Compliance Guide Presentation (Full Guide)

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This presentation on dealer compliance issues was given in June of 2011 at 6 locations throughout Colorado in conjunction with the Colorado Automobile Dealers Association.

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Compliance Guide Presentation (Full Guide)

  1. 1. COLORADO DEALER COMPLIANCE GUIDE
  2. 2. Presenter CADA/McGloin, Davenport, Severson and Snow, P.C. Michael J. Dommermuth, Esq. McGloin, Davenport, Severson & Snow, P.C. 1600 Stout Street, Suite 1600 Denver, Colorado, 80202 Direct Dial: (720) 536-3550 Phone: (303) 863-9800 Facsimile: (303) 571-1600 [email_address]  
  3. 3. Your Guide to Colorado Laws and Regulations CADA/McGloin, Davenport, Severson and Snow, P.C. <ul><li>Provide Dealers with a Single Reference Guide </li></ul><ul><li>Summarize Key Colorado State Laws that Impact Dealers </li></ul><ul><li>Organized for Ease of Use </li></ul><ul><li>Understandable and Useful Summaries (2-3 Pages per Topic) </li></ul><ul><li>Relevant State Forms and Publications and Links to Additional Resources </li></ul><ul><li>Cross-references to Statutes and Regulations </li></ul><ul><li>Joint Effort of CADA and MDSS </li></ul>
  4. 4. SOURCES OF REGULATION <ul><li>Statute </li></ul><ul><li>Regulations </li></ul><ul><li>Case Law </li></ul><ul><li>CADA/McGloin, Davenport, Severson and Snow, P.C. </li></ul>
  5. 5. <ul><li>Licenses </li></ul><ul><li>  Two Government Agencies </li></ul><ul><li>Motor Vehicle Dealer Board (administer laws, create rules, discipline) </li></ul><ul><li>Auto Industry Division (enforcement, licensing, regulation) </li></ul><ul><li>Manufacturer/Distributors </li></ul><ul><li>Executive Director of Department of Revenue </li></ul><ul><li>  Powersports Industry </li></ul><ul><li>  Other State Agencies </li></ul>CADA/McGloin, Davenport, Severson and Snow, P.C. OVERVIEW OF STATE REGULATIONS
  6. 6. <ul><li>Do Not Abandon a Vehicle - Crime </li></ul><ul><li>Vehicle Presumed Abandoned </li></ul><ul><ul><li>Left Unattended or Unmoved 7 or More Days or </li></ul></ul><ul><ul><li>License Plate/Vin Removed </li></ul></ul><ul><ul><li>Vehicle Damage exceeds Value (Salvage) </li></ul></ul><ul><ul><li>Owner Contacted by Law Enforcement to Remove and Fails to Do so Within in 3 days </li></ul></ul>CADA/McGloin, Davenport, Severson and Snow, P.C. ABANDONED VEHICLES
  7. 7. <ul><li>Repair Shop Abandonment </li></ul><ul><ul><li>Vehicle Left at Repair by Owner and </li></ul></ul><ul><ul><li>Repair Shop Offered to Repair and Offered an Estimate and </li></ul></ul><ul><ul><li>Owner Refused to Allow Repair, Refused to Remove the Vehicle Or Refused to Pay for Authorized Repairs and </li></ul></ul><ul><ul><li>Vehicle Not Subject to Sale Agreement </li></ul></ul><ul><li>Must Meet all 4 </li></ul>CADA/McGloin, Davenport, Severson and Snow, P.C. ABANDONED VEHICLES (cont.)
  8. 8. ABANDONED VEHICLES (cont.) <ul><li>To Satisfy 3 rd Requirement </li></ul><ul><ul><li>Send Certified Letter to Owner, Include Copy of Repair Order </li></ul></ul><ul><ul><li>If No Response Within 10 Working Days of Postmark date, Vehicle is Considered Abandoned </li></ul></ul><ul><ul><li>CADA/McGloin, Davenport, Severson and Snow, P.C. </li></ul></ul>
  9. 9. ABANDONED VEHICLES (cont.) <ul><li>Current Regulation Includes a $2,000 Limit </li></ul><ul><li>If Value Less Than $200 – Scrap </li></ul><ul><li>Procedures DR 2542 </li></ul><ul><ul><li>Establish Value – 15-30 days </li></ul></ul><ul><ul><li>Certify Vin </li></ul></ul><ul><ul><li>Request Title Search </li></ul></ul><ul><ul><li>Notify Owner and Lienholders </li></ul></ul><ul><ul><li>Bond 2x </li></ul></ul><ul><ul><li>Wait 30 Days – File Statement with DMV </li></ul></ul><ul><li>Records Must Be Kept 3 Years! </li></ul><ul><li>CADA/McGloin, Davenport, Severson and Snow, P.C. </li></ul>
  10. 10. <ul><li>  Very Broad Definition </li></ul><ul><li>Colorado Requirements </li></ul><ul><ul><li>State Dealer’s name </li></ul></ul><ul><ul><li>Sales Tax </li></ul></ul><ul><ul><li>Accurate! (MVDB Rules) </li></ul></ul><ul><ul><li>Price </li></ul></ul><ul><ul><ul><li>Include all costs to customer </li></ul></ul></ul><ul><ul><ul><li>Requirements if a specific vehicle is advertised </li></ul></ul></ul><ul><ul><ul><li>Savings must be documented </li></ul></ul></ul><ul><ul><ul><li>Trade-in amount with MSRP </li></ul></ul></ul>CADA/McGloin, Davenport, Severson and Snow, P.C. ADVERTISING
  11. 11. <ul><li>Colorado Requirements (cont.) </li></ul><ul><ul><li>Condition of Advertised Vehicle </li></ul></ul><ul><ul><ul><li>Not operable </li></ul></ul></ul><ul><ul><ul><li>Photo of similar vehicle </li></ul></ul></ul><ul><ul><ul><li>State if used </li></ul></ul></ul><ul><ul><ul><li>State if salvage </li></ul></ul></ul><ul><ul><li>Miscellaneous </li></ul></ul><ul><ul><ul><li>Going out of business </li></ul></ul></ul><ul><ul><ul><li>Do not try to hide terms </li></ul></ul></ul><ul><ul><ul><li>Do not falsely imply terms </li></ul></ul></ul><ul><ul><ul><li>Do not use terms “dealer cost”, “invoice”, or “wholesale” </li></ul></ul></ul><ul><ul><ul><li>Restriction on prize or gift ads </li></ul></ul></ul><ul><li>  Out of State Advertising </li></ul><ul><ul><li>Jurisdictional issues </li></ul></ul><ul><ul><li>Posting on internet </li></ul></ul>CADA/McGloin, Davenport, Severson and Snow, P.C. ADVERTISING
  12. 12. <ul><li>Private Dispute Resolution </li></ul><ul><li>Stay out of Court </li></ul><ul><li>Requires a Contractual Agreement </li></ul><ul><li>Private Judge </li></ul>CADA/McGloin, Davenport, Severson and Snow, P.C. ARBITRATION
  13. 13. ARBITRATION (cont.) <ul><li>PROS </li></ul><ul><li>Less Expensive </li></ul><ul><li>Faster and More Efficient </li></ul><ul><li>Use in Conjunction with Class Waiver </li></ul><ul><li>Less Adversarial – Minimize Hostility </li></ul><ul><li>No Punitive Damages </li></ul><ul><li>Can be Done Without Attorneys </li></ul><ul><li>CADA/McGloin, Davenport, Severson & Snow, P.C. </li></ul><ul><li>CONS </li></ul><ul><li>No Appeal Rights – If Lose, That’s It! </li></ul><ul><li>Arbitrators Split baby </li></ul><ul><li>Same Arbitration Forums Expensive - $500 Per Hour Arbiters </li></ul><ul><li>Dealer Should Pay Most of Cost of Arbitration </li></ul>
  14. 14. ARBITRATION (cont.) <ul><li>KEY TERMS </li></ul><ul><li>Who – How Many Arbitrators </li></ul><ul><li>Where </li></ul><ul><li>What Types of Disputes </li></ul><ul><li>How </li></ul><ul><li>Appeal Rights </li></ul><ul><li>Consistency with RISC and Purchase Agreement </li></ul><ul><li>Do you Sell if Customer Refuses </li></ul><ul><li>CADA/McGloin, Davenport, Severson and Snow, P.C. </li></ul>
  15. 15. <ul><li>Three Types </li></ul><ul><ul><li>Chapter 7 </li></ul></ul><ul><ul><li>Chapter 13 </li></ul></ul><ul><ul><li>Chapter 11 </li></ul></ul><ul><li>Federal Law Generally </li></ul><ul><li>State Law for Lien Perfection </li></ul><ul><li>Lien Perfection Is Essential </li></ul><ul><ul><li>Protect your claim </li></ul></ul><ul><ul><li>Prevent lender buy-back </li></ul></ul>CADA/McGloin, Davenport, Severson and Snow, P.C. BANKRUPTCY / LIEN PERFECTION
  16. 16. <ul><li>Bankruptcy Basics </li></ul><ul><ul><li>Begins with debtor filing a “petition” </li></ul></ul><ul><ul><li>Automatic stay prohibits any collection activities </li></ul></ul><ul><ul><ul><li>Including repossession </li></ul></ul></ul><ul><li>Important Dates </li></ul><ul><ul><li>Creditor’s meeting </li></ul></ul><ul><ul><li>Proof of claim deadline </li></ul></ul><ul><li>  Contact Legal Counsel </li></ul>CADA/McGloin, Davenport, Severson and Snow, P.C. BANKRUPTCY / LIEN PERFECTION (Cont.)
  17. 17. BANKRUPTCY / LIEN PERFECTION (Cont.) <ul><li>Automatic Stay </li></ul><ul><li>What Do You Do When You Get A Bankruptcy Notice </li></ul><ul><li>CADA/McGloin, Davenport, Severson and Snow, P.C. </li></ul>
  18. 18. <ul><li>30 Days! </li></ul><ul><ul><li>Procedure </li></ul></ul><ul><ul><li>Must File with DMV: </li></ul></ul><ul><ul><ul><li>Signed RISC </li></ul></ul></ul><ul><ul><ul><ul><li>Name and Address of Debtor(s) </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Name and Address of Lienholder </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Make, VIN and Year </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Date and Amount of Loan </li></ul></ul></ul></ul><ul><ul><ul><li>Certificate of Title Application </li></ul></ul></ul><ul><ul><ul><li>State Filing Fee </li></ul></ul></ul><ul><li>Time: Date Stamped Receipt of Filing </li></ul>CADA/McGloin, Davenport, Severson and Snow, P.C. BANKRUPTCY / LIEN PERFECTION (Cont.)
  19. 19. <ul><li>Lawsuit by Group of People in Same Situation </li></ul><ul><ul><li>Plaintiff’s goal is settlement </li></ul></ul><ul><li>The Class </li></ul><ul><ul><li>Request to certify </li></ul></ul><ul><ul><li>Four elements </li></ul></ul><ul><ul><li>Expensive early process </li></ul></ul><ul><li>Class Action Waivers in Contracts </li></ul><ul><li>Add-on fees </li></ul><ul><ul><li>Frequent target of class actions </li></ul></ul><ul><ul><li>Include in price of car </li></ul></ul><ul><ul><li>Disclose to customer </li></ul></ul><ul><ul><li>Justifiable </li></ul></ul><ul><ul><li>Include in repair estimate </li></ul></ul>CADA/McGloin, Davenport, Severson and Snow, P.C. CLASS ACTION LAWSUITS
  20. 20. <ul><li>Sale of Vehicle on Behalf of Owner </li></ul><ul><li>Need a Written Agreement </li></ul><ul><li>Owner May Be Required to Deliver Title Even if Not Paid </li></ul><ul><li>ISSUES TO CONSIDER </li></ul>CADA/McGloin, Davenport, Severson and Snow, P.C. CONSIGNMENT
  21. 21. <ul><li>Generally </li></ul><ul><ul><li>Regulates transactions with consumers </li></ul></ul><ul><ul><li>Limits finance charges / sets maximums </li></ul></ul><ul><ul><li>Applies to products used for personal or household purposes   </li></ul></ul><ul><li>Annual Notice Filing  </li></ul><ul><li>Allowable “Additional Charges” </li></ul><ul><ul><li>Not included in finance charge </li></ul></ul><ul><ul><li>Fees, taxes, insurance charges, etc.   </li></ul></ul>CADA/McGloin, Davenport, Severson and Snow, P.C. CONSUMER CREDIT CODE
  22. 22. <ul><li>Written Contract Required </li></ul><ul><ul><li>Even if deal re-done </li></ul></ul><ul><ul><li>Disclose information about financing (APR, financing charge, etc.) </li></ul></ul><ul><ul><li>Insurance disclosure </li></ul></ul><ul><li>Buyer’s Right to Cancel “Home Solicitation Sale”   </li></ul><ul><li>Notice of Default and Right to Cure Required  </li></ul><ul><li>No “Unconscionable” Conduct </li></ul><ul><ul><li>Taking advantage </li></ul></ul>CADA/McGloin, Davenport, Severson and Snow, P.C. CONSUMER CREDIT CODE (Cont.)
  23. 23. <ul><li>CCPA – Deceptive Trade Practices </li></ul><ul><ul><li>False representation regarding vehicles (new v. used, advertising) </li></ul></ul><ul><ul><li>Failure to deliver written contract </li></ul></ul><ul><ul><li>Failure to disclose </li></ul></ul><ul><ul><li>Failure to have licenses </li></ul></ul><ul><li>  Specific to Motor Vehicles </li></ul><ul><ul><li>Guarantee financing </li></ul></ul><ul><ul><li>Selling trade-in/return down payment </li></ul></ul><ul><li>Triple Damages and Attorney Fees </li></ul><ul><li>Security Breach Notification </li></ul>CADA/McGloin, Davenport, Severson and Snow, P.C. CONSUMER PROTECTION ACT
  24. 24. <ul><li>TRUNCATION!!! </li></ul>CADA/McGloin, Davenport, Severson and Snow, P.C. CREDIT CARDS
  25. 25. <ul><li>Dealers Must Make Written Disclosure </li></ul><ul><ul><li>Salvage </li></ul></ul><ul><ul><li>Lemon </li></ul></ul><ul><ul><li>Known Material Damage </li></ul></ul><ul><li>Salvage </li></ul><ul><ul><li>Cost of Repair Exceeds Value </li></ul></ul><ul><ul><li>Failure to Disclose Salvage Requires Full and Immediate Refund </li></ul></ul><ul><li>Material </li></ul><ul><ul><li>“ Those Details Concerning a Vehicle for Sale that are Essential or Necessary for a Reasonable Prospective Buyer to Know” </li></ul></ul><ul><ul><li>Question of Fact = Jury Trial </li></ul></ul><ul><ul><li>Best Practice – Disclose </li></ul></ul><ul><ul><li>Might Have a Claim against Seller Upstream </li></ul></ul>CADA/McGloin, Davenport, Severson and Snow, P.C. DAMAGE DISCLOSURE
  26. 26. <ul><li>Permissible, But Not in Statute or Regulation  </li></ul><ul><li>Must Charge Uniformly </li></ul><ul><ul><li>Cash and credit customers </li></ul></ul><ul><li>Risk of Class Actions  </li></ul><ul><li>Must Disclose as Additional Dealer Costs and Profits </li></ul><ul><ul><li>Disclose in all purchase contracts </li></ul></ul><ul><ul><li>Post signs  </li></ul></ul><ul><li>Must Be in Advertised Prices </li></ul><ul><ul><li>“ Advertisement” is defined broadly  </li></ul></ul><ul><li>Manufacturer Programs </li></ul>CADA/McGloin, Davenport, Severson and Snow, P.C. DELIVERY & HANDLING FEES
  27. 27. <ul><li>Disclosures </li></ul><ul><ul><li>All transactions </li></ul></ul><ul><li>Failure to Make Disclosures = Deceptive Trade Practice </li></ul><ul><li>Terms </li></ul><ul><ul><li>Legal documents </li></ul></ul><ul><ul><li>Only written terms are enforceable </li></ul></ul><ul><ul><li>Notice that fraud is punishable by law </li></ul></ul><ul><ul><li>CASH SALE – notice that a lump sum is due </li></ul></ul><ul><ul><li>CONTINGENT FINANCING - customer will agree to maximum APR </li></ul></ul><ul><ul><ul><li>Best Practice – use interest rate close to RISC </li></ul></ul></ul><ul><ul><li>Daily and mileage rate if no financing </li></ul></ul><ul><ul><li>MVDB contact  </li></ul></ul><ul><li>Sign New Documents on Refinancing </li></ul><ul><li>Disclose Lemon Status Conspicuously </li></ul>CADA/McGloin, Davenport, Severson and Snow, P.C. DISCLOSURES
  28. 28. <ul><li>Program Area </li></ul><ul><ul><li>Enhanced/Gasoline Testing (metro counties) </li></ul></ul><ul><ul><li>Diesel (metro counties) </li></ul></ul><ul><li>Emission Exempt Stickers (Four Year) </li></ul><ul><ul><li>Resale </li></ul></ul><ul><ul><li>Record-keeping requirements </li></ul></ul><ul><li>Exempt Sticker Replacements </li></ul><ul><li>Emission Testing Vouchers or Test Must be Provided </li></ul><ul><li>Cost Passed to Customers </li></ul><ul><li>Retain Proof of Emissions Test </li></ul><ul><li>Vehicles that FAIL Emissions </li></ul><ul><ul><li>Timing </li></ul></ul><ul><ul><li>Repair or unwind  </li></ul></ul>CADA/McGloin, Davenport, Severson and Snow, P.C. EMISSIONS
  29. 29. EQUIPMENT <ul><li>Dealers have a Statutory Obligation to Sell Vehicles with Certain Equipment </li></ul><ul><li>Proper Condition and Adjustment </li></ul><ul><li>Safety Inspection </li></ul><ul><li>Tow Away, Not to Be Driven </li></ul><ul><li>CADA/McGloin, Davenport, Severson and Snow, P.C. </li></ul>
  30. 30. EQUIPMENT (Cont .) <ul><li>Equipment Certification </li></ul><ul><li>TV Screens </li></ul><ul><li>2 Head lamps </li></ul><ul><li>2 Tail lamps </li></ul><ul><li>License Plate Lamp </li></ul><ul><li>Rear Reflectors </li></ul><ul><li>Break Lights </li></ul><ul><li>Turn Signals </li></ul><ul><li>CADA/McGloin, Davenport, Severson and Snow, P.C. </li></ul><ul><li>Functioning Beam Indicator </li></ul><ul><li>Working Breaks </li></ul><ul><li>Horn </li></ul><ul><li>Review Mirror </li></ul><ul><li>Wipers </li></ul>
  31. 31. <ul><li>Goal – To Protect Competition in Financing </li></ul><ul><ul><li>No single source financing agreement </li></ul></ul><ul><ul><li>No side-deals that reduce competition </li></ul></ul><ul><ul><li>Dealers must be free to offer financing from multiple sources </li></ul></ul><ul><li>For a Violation </li></ul><ul><ul><li>Possible crime </li></ul></ul><ul><ul><li>Double damages </li></ul></ul><ul><ul><li>Void contract </li></ul></ul>CADA/McGloin, Davenport, Severson and Snow, P.C. FINANCE – ANTI-MONPOLOY LAW
  32. 32. <ul><li>Transfer of Franchise Ownership or Change of Management </li></ul><ul><ul><li>No unreasonable denial </li></ul></ul><ul><ul><li>20 days to confirm receipt of notice/ask for information </li></ul></ul><ul><ul><li>60 days to decide </li></ul></ul><ul><ul><li>Cannot condition on site control, renovation </li></ul></ul><ul><li>Protection from Exclusivity Requirement </li></ul><ul><li>Manufacturer Must Make All Models Available to All Dealers </li></ul><ul><li>Equal Treatment on Incentives, Bonuses and Rebates </li></ul>CADA/McGloin, Davenport, Severson and Snow, P.C. FRANCHISE LAW
  33. 33. <ul><li>Protection from Required Facility Upgrades </li></ul><ul><li>Protection for Relocation Requests </li></ul><ul><li>Manufacturers Are Prohibited from Owning Franchises </li></ul><ul><li>Reimbursement for Right of First Refusal </li></ul><ul><li>Protection from Unreasonable Export Charge Backs </li></ul><ul><li>Termination of a Franchise – “Just Cause” Required </li></ul>CADA/McGloin, Davenport, Severson and Snow, P.C. FRANCHISE LAW (Cont.)
  34. 34. <ul><li>Disclose Value of Prize in Advertisement (CCPA) </li></ul><ul><li>“ No Purchase or Payment Necessary” Language </li></ul><ul><li>“ Free” Item in Connection with Purchase – Cannot Raise the Price of the Required Purchase (Federal Law) </li></ul><ul><li>Sweepstakes Cannot Require a Purchase (Federal Law) </li></ul>CADA/McGloin, Davenport, Severson and Snow, P.C. GIVEAWAYS, RAFFLES AND PRIZE PROMOTIONS
  35. 35. <ul><li>Debt Cancellation or Insurance? </li></ul><ul><ul><li>Typically a debt-cancellation contract (lender waives amount due after loss) </li></ul></ul><ul><ul><li>Insurance (insurer pays off amount due after loss) </li></ul></ul><ul><li>Maximum Charges </li></ul><ul><ul><li>GAP fee may not exceed $300 or 2% of the amount financed , whichever is higher . </li></ul></ul>CADA/McGloin, Davenport, Severson and Snow, P.C. GUARANTEED AUTOMOBILE PROTECTION (GAP)
  36. 36. <ul><li>Requirements </li></ul><ul><ul><li>Leases are excluded </li></ul></ul><ul><ul><li>Allows GAP to be sold for an “additional fee” </li></ul></ul><ul><ul><li>Disclosure </li></ul></ul><ul><ul><ul><li>GAP not required, may cancel, fee </li></ul></ul></ul><ul><ul><li>Contract provision </li></ul></ul><ul><ul><li>Separate cancellation agreement </li></ul></ul><ul><li>Provide Customer with Policy and Terms </li></ul><ul><li>Refunds – if Loan is Prepaid or on Repossession </li></ul>CADA/McGloin, Davenport, Severson and Snow, P.C. GUARANTEED AUTOMOBILE PROTECTION (GAP) (Cont.)
  37. 37. <ul><li>Dealer’s Obligation  </li></ul><ul><li>Secure and Verifiable ID (SVID) Required for Title </li></ul><ul><ul><li>Dealers must provide ID verification </li></ul></ul><ul><ul><li>Only certain forms of ID acceptable </li></ul></ul><ul><li>  Temporary Permits </li></ul><ul><ul><li>Obtain proof vehicle sold to person on permit </li></ul></ul><ul><ul><li>Vehicles going out of state excepted  </li></ul></ul><ul><li>Third-Party Lender Agreements Require Verification </li></ul><ul><li>Not the Same as “Evidence of Lawful Presence” </li></ul>CADA/McGloin, Davenport, Severson and Snow, P.C. ID THEFT / SECURITY BREACH NOTICE
  38. 38. <ul><li>“ Insurance” – One Party Takes Risk For Payment </li></ul><ul><li>Must be Licensed to Sell Insurance With Vehicle </li></ul><ul><li>Individual License </li></ul><ul><ul><li>Pre-license education and continuing education </li></ul></ul><ul><li>  Agency License </li></ul><ul><ul><li>Nominate responsible person </li></ul></ul><ul><ul><li>Responsible person must be licensed </li></ul></ul>CADA/McGloin, Davenport, Severson and Snow, P.C. INSURANCE (SELLING)
  39. 39. <ul><li>Dealers not Legally Required to Confirm Customer has Insurance   </li></ul><ul><li>Consumer Credit Transaction </li></ul><ul><ul><li>Disclose that dealer is not providing insurance </li></ul></ul><ul><ul><li>Have customer indicate whether they have insurance   </li></ul></ul><ul><li>Best practice - Verify Insurance </li></ul><ul><ul><li>Failure may be breach of lender agreements </li></ul></ul><ul><ul><li>Prevent third-party claims against dealer if customer causes accident </li></ul></ul>CADA/McGloin, Davenport, Severson and Snow, P.C. INSURANCE VERIFICATION
  40. 40. <ul><li>Violations of Law by Dealers or Salespersons </li></ul><ul><ul><li>Auto Industry Division – primary enforcement agency </li></ul></ul><ul><ul><li>Motor Vehicle Dealer Board – decision maker </li></ul></ul><ul><li>  Procedure </li></ul><ul><ul><li>Complaint (consumer, another dealer, salesperson, audit) </li></ul></ul><ul><ul><li>AID conducts an initial investigation and findings </li></ul></ul><ul><ul><ul><li>AID can settle the matter </li></ul></ul></ul><ul><ul><ul><li>MVDB can review any case (pattern of violations, willful violations, danger to public) </li></ul></ul></ul><ul><ul><li>Final decision </li></ul></ul><ul><ul><ul><li>Penalties and fines (punitive, increase for successive violations) </li></ul></ul></ul><ul><ul><li>Appeal </li></ul></ul>CADA/McGloin, Davenport, Severson and Snow, P.C. INVESTIGATIONS / DISCIPLINARY ACTIONS
  41. 41. <ul><li>License Denial, Suspension or Revocation </li></ul><ul><ul><li>Material misstatement in application </li></ul></ul><ul><ul><li>Fraud </li></ul></ul><ul><ul><li>Failure to maintain bond </li></ul></ul><ul><ul><li>Misleading advertising </li></ul></ul><ul><ul><li>Selling unsafe vehicle </li></ul></ul><ul><li>Violations that Apply to Dealer Licensees Only </li></ul><ul><ul><li>Failure to perform agreements </li></ul></ul><ul><ul><li>Misrepresenting material facts to customer </li></ul></ul><ul><ul><li>No principal place of business </li></ul></ul><ul><ul><li>No notice of rejection of purchase </li></ul></ul><ul><li>Violations that Apply to Salesperson Licensees Only </li></ul><ul><ul><li>Selling without a license </li></ul></ul><ul><ul><li>Improperly using or withholding a customer’s money </li></ul></ul>CADA/McGloin, Davenport, Severson and Snow, P.C. INVESTIGATIONS / DISCIPLINARY ACTIONS (Cont.)
  42. 42. <ul><li>Primarily Manufacturer Obligation </li></ul><ul><li>Only New Vehicles Still Within Manufacturers Original Written Warranty </li></ul><ul><li>No Commercial Vehicle Coverage </li></ul><ul><li>Excludes Motor Homes, Motorcycles, Vehicles capable of Carrying 10+ </li></ul>CADA/McGloin, Davenport, Severson and Snow, P.C. LEMON LAWS
  43. 43. LEMON LAWS (Cont.) <ul><li>Must Conform to Warranty Within 1 Year of Delivery </li></ul><ul><li>If Cannot be repaired after a reasonable number of attempts and defect substantially impairs use and market value… </li></ul><ul><li>Manufacturer Must Replace or Refund Full Purchase Price </li></ul><ul><li>CADA/McGloin, Davenport, Severson and Snow, P.C. </li></ul>
  44. 44. LEMON LAWS (Cont.) <ul><li>Written Notice to Manufacturer Required </li></ul><ul><li>Written Disclosure to Subsequent Purchaser </li></ul><ul><li>CADA/McGloin, Davenport, Severson and Snow, P.C . </li></ul>
  45. 45. <ul><li>Repair Shops Have a Lien </li></ul><ul><ul><li>But must keep vehicle </li></ul></ul><ul><li>Twelve-Day Repossession For Non-Payment </li></ul><ul><ul><li>Sample letters in Guide </li></ul></ul><ul><li>Foreclosure </li></ul><ul><ul><li>Must have possession </li></ul></ul><ul><ul><li>30 days after bill was due </li></ul></ul><ul><ul><li>File lawsuit </li></ul></ul><ul><ul><li>90-day limit </li></ul></ul><ul><li>Recommended Notices  </li></ul><ul><li>Best Practices </li></ul><ul><ul><li>Get customer’s address </li></ul></ul><ul><ul><li>Have owner’s information </li></ul></ul><ul><ul><li>Accurate description of vehicle </li></ul></ul><ul><ul><li>Repossess vehicle peacefully or not at all </li></ul></ul>CADA/McGloin, Davenport, Severson and Snow, P.C. MECHANICS AND STORAGE LIEN
  46. 46. <ul><li>Defined by Law </li></ul><ul><ul><li>New: transferred from manufacturer to dealer for the first time </li></ul></ul><ul><ul><ul><li>Demo < 1,500 mi (must be demo use only) </li></ul></ul></ul><ul><ul><li>Used: Not new   </li></ul></ul><ul><li>Illegal to Represent Used Vehicle as New </li></ul><ul><ul><li>Includes advertisements  </li></ul></ul><ul><li>Best practice – a Failed Spot Delivery Converts a “New” Vehicle to “Used”  </li></ul><ul><li>Check the Correct Box in RISC </li></ul>CADA/McGloin, Davenport, Severson and Snow, P.C. NEW vs. USED
  47. 47. <ul><li>Disclosure Required on Sale and Service </li></ul><ul><ul><li>Disclose discrepancy </li></ul></ul><ul><li>Tampering/Fraud is a Serious Offense </li></ul><ul><ul><li>Dealer and Salesperson cannot renew license </li></ul></ul><ul><li>Legitimate Repair </li></ul><ul><ul><li>Set to zero </li></ul></ul><ul><ul><li>Written notice attached to vehicle </li></ul></ul>CADA/McGloin, Davenport, Severson and Snow, P.C. ODOMETER
  48. 48. <ul><li>Permit to Sell Away from Dealership </li></ul><ul><ul><li>Not for “display” only events </li></ul></ul><ul><li>Key Requirements </li></ul><ul><ul><li>Request permit in writing before event </li></ul></ul><ul><ul><li>Post permit at sale </li></ul></ul><ul><ul><li>6-day maximum </li></ul></ul><ul><ul><li>No consecutive permits </li></ul></ul>CADA/McGloin, Davenport, Severson and Snow, P.C. OFF PREMISE PERMITS
  49. 49. <ul><li>Full-Use Dealer Plates </li></ul><ul><ul><li>Many purposes </li></ul></ul><ul><ul><li>Owners or employees of the dealership </li></ul></ul><ul><ul><li>Inventory and sales requirements </li></ul></ul><ul><li>Dealer Demo Plates </li></ul><ul><ul><li>Only for prospective buyer demonstration or legitimate business purposes </li></ul></ul><ul><ul><li>7 day maximum </li></ul></ul><ul><li>Depot Plates </li></ul><ul><ul><li>Moving vehicle for repair </li></ul></ul><ul><li>In-Transit Plates </li></ul><ul><ul><li>From purchase to storage or storage to point of sale </li></ul></ul>CADA/McGloin, Davenport, Severson and Snow, P.C. PLATES
  50. 50. <ul><li>State and Federal Laws </li></ul><ul><li>Statute of Limitations for Potential Lawsuits </li></ul><ul><li>Record Retention Guidance from Heider, Tanner and Dirks </li></ul>CADA/McGloin, Davenport, Severson and Snow, P.C. RECORD RETENTION
  51. 51. <ul><li>Generally Allowed </li></ul><ul><ul><li>No specific law, regulation or guideline </li></ul></ul><ul><li>Gray Area for Licensing </li></ul><ul><li>Licensed “Buyers Agents” Cannot be Paid Referral Fees </li></ul>CADA/McGloin, Davenport, Severson and Snow, P.C. REFERRAL FEES
  52. 52. <ul><li>Motor Vehicle Repair Act </li></ul><ul><ul><li>Ensure customers informed and consent before repair work </li></ul></ul><ul><li>  Customer Authorization for Repairs / Work Order </li></ul><ul><ul><li>Total cost of repair </li></ul></ul><ul><ul><li>Completion date </li></ul></ul><ul><ul><li>SIGNED </li></ul></ul><ul><ul><li>Exceptions </li></ul></ul><ul><li>Waiver Language </li></ul>CADA/McGloin, Davenport, Severson and Snow, P.C. REPAIRS / SERVICE (MVRA)
  53. 53. <ul><li>Oral Consent </li></ul><ul><ul><li>1. Date Given </li></ul></ul><ul><ul><li>2. Time </li></ul></ul><ul><ul><li>3. Manner of Consent (Telephone or Otherwise) </li></ul></ul><ul><ul><li>4. Name of Service Advisor </li></ul></ul><ul><ul><li>5. Total Amount of Estimate </li></ul></ul><ul><ul><li>6. Expected Completion Date </li></ul></ul><ul><ul><li>7. Name of Person Giving Consent </li></ul></ul>CADA/McGloin, Davenport, Severson and Snow, P.C. REPAIRS / SERVICE (MVRA) (Cont.)
  54. 54. <ul><li>Disassembly </li></ul><ul><li>Completion Dates </li></ul><ul><li>Storage – Requires a Separate Written Contract – Storage Limitation </li></ul>CADA/McGloin, Davenport, Severson and Snow, P.C. REPAIRS / SERVICE (MVRA) (Cont.)
  55. 55. <ul><li>Invoice </li></ul><ul><ul><li>1. Customers Name and Address </li></ul></ul><ul><ul><li>Year, Make, Model, Odometer, Start Date and License Number </li></ul></ul><ul><ul><li>Date Brought In </li></ul></ul><ul><ul><li>Itemization of All Parts </li></ul></ul><ul><ul><li>All Labor Charges – Including Name of Mechanic </li></ul></ul><ul><ul><li>Stages – Separate Mechanics </li></ul></ul><ul><ul><li>Itemized Statement of Charges </li></ul></ul><ul><ul><li>Identification of Sublet Repairs </li></ul></ul><ul><ul><li>Initials of Person Completing </li></ul></ul>CADA/McGloin, Davenport, Severson and Snow, P.C. REPAIRS / SERVICE (MVRA) (Cont.)
  56. 56. <ul><li>Before Repossession </li></ul><ul><ul><li>Dealer must have valid security interest </li></ul></ul><ul><ul><li>Buyer must be in default </li></ul></ul><ul><li>If Using a 3 rd Party Must Use Bonded Repossession Service </li></ul><ul><li>Consumer Credit Sales - Default </li></ul><ul><ul><li>Default: 10 day failure to make payment </li></ul></ul><ul><ul><li>Send notice of right to cure </li></ul></ul><ul><ul><li>20 day right to cure </li></ul></ul><ul><ul><li>Co-signer </li></ul></ul>CADA/McGloin, Davenport, Severson and Snow, P.C. REPOSSESSION
  57. 57. REPOSSESSION (Cont.) <ul><li>Notice of Intent to Repossess to Law Enforcement Notice of Intent to Sell </li></ul><ul><li>Notice to Law Enforcement within 1 Hour </li></ul><ul><li>Do Not Breach Peace </li></ul><ul><li>CADA/McGloin, Davenport, Severson and Snow, P.C. </li></ul>
  58. 58. <ul><li>Salvage – Cost of Repair Exceeds Value </li></ul><ul><ul><li>Excludes vehicles 6 years or older </li></ul></ul><ul><li>Salvage Status Must be Disclosed to Buyer </li></ul><ul><ul><li>Buyer is entitled to a full refund if not </li></ul></ul><ul><ul><li>Knowledge not relevant </li></ul></ul><ul><li>Salvage Status Must be Noted on Title </li></ul><ul><ul><li>Branded on door also </li></ul></ul><ul><li>Other States may not Note Salvage Status on Title </li></ul>CADA/McGloin, Davenport, Severson and Snow, P.C. SALVAGE VEHICLES
  59. 59. <ul><li>Must Be Insured  </li></ul><ul><li>Service Contract Must State </li></ul><ul><ul><li>Insurer will pay if “provider” does not </li></ul></ul><ul><ul><li>Contact information for insurer  </li></ul></ul><ul><li>Manufacturer Warranties Excluded </li></ul><ul><li>Penalties </li></ul><ul><ul><li>Attorney fees </li></ul></ul><ul><ul><li>Triple damages </li></ul></ul><ul><ul><li>MVDB enforcement </li></ul></ul>CADA/McGloin, Davenport, Severson and Snow, P.C. SERVICE CONTRACTS / VSC / EXTENDED WARRANTIES
  60. 60. <ul><li>Legally Allowed, But: </li></ul><ul><ul><li>CANNOT sell trade-in before approval </li></ul></ul><ul><ul><ul><li>Deceptive trade practice </li></ul></ul></ul><ul><ul><li>NEVER “guarantee” financing IN ANY WAY </li></ul></ul><ul><ul><ul><li>“ With your credit score, financing will be no problem at all.&quot; </li></ul></ul></ul><ul><li>  10 Day Notification if Financing not Approved </li></ul><ul><ul><li>Not business days </li></ul></ul><ul><ul><li>Best practice – in writing </li></ul></ul><ul><ul><li>Best practice – notify customer if the lender has not funded for any reason </li></ul></ul>CADA/McGloin, Davenport, Severson and Snow, P.C. SPOT DELIVERY
  61. 61. <ul><li>Required Disclosure </li></ul><ul><ul><li>Bailment charges </li></ul></ul><ul><ul><ul><li>Take steps to minimize </li></ul></ul></ul><ul><ul><li>Must negotiate alternatives </li></ul></ul><ul><li>Re-Contracting: DO NOT PRE-DATE THE CONTRACT </li></ul><ul><li>  Retain Deposits to Cover Charges </li></ul><ul><ul><li>Must be in disclosure </li></ul></ul><ul><ul><li>Only if no “guarantee” of financing </li></ul></ul><ul><li>  Follow the Same Practices for Leases </li></ul>CADA/McGloin, Davenport, Severson and Snow, P.C. SPOT DELIVERY (Cont.)
  62. 62. <ul><li>DR 2434 </li></ul><ul><ul><li>RISC </li></ul></ul><ul><ul><li>Seller can Cancel </li></ul></ul><ul><ul><li>No Guarantee of Financing </li></ul></ul><ul><ul><li>Bailment </li></ul></ul><ul><ul><li>10 Day Notice Requirement – Written Notice </li></ul></ul><ul><ul><li>DO NOT SELL TRADE </li></ul></ul>CADA/McGloin, Davenport, Severson and Snow, P.C. SPOT DELIVERY (Cont.)
  63. 63. <ul><li>No Selling on Sundays </li></ul><ul><ul><li>Applies to motor vehicles </li></ul></ul><ul><ul><li>Applies to every person </li></ul></ul><ul><ul><li>Applies to selling, negotiating and offering to sell </li></ul></ul><ul><li>Excludes Boats, Snowmobiles, and Agricultural Equipment </li></ul><ul><li>Excludes Repair or Towing Services </li></ul>CADA/McGloin, Davenport, Severson and Snow, P.C. SUNDAY SALES
  64. 64. <ul><li>Dealers Collect Sales Tax </li></ul><ul><ul><li>State and local taxes </li></ul></ul><ul><ul><li>Use tax </li></ul></ul><ul><li>Tax Rate Depends on Place of Registration </li></ul><ul><ul><li>Residence for private customer </li></ul></ul><ul><ul><li>Where operated for business </li></ul></ul><ul><li>Collect Sales Tax Where Dealer and Customer Share Location </li></ul><ul><li>Tax Discrepancies Do Not Change the Lien Perfection Date </li></ul><ul><ul><li>No title issued until all taxes collected </li></ul></ul><ul><li>  </li></ul>CADA/McGloin, Davenport, Severson and Snow, P.C. TAXES – SALES AND USE
  65. 65. <ul><li>Resources for Tax Rates – State and Private Parties </li></ul><ul><ul><li>Hold Harmless Provisions – document how dealer obtained tax rate </li></ul></ul><ul><ul><li>No help for delayed titles </li></ul></ul><ul><li>No Sales Tax if Vehicle Removed from Colorado Within 30 Days </li></ul>CADA/McGloin, Davenport, Severson and Snow, P.C. TAXES – SALES AND USE (Cont.)
  66. 66. <ul><li>Purchased from County </li></ul><ul><li>Monitored by State and Law Enforcement </li></ul><ul><li>Key Requirements </li></ul><ul><ul><li>Dealer completes </li></ul></ul><ul><ul><ul><li>Errors void the plate </li></ul></ul></ul><ul><ul><li>60-day duration </li></ul></ul><ul><ul><li>Dealer stubs to state, customer and dealer </li></ul></ul><ul><ul><li>Placed in rear of vehicle in readable location </li></ul></ul><ul><ul><li>May only be used for operable vehicles </li></ul></ul><ul><li>Report Lost or Stolen Permits </li></ul><ul><ul><li>If lost by customer, customer must go to the county for re-issue </li></ul></ul>CADA/McGloin, Davenport, Severson and Snow, P.C. TEMPORARY PERMITS
  67. 67. <ul><li>Upon Sale – Registered and New Title Issued </li></ul><ul><li>Dealer's Obligations Upon Sale </li></ul><ul><ul><li>Deliver certificate of title within 30 days </li></ul></ul><ul><ul><ul><li>To customer on cash sale </li></ul></ul></ul><ul><ul><ul><li>To correct DMV on financed sale </li></ul></ul></ul><ul><ul><ul><li>To county of residence or primary use </li></ul></ul></ul><ul><ul><li>Failure could lead to loss of lien or liability to customer  </li></ul></ul><ul><li>Contents of Application </li></ul><ul><ul><li>Application for title and registration (DR 2395) </li></ul></ul><ul><ul><li>Sales tax receipt, bill of sale, odometer disclosure, power of attorney, emissions   </li></ul></ul><ul><li>Dealers Must Maintain Proof of Ownership </li></ul>CADA/McGloin, Davenport, Severson and Snow, P.C. TITLE PROCESSING & REGISTRATION
  68. 68. <ul><li>Objective is the Return of Unclaimed Property </li></ul><ul><ul><li>Office of the State Treasurer, Unclaimed Property </li></ul></ul><ul><ul><li>Unclaimed property held in trust </li></ul></ul><ul><ul><li>Not motor vehicles </li></ul></ul><ul><li>Dealers Must </li></ul><ul><ul><li>Attempt to identify, reach owners </li></ul></ul><ul><ul><li>Turn unclaimed property over to State </li></ul></ul><ul><ul><li>Report unclaimed property to State </li></ul></ul><ul><li>  Any Money Due is Covered </li></ul><ul><ul><li>Credit balances, refunds, referral fees, etc.  </li></ul></ul><ul><li>The State May Audit   </li></ul><ul><li>Retain Records for 5 Years  </li></ul>CADA/McGloin, Davenport, Severson and Snow, P.C. UNCLAIMED PROPERTY
  69. 69. <ul><li>Prevents Loss From a Specific Cause </li></ul><ul><ul><li>Etch, theft registration, tire protection programs </li></ul></ul><ul><li>Colorado Vehicle Protection Products Act </li></ul><ul><li>Contract Requirements </li></ul><ul><ul><li>Identity of all parties </li></ul></ul><ul><ul><li>Guaranteed by insurance policy </li></ul></ul><ul><ul><li>Customer may claim against insurer </li></ul></ul><ul><ul><li>Disclosure that product is not insurance </li></ul></ul><ul><li>Not Insurance – Exempt from Insurance Laws and Regulations  </li></ul><ul><li>Consumer Suits Possible if Products are not Disclosed </li></ul>CADA/McGloin, Davenport, Severson and Snow, P.C. VEHICLE PROTECTION PRODUCTS
  70. 70. <ul><li>Not Suitable for Use on a Vehicle </li></ul><ul><ul><li>Included motorcycles </li></ul></ul><ul><li>Dealers Must </li></ul><ul><ul><li>Register as a retailer that generates waste tires </li></ul></ul><ul><ul><li>Keep a copy of the registration </li></ul></ul><ul><ul><li>Only use a registered hauler to transport waste tires </li></ul></ul><ul><li>Waste Tire Recycling Fee Collection </li></ul><ul><ul><li>On sales of new tires </li></ul></ul><ul><ul><li>Disclose fee on invoice </li></ul></ul>CADA/McGloin, Davenport, Severson and Snow, P.C. WASTE TIRES
  71. 71. Thank You! Contact: Tammi McCoy, CADA Mike Dommermuth, MDSS

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