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Compliance Guide Presentation Full Guide V6 7 12 2011 Session Re Sort
 

Compliance Guide Presentation Full Guide V6 7 12 2011 Session Re Sort

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    Compliance Guide Presentation Full Guide V6 7 12 2011 Session Re Sort Compliance Guide Presentation Full Guide V6 7 12 2011 Session Re Sort Presentation Transcript

    • Colorado Dealer Compliance Guide
      July 12, 2011
    • Presenter
      Michael J. Dommermuth, Esq.
      McGloin, Davenport, Severson & Snow, P.C.
      1600 Stout Street, Suite 1600Denver, Colorado 80202
      Direct Dial: (720) 536-3550
      Phone: (303) 863-9800
      Facsimile: (303) 571-1600
      MikeD@mdsslaw.com
       
      CADA/McGloin, Davenport, Severson & Snow, P.C.
    • Your Guide to Colorado Laws and Regulations
      • Provide Dealers with a Single Reference Guide
      • Summarize Key Colorado State Laws that Impact Dealers
      • Organized for Ease of Use
      • Understandable and Useful Summaries (2-3 Pages per Topic)
      • Relevant State Forms and Publications and Links to Additional Resources
      • Cross-references to Statutes and Regulations
      • Joint Effort of CADA and MDSS
      CADA/McGloin, Davenport, Severson & Snow, P.C.
    • OVERVIEW OF GUIDE CONTENTS
      Topical by compliance area (can easily update)
      Expect annual updates July/August after legislative sessions
      Each section has:
      Summary
      List of relevant statutes and regulations
      Attachments (forms, state publications, etc)
      Additional Resources (web site, third party, etc)
      About this Guide
      How to look up statutes/regulations for more detail (or call us!)
      Appendix – file legal alerts from CADA
      Suggestions for improvements
      Table of Contents – Key Terms & Main Topics
      CADA/McGloin, Davenport, Severson & Snow, P.C.
    • SOURCES OF REGULATION
      Statute
      Regulations
      Case Law
      CADA/McGloin, Davenport, Severson & Snow, P.C.
    • OVERVIEW OF STATE REGULATIONS
      Licenses
      Two Government Agencies
      Motor Vehicle Dealer Board (Create Rules, Oversight of Disciplinary Actions)
      Nine members: 3 new dealers; 3 used dealers; 3 public members
      Auto Industry Division (Enforcement, Licensing, Regulation)
      Manufacturer/Distributors
      Executive Director of Department of Revenue
      Powersports Industry
      Other State Agencies
      CADA/McGloin, Davenport, Severson & Snow, P.C.
    • CLASS ACTION LAWSUITS
      Lawsuit by Group of People in Same Situation
      Plaintiff’s Goal is Settlement
      The Class
      Request to Certify
      Four Elements
      Expensive Early Process
      Class Action Waivers in Contracts
      Add-on fees
      Frequent Target of Class Actions
      Include in Price of Car
      Disclose to Customer
      Justifiable
      Include in Repair Estimate
      CADA/McGloin, Davenport, Severson & Snow, P.C.
    • ARBITRATION
      Private Dispute Resolution
      Stay Out of Court
      Requires a Contractual Agreement
      Private Judge
      Negotiation
      Mediation
      CADA/McGloin, Davenport, Severson & Snow, P.C.
    • ARBITRATION (cont.)
      PROS
      CONS
      Less Expensive
      Faster and More Efficient
      Use in Conjunction with Class Waiver
      Less Adversarial – Minimize Hostility
      No Punitive Damages
      Can be Done Without Attorneys
      No Appeal Rights – If Lose, That’s It!
      Arbitrators Split Baby
      Same Arbitration Forums Expensive - $500 Per Hour Arbiters
      Dealer Should Pay Most of Cost of Arbitration
      CADA/McGloin, Davenport, Severson & Snow, P.C.
    • ARBITRATION (cont.)
      Key Terms
      Arbitrators (who and how many)
      Where
      What Types of Disputes
      How
      Appeal Rights
      Consistency with RISC and Purchase Agreement
      Do You Sell if Customer Refuses
      Sample agreement in materials
      CADA/McGloin, Davenport, Severson & Snow, P.C.
    • DELIVERY & HANDLING FEES
      Permissible, But Not in Statute or Regulation 
      Must Charge Uniformly
      Cash and Credit Customers
      Risk of Class Actions 
      Must Disclose as Additional Dealer Costs and Profits
      Disclose in All Purchase Contracts
      Post Signs (Sample in Guide)
      Must Be in Advertised Prices
      “Advertisement” is Defined Broadly 
      Manufacturer Programs
      CADA/McGloin, Davenport, Severson & Snow, P.C.
    • ADVERTISING
      Very Broad Definition
      Any commercial message
      Any window display or computer display
      EXCEPT: materials required by state or federal law
      Colorado Requirements
      State Dealer’s Name
      Cannot Advertise Any Payment or Waiver of Sales Tax
      Cannot be “Inaccurate” or “Misleading”
      Price
      Include all costs to customer
      Requirements if a specific vehicle is advertised
      Savings must be documented
      Trade-in amount with MSRP
      CADA/McGloin, Davenport, Severson & Snow, P.C.
    • ADVERTISING (cont.)
      Colorado Requirements (cont.)
      Condition of Advertised Vehicle
      Not operable
      Photo of similar vehicle
      State if used
      State if salvage
      Miscellaneous
      Going out of business
      Do not try to hide terms
      Do not falsely imply terms
      Do not use terms “dealer cost”, “invoice”, or “wholesale”
      Restriction on prize or gift ads
       Out of State Advertising
      Jurisdictional issues
      CADA/McGloin, Davenport, Severson & Snow, P.C.
    • PRIZE PROMOTIONS
      GIVEAWAYS / RAFFLES
      Disclose Value of Prize in Advertisement (CCPA)
      “No Purchase or Payment Necessary” Language in Contests (Dealer Board Rule 16)
      “Free” Item in Connection with Purchase
      Cannot use the word “Free” if Conditioned on Purchase (Dealer Board Rule 9)
      Cannot Raise the Price of the Required Purchase (Federal Law)
      Sweepstakes Cannot Require a Purchase (Federal Law)
      CADA/McGloin, Davenport, Severson & Snow, P.C.
    • BANKRUPTCY / LIEN PERFECTION
      Three Types
      Chapter 7
      Chapter 13
      Chapter 11
      Federal Law Generally
      State Law for
      Lien Perfection
      Lien Perfection Is Essential
      Protect Your Claim
      Prevent Lender Buy-Back
      CADA/McGloin, Davenport, Severson & Snow, P.C.
    • BK / LIEN PERFECTION (cont.)
      Bankruptcy Basics
      Begins with Debtor Filing a “Petition”
      Automatic Stay Prohibits any Collection Activities
      Including Repossession
      Important Dates
      Creditor’s Meeting
      Proof of Claim Deadline
       Contact Legal Counsel
      CADA/McGloin, Davenport, Severson & Snow, P.C.
    • BK / LIEN PERFECTION (cont.)
      Automatic Stay
      What Do You Do When You Get A Bankruptcy Notice
      CADA/McGloin, Davenport, Severson & Snow, P.C.
    • BK / LIEN PERFECTION (cont.)
      30 Days! 30 Days! 30 Days! 30 Days!
      Procedure
      Must File with County:
      Signed RISC
      Name and address of debtor
      Name and address of lienholder
      Make, VIN and year
      Date and amount of loan
      Certificate of Title Application
      State Filing Fee
      Time: Date-Stamped Receipt of Filing
      CADA/McGloin, Davenport, Severson & Snow, P.C.
    • TITLE PROCESSING & REGISTRATION
      Upon Sale – Registered and New Title Issued
      Dealer's Obligations Upon Sale
      Deliver Certificate of Title Within 30 days
      To customer on cash sale
      To correct DMV on financed sale
      To county of residence or primary use
      Failure could lead to loss of lien or liability to customer 
      Contents of Application
      Application for Title and Registration (DR 2395)
      Sales Tax Receipt, Bill of Sale, Odometer Disclosure, Power of Attorney, Emissions 
      Dealers Must Maintain Proof of Ownership
      CADA/McGloin, Davenport, Severson & Snow, P.C.
    • REPOSSESSION
      Before Repossession
      Dealer Must have Valid Security Interest
      Buyer Must Be in Default
      If Using a 3rd Party, Must Use Bonded Repossession Service
      Consumer Credit Sales - Default
      Default: 10-Day Failure to Make Payment
      Send Notice of Right to Cure
      20-day right to Cure
      Co-Signer
      CADA/McGloin, Davenport, Severson & Snow, P.C.
    • REPOSSESSION (cont.)
      Notice of Intent to Repossess to Law Enforcement
      Notice to Intent to Sell
      Do Not Breach Peace
      CADA/McGloin, Davenport, Severson & Snow, P.C.
    • CONSUMER PROTECTION ACT
      CCPA – Deceptive Trade Practices
      False Representation Regarding Vehicles (New vs. Used, Advertising)
      Failure to Deliver Written Contract
      Failure to Disclose
      Failure to Have Licenses
       Specific to Motor Vehicles
      Cannot Guarantee Financing
      Selling Trade-in Before
      Financing is Final on Purchase
      Fail to Return Down Payment
      Fail to Disclose salvage, lemon,
      material damage
      CADA/McGloin, Davenport, Severson & Snow, P.C.
    • CONSUMER PROTECTION ACT(cont.)
      Security Breach Notice
      Penalties:
      Triple Damages
      Attorney Fees
      CADA/McGloin, Davenport, Severson & Snow, P.C.
    • DAMAGE DISCLOSURE
      Dealers Must Make Written Disclosure
      Salvage, Lemon, Known Material Damage
      Salvage
      Cost of Repair Exceeds Value
      Failure to Disclose Salvage Requires Full and Immediate Refund
      Material
      “Those Details Concerning a Vehicle for Sale that are Essential or Necessary for a Reasonable Prospective Buyer to Know”
      Question of Fact = Jury Trial
      Best Practice – Disclose
      Might Have a Claim Against Seller Upstream
      CADA/McGloin, Davenport, Severson & Snow, P.C.
    • DISCLOSURES
      Disclosures
      All Transactions
      Terms
      Legal Documents
      Only Written Terms are Enforceable
      Notice that Fraud is Punishable by Law
      CASH SALE – Notice That a Lump Sum is Due
      CONTINGENT FINANCING - Customer Will Agree to Maximum APR
      Best Practice – use interest rate close to RISC
      Daily and Mileage Rate if No Financing
      MVDB Contact 
      Sign New Documents on Refinancing
      If two purchasers on contract; have both sign (best practice)
      CADA/McGloin, Davenport, Severson & Snow, P.C.
    • LEMON LAWS
      Primarily Manufacturer Obligation
      Only New Vehicles Still Within Manufacturers Original Written Warranty
      No Commercial Vehicle Coverage
      Excludes Motor Homes, Motorcycles, Vehicles Capable of Carrying 10+
      CADA/McGloin, Davenport, Severson & Snow, P.C.
    • LEMON LAWS (cont.)
      Must Conform to Warranty Within 1 Year of Delivery
      “If cannot be repaired after a reasonable number of attempts and defect substantially impairs use and market value…”
      Manufacturer Must Replace or Refund Purchase Price
      CADA/McGloin, Davenport, Severson & Snow, P.C.
    • LEMON LAWS (cont.)
      Written Notice to Manufacturer Required
      Written Disclosure to Subsequent Purchaser
      CADA/McGloin, Davenport, Severson & Snow, P.C.
    • SALVAGE VEHICLES
      Salvage – Cost of Repair Exceeds Value
      Excludes Vehicles 6 years or Older (At Time of Damage)
      Salvage Status Must be Disclosed to Buyer
      Buyer is Entitled to a Full Refund if Not
      Knowledge not Relevant
      Salvage Status Must be
      Noted on Title
      Branded on Door Also
      States vary
      See NMVTIS Map For
      status of all states
      CADA/McGloin, Davenport, Severson & Snow, P.C.
    • NEW vs. USED
      Defined by Law
      New: Transferred from Manufacturer to Dealer for the First Time
      Demo < 1,500 mi (must be demo use only)
      Used: Not New 
      Illegal to Represent Used Vehicle as New
      Includes Advertisements 
      Best practice – a Failed Spot Delivery Converts a “New” Vehicle to “Used” 
      Check the Correct Box in RISC
      CADA/McGloin, Davenport, Severson & Snow, P.C.
    • SPOT DELIVERY
      Legally Allowed, But:
      CANNOT Sell Trade-In Before Approval
      Deceptive Trade Practice
      NEVER “Guarantee” Financing IN ANY WAY
      “With your credit score, financing will be no problem at all"
       10-Day Notification if Financing Not Approved
      Not Business Days
      Best Practice – In Writing
      Best Practice – Notify Customer if the Lender Has not Funded for Any Reason
      CADA/McGloin, Davenport, Severson & Snow, P.C.
    • SPOT DELIVERY (cont.)
      Required Disclosure
      Bailment Charges
      Take steps to minimize
      Must Negotiate Alternatives
      Re-Contracting: DO NOT PRE-DATE THE CONTRACT
      Best practice is to re-sign ALL documents, disclosures, etc.
       Retain Deposits to Cover Charges
      Must be in Disclosure
      Only if no “Guarantee” of Financing
       Follow the Same Practices for Leases
      CADA/McGloin, Davenport, Severson & Snow, P.C.
    • SPOT DELIVERY (cont.)
      DR 2434 Disclosure Form
      RISC
      Seller can Cancel
      No Guarantee of Financing
      Bailment
      10-Day Notice
      Requirement
      DO NOT SELL TRADE!
      CADA/McGloin, Davenport, Severson & Snow, P.C.
    • TEMPORARY PERMITS
      Purchased from County
      Monitored by State and Law Enforcement
      Key Requirements
      Dealer Completes
      Errors void the permit; Dealers Can Correct Re-Issue Mistakes
      60-day Duration (see specific guidance on end-dates)
      Dealer Stubs to State, Customer and Dealer
      Placed in Rear of Vehicle in Readable Location
      May Only be Used for Operable Vehicles
      Report Lost or Stolen Permits
      If Lost, Stolen or Damaged After Issued, Customer Must Go to the County for Re-Issue
      CADA/McGloin, Davenport, Severson & Snow, P.C.
    • FRANCHISE LAW
      Transfer of Franchise Ownership or Change of Management
      No Unreasonable Denial
      20 Days to Confirm Receipt of Notice/Ask for Information
      60 Days to Decide
      Cannot Condition on Site Control, Renovation
      Protection from Exclusivity Requirement
      Manufacturer Must Make All Models Available to All Dealers
      Equal Treatment on Incentives, Bonuses and Rebates
      CADA/McGloin, Davenport, Severson & Snow, P.C.
    • FRANCHISE LAW (cont.)
      Protection from Required Facility Upgrades
      Protection for Relocation Requests
      Manufacturers Are Prohibited from Owning Franchises
      Reimbursement for Right of First Refusal
      Protection from
      Unreasonable
      Export Charge Backs
      Termination of a
      Franchise – “Just Cause”
      CADA/McGloin, Davenport, Severson & Snow, P.C.
    • FINANCE – ANTI-MONOPOLOY LAW
      Goal – To Protect Competition in Financing
      No Single Source Financing Agreement
      No Side-Deals that Reduce Competition
      Dealers Must be Free to Offer Financing from Multiple Sources
      For a Violation
      Possible Crime
      Double Damages
      Void Contract
      CADA/McGloin, Davenport, Severson & Snow, P.C.
    • INSURANCE (SELLING)
      “Insurance” – One Party Takes Risk For Payment
      Must be Licensed to Sell Insurance With Vehicle
      Individual License
      Pre-license education and continuing education
       Agency License
      Nominate responsible person
      Responsible person must be licensed
      CADA/McGloin, Davenport, Severson & Snow, P.C.
    • SERVICE CONTRACTS / VSC / EXTENDED WARRANTIES
      Must Be Insured 
      Service Contract Must State
      Insurer Will Pay if “Provider” Does Not
      Contact Information for Insurer 
      Manufacturer Warranties Excluded
      Penalties
      Attorney Fees
      Triple Damages
      MVDB Enforcement
      CADA/McGloin, Davenport, Severson & Snow, P.C.
    • VEHICLE PROTECTION PRODUCTS
      Prevents Loss from a Specific Cause
      Etch, Theft Registration, Tire Protection Programs
      Colorado Vehicle Protection Products Act
      Contract Requirements
      Identity of all Parties
      Guaranteed by Insurance Policy
      Customer may Claim against Insurer
      Disclosure that Product is not Insurance
      Not Insurance – Exempt from Insurance Laws and Regulations 
      Consumer Suits Possible if Products Are Not Disclosed
      CADA/McGloin, Davenport, Severson & Snow, P.C.
    • ID CHECKING / ID THEFT
      Dealer’s Obligation 
      Secure and Verifiable ID (SVID) Required for Title
      Dealers Must Provide ID Verification
      Only Certain Forms of ID Acceptable
       Temporary Permits
      Obtain Proof Vehicle Sold to Person on Permit
      Vehicles Going out of State Excepted 
      Third-Party Lender Agreements Require Verification
      Different than “Evidence of Lawful Presence” (licensing)
      Federal issues: Red Flags Rule / OFAC
      CADA/McGloin, Davenport, Severson & Snow, P.C.
    • Licensing (Salesperson and Dealers)
      License Required
      Dealer License
      Three or More Vehicles
      Background Check
      Financial Condition
      Bond - $50,000
      Principal Place of Business
      Used Dealer License is Similar
      Additional Place of Business
      Name/Ownership Change – Notice required
      Change of Entity – New license required
      CADA/McGloin, Davenport, Severson & Snow, P.C.
    • Licensing (Salesperson and Dealers)
      Salesperson License
      Employed by Dealer
      Background Check
      Mastery Examination
      Bond - $15,000
      Dealers as Brokers
      Wholesale Dealer
      Powersports Dealer
      Buyer’s Agent
      CADA/McGloin, Davenport, Severson & Snow, P.C.
    • OFF PREMISE PERMITS
      Permit to Sell Away from Dealership
      Not for “Display” only Events
      Key Requirements
      Request Permit in Writing before Event
      Post Permit at Sale
      6-Day Maximum
      No Consecutive Permits
      CADA/McGloin, Davenport, Severson & Snow, P.C.
    • INVESTIGATIONS / DISCIPLINARY ACTIONS
      Violations of Law by Dealers or Salespersons
      Auto Industry Division – primary enforcement agency
      Motor Vehicle Dealer Board – final decision maker
       Procedure
      Complaint (consumer, another dealer, salesperson, audit)
      AID conducts an initial investigation and findings
      AID can settle the matter
      MVDB can review any case (pattern of violations, willful violations, danger to public)
      Final decision
      Penalties and fines (punitive, increase for successive violations)
      Appeal
      Latest Compliance Inspection Checklist in Guide
      CADA/McGloin, Davenport, Severson & Snow, P.C.
    • INVESTIGATIONS / DISCIPLINARY ACTIONS (cont.)
      License Denial, Suspension or Revocation
      Material Misstatement in Application
      Fraud
      Failure to Maintain Bond
      Misleading Advertising
      Selling Unsafe Vehicle
      Violations that Apply to Dealer Licensees Only
      Failure to Perform Agreements
      Misrepresenting Material Facts to Customer
      No Principal Place of Business
      No Notice of Rejection of Purchase
      Violations that Apply to Salesperson Licensees Only
      Selling Without a License
      Improperly Using or Withholding a Customer’s Money
      CADA/McGloin, Davenport, Severson & Snow, P.C.
    • REFERRAL FEES
      Generally Allowed
      No Specific law, Regulation or Guideline
      Gray Area for Licensing
      Licensed “Buyers Agents” Cannot be Paid Referral Fees
      CADA/McGloin, Davenport, Severson & Snow, P.C.
    • SUNDAY SALES
      No Selling on Sundays
      Applies to Motor Vehicles
      Applies to Every Person
      Applies to Selling, Negotiating and Offering to Sell
      Excludes Boats, Snowmobiles, and Agricultural Equipment
      Excludes Repair or Towing Services
      CADA/McGloin, Davenport, Severson & Snow, P.C.
    • REPAIRS / SERVICE (MVRA)
      Motor Vehicle Repair Act
      Ensure Customers Informed and Consent Before Repair Work
       Customer Authorization for Repairs / Work Order
      Total Cost of Repair
      Completion Date
      SIGNED
      Exceptions
      Waiver Language
      CADA/McGloin, Davenport, Severson & Snow, P.C.
    • REPAIRS / SERVICE (MVRA) (cont.)
      Oral Consent
      1. Date Given
      2. Time
      3. Manner of Consent (Telephone or Otherwise)
      4. Name of Service Advisor
      5. Total Amount of Estimate
      6. Expected Completion Date
      7. Name of Person Giving Consent
      CADA/McGloin, Davenport, Severson & Snow, P.C.
    • REPAIRS / SERVICE (MVRA) (cont.)
      Disassembly
      Completion Dates
      Storage – Requires a Separate Written Contract – Storage Limitation
      CADA/McGloin, Davenport, Severson & Snow, P.C.
    • REPAIRS / SERVICE (MVRA) (cont.)
      Invoice
      1. Customer’s Name and Address
      Year, Make, Model, Odometer, Start Date and License Number
      Date Brought In
      Itemization of All Parts
      All Labor Charges – Including Name of Mechanic
      Stages – Separate Mechanics
      Itemized Statement of Charges
      Identification of Sublet Repairs
      Initials of Person Completing
      CADA/McGloin, Davenport, Severson & Snow, P.C.
    • ODOMETER
      Disclosure Required on Sale and Service
      Disclose Discrepancy
      Tampering/Fraud Is a Serious Offense
      Dealer and Salesperson Cannot Renew License
      Legitimate Repair
      Set to Zero
      Written Notice Attached to
      Vehicle
      CADA/McGloin, Davenport, Severson & Snow, P.C.
    • MECHANICS AND STORAGE LIEN
      Repair Shops Have a Lien
      But Must Keep Vehicle
      Twelve-Day Repossession for Non-Payment
      Sample Letters in Guide
      Foreclosure
      Must have Possession
      30 Days After Bill was Due
      File Lawsuit
      90-Day Limit
      Recommended Notices 
      Best Practices
      Get Customer’s Address
      Have Owner’s Information
      Accurate Description of Vehicle
      Repossess Vehicle Peacefully or not at All
      CADA/McGloin, Davenport, Severson & Snow, P.C.
    • ABANDONED VEHICLES
      Abandonment of a Vehicle is a Crime
      Vehicle Presumed Abandoned
      Left Unattended or Unmoved 7 or More Days or
      License Plate/VIN Removed
      Vehicle Damage Exceeds Value (Salvage)
      Owner Contacted by Law Enforcement to Remove and Fails to Do So Within 3 Days
      CADA/McGloin, Davenport, Severson & Snow, P.C.
    • ABANDONED VEHICLES (cont.)
      Repair Shop Abandonment
      Vehicle Left at Repair by Owner and
      Repair Shop Offered to Repair and Offered an Estimate and
      Owner Refused to Allow Repair, Refused to Remove the Vehicle Or Refused to Pay for Authorized Repairs and
      Vehicle Not Subject to Sale Agreement
      Must Meet all 4
      CADA/McGloin, Davenport, Severson & Snow, P.C.
    • ABANDONED VEHICLES (cont.)
      To Satisfy 3rd Requirement
      Send Certified Letter to Owner, Include Copy of Repair Order
      If No Response Within 10 Working Days of Postmark Date, Vehicle is Considered Abandoned
      CADA/McGloin, Davenport, Severson & Snow, P.C.
    • ABANDONED VEHICLES (cont.)
      Current Regulation Includes a $2,000 Limit
      HOWEVER, state confirmed no basis in statute; will remove
      If Value Less Than $200 – Scrap
      ProceduresDR 2542 Checklist
      Establish Value – 15-30 days
      Certify VIN
      Request Title Search
      Notify Owner and Lienholders
      Bond 2x
      Wait 30 Days – File Statement with DMV
      Records Must Be Kept 3 Years!
      CADA/McGloin, Davenport, Severson & Snow, P.C.
    • CONSUMER CREDIT CODE
      Generally
      Regulates Transactions with Consumers
      Limits Finance Charges / Sets Maximums
      Applies to Products Used for Personal or Household Purposes 
      Annual Notice Filing - Jan. 31st
      Penalty is $5/day after March 1st
      Allowable “Additional Charges”
      Not included in Finance Charge
      Fees, Taxes, Insurance Charges, Etc. 
      CADA/McGloin, Davenport, Severson & Snow, P.C.
    • CONSUMER CREDIT CODE (cont.)
      Written Contract Required
      Even if Deal Re-Done
      Disclose Information About Financing (APR, Financing Charge, Etc.)
      Insurance Disclosure
      Buyer’s Right to Cancel “Home Solicitation Sale” 
      Notice of Default and Right to Cure Required 
      No “Unconscionable” Conduct
      Taking Advantage
      CADA/McGloin, Davenport, Severson & Snow, P.C.
    • CONSUMER CREDIT CODE (cont.)
      Required disclosure:
      THIS CONTRACT DOES NOT PROVIDE FOR AUTOMOBILE
      LIABILITY INSURANCE, AND SAID BUYER ALSO STATES
      THAT HE OR SHE HAS / DOES NOT HAVE (strike the words not applicable) IN EFFECT AN AUTOMOBILE LIABILITY POLICY AS DEFINED IN SECTION 42-7-103(2), COLORADO REVISED STATUES, ON THE MOTOR VEHICLE SOLD BY THIS CONTRACT.
      IMPORTANT! Make sure that the appropriate inapplicable words are stricken from the statement provided above.
      CADA/McGloin, Davenport, Severson & Snow, P.C.
    • INSURANCE VERIFICATION
      Dealers not Legally Required to Confirm Customer has Insurance  
      Consumer Credit Transaction
      Disclose that Dealer is not Providing Insurance
      Have Customer Indicate Whether they have Insurance 
      Best practice - Verify Insurance
      Failure may Be a Breach of Lender Agreements
      Prevent Third-Party Claims Against Dealer if Customer Causes Accident
      CADA/McGloin, Davenport, Severson & Snow, P.C.
    • GUARANTEED AUTOMOBILE PROTECTION (GAP)
      Debt Cancellation or Insurance?
      Typically a Debt-Cancellation Contract (Lender Waives Amount Due after Loss)
      Insurance (Insurer Pays-Off Amount Due After Loss)
      Maximum Charges
      GAP Fee may not Exceed $300 or 2% of the Amount Financed, Whichever is Higher (UCCC Rules)
      CADA/McGloin, Davenport, Severson & Snow, P.C.
    • GUARANTEED AUTOMOBILE PROTECTION (GAP) (cont.)
      Requirements
      Leases are Excluded
      Allows GAP to Be Sold for an “Additional Fee”
      Disclosure
      GAP not Required, may Cancel, Fee
      Contract Provision
      Separate Cancellation Agreement
      Provide Customer with Policy and Terms
      Refunds – if Loan is Prepaid or on Repossession
      CADA/McGloin, Davenport, Severson & Snow, P.C.
    • CREDIT CARDS
      TRUNCATION!!!
      Federal and state laws
      Know your lender restrictions
      No surcharges (UCCC)
      CADA/McGloin, Davenport, Severson & Snow, P.C.
    • CONSIGNMENT
      Sale of Vehicle on Behalf of Owner
      Need a Written Agreement
      Owner May Be Required to Deliver Title Even if Not Paid
      ISSUES TO CONSIDER
      CADA/McGloin, Davenport, Severson & Snow, P.C.
    • EQUIPMENT
      Dealers have a Statutory Obligation to Sell Vehicles with Certain Equipment
      Proper Condition and Adjustment
      Safety Inspection
      Tow Away, Not to Be Driven
      CADA/McGloin, Davenport, Severson & Snow, P.C.
    • EQUIPMENT (cont.)
      Equipment Certification
      TV Screens
      2 Head Lamps
      2 Tail Lamps
      License Plate Lamp
      Rear Reflectors
      Brake Lights
      Turn Signals
      Functioning Beam Indicator
      Working Brakes
      Horn
      Rear View Mirror
      Wipers
      CADA/McGloin, Davenport, Severson & Snow, P.C.
    • RECORD RETENTION
      State and Federal Laws
      Statute of Limitations for Potential Lawsuits
      Record Retention Guidance from Heider, Tanner and Dirks
      CADA/McGloin, Davenport, Severson & Snow, P.C.
    • TAXES – SALES AND USE
      Dealers Collect Sales/ Use Tax
      State and Local Taxes
      Tax Rate Depends on Place of Registration / Statute
      Residence for Private Customer
      Where “Principally Operated” for Business
      Except: Where “permanently maintained” in some cases
      Self-Collected Home Rule Cities (DR 1002)
      Set Their Own Rules and Can Change Any Time
      Collect Sales Tax Where Dealer and Customer Share Location
      Tax Discrepancies Do Not Change the Lien Perfection Date
      No Title Issued Until ALL Taxes Collected
       
      CADA/McGloin, Davenport, Severson & Snow, P.C.
    • TAXES – SALES AND USE (cont.)
      Resources for Tax Rates – State and Private Co’s
      IDS from State, not certified (also has license databases)
      Hold Harmless Provisions - Document Database lookup
      One Applies to Certified Databases / Rates and Jurisdictions
      One Applies to Address Provided by Consumer
      No Sales Tax if Vehicle Removed from Colorado Within 30 Days (State Affidavit Form DR 0780)
      CADA/McGloin, Davenport, Severson & Snow, P.C.
    • PLATES
      Full-Use Dealer Plates
      Many Purposes, “Legitimate business interest”
      Owners or Employees of the Dealership
      Inventory and Sales Requirements
      Not on vehicles with large dealership advertisements (rule)
      Dealer Demo Plates
      Only for Prospective Buyer Demonstration orBy Dealership Employee During Normal Business Hours
      Overnight Allowed: 7-day Maximum / Authorization Letter
      Depot Plates
      Moving Vehicle for Repair
      In-Transit Plates
      From Purchase to Storage or Storage to Point-of-Sale
      CADA/McGloin, Davenport, Severson & Snow, P.C.
    • Environmental, Health & Safety
      Limited topics covered in Guide
      Specialized and technical area of compliance
      Complex Mix Federal (EPA) and State Laws
      Two Areas Covered in Guide After Recent State Changes
      Oil – Aboveground Storage Tanks
      Tires – Waste
      KPA – CADA’s Endorsed Provider for assistance
      www.kpaonline.com
      CADA/McGloin, Davenport, Severson & Snow, P.C.
    • Oil- Aboveground Storage Tanks
      CO Division of Oil & Public Safety
      Key requirements:
      Registration of all ASTs of 660 gallons or more
      Ullage Logs (to prevent over-filling)
      New Exception if Tank Has Audible Alarm or Device to Prevent Overfilling (as of April 14, 2011)
      Monthly Inspections
      KPA Guidance
      More Details on AST requirements in Guide
      CADA/McGloin, Davenport, Severson & Snow, P.C.
    • TIRES - WASTE
      Not Suitable for Use on a Vehicle
      Includes Motorcycles
      Dealers Must
      Register as a Retailer that Generates Waste Tires
      Display a Decal / Certificate
      Only Use a Registered Hauler to Transport Waste Tires
      Waste Tire Recycling Fee Collection
      On Sales of NEW Tires
      Disclose Fee on Invoice
      (Specific Language)
      CADA/McGloin, Davenport, Severson & Snow, P.C.
    • EMISSIONS
      Program Areas – Two Distinct program areas
      Gasoline Testing Area
      (Boulder, Broomfield, Denver, Douglas, Jefferson (All); Adams, Arapahoe,
      Larimer, Weld (parts)
      Diesel Testing Area (Above plus El Paso; boundaries may vary)
      Emission Exempt Stickers (4-year)
      New vehicles
      Replacement allowed – with record-Keeping Requirements
      Resale: Emission Testing Voucher or Test Must Be Provided
      If less than 12 months remaining on 4-year exemption; from Jan. 1st of original model year
      Cost Can Be Passed to Customers
      Retain Proof of Test or Voucher
      Vehicles that FAIL Emissions
      Timing; Repair or Unwind 
      CADA/McGloin, Davenport, Severson & Snow, P.C.
    • Employment / Labor
      CADA Members Have Membership in MSEC:
      Mountain States Employers Council (MSEC)
      Call to obtain ID/password to web site
      DOL / KPA – Colorado Labor Laws Guide 2011
      KPA / HotlinkHR – Online HR Compliance Software and Services
      Wells Fargo Insurance Services
      Workers compensation Program / Pinnacol Assurance
      CADA/McGloin, Davenport, Severson & Snow, P.C.
    • Employment / Labor
      Employment-At-Will
      Wages (Colorado Wage Act)
      “Show-up” Time – Not Required
      Colorado Minimum Wage - $7.36 (Only Certain Jobs)
      Overtime (40 Hour Week, 12 Hour Day)
      Exemptions
      Pay Periods – 30 Days or Less
      Pay Statements Required
      Deductions from Pay
      Vacation/Leave Pay – No State Requirements
      Termination – Wages Due Immediately
      Employment Verification Law
      CADA/McGloin, Davenport, Severson & Snow, P.C.
    • UNCLAIMED PROPERTY
      Objective Is the Return of Unclaimed Property
      Office of the State Treasurer, Unclaimed Property
      Unclaimed Property Held in Trust
      Not Motor Vehicles
      Dealers Must
      Attempt to Identify, Reach Owners
      Turn Unclaimed Property over to State
      Report Unclaimed Property to State
       Any Money Due is Covered
      Credit Balances, Refunds, Referral Fees 
      The State May Audit  
      Retain Records for 5 Years 
      CADA/McGloin, Davenport, Severson & Snow, P.C.
    • Thank You!
      Contact: Tammi McCoy, CADA
      Michael Dommermuth, MDSS