As compliance questions arise, we provide the resources for answers.
23) Red Flag Rules and Dealer Compliance
All dealers are required to have a Red Flag written policy completed after January 1st, 2011.
GIADA has developed a Dealership Red Flag Written Policy in outline MS Word format for a small size operation. Many of our members have taken this outline and customized it to fit their specific business model. GIADA is happy to share this document with only GIADA members. Just send an email to email@example.com to request a Dealership Red Flag Written Policy for you to use. If you have any questions about developing your company Red Flag written policy please give me a call. Paul John – 770-745-9650 or send email to firstname.lastname@example.org.
These documents are intended to explain, as well as provide compliance information. They are not intended to address the specific facts and circumstances of every motor vehicle dealership. Specific applications will vary depending upon how a motor vehicle dealership transacts business.
The Federal Trade Commission and the federal financial institution regulatory agencies have published final rules on identity theft “red flags” and address discrepancies. The Final Rules implement sections 114 and 315 of the Fair and Accurate Credit Transactions Act of 2003.
We have developed materials to assist Dealers in complying with the Rules. These materials are being provided to you for distribution free of charge.
Please keep in mind that these materials are designed to assist dealers in the development of a written dealership policy for the detection, prevention and mitigation of identity theft and are intended to serve as a guide. While not intended as a universal solution that every dealership can adopt, since they are drafted from a used motor vehicle dealer’s perspective, NIADA members should find that they are easy to use and customize for their dealerships. They may wish to consult with their legal counsel or other professional consultants to ensure that their dealership policies are appropriate and in compliance with applicable federal and state laws, rules and regulations. The information contained in this document and the additional materials provided are for general information purposes only and should not be considered as legal advice.
22) New FTC Privacy Statement
The New FTC Privacy Notice. Dealer mandatory compliance by 01/01/11Privacy is a central element of the FTC’s consumer protection mission. In recent years, advances in computer technology have made it possible for detailed information about people to be compiled and shared more easily and cheaply than ever. That has produced many benefits for society as a whole and individual consumers. For example, it is easier for law enforcement to track down criminals, for banks to prevent fraud, and for consumers to learn about new products and services, allowing them to make better-informed purchasing decisions. At the same time, as personal information becomes more accessible, each of us – companies, associations, government agencies, and consumers – must take precautions to protect against the misuse of our information.The Federal Trade Commission is educating consumers and businesses about the importance of personal information privacy, including the security of personal information. Under the FTC Act, the Commission guards against unfairness and deception by enforcing companies’ privacy promises about how they collect, use and secure consumers’ personal information. Under the Gramm-Leach-Bliley Act, the Commission has implemented rules concerning financial privacy notices and the administrative, technical and physical safeguarding of personal information, and it aggressively enforces against pretexting. The Commission also protects consumer privacy under the Fair Credit Reporting Act and the Children’s Online Privacy Protection Act. Use the topic links on the left to read more about our efforts in each of these areas, including what we’ve learned, and what you can do to protect the privacy of your personal information.Dealers who distribute privacy notices to their customers must be using the new FTC Privacy Notice as of 01/01/11. GIADA has taken the FTC Model Privacy Notice Form and formatted it for general use to accommodate the typical independent auto dealer. You will want to retain a signed copy of this form for your records and proof the notice was given to the customer. Depending on your particular business model and practices, modifications may be required to this privacy notice if for an example you routinely share customer information with other entities. Click Here to purchase form GIADA the Consumer Privacy Notice.
DISCLAIMER NOTICE: The information in this document is intended for information purposes only and does not constitute the giving of legal or compliance advice to any person. Because of the generality of this update, the information provided in this document may not apply to all situations and should not be acted upon without specific legal advice based on your dealership’s particular situations from a knowledgeable attorney or compliance professional licensed to practice in your state.
21) Risk Based Pricing Rule Compliance
The new FTC Risk Based Pricing Rulewent into effect January 1st, 2011. It is important that you determine if these new rules apply to you because of the way you do business. GIADA has developed an easy to understand FAQ’s. (Frequently Asked Questions) Reading through the FAQ’s will help you determine if your business model requires you to distribute one of the new FTC Risk Based Pricing Rule Notices. Samples of these forms are provided in this section. FAQ’s for Risk Based Pricing Sample: B-1 (Risk Based Pricing Notice) Sample: B-4 (Credit Score Disclosure Exception Notice) Sample: B-5 (Credit Score Not Available Notice)
Here is an easy to understand article written by an attorney that explains the new rules. GIADA members are encouraged to call Paul John at GIADA with any questions or concerns. We are here to help our members. 770-745-9650 or 800-472-8101. or email: email@example.com.
READ THE ARTICLE: Effective January 1, 2011, dealers will be subject to the FTC’s Risk-Based Pricing Rule. The idea behind this Rule is that certain customers get worse deals because of bad credit and they should know that. So a creditor who uses a consumer report and “grants, extends, or otherwise provides credit to that consumer on material terms that are materially less favorable than the most favorable terms available to a substantial proportion of consumers from or through that person” either has to give these customers a risk-based pricing notice or give an “exception notice” to every consumer who applies for credit through the dealership.
For indirect auto finance, auto dealers have to give risk-based pricing notices or implement the exception notice process discussed below. Oral risk-based pricing notices are permitted but written notices are recommended and the exception notice must be in writing. The Rule does not apply to lease transactions or business credit.
If you are going to give a risk-based pricing notice to customers you finance, the first task is to identify who should get a notice. The “material terms” element of the rule means the APR or, in the case of credit that doesn’t have an APR, “”the financial term that varies based on information in a consumer report and that has the most significant financial impact on consumers such as a deposit….” You don’t have to give a notice if the customer applied for specific credit terms and you give them exactly those terms like a promotional APR.
While there are a number of ways to comply with the Rule, most dealers will use one of two: i) give a risk-based pricing notice to certain financed customers based on the “credit score proxy” notice method; or ii) give an “exception notice” to every consumer who applies to your dealership for financing. The FTC and the NADA recommend but don’t require using the exception notice. Let’s briefly discuss both.
The way the “credit score proxy” notice works is that you do a representative sampling of your completed deals from the past two years (you must do this separately for new vehicle credit and used vehicle credit). You then identify a cutoff credit score representing the credit score at which approximately 40% of your customers have higher credit scores and approximately 60% of your customers have lower credit scores. (say 632 for example). You then must give a risk-based pricing notice to every new customer you finance whose credit score is lower than the cutoff score (632 in our example). The notice has mandatory language you must use. Special rules apply if you use more than one credit score in setting the material terms of credit. You must recalculate your cutoff credit score no less than every two years if you used a two-year representative sample or one year if you didn’t have two years of deals to sample. You must also give any customer who does not have a credit score a different notice.
Customers who get these risk-based pricing notices are entitled to a free credit report much like a customer who receives an adverse action notice.
The “exception notice” doesn’t require you to give a risk-based pricing notice to anybody. But it does require you to give a written credit score disclosure notice to every consumer who applies for credit through your dealership even if you don’t finance them. Consumers who receive this notice are not entitled to a free credit report other than the annual free credit report all consumers can get from each credit bureau at the site, http://www.annualcreditreport.com/
The exception notice tells the consumer their credit score, the source of the credit score, the date the score was created and contains other mandatory disclosure language. It also has to provide information about the percentage of U.S. consumers who have lower and higher credit scores than the consumer, either by using a bar chart of credit score distribution ranges or by telling the consumer where their credit score falls in the national range of consumer credit scores. If you use this exception notice, give this notice to each credit applicant as soon as reasonably practicable after you obtain their credit score but before you consummate the transaction. Use the same notice for consumers without credit scores as described above. If you use the exception notice, you will have to obtain a credit score and a notice form from a credit bureau or other provider showing the national range of credit scores or indicating where the consumer’s credit score falls in the national distribution of scores.
Whatever notice procedure you use, keep a copy of the notice you give in the deal jacket to document your compliance with the rule.
Randy Henrick is Associate General Counsel and lead Compliance Counsel for DealerTrack, Inc. He is also Chairman of the New York State Bar Association’s Consumer Financial Services Committee. This article is intended for information purposes only and does not constitute the giving of legal or compliance advice to any person. Because of the generality of this update, the information provided in this article may not apply to all situations and should not be acted upon without specific legal advice based on your dealership’s particular situations from a knowledgeable attorney or compliance professional licensed to practice in your state.
20) Your Own “Lot Audit” | Are You Compliant?
Car dealers are constantly under scrutiny by not only local and state regulators, but also on a Federal level as well. GIADA helps its members stay compliant and through proper education dealers can avoid staggering penalties and fines. Members, please call one of our capable staff members whenever you have any type of legal or compliance questions. While we are not attorneys, we have the expertise and answers you need. If not, we will refer you to one of member attorneys for guidance.Take the self audit test. Can you answer YES to each questions? Print Lot Audit
TITLE 10. COMMERCE AND TRADE
This statute also explains how late fees may be charged. This statute also explains how late fees may be charged.
18) The Governors Office of Consumer Affairs – Deceptive sales practices
Avoid possible steep penalties The Governors Office of Consumer Affairs, (G.O.C.A.) monitors and regulates how companies advertise their products. Since auto dealers routinely advertise in various ways including on-line, dealers are well advised to make sure that they understand the rules. Penalties for deceptive advertising can be rather severe. The G.O.C.A. and GIADA are working together to properly inform and educate dealers about acceptable and legal advertising. The G.O.C.A.’s just released information about the top 15 most common advertising violations and the G.O.C.A. Auto Advertising and Sales Practices Enforcement Policies. Don’t hesitate to call the GIADA office if you have any questions.
17) Endangering Security Interest Statute
Endangering Security Interest Statute: O.C.G.A Code 16-9-51 is a Georgia statute that was enacted to protect lien holders and their security interests. Specifically, this law may be used by you to get the Court System and Local Law Enforcement involved to help you retrieve your financed vehicle when the customer has defaulted and refuses to allow you or your repo company to take back the vehicle. In some counties they will allow you swear out an arrest warrant for your customer. Check with your local authorities to find out if this Georgia statute can help you.
16) Dealer Temporary (Drive-out) Tag Laws
Dealers are required to hand write the vehicles VIN, year, make and model and master 12 digit dealer number on each Holographic sticker attached to a dealer drive-out tag at time of delivery, in addition to the expiration date. After January 1st, 2006, each holographic sticker will be required to have a unique number. All holographic stickers manufactured after July 1st, 2005 shall be numbered with a distinct number. All sellers of holographic stickers (images) are going to be required to maintain an inventory record of holographic images by number and Purchaser.
For two years, we have been educating dealers and preaching that they understand and use the T-226 Form. This form is available to anyone on-line. At day 25, if you still haven’t received the customer’s title from whom you bought it from, have them come in, help them fill out the T-226 Form and send them to their tag office to obtain a legal 30-day extension temp tag from their tag agent. While this doesn’t completely eliminate the possibility of still being fined $500 for your inability to transfer title ownership within 30 days, it will buy you some time and earn confidence from your customer by making sure they are legal.
15) Dealer Tag Usage Laws
Dealer Tag Usage Laws Dealer Tag Usage Statute 40-2-38 DMV Dealer Tag Rules CODE: 40-2-38. A dealer may use or permit to be used a dealer’s number for private use on vehicles owned by the dealership, regardless of whether such vehicle has been issued a certificate of title or registered, when such vehicles are operated by an employee or corporate officer of the dealer which has been issued such number. A distinguishing dealers number used by an employee or officer for private use shall authorize such person to operate the vehicle to which the number is attached on the public highways and streets. For purposes of this paragraph, “employee” means a person who works a minimum of 36 hours per week at the dealership.
14) House Bill – 22 Motor Vehicle Situs Bill
House Bill – 22 Motor Vehicle Situs Bill
This bill changes the point of sale for imposing sales tax on motor vehicle sales, and rentals or leases exceeding 30 days to Georgia residences to the county of motor vehicle registration without regard to the selling dealer’s physical location. Example: A Fulton Co. Purchaser buys a car from a Cobb Dealer. The Cobb Dealer will be required to collect, report and remit the taxes imposed in Fulton County (4% State, 1% MARTA, 1% Local Option and 1% Educational Taxes). 7%. The only exception to this new rule is with sales to College Students and Military Service personnel temporarily residing in Georgia. The correct tax rate to charge these customers will be based upon the point of delivery, which means your county in which your dealership is based. The form “Affidavit of out of County Delivery” will no longer be required. However, when selling to out of state customers, the ST-6 or ST-8 will still need to be completed and kept in your deal jacket. The ST-6 is used to document when your dealership makes deliveries outside of Georgia. The ST-8 is used to document a sale to a nonresident that is immediately removing the vehicle from Georgia for use in another state.
13) Notice from the DMVS
Notice from the DMVS
DMVS Dealer Newsletter 09/20/04
12) Beware of Persons Impersonating FTC Employees
Beware of Persons Impersonating FTC Employees
May 28, 2004 By now, dealers should be aware of their obligations under the Gramm-Leach-Bliley Act’s Privacy Rule and Safeguards Rule. Dealers are also likely aware that the Federal Trade Commission (‘FTC’) is the federal agency responsible for enforcing these rules.
We recently learned that two men purporting to work for the FTC visited a dealership to inquire about the dealership’s compliance with the Safeguards Rule and other federal privacy regulations. According to the agency, its staff is not currently conducting on-site investigations of automobile dealers for privacy violations. Further, in general, it does not conduct on-site visits in connection with its privacy investigations prior to establishing contact with the company through written or oral communication.
Ask for their names and telephone numbers.
Do not disclose any information and certainly not customer information unless you have confirmed that the visitors are in fact FTC personnel.
10) The FTC Safe Guards Rule: Are You In Compliance?
If you don’t have a safeguarding policy in place, you’d better get one soon. The FTC can wield an $11,000 per violation, and they like to use it to make examples and grab headlines. The current probes of car dealers indicate that the FTC is serious about the new Safeguarding Rule. You’d better be serious, too.
9) Executive Anti-Terrorism Order – Verify Customer I.D. & Check Blocked Persons List
Executive Anti-Terrorism Order – Verify Customer I.D. & Check Blocked Persons List With so much attention being directed toward the rules evolving under the Patriot Act, the requirements under Presidential Executive Order 13224 are often overlooked. The Executive Order prohibits U.S. citizens from entering into any transaction or dealing with individuals or entities identified either in the Executive Order, by the Department of Treasury or by the Secretaries of State as posing a significant risk of committing terrorist acts or providing support to these organizations or individuals. The Office of Foreign Asset Control (OFAC) maintains an alphabetical master list of Specially Designated Nationals and Blocked Persons. Individuals who violate the Order by entering into a transaction with a blocked person or entity can be fined up to $250,000 and serve up to 10 years in prison, while companies can be fined up to $500,000.
8) Drivers License Requirements to Obtain Title Transfer in Georgia
Drivers License Requirements to Obtain Title Transfer in Georgia GIADA Official Position – Effective July 1, 2003 Senate Bill 250 amended Official Code of Georgia Annotated 40-3-21(a)(1) and added the following additional requirements to the contents for an application for a first certificate of title:
7) Experts Urging Dealers to Stop Telemarketing Until They Understand The Law
Experts Urging Dealers to Stop Telemarketing Until They Understand The Law
6) Georgia Abandoned Vehicle Laws – You Need to Know THE LAW!
Georgia Abandoned Vehicle Laws – You Need to Know THE LAW! O.C.G.A. Code 40-11-2
Any person who removes a motor vehicle from public property at the request of a law enforcement officer or stores such vehicle shall seek the identity of and address of all known owners and/or security interest holder of such vehicle from the law enforcement officer requesting removal of such within three business days of removal. The local law enforcement agency shall furnish such information to the person removing such vehicle within three business days after receipt of such request.
5) Spot Delivery Newsletter Service is a Great Resource for Dealers and Finance Companies
Spot Delivery Newsletter Service is a Great Resource for Dealers and Finance Companies.
Dealers: GIADA subscribes to Spot Delivery monthly newsletter service and on-line access to plain and simple answers to legal questions and issues affecting our industry. You should check it out and sign up yourself. Click Here for More Information Spot Delivery is a concise, easy-to-read, monthly legal update that you can depend on to provide timely answers to legal questions you face every day. Spot Delivery addresses complex legal issues from an industry perspective; it also keeps you informed on new legal developments affecting your business.
4) Buy Here – Pay Here Issues Regarding the Cash Method of Accounting
3) A Dealer’s Guide to the Used Car Rule
Dealer Legal Compliance
Buy Here – Pay Here Issues Regarding the Cash Method of Accounting CLICK HERE FOR FULL STORY
2) Vehicle Emission Inspection – Clean Air Force Requirements
Georgia law requires that no person (dealers, auctioneers or individuals) sell a used vehicle, if such vehicle is to be registered in one of the 13 covered counties (Cherokee, Clayton, Cobb, Coweta, DeKalb, Douglas, Fayette, Forsyth, Fulton, Gwinnet, Henry, Paulding, and Rockdale), unless such vehicle has a valid, passing certificate of vehicle emission inspection at the time of sale (DNR Rule 391-3-20-.18(1)). The seller is not required to provide the buyer with a copy of the VIR. Please note: the Georgia Environmental Protection Division (EPD) can only investigate sales that have occurred within Georgia. Vehicle Sale Information (Clean Air Website)
Sellers may print free copies of Georgia Vehicle Emission Inspection Reports (VIR) by clicking here.
Ga. Code 12-9-54 Ga. Code 12-9-55
1) Law Changes – Proof of Liability Insurance Coverage – Effect Tag Purchases
Motor Vehicle Liability Insurance Coverage Owner Responsibilities.
You are stopped by law enforcement; or when,
You are attempting to register and obtain a tag for your vehicle; or,
When you are trying to replace, transfer, or renew your existing Georgia tag.
DMVS (MV18H) Insurance Verification Form can be obtained by ordering through GIADA.