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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

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