january 2011 issue fiada independent dealer magazine

January 2011 — Independent Dealer — 1www.fiada.com

Information and Insight for Florida Used Car Dealers January 2011 www.FIADA.com

SINCE 1940

A Publication of the Florida Independent Automobile Dealers Association

PRST STDU.S. POSTAGE

P A I DFULTON, MO

PERMIT NO. 38

JOIN FIADA TODAYPages 17-18

DEALER TECH SERIES 2.0Page 6

NIADA CERTIFIEDOFFERS MOREVALUEPage 8

2 — Independent Dealer — January 2011 www.fiada.com

PAID

AD

VERT

ISIN

G


MAILING ADDRESS 1840 Fiddler Court Tallahassee, FL 32308

TELEPHONE (850) 385-2712 (800) 237-0448

FAX (850) 385-3251

WEBSITE www.FIADA.com

EXECUTIVE COMMITTEE Jeff Gann President

Greg Edwards Chairman of the Board

John Cousins Senior Vice President

Dino Mercurio Secretary

Brandi Noegel Treasurer

Jim Kagiliery Regional Vice President

Frank Fuzy Regional Vice President

George Hickey Regional Vice President

Steve Marbais, CMD Regional Vice President

Chris Leedom Regional Vice President

FIADA STAFF Steve Jordan Executive Director

Ginger White Director of Membership Recruitment & Retention

Terry Myers Educational Instructor

Sarah Langley Membership Coordinator

Alex Romans Education Coordinator

Christy Taylor Editorial/Advertising

POSTMASTER:Send address changes to:FIADA • 1840 Fiddler Court

Tallahassee, FL 32308(850) 385-2712 • Toll Free: (800) 237-0448

Fax: (850) 385-3251 • www.FIADA.com

The Independent Dealer is a publication of: Florida Independent Automobile

Dealers Association, 1840 Fiddler Court, Tallahassee, FL 32308.

The magazine is published every month in Tallahassee and distributed to Florida new, used, wholesale and lease/retail car dealers. Advertising rates are available upon request.

The statements and opinions expressed herein are those of the individual authors

and do not necessarily represent the views of Independent Dealer or the Association.

Likewise, the appearance of advertisers, or their identification as members of FIADA, does

not constitute an endorsement of the products or services featured.

ContentsJanuary 2011

For members of the Florida Independent Automobile Dealers Association

C O L U M N S & F E A T U R E S

4 President’s Message Jeff Gann

5 You’re Invited: FIADA Board Meeting and Dealer Training

6 The Car Counselor’s T.A.R.P.: Dealer Tech Series 2.0 Preview

7 Looking for Legal Advice? FIADA can help you find an attorney who specializes in the auto industry.

8 NIADA Certified Updates to the national certified pre-owned program.

14 Tip the Scales for Your Business Auto Search Technologies CEO Mike Jackson gives practical tips on how to increase your positive image on the world wide web, without spending money.

17 Gear Up. Work Together. Top 10 reasons to be a member of FIADA.

20 Legislative Update Hon. John Grant, FIADA Lobbyist

22 Could a Vendor Checklist Keep You Out of the Soup? Attorney Tom Hudson suggests researching and reviewing vendor relationships

to reduce potential liability.

26 New Year, New Laws A new year means new rules and laws you need to be compliant with.

27 2010/11 Executive Committee

Use this form to make your contribution, or go online to www.FIADA.com.

CONTRIBUTOR’S NAME:

DEALERSHIP:

ADDRESS:

Make your check out to FIADA-PAC and mail your contribution to: FIADA • 1840 Fiddler Court • Tallahassee, FL 32808

Enclosed is my check for:

$1,000 $500 $250 $100 ______ Monthly Contribution _______

PAC CONTRIBUTION FORM


The year 2010 went out with a bang, but don’t uncover your ears yet as 2011 is poised to be a whopper. On the heels of FIADA’s many

accomplishments during the past year lay many challenges ahead. The market environment continues to change rapidly on many fronts. At least ten new manufacturers, many attempting to address alternate fuel technologies, have sprung up worldwide. Eventually these cars will end up in the wholesale market and we will need to understand their appeal to resale buyers and the technical challenges to maintenance and repair. For better or worse, many dealers have gone out of business potentially leading to increased market share for those of us left standing. You may have already noticed the changing demographic profile of customers shopping your lot as I have at my dealership. We have been training our staff to recognize this phenomenon and adapt the sales and pre-qualification process accordingly. For instance, we have seen a number of previously well-qualified buyers willing to admit they are voluntarily returning their nearly new car to the finance company in order to downsize. Regulatory changes and new paperwork pose a challenge in the compliance department. Those of you using DMS programs may have already noticed changes to certain documents. What remains to be seen is the impact of federal finance reform legislation on BHPH dealers.

Focus on the FutureBY JEFF GANN

F R O M T H E P R E S I D E N T

Congressman Darrell Issa (R-CA) was recently quoted as saying he wants to hear from businesses on what needs to be fixed so he and the new Republican majority in the house can set about fixing it. He, like many others newly elected to congress believe the solution to our economic problems lie in creating a fertile environment for businesses to prosper without unnecessary government regulation and interference, as meaningful job creation comes from the private sector, not the government. We must fight harder than ever to protect the freedoms inherent in a free market, and to reverse the negative elements currently impeding it. We must take up Rep. Issa’s offer to let him and his colleagues know what it will take return America’s marketplace into the power house it can be. Our voice must be focused and loud. Please do your part by seeking out dealers to join the association, and contribute as much as you can afford to our PAC Fund. Stay tuned for new programs being planned by your association to assist you with compliance and profitability. The benefits of membership have never been better, and they’re getting better yet. Your membership will give you the edge you need to meet the challenges ahead. It’is going to be a great year.

Jeff Gann,FIADA President

January 2011 — Independent Dealer — 5www.fiada.comwww.fiada.com

All dealers invited to attend the first quarterly board meeting of 2011.

Hyatt Regency Grand CypressOne Grand Cypress BlvdOrlando, FL 32836

Group Rate: $139/night plus tax

For reservations,please call the hotel at 888-421-1442 and mention you are with the FIADA, or register online from www.FIADA.com. Just click on the link toHyatt Reservations Online to access the portal.

Featuring Keith Whann’s Dealer Tech 2.0 Series Capitol Hill Update: How your business and the industry will be affected. Online and Offline Marketing: Sell more cars the right way. WEB 2.0: Enhance your Internet presence. Compliance Solutions: Practical approaches to diminish and eliminate liability. Buy Here Pay Here: Success solutions for today’s changing marketplace. Access to Capital: Relationships have never been more important.

Go to www.FIADA.com to RSVP now for this seminar.

January 2011 — Independent Dealer — 5


The Risk Based Pricing form, a reworked Privacy Notice and Red Flags Rule enforcement

are all critical issues that you need to be consulting with a licensed attorney on to make sure your forms and dealer operations are in compliance. Your forms and practices need to stand the legal scrutiny of a regulatory audit or even worse a law suit. An essential key in selecting someone to review your forms or practices is whether or not they can represent you in a court of law. If someone is going to tell you that your forms or practices are legally compliant, they need to be willing to say that in a court of law and have the ability to legally represent you to that affect, in a worst cased scenario. Anything else is just an educated opinion. Many of you may already have solid legal counsel from a licensed attorney that has deep experience in representing dealers and ensuring compliance, but if you are in need of legal assistance or seeking out counsel, the FIADA can recommend licensed attorneys who specialize in the automotive industry. Call FIADA at (800) 237-0448 or go online to www.fiada.com to access the list. As a member benefit FIADA members have access to Rob Sickles, our outside general counsel, who is available for legal and technical assistance questions through our office. If you are not a member, join today and you can have access to Rob and his legal assistance as well.

Rob SicklesHinshaw & Culbertson, LLPTampa, FL800.237.0448

PAID

AD

VERT

ISIN

G

PAID

AD

VERT

ISIN

G

Looking for Legal Advice?


The National Independent Automobile Dealers Association created the NIADA Certified program to give independent dealers a competitive edge

against franchise dealers offering manufacturer certified pre-owned vehicles. With NIADA Certified, dealers can advertise an “NIADA Certified” vehicle to customers and offer them a limited warranty with a $0 deductible, rental car coverage, and roadside assistance. Recently, the program, which is available for FIADA and NIADA members, has enjoyed some exciting updates that give it even more benefit and substance.

In November 2010, the NIADA Certified program underwent some significant changes that according to NIADA Certified Strategic Relationship Director Greg Levi provide more value to dealers and even higher satisfaction to customers. Increasing the coverage, adding strategic partnerships and providing above-and-beyond support and service have given dealers a way to provide consistent value to consumers as well as solidify relationships with lenders.

“Banks and consumers, were looking at one deal with a 3/3 and the same vehicle at another dealership with a 12/12,” Levi explained. “With the 12/12 limited warranty we are providing consistent value without sacrificing eligibility.”

The same eligibility guidelines for NIADA Certified apply, even with the increased warranty coverage: most 10-year-old or newer models with less than 100,000 miles.

After the car has passed an inspection that meets the program’s standards it can be labeled “certified” and offered with the limited warranty that begins at the time of sale. National Auto

Care (NAC) is the administrator of the NIADA Certified program, and the warranties are backed by an “A” rated insurasnce carrier with over $20 billion in assets providing dealers the peace-of-mind of a fully insured program.

NIADA Certified has also started to ramp up efforts to build partnerships with lenders to offer incentives and discounts on funding for certified vehicles. Recently, NIADA Certified announced that Columbus Finance, Inc., a lender serving the central Ohio market, agreed to give dealers an additional 10% advance (up to $1,000) and will offer customers one percentage point off program rates when they buy certified. Levi says that he is working with additional lenders to put together similar partnerships and lender opportunities to dealers around the country.

Dealers benefit from NIADA Certified’s support before, during and after initiation into the program. After signing on to participate in NIADA Certified (which is no cost to dealers), the dealer is encouraged to listen in on an interactive, training call that helps answer questions and provide tips and advice on getting the most from the program. A dealer has to complete this training before receiving any marketing materials. After the training, dealers continue to receive support through “check-in” phone calls and additional training opportunities and best practices reviews.

When an inspected vehicle is recorded with NIADA Certified the dealer gets access to a free copy of an AutoCheck vehicle history report, the ability to print a compliant Buyer’s Guide that can be posted in the car’s window and a clean, PDF copy of the inspection checklist that the dealer can use in either in the showroom or online

NIADA Certified Offers More ValueB Y C H R I S T Y TAY LO R

www.fiada.com8 — Independent Dealer — January 2011


PAID

AD

VERT

ISIN

G

10 — Independent Dealer — December 2010

in the vehicle’s internet posting. All of these forms and papers are prepared in a professional look and all the dealer has to do to access them is click print.

Soon, dealers will be able to export their NIADA Certified inventory right into eBay classifieds. As customers sort through online inventory, the benefit to participating in NIADA Certified will be seen through added interest and additional profits. According to Edmunds.com, CPO status can add an extra $1,500 to the sticker price and a report from Autotrader.com suggests that certified inventory turns twice as fast as non-CPO vehicles.

To offer NIADA Certified, dealers must first be a member of their state independent automobile dealers association. (See FIADA membership application on page 18). FIADA membership signifies professionalism and a consistent industry standard for dealers, which mirror the tenants of the NIADA Certified program. After becoming a member, dealers can participate in NIADA Certified, which does not require any start-up or application fees.

Currently there are 117 dealers participating in NIADA Certified in 30 states around the country. Details on NIADA Certified can be found at www.niadacertified.com.

The Basics of NIADA Certified• Sign up and submit at no cost.

• Car is inspected in your service department, at the auction or a third party facility.

• After passing inspection, the car can be advertised as “NIADA Certified” vehicle and offered to your customers with a $0 deductible, rental car coverage and road-side assistance for 12 months/12,000 miles.

• Both the Buyer’s Guide and Vehicle Inspection, along with additional materials are placed on the vehicle.

• Once the vehicle is sold, the dealer sends in funds and warranty along with a copy of the certification and the repair order.

• If an NAC vehicle service contract is sold in conjunction with the Limited Warranty the dealer also sends in a copy of the Vehicle Service Agreement.

Before you know it, you’ll be renewing your dealer license for 2011. Be sure you get your required continuing education credit before you renew.

The easiest way to get it is by logging on to www.FIADA.com and clicking on the Continuing Education link. Our convenient online continuing education program brings you the latest information regarding state and federal laws and industry issues that you need to know about.

Member price for continuing education is only $39.95. Non-members pay only $65.95

Sign up for FIADA’s online continuing education program today! Go to www.fiada.com and click on Online Continuing Education.

MEMBERS PRICE

$39.95NON-MEMBERS PRICE

$65.95

www.fiada.com


PAID

AD

VERT

ISIN

G


PAID ADVERTISING

14 — Independent Dealer — January 2011

look like you have been around for a while, this will add valuable visibility for your business online. Most all business listings allow you to insert a URL to your website, and if you need to battle against any negative online reviews, a good way to combat those remarks is to include the URL to your website, but directly to a page in your website dedicated to positive “Client Testimonials.” Make sure that when you are setting up a business profile listing that you make sure to keep a clear record of the username and password you use to set up the profile, in case you need to edit any of the content at a later date.

Press Releases:Press releases are very commonly overlooked as an advertising medium however this is a great tool to utilize for building your online reputation for free. Press releases can be picked up by many outlets and redistributed in various media channels without having to do all of the legwork. Press releases can also give other local news/media outlets content to write about your business furthering in additional content distribution about your business. If you help support local charities, non-profit organizations or even donate to a local cause, make sure to send out a press release about your

The “World Wide Web” is considerably immense, and there are many places to take

into account when advertising online. In today’s day in age having a dynamic web presence versus just a web presence is important. Traditionally when a dealership thinks of online advertising, the first thing that primarily comes to mind is the cost. You can’t traditionally get anything in the world unless you pay for it, or can you?

There are many free resources that are available to auto dealerships for online advertising that are rarely used to their fullest potential. Sometimes these avenues are actually the ones that are the most important when it comes to building and growing your online business dynasty.

Once your potential customer has researched and found the desired vehicle that they wish to purchase, you would be surprised how much research that they will conduct on your actual business to find out if you are a creditable dealership or not, using sites like www.RipOffReport.com , www.DealerRater.com, www.CarDealerCheck.com . Consumer reviews from sites like this play a valuable role in deciding to buy from your dealership or not. Currently the

number one resource for a consumer is the internet. This is traditionally started by the consumer conducting a search for the name of your business into a search engine of their choice (Google, Bing, Yahoo, Ask, Lycos). The results that are displayed within the first several pages of results will ultimately play a large decision during the consumer’s buying process.

Think of it like evaluating a potential customer’s credit report. Just because there might not be any negative information within the listings, finding very little positive information can also play a key factor. When searching your business on the internet, lack of information can be just as telling as negative information in the customer’s decision making process. Make sure the scale is tipped heavily in your business favor by ensuring that you have a dynamic presence.

Business Directory Listings:Business directory listings are a great and free way to ensure that potential consumers can see your business name repetitively when conducting research on your business. Wither you are established business that has been in operation for a long period of time, or a recent startup that wants to

Tip the

BUSINESSScales for Your

BY MIKE JACKSON, CEO

AUTO SEARCH TECHNOLOGIES

www.fiada.com


PAID

AD

VERT

ISIN

G


business’s philanthropic efforts. Press releases can also give you great content to use in your social media and blog postings, and if your dealership uses “Social Media” having good content to use is like gold.

Social Media:Social Media pages are becoming more popular for consumer research and reviews because they show up in the search engines when your consumers are conducting their online research. Social Media can give a snapshot and insight into the dealership as well as its employees. Most businesses social media pages do have friends or followers that are customers, and this gives them the ability to contact them to find out how they feel about your business. Displaying positive customer testimonials on a weekly basis will allow you to always make sure that positive content is displayed on your social media outlets so that when

your consumers find your company’s page it helps reinforce your positive reputation. Setting up a schedule of what you post on each day can make it easier to keep up to date with as well as let your employees follow along with it as well.

Monday = Client TestimonialTuesday = Prize Giveaway WinnerWednesday = Sales AnnouncementThursday = Press Release/AnnouncementFriday = Photo/Video Update

Blogs:Blogs are inexpensive to setup and are quick and easy to maintain. They can provide easy access to company news and information for your consumers, and they help make your dealership appear more accessible, and authoritative. Even if you have an internal blog in your website, having an external blog for your company provides yet another channel to help grow your dealerships reputation and

footprint to spin additional positive aspects of your business.

Linking Together:On their own websites, paid listing services, free online listing services, social media outlets, blogs, business directories and press releases can all be useful tools in building your online footprint, however linking them together can create more value that you can imagine. It is no secret that link internal building for your website can add positive SEO factors. The more links that point to your website, the higher your page will climb in the rankings of the search engines. Linking to and from your other online outlets is also equally important. Make sure that if you have a page dedicated to “Client Testimonials” or a section pertaining to them in your social media that you add links in your business directory listings to allow those researching your company to find the positive information pertaining to you.

PAID

AD

VERT

ISIN

G


Auction Buy/Sell Fee Discounts• FIADA’srelationshipwithauctionsprovidesyouwithover$1,175indiscountsonauctionbuy/sellfees.That’s

$1,175inimmediatecashflowsavings.

• Inaddition,youwillreceiveover$6,000indiscountsonadvertising,software,education,forms,shipping,officesuppliesandmore.

Help Your Business Win• Asamember,you’repartofanassociationthat’s70yearsold.So,evenifyou’rejuststartingout,youdon’thave

tolooklikeit.YouwillhaveaccesstotheFIADAlogoforuseonyourprintandelectroniccommunications.YouwillalsoreceivetheFIADACodeofEthicsCertificateandaFIADAMemberDecaltodisplayinyourstorelocation.

• Pickupnewideasandnetworkwithotherdealersandindustryserviceprovidersatourannualconventionandquarterlyboardmeetings.

• Needtocontactanotherdealerinanotherpartofthestateoracrossthecountry?WithFIADA’sonlinememberdirectoryyoucancontactdealersacrossthestateforassistance.Haveacustomerthatmovedacrossthecountry?ThroughouraffiliationwithNIADA,FIADAisapartofanationwidenetworkofindependentdealersthatcanassistyouwithfindingyourcustomersandyourcars.

• FIADAMemberssaveontheDMVrequiredonlinecontinuingeducationcourse.SimplyloginwithyourMemberIDandpasswordtosave$30.

• BydonatingtothePoliticalActionCommitteeyoucandirectlysupportcandidatesandelectedofficialsinstateofficeswhohaveapositiverelationshipwiththeautomobileindustry.

Industry Compliance Made Simple• KeepabreastofthelatestrulesandregulationsaffectingFlorida’sIndependentDealer.FIADApublishes

IndependentDealermagazinetokeepyouup-to-date.Alsoaslatebreakingchangesoccur,FIADAwillkeepyouupdatedviaemailblasts.

• Staycompliantwithnewfederalregulations.FIADAprovidesthetoolsandresourcesnecessaryfordealerstocomplywiththeRedFlagsRuleandSafeguardsRule.

• FIADAmembersalsohaveaccesstoinformationregardingother complianceissuessuchassalestax,titlesandregistrations.

• Havequestionsabouttheautomobileindustry?AsanFIADA member,helpisalwaysjustaphonecallaway.FIADAmembers haveunlimitedaccesstoourin-houseexpertisetogive assistancetocommonproblemsthatcanbecumbersome andtechnical.

Annual Dues: $300

Top Reasons Independent Dealers Belong to FIADA

gear up. work together.

join today.January 2011 — Independent Dealer — 17www.fiada.com

Independent Dealer Magazine


PAID

AD

VERT

ISIN

G

www.fiada.com

The Balancing Act BeginsBY HONORABLE JOHN GRANT, F IADA LOBBYIST

The elections are over as is the pomp and circumstance of the organizational session. Now it is time to get to work. The first round

of committee sessions have happened and the FIADA legislative presence was there.

Last year, our highlight accomplishment was the passage of the curbstoning bill and the related items contained in it. We came out of the session with every key point we went in asking for.

Our legislative agenda for this session is primarily to play defense and keep any unfriendly bills from passing, especially any attempts to unwind what was in our legislative package that successfully passed last year.

We will also be lending our voice to help those bills designed to stimulate the economy, create jobs and reduce the burdensome regulations placed on small business men and women, like our dealers. This year’s session will be dominated by two things:

1. Balancinging the budget. The state’s budget faces a daily growing deficit, now north of $3.5 billion, largely due to spiraling Medicaid costs.

2. Stimulating job creation. Creating new jobs will help jump-start Florida’s struggling economy

At this early stage in the session it appears that small businessmen and women, like our dealers, have nothing to worry about. The legislature has taken a blood oath not to increase taxes and therefore, the only way to balance the budget will be to cut spending. The

L E G I S L A T I V E U P D A T E

main focus of that will be in cutting the cost and size of government. A smaller government means less regulation, oversight and bureaucracy and less of the burdensome regulatory compliance issues faced by small business.

Florida Tax Watch, the state’s watchdog organization for government accountability, has come up with 125 ways to cut billions from the state budget without impacting health, safety, education and the most critical services needed.

For example, they suggest considering placing a cap on retirement cost of living increases for state employees as well as making employees pay part of their retirement contributions, raising the retirement age and eliminating the DROP program. All together, the total of the TaxWatch recommendations would save the state $4 billion, which is more than enough to cover the current deficit shortfall. The proposal has support from both sides of the aisle.

Other suggested provisions under consideration include reviewing and partially privatizing the state prison system and reducing travel for state workers. Implementation of these recommendations would save money without harming core services and they would force Florida’s government to perform more efficiently. FIADA has a long-standing positive relationship with Florida TaxWatch our organizations share similar interests.

Additionally, the Governor and legislature will be looking much more closely at selectively cutting



Details Coming Soonwww.FIADA.com

previously provided services, especially in Medicaid which is the largest contributor to the budget deficit. For example, a proposal is on the table to remove dental care for Medicaid provided services.

From the personnel side of our lobby team, I am pleased to announce that we have added Jennifer Lux who will be joining me as we lobby on behalf of FIADA. Jen brings extensive legislative and political experience with her at both the state and federal levels. Among other assignments, she was a top aide to Senator John McCain and his family during the last presidential campaign. FIADA members will enjoy working with her and she will greatly increase our clout in Tallahassee.

Jen and I look forward to working with each of you during the coming year and look forward to working with the legislative committee as we keep an eye on legislative developments. We invite all of our dealers to visit us during the session in Tallahassee and to walk the halls with us as we tell the FIADA story to members of the legislature.

PAID

AD

VERT

ISIN

G


Would a Vendor Checklist Keep You Out of the Soup?

Make a note to yourself. Write it on the back of your hand, if you can’t find

a piece of paper. It should say, “Create Vendor Checklist.”

Then the next time you have a few minutes of downtime, create the thing. Your vendor checklist should be designed to put the burden on vendors who try to sell stuff to your dealership to prove to you that the

stuff they are selling won’t get you into trouble. What if, for example, your vendor

was doing the sorts of

things that an ad company was accused of in a recent lawsuit?

Iowa Attorney General Tom Miller sued a Louisiana company called Smart Automotive Group, alleging that it used deceptive “false-premise” ads for used car

“sales events”

in Iowa. According to an

AG press release describing the lawsuit,

Smart Automotive Group sale ads falsely used terms

such as “Seized and Repossessed Vehicle Event,” “Statewide Used

Vehicle Liquidation,” “Emergency Disposal Event,” and other deceptive and misleading terms that were not true.

Smart Automotive Group sold promotional advertising and sales packages to Iowa auto dealers to increase sales of the dealers’ used

vehicles, the suit said. The suit claimed that such packages “are designed to trick consumers into believing the vehicles come from a source other than the dealer’s usual used vehicle inventory and are available at lower than usual retail prices.” Miller called the practice “false-premise” deceptive advertising.

“The problem is that such ads mislead customers into thinking vehicles must be sold quickly and at bargain prices, when that is not the case,” Miller said. “Consumers are misled, and sometimes they end up paying prices that are even higher than normal,” he said. “We alleged they used deceptive ads to trick consumers into thinking used cars and trucks were being sold at bargain prices at special sales events when in fact vehicles were from dealers’ regular used-vehicle inventories,” Miller said.

The suit also alleged Smart Automotive Group used other misleading ads or tactics, such as scratch-off prize cards, as “a subterfuge designed to trick consumers into visiting the dealership,” subjecting consumers to undesired sales pitches.

BY THOMAS B. HUDSON

L E G A L B R I E F S


PAID

AD

VERT

ISIN

G

www.fiada.com

The suit also said Smart Automotive Group sometimes sent in sales teams who “use high pressure sales tactics to sell consumers vehicles under false pretenses.” The suit asks the court to order civil penalties up to $40,000 per violation of the Consumer Fraud Act, order restitution for consumers, and prohibit future violations.

Now there’s sometimes a bit of distance between “alleging” and “proving,” and, so far, we haven’t heard what Smart Automotive Group’s defenses to these claims might be. But assume with me for a moment that the AG prevails in his suit. What happens to the dealers who used this marketing firm?

I’ll bet that those allegedly false ads and tactics were done in the names of the dealers that Smart Automotive Group was working for. If that’s the case, the dealers could have easily been named in the AG’s suit as well, and are lucky they weren’t. Dealers would be well advised to assume that the AGs in their states might well decide to sue the dealers and the ad companies together.

How can dealers avoid being swept up in such suits? Remember the Vendor Checklist that I mentioned in the first paragraph? What would such a checklist look like, and how would it prevent this kind of trouble? Here are a few suggestions:

First, apply the “smell test.” If there is anything fishy about what the vendor is peddling, go on high alert. If the dealers who Smart Automotive Group were doing ads for knew that the cars being hawked by Smart were the same cars normally included in their inventory and were not “seized or repossessed,” for example, alarms should have sounded.

Ask the vendor for references. What other dealers has the vendor worked with, and when? In which states has the vendor operated?

Determine whether the vendor has obtained legal opinions stating that the goods or services that it’s peddling are legal, and that your sale of them in the way the vendor advises does not violate state or federal law. Either the vendor will have such opinions or not. The failure to have them, and to provide them to you when asked, should be a deal-killer.

Ask whether the vendor has been the target of any federal or state enforcement actions.

Ask whether the vendor maintains errors and omissions insurance coverage or any other insurance that will protect you if anything goes wrong. If the answer is yes, verify the vendor’s claim with the insurer.

Do an Internet search using the vendor’s name. That should turn up news and enforcement agency press releases dealing with the company.

Make sure that your contract with the vendor requires that the vendor cover your damages in the event that the vendor’s goods, services, or actions get you into trouble, and then determine whether the vendor has the wherewithal to pony up those damages. The contractual provision is worthless if the vendor is not financially able to honor it.

A vendor’s failure to “pass” every one of these bullet points wouldn’t necessarily eliminate that vendor, but every “fail” ought to increase your “spidey sense.” You might have other items for the checklist, but even one as rudimentary as this one, if followed, should do a pretty good job of steering your dealership away from vendors whose actions lead to these nasty lawsuits.

Thomas B. Hudson, Esq. ([email protected]) is the Publisher of Spot Delivery®, a monthly legal newsletter for auto dealers, and the Editor in Chief of CARLAW®, a monthly report of legal developments in all states for the auto finance and leasing industry. He is also a partner in the Maryland office of Hudson Cook, LLP. Spot Delivery and CARLAW are produced by CounselorLibrary.com LLC, 7250 Parkway Drive, 5th Floor, Hanover, MD 21076-1343. For information, call 410-865-5411 or visit www.counselorlibrary.com.

A vendor checklist does a pretty good job of steering your dealership away from vendors

whose actions lead to nasty lawsuits.



PAID

AD

VERT

ISIN

G


Whether its resolutions or reflection, January 1 is a good time to start new

things, and for independent dealers it is the time to make sure you are in compliance with federal laws that have gone into effect.

FTC Risk Based PricingThe FTC crafted this rule in an effort to educate consumers about credit. In a nutshell, if you use a credit report or credit score to determine the interest rate for a customer, it is considered risk based pricing. As of January 1, the FTC is now requiring all lending institutions to notify customers when their credit score (good or bad) affects their interest rate. Even if you are not a buy-here, pay-here dealer, it is your responsibility, not the finance company, to comply with this rule and notify your customers.

There are a variety of resources to find examples of disclosure templates you can use in your dealership including many DMS providers, the FTC (ftc.com) and FIADA (fiada.com). While these templates are helpful in providing you with an example of what information should be included and how it should be presented, there are too many business variables to provide a “model” form. Make sure you consult with a licensed attorney who can guide you into full compliance.

Privacy NoticesBy now you should be very familiar with privacy notices and opt-out forms as they have been a requirement for dealers since the Gramm-Leach-Bliley Act was enacted in 1999. There have been some updates to the language used on the Privacy Notice that helps your customers better understand how your company will collect, share and protect their personal information and as of January 1 your notice needs to include these edits.

Check with your DMS company to see if the notice you are using has been updated in their system or go to the FIADA or FTC’s website for template examples. These sample forms are generic and can be used nearly “as-is” by most dealerships, however you should consult with your legal counsel as to which form is appropriate for your dealership.

Red Flags RuleEnforcement of the Federal Red Flags Rule has had several delays over the past few years, but January 1

marked the official date of enforcement. Your Red Flags Rule should already be in place, however,

because even though FTC is now authorized

to enforce them their requirements to comply

with them have not changed.

The Final Rules require financial institutions and creditors holding consumer accounts, or other accounts for which there is a risk of identity theft, to develop and implement an Identity Theft Prevention Program. The Program must include reasonable policies and procedures for detecting, preventing, and mitigating identity theft and enable a financial institution or creditor to:

1. Identify relevant patterns, practices, and specific forms of activity that are “red flags” signaling possible identity theft and incorporate those red flags into the Program;2. Detect red flags that have been incorporated into the Program;3. Respond appropriately to any red flags that are detected in order to prevent and mitigate identity theft; and4. Ensure the Program is updated periodically to reflect changes in identity theft risks. If you are still unsure about your Red Flags policies, check out our special Red Flags Rule section in the dealer resources section at www.fiada.com.

FIADA membership includes access to these “members-only” sections of the www.fiada.com website which offer dealer resources and advice. FIADA Members are also able to contact FIADA at (800) 237-0448 for technical questions and advice as well as access to consultations by the FIADA outside general counsel, Rob Sickles. For non-members, join today using the application on page 18, and start accessing these rock solid dealer resources.

New Year, New LawsA new year means new rules and laws. Make sure your dealership is compliant.


PresidentJeff Gann

Lakeshore MotorsEast Lake Weir, FL

[email protected]

Chairman of the BoardGreg Edwards

Greg Edwards Enterprises Daytona Beach, FL

[email protected]

SENIOR VICE PRE

2010-2011 Executive CommitteeAre you looking for advice or suggestions? As the Association’s leadership, these men and women have volun-teered to make themselves available to all members for advice, discussion and assistance.

SENIOR VICE PRESIDENTJohn Cousins

Southeast Car AgencyGainesville, FL352.377.7787

[email protected]

TREASURERBrandi Noegel

Noegel’s Auto SalesStarke, FL

[email protected]

SECRETARYDino Mercurio

Independent Credit, Inc.West Palm Beach, FL

[email protected]

REGIONAL VICE PRESIDENTJim Kagiliery

Brightstar Financial Group, Inc.Jacksonville, FL904.400.6190

[email protected]

REGIONAL VICE PRESIDENTFrank Fuzy

Century Motors of South FLPompano Beach, FL

[email protected]

REGIONAL VICE PRESIDENTGeorge Hickey

Bond Auto Sales, Inc.Tampa, FL 34761

[email protected]

REGIONAL VICE PRESIDENTSteve Marbais

Marbais Enterprises, Inc.Ocoee, FL 34761

[email protected]

REGIONAL VICE PRESIDENTChris Leedom

AutoMaxxSarasota, FL

941.309.1111 [email protected]

PAID

AD

VERT

ISIN

G


NORTHEAST FLORIDAAdesa JacksonvilleAuto Auction11700 New Kings Rd.Jacksonville, 32219

WEST COASTInsurance A/A of Clearwater5152 126th Ave N.Clearwater, 33760

Ramada Inn Tampa11714 Morris Bridge Rd. 1-75 Exit 265Tampa

CENTRAL FLORIDAManheim’s ImperialAuto Auction3300 County Line Rd.Lakeland, 33811

Ocala Driver’s License Office110 SE 25th AvenueOcala, 34471

Manheim Central Florida Auto Auction9800 Bachman Rd.Orlando, 32824

Manheim Remarketing Site Orlando/Ocoee1275 E. Story RoadWinter Garden, 34787

SOUTH FLORIDAManheim Ft. Lauderdale5353 State Road 7Davie, 33314

Adesa Miami/Insurance Auto Auction of Miami12700 NW 42nd AveOpa Locka, 33054

PANHANDLEComfort Inn1013 East 23rd St.Panama City, 32405

FIADA Office1840 Fiddler CourtTallahassee

View Course Descriptions and Register at www.FIADA.com

Gulf States Auto Auction6615 Mobile HighwayPensacola, FL 32526

Jan. 6-7 Orlando/Winter Garden

Jan. 8-9 Tampa

Jan. 10-11 Ocala

Jan. 10-11 Pensacola

Jan. 12-13 Miami/Opa Locka

Jan. 15-16 Orlando

Jan. 17-18 Clearwater

Jan. 19-20 Lakeland

Jan. 22-23 Ft. Lauderdale

Jan. 24-25 Jacksonville

Jan. 26-27 Tallahassee

Feb. 3-4 Orlando/Winter Garden

Feb. 5-6 Tampa

Feb. 7-8 Pensacola

Feb. 7-8 Ocala

Feb. 9-10 Miami/Opa Locka

Feb. 12-13 Orlando

Feb. 14-15 Clearwater

Feb. 16-17 Lakeland

Feb. 19-20 Ft. Lauderdale

Feb. 21-22 Jacksonville

Feb. 23-24 Tallahassee

JUNE 2010 JULY 2010JANUARY 2011 FEBRUARY 2011 MARCH 2011

Feb. 28 - Mar. 1 Pensacola

March 3-4 Orlando/Winter Garden

March 5-6 Tampa

March 7-8 Ocala

March 9-10 Miami/Opa Locka

March 12-13 Orlando

March 14-15 Clearwater

March 16-17 Lakeland

March 19-20 Ft. Lauderdale

March 21-22 Jacksonville

March 23-24 Tallahassee

March 28-29 Pensacola


PAID

AD

VERT

ISIN

G


PAID ADVERTISING

january 2011 issue fiada independent dealer magazine

Documents