So Oregon
541-267-5361
I-5 Auctions
541-673-5636 (Roseburg)
Commercial Industrial Auctioneers
503-467-4846
Petersen’s Auction Group
541-689-6824
BONDING AND INSURANCE
SERVICES
Hecht & Hecht Insurance
800-609-0979
Zurich –Portland
800-821-7803
Ext 6125
CAR RENTALS COMPANIES
Enterprise Rent-A-Car
503-692-8400
Management Systems
OVDA
503-399-9199
Auto Manager
800-300-2808
Skywerks.com (Versidata)
866-534-3194
F&I Central
866-219-0926
Finance Express
630-667-8765
FINANCING
Car Financial Services, Inc.
800-252-7411
Finance Express
640-667-8765
Fireside Bank
503-643-0494
People’s Credit Co. Inc
800-531-4420 ext. 202
Reliable Credit Association
503-462-3022
Vehicle Acceptance Corp.
1-800-380-3882
Western Funding, Inc
503-786-5911
FORMS
OVDA Forms
503-399-9199
DMV Secure Forms
503-399-9199
OADA Form Orders
1-877-541-2277
GUIDE BOOKS
Black Book
800-554-1026
Kelly Blue Book
800-854-0585
NADA Books
800-966-6232
Skywerks.com
866-534-3194
INSURANCE
See Bonding and Insurance
LEGAL SERVICES
Deborah Lush, Att.
503-585-4422 ext. 303
Prepaid Legal
503-585-4075
LIEN PROCESSING
Oregon Lien Service
503-233-3580
Oregon Lien Source
503-885-1444
REPOSSESSING
American Lenders Service
503-978-0356
SERVICE CONTRACTS
Auto Services Co.
503-705-7597
NW Dealer Direct
503-659-8868 or 503-888-6034
Zurich –
Portland 800-391-1732
Eugene 541-461-9160
Terrorist Watch List
Skywerks.com
866-534-3194
TRAINING
Buy Here Pay Here Conf.
713-290-8171
OVDA Dealer Education
503-399-9199 or
[email protected]
Have a special
service you want
listed in the
Services Page?
Call OVDA/OPSA
at 503-399-9199.
Free listings for
members.