I initially began my article writing process by tossing around a couple of topics. I chose to go with some recent subjects of conversations that I have personally been involved in, along with several dealers, on the GIADA Facebook Member Group Site.
Specifically, the complicated issues of how dealers are and should be dealing with OEM recall issues, as well as, the non-related subject of Dealer DOC fees.
As I started to write, I discovered that while both topics were very different from one another, they did have a common denominator that could cause significant headaches for car dealers. That one factor was: Transparency, or more accurately, the lack of transparency.
So, I googled “Transparency” and Webster’s dictionary (and a few others) gave some variations of its definition.
The first one that popped up was this: Transparency: Permitting the uninterrupted passage of light; clear: a window is transparent.
As it turns out, transparency is a word that comes in an assortment of flavors and meanings. The one’s I enjoyed most and thought were best fitting read as follows:
Transparency: The quality of being done in an open way without secrets: Characterized by honesty and fairness; “straight dealing”; “a square deal” candid; frank; open; free of deceit.
Now that you know the “word of the day”, Transparency, let me share a couple of things with you.
Recently, New York’s attorney general has reached legal settlements with 104 dealerships it identified as having sold vehicles without disclosing open safety recalls. “Without disclosing” are the very key words here.
The safety recalls that authorities uncovered were serious — and potentially deadly. I think that we can all agree that consumers deserve to know of any unresolved safety issues before buying a car for themselves or their family. It doesn’t take a genius to understand the serious liability of selling a car with an undisclosed open safety recall.
Let’s consider the facts about manufacturer recalls.
First, there is no law that prohibits the sale of used motor vehicle with an open recall.
But… if you want to cover yourself and avoid recall related problems, here is what I’d suggest you consider.
- Dealers should check their inventory regularly for open recalls. If a vehicle has an open recall, dealers should try to have the vehicle fixed if possible.
- To find out if cars in your inventory have unresolved recalls, use the National Highway Traffic Safety Administration website to search for recalls by VIN – safercar.gov
- Wayne Reaves and Frazer DMS software have disclosure forms for recalls. GIADA also provides a recall disclosure form for members upon request.
- If dealers are unable to have a vehicle fixed, dealers should disclose to the consumer prior to consummating a sale if the vehicle has an open recall and provide them with information about the open recall, using the information obtained from the NHTSA website.
- If dealers are advertising, either expressly or implicitly, that a vehicle has undergone some sort of enhanced inspection (i.e. 125 pt inspection), then the dealer is required to disclose that the vehicle may be subject to open recall and provide information on where the consumer can go to get more information about the recall status of the vehicle.
- And finally, don’t allow your customer to take delivery of a vehicle with an unresolved safety recall under any circumstances. (Safety Recall examples: airbag, brakes, fire hazard, seatbelt, etc.)
The vehicle recall issue is an on-going serious problem and a complicated situation for car manufacturers, car dealers and consumers. At this point, no one knows quite where all of this is going.
Thank goodness that we have NIADA staying on top of recall developments in DC. The last thing we need is Federal Regulators passing a law prohibiting dealers from selling vehicles with unresolved manufacturer recalls. Just consider all the problems that would cause everybody, including consumers trying to trade their car in with unresolved recall issues because of a part on back order. Not good.
Transparency is the word of the day, every day. Make sure that your customer is well informed about any recall situation on the car they are buying, and always try to do the right thing.
Now let’s discuss Dealer DOC Fees.
Some states regulate or prohibit DOC fees altogether. Georgia regulators do not. However, they do have a very strong opinion about how car dealers treat DOC fees, including the proper disclosure of a DOC fee when advertising vehicle prices using any type of media. Although, most violations occur on the dealer’s website, or when listing vehicles in third party websites like Cars.com or AutoTrader.com.
Let me be clear about something. You, the person posting the vehicles ads, are responsible for the content in the ad, not the third party listing services.
Although in our state, while DOC fees are not illegal, the Governor’s office of consumer protection does go after dealers who don’t include DOC fees in their advertised price. This includes the dealer’s website if they post prices. Yep… that can be $5k per ad, and they’ve busted many dealers for ignoring this simple policy. Giving full disclosure really is the right thing to do. No customer responding to an advertised price wants surprises when they get to the dealership. Just another great example of transparency being the smartest move you can make.
Suppose you charge an administrative fee of $500 and you want to list a car for $15,000. Because your advertised price must include your dealer fee, you have effectively reduced the vehicle price to $14,500 to accommodate the dealer fee. It is not acceptable to list a price of $15,000 and then add the additional $500 at the time of purchase. Similarly, you may not include a disclaimer such as “price plus tax, tag, registration, and fees,” “plus government and a $500 dealer fee,” or any other disclosure which informs the customer that he or she will be required to pay additional non-government charges upon purchase.
Also, on pricing disclosures: Keep in mind that your pricing disclosures may, but are not required to, contain a statement telling your customers what is included in your pricing (e.g. “Price includes our dealer fee”.) You should indicate that the customer will be responsible for government fees (including applicable TAVT and title application fees).
ETR fees are treated the same way as DOC fees, they must also be included in your advertised price.
Let’s recap: Advertised vehicle prices must include all non-government charges that a consumer is required to pay in order to purchase a vehicle, including but not limited to, dealer fees, DOC fees, and electronic titling fees (ETR).
Again, transparency is the word of the day. Make sure that your customer is well informed about any and all fees they are required to pay on the front end of the deal. Do not surprise them with dealer DOC fees at the time of sale. Your customer will appreciate this and as a result your reviews will likely be positive, which is vitally important these days to stay in business.
Lastly, while I was searching for the official definition of “transparency”, I stumbled across the following on google and wanted to share it. I hope you enjoy it as much as I did. (http://www.socialmediatoday.com/content/what-does-it-really-mean-be-transparent)
What Does It Really Mean to Be Transparent?
If you’ve had any exposure to social media, you’ve probably already heard the term “transparency” before. You’ve also probably heard that it’s a very good thing for social media users to have. So fine. You want to be transparent, then. Good. But what does that mean for your business, exactly? It’s time to break down that term as it relates to your company’s involvement in social media.
It means what you think it means. Just as the term implies, your customers need to be able to see who you really are on social media platforms. Don’t overthink what your image should be or try to be something you aren’t. Your authenticity will translate as both honesty and integrity to your customers.
It means you’re not afraid. If your company stays transparent via social media, it shows your customers that you’re brave enough to welcome criticism. Your willingness to open yourself up to positive and negative feedback, and then address both publically, will immediately build brand trust.
It means you have nothing to hide. Kind of. Yes, you should be up front and personable via social media. However, you should not overshare either. Trade secrets, tedious company details, and your heartbreak over a recent break-up do NOT need to be disclosed. Rather share what is appropriate and engaging, share often, and always keep it professional.
It means saying that you work there. If you are tweeting from your personal account about a fantastic company product, you need to share your connection to your company. Not only is that an ethical social media standard, but the FTC insists upon it.
It means you like to talk. Transparent companies engaging through social media like to have online conversations with their customers. They reply to comments, they retweet funny ideas, and they treat their customers like new friends. This is social media, after all.
Without a doubt, transparency is a fundamental part of most successful social media connections and campaigns. And your company’s willingness to be transparent in a way that customers have come to expect will only mean further brand loyalty in your future.