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

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  • 1. Colorado Dealer Compliance Guide
    July 12, 2011
  • 2. 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.
  • 3. Your Guide to Colorado Laws and Regulations
    • Provide Dealers with a Single Reference Guide
    • 4. Summarize Key Colorado State Laws that Impact Dealers
    • 5. Organized for Ease of Use
    • 6. Understandable and Useful Summaries (2-3 Pages per Topic)
    • 7. Relevant State Forms and Publications and Links to Additional Resources
    • 8. Cross-references to Statutes and Regulations
    • 9. Joint Effort of CADA and MDSS
    CADA/McGloin, Davenport, Severson & Snow, P.C.
  • 10. 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.
  • 11. SOURCES OF REGULATION
    Statute
    Regulations
    Case Law
    CADA/McGloin, Davenport, Severson & Snow, P.C.
  • 12. 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.
  • 13. 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.
  • 14. ARBITRATION
    Private Dispute Resolution
    Stay Out of Court
    Requires a Contractual Agreement
    Private Judge
    Negotiation
    Mediation
    CADA/McGloin, Davenport, Severson & Snow, P.C.
  • 15. 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.
  • 16. 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.
  • 17. 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.
  • 18. 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.
  • 19. 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.
  • 20. 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.
  • 21. 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.
  • 22. 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.
  • 23. BK / LIEN PERFECTION (cont.)
    Automatic Stay
    What Do You Do When You Get A Bankruptcy Notice
    CADA/McGloin, Davenport, Severson & Snow, P.C.
  • 24. 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.
  • 25. 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.
  • 26. 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.
  • 27. 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.
  • 28. 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.
  • 29. CONSUMER PROTECTION ACT(cont.)
    Security Breach Notice
    Penalties:
    Triple Damages
    Attorney Fees
    CADA/McGloin, Davenport, Severson & Snow, P.C.
  • 30. 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.
  • 31. 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.
  • 32. 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.
  • 33. 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.
  • 34. LEMON LAWS (cont.)
    Written Notice to Manufacturer Required
    Written Disclosure to Subsequent Purchaser
    CADA/McGloin, Davenport, Severson & Snow, P.C.
  • 35. 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.
  • 36. 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.
  • 37. 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.
  • 38. 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.
  • 39. 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.
  • 40. 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.
  • 41. 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.
  • 42. 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.
  • 43. 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.
  • 44. 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.
  • 45. 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.
  • 46. 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.
  • 47. 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.
  • 48. 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.
  • 49. 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.
  • 50. 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.
  • 51. 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.
  • 52. 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.
  • 53. 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.
  • 54. 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.
  • 55. 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.
  • 56. 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.
  • 57. REPAIRS / SERVICE (MVRA) (cont.)
    Disassembly
    Completion Dates
    Storage – Requires a Separate Written Contract – Storage Limitation
    CADA/McGloin, Davenport, Severson & Snow, P.C.
  • 58. 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.
  • 59. 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.
  • 60. 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.
  • 61. 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.
  • 62. 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.
  • 63. 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.
  • 64. 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.
  • 65. 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.
  • 66. 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.
  • 67. 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.
  • 68. 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.
  • 69. 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.
  • 70. 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.
  • 71. CREDIT CARDS
    TRUNCATION!!!
    Federal and state laws
    Know your lender restrictions
    No surcharges (UCCC)
    CADA/McGloin, Davenport, Severson & Snow, P.C.
  • 72. 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.
  • 73. 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.
  • 74. 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.
  • 75. 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.
  • 76. 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.
  • 77. 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.
  • 78. 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.
  • 79. 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.
  • 80. 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.
  • 81. 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.
  • 82. 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.
  • 83. 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.
  • 84. 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.
  • 85. 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.
  • 86. Thank You!
    Contact: Tammi McCoy, CADA
    Michael Dommermuth, MDSS