Dealer - Fiada

SINCE 1940
December 2012
www.FIADA.com
A Publication of the
Florida Independent
Automobile Dealers
Association
Information and Insight for Florida Used Car Dealers
Providing turn-by-turn directions to
independent dealers for over 72 years.
FULTON, MO
PERMIT NO. 38
PA I D
PRST STD
U.S. POSTAGE
www.fiada.com
December 2012 — Independent Dealer — 1
2 — Independent Dealer — December 2012
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www.fiada.com
Dealer
Independent
MAILING ADDRESS 1840 Fiddler Court
Tallahassee, FL 32308
TELEPHONE (850) 385-2712
(800) 237-0448
FAX (850) 385-3251
WEBSITEwww.FIADA.com
EXECUTIVE COMMITTEE Christopher Leedom
President
Dino Mercurio
Senior Vice President
Brandi Noegel
Chairman of the Board
David Cox, CMD
Secretary
Paul Matton
Treasurer
Frank Fuzy
Regional Vice President
George Hickey
Regional Vice President
Steve Marbais, CMD
Regional Vice President
Jim Winterick, Sr.
Regional Vice President
Jim Winterick, Jr.
Regional Vice President
FIADA STAFF Lisette Mariner
Executive Director
Terry Myers
Educational Instructor
Sarah Langley
Administrative Director
Leah Nash
Membership Coordinator
Nicole Lee
Development Administrator
Amelia Tillman
Administrative Assistant
Christy Taylor
Editorial/Advertising
POSTMASTER:
Send address changes to
FIADA • 1840 Fiddler Court
Tallahassee, FL 32308
(850) 385-2712 • Toll Free: (800) 237-0448
Fax (850) 385-3251 • www.FIADA.com
The Independent Dealer is a publication of:
Florida Independent Automobile
Dealers Association,
1840 Fiddler Court, Tallahassee, FL 32308
The magazine is published every month in
Tallahassee and distributed to Florida new, used,
wholesale and lease/retail car dealers.
Advertising rates are available upon request.
The statements and opinions expressed
herein are those of the individual authors and do
not necessarily represent the views of Independent
Dealer or the Association. Likewise, the
appearance of advertisers, or their identification
as members of FIADA, does not constitute an
endorsement of the products or services featured.
www.fiada.com
Contents
December 2012
For members of the Florida Independent Automobile Dealers Association
C O L U M N S & F E AT U R E S
4
President’s Message
Christopher Leedom
6
Executive Director’s Message
Lisette Mariner
8
Curb the Curbstoners
A brief refresher on the proper procedures for turning in a curbstoner.
10
Membership News
New, Renewing and Rejoining Members
12
Logged On
It’s all about who you know, and at www.FIADA.com making connections with
other members has never been easier.
13
Invitation to Dealer Town Hall Meeting and Board Meeting
Finance will be the topic of discussion in January so reserve your spot now to
attend. Stick around for the Board of Directors Meeting, open to al members.
14
Remember December
Terry Myers
16
Standing Up For Dealers
FIADA stands up for dealers with judicial action intending to protect
lienholder’s rights.
17
Title and Registration Training
Take advantage of this new course being offered by the FIADA
20
How to Make Tax Time Work for You
The race is on stake a claim on customers looking to use their tax refund
towards a used car.
24
Leadership Profile: Paul Matton, Treasurer
The FIADA Executive Committee members are dealers just like you who want to
give back to the Association. Learn their story and how they want to help you.
22
Introducing the FIADA Gift Membership Program
Help reach the goal of increasing membership by sponsoring a new member
26
Legal Round-Up
Attorneys Thomas B. Hudson and Nicole Frush Munro update dealers on
important federal news and ongoing litigation of importance to dealers.
29
Obamacare: Are You Prepared?
Time is ticking to make sure you will be compliant as an employer with the new health care laws.
December 2012 — Independent Dealer — 3
FROM THE PRESIDENT
It’s the Most Wonderful
Time of the Year!
BY CHRISTOPHER LEEDOM, FIADA PRESIDENT
I
t is that time of year again – the holiday season is
upon us! Merry Christmas and a Happy Holiday
Season to each of you.
As we approach the final days of 2012 I thought it might
be helpful to remind each of us as dealers to begin our
year end planning. There is a lot to consider this year
– potential tax changes, new regulatory oversight and
growth plans for 2013. It is also important to take stock
and see what you accomplished this year. For many of the
dealers I have the opportunity to speak with it has been a
pretty good year.
My message this month is based on something I try to
remind myself to do all the time. I have a small card I
picked up years ago that says:
“Somewhere on the journey, don’t forget
to turn around and enjoy the view”
As dealers and small business owners we can sometimes
get so caught up in serving customers, buying cars,
hiring employees and running a business that we truly
forget to enjoy it. This holiday season I would encourage
you to stop and think about how great it is to have the
opportunity to be a dealer-owner, operating a small
business and hopefully enjoying life. Enjoy an extra
moment with your family or loved ones, have a glass of
wine and reflect, or go for a walk and just think about
what you have accomplished. I try to remind myself to do
this every year and it is amazing when you look back how
sometimes problems that seemed insurmountable at the
time don’t quite look the same and successes look even
larger than they did previously.
I also would encourage us as small business owners to
help support our communities this time of year. We
4 — Independent Dealer — December 2012
are hosting a major food drive to benefit children in the
community. Sure we do things year round but this is an
opportunity to really support causes when most people
are willing to contribute. Adopt a family, help a customer,
find someone less fortunate and do something to help.
Do it anonymously and you will find it even more
rewarding.
Also, don’t forget about FIADA. As we begin to move
forward into a new year remember to help increase
our membership ranks. Invite—or even sponsor—a
dealership to join. This helps our association stay strong
and continue to serve all of us in the dealer community.
While we are talking about FIADA I would like to thank
Lisette Mariner and her team that works with us all year
long and puts forth a tremendous amount of effort to
make our association the best it can be.
Finally, set some goals for next year. After you take stock
of 2012 think about what you want to accomplish in 2013.
What opportunities do you have in front of you? What
do you do well? What do you need to improve? How do
you make your dealership more successful and profitable?
This is a great time to think about what we want to
accomplish next year and start to focus our efforts to that
end.
In January we will have a town hall meeting and a board
meeting in Sarasota on January 18-19th. Come on out
and participate in our town hall meeting and if you can
join us for the board meeting. I hope to see you there!
Have a great month, Merry Christmas and Happy
Holiday Season!
Christopher Leedom,
FIADA President
www.fiada.com
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August 2012 — Independent Dealer — 5
October2012
2012 —
— Independent
Independent Dealer
Dealer —
— 55
December
EXECUTIVE DIREC TOR’S MESSAGE
What the New Year
Brings
BY LISET TE MARINER, EXECUTIVE DIREC TOR
R
ecently I had the opportunity to attend the
Automobile Dealers Industry Advisory Board
Meeting. This meeting includes representatives from
Independent Dealers, Franchise Dealers, the Department of
Motorist Services, the Department of Revenue, Insurance
and Tax Collectors. We reviewed the many items that were
included in last year’s transportation bill which are set to go
into effect January 1, 2013. These items include:
•
Liens must be transmitted electronically (FS 319.24(8))
•
Lienholders shall electronically transmit liens and lien
satisfaction to the department. (FS 319.27(7))
•
The department may adopt rules to implement an
electronic system for issuing salvage certificates of title
and certificates of destruction. (FS 319.30(10))
•
New license plates are created for veterans of the
Vietnam War and recipients of the Combat Infantry
Badge upon proof of eligibility. (FS 320.13(1))
•
A dealer of heavy trucks may secure one or more dealer
license plates that are valid for use on vehicles owned
or are in inventory and for sale and are used only for
demonstration purposes.
•
A motor vehicle registrant who has renewed a motor
vehicle registration during the advance renewal period
and surrenders the license plate for the vehicle before
the end of the renewal period may apply for a refund of
the license taxes. (FS 320.15)
•
A salvage motor vehicle dealer is exempt from the
requirements for garage liability insurance and personal
injury protection insurance on those vehicles that
cannot be legally operated on road, highways, or streets
in this state. (FS 320.27(3))
•
Recreational vehicle dealers may apply for title only
if the dealer is authorized by a manufacturer agreement
6 — Independent Dealer — December 2012
to buy, sell or deal in that particular line-make.
(FS 320.771)
Remember, Auto Data Direct is offering free
activation for dealers who sign up for their ELT
services and deposit $50 in a pre-paid account. ADD’s web-based ELT service offers volume
discounts, an online lien manifest, email and text
notification, printable confirmations, integrated
paper title requests, and many additional dealer
tools. To take advantage of the free activation offer,
visithttp://www.ADD123.com and use the promo
code FIADAELT when you sign up. Current ADD
customers can take advantage of the special offer by
entering the FIADAELT promo code under the ELT
tab after log-in.
On the 2013 horizon, the department will
pursue several items in their legislative package
including the option for dealers to have a two year
license renewal, the elimination of certificates of
repossession, moving the delinquent registration
fee to the day it expires instead of allowing the
grace period, and the license plate redesign. The
department is also in the midst of test piloting a
program in the Tallahassee region that helps to
find curbstoners. Staff reviews craigslist postings to
find curbstoners. Once it is determined that there
is a violation, a cease and desist order is sent. If the
action is found a second time then an injunction
is placed on both the dealer that is committing
the offense and the private citizen. Last year the
department investigated 904 cases. In this first
quarter the department has logged 442 cases.
Regions still investigate complaints, so continue to
Continued on Page 8.
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WHAT THE NEW YEAR BRINGS continued from Page 6.
report offenses in your area. See the bottom of this page for
a refresher on curbstoning procedures.
Looking ahead, FIADA’s legislative agenda includes the
reinstatement of the surrender stops. Remember, just
before the annual convention, the department ceased
enforcement of the surrender stops. The ability to place
a stop on a registration has a great impact for dealers that
otherwise cannot find the vehicle. Though it would take
time to recover, it enabled the dealer to either obtain a
settled amount or the vehicle back into inventory. Based
on the respondent to our recent survey, dealers responded
this section of the law impacted their business by anywhere
from $20,000 - $75,000. The changes being proposed will
have this section reinstated and also include a remedy for
resolve any discrepancies; something that was lacking in the
previous version of the law.
The FIADA is working hard to set the groundwork for a
wonderful start to the New Year. Don’t forget to register to
attend the first town hall meeting in Sarasota, FL on January
18 at the Leedom Group. Visit www.FIADA.com!
MEMBER BENEFIT OF THE MONTH:
Online Reference Material and Resources
As an FIADA member, the information you need is
always at your fingertips. Only FIADA members have
access to the most comprehensive dealer reference
library for Florida dealers including the Dealer Training
School Manual, Reposession
Manual, Red Flags Rule Templates,
Safeguards Rule Information and
more. Check it out at www.FIADA.
com or scan this code with your
mobile device and start learning.
Curb the Curbstoners
If Curbstoners are a problem in your area, take action by
reporting them to your DMV Regional Office. Here’s how.
C
urbstoned vehicles are a problem for Independent
Dealers. Thanks to FIADA legislation that was
passed a few years ago, vehicles found in violation
of curbstoning statutes can be towed and removed from
the property. The problem is, for now, the only way to
get a vehicle removed is by reporting it to the Division of
Motor Vehicles. If you see a curbstoned vehicle, follow
these instructions on how to file a complaint with DHSMV.
Use the attached list of DMV Regional Offices to submit a
complaint in writing (email is preferred) and provide them
with the following information:
• Specific location where vehicles were or are being
offered for sale.
• Dates that the vehicles were or will be offered for sale.
• Contact information for the person filing the
complaint.
• Any other data that may aid in the investigation, e.g.
name and or telephone number displayed on the vehicle.
8 — Independent Dealer — December 2012
Upon receipt of the
written complaint, the DMV
Regional Office will assign a Compliance
Examiner to investigate and take appropriate action if
warranted. The information can be emailed to the Regional
Offices at the following email addresses:
Region 1, Margate ‐ [email protected]
Region 2, Ocala ‐ [email protected]
Region 3, Jacksonville ‐ [email protected]
Region 4, Deland ‐ [email protected]
Region 5, Orlando ‐ [email protected]
Region 6, Tampa ‐ [email protected]
Region 7, Tallahassee ‐ [email protected]
Region 8, Palmetto ‐ [email protected]
Region 9, West Palm Beach ‐ [email protected]
Region 10, Miami ‐ [email protected]
www.fiada.com
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www.fiada.com
December 2012 — Independent Dealer — 9
MEMBERSHIP NEWS
New Members
NOVEMBER 2012
Renewing Members
auto sales zone, llc
Lake City, FL
Steven Cronin
Sponsor: FIADA
PAPERLESS
TECHNOLOGIES, LLC
Gainesville, FL
Tommy Lane
Sponsor: John Cousins
40+ Year Members
Southside Autos, Inc.
BAYSIDE AUTO SALES, LLC
Wilton Manors, FL
William Likas
Sponsor: Kevin Scott
CAPITAL MOTORS, LLC
Orlando, FL
Tahir Malik
Sponsor: Terry Myers
JONES AUTO SALES
& SERVICE, LLC
Silver Springs, FL
Phil Cackett
Sponsor: Kevin Scott
SUAZO mOTOR CARS, LLC
Jacksonville, FL
Miguel Suazo
Sponsor: Terry Myers
Top Car Sales
Fort Myers, FLBC
Fernando Gomes
Sponsor: FIADA
Trust Motors, LLC
Jacksonville, FL
Khaled Akkoub
Sponsor: Lisette Mariner
CARL STRICKLAND
Clermont, FL
Sponsor: FIADA
Give the Gift of Membership!
FIADA President Chris Leedom has challenged FIADA
members to recruit at least one new member this year and
double the size of the Association. One easy way to do that
is by sponsoring the membership for a fellow dealer. If you
would like to buy a membership for a new dealer, please
call the office at (800) 237-0448.
20+ Year Members
Cherry Cars, Inc.
Fett Motors, Inc.
N O VEM BE R 2012
Orlando, FL
Ft. Myers, FL
Pinellas Park, FL
10+ Year Members
BC Motor Company, Inc.
Big O’s Northside Auto Sales
Mobility Freedom, Inc.
Naples Motorsports
Reliable Used Cars, Inc.
Wayne Reaves Computer Systems
Xpress Finance, Inc.
West Palm Beach, FL
Interlachen, FL
Clermont, FL
Naples, FL
DeLand, FL
Macon, GA
Orlando, FL
Under 10 Year Members
Charleston Auto Aucion
Charlotte County RV Center, LLC
Corbin Auto Sales
Dan’s Deals on Wheels Auto Sales, Inc.
First Place Auto Sales, Inc.
Frazer Computing, Inc.
Goldstar GPS
Graham Auto, Inc.
HH Sales, LLC
International Auto Group
Liberty Hauling, Inc.
Mark One Financial
Neal’s Wheels
Tom Bush Auto Plex
Verde Classics, LLC
Winter Garden Auto Sales
Moncks Corner, SC
Port Charlotte, FL
Chipley, FL
Hollywood, FL
Gainesville, FL
Canton, NY
Knoxville, TN
Live Oak, FL
Jacksonville, FL
Pompano Beach, FL
Polk City, FL
Jacksonville, FL
Fanning Springs, FL
Jacksonville, FL
Boynton Beach, FL
Winter Garden, FL
FIADAisyournumberonesourceforadviceandinformation.
Technicalquestions,legalquestions,regulatoryquestions...
bring them on!
Our network of industry veterans, professionals and
consultants can help you find the answers you are looking
for. The best part is, it’s free to FIADA members. Call us
anytime at (800) 237-0448!
10 — Independent Dealer — December 2012
www.fiada.com
PAID ADVERTISING
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September
November2012
2012——Independent
IndependentDealer
Dealer——1111
LO G G E D O N
Making Connections and Online Networking
Y
ou hear a lot about the importance of networking and how sharing information and advice with fellow dealers is one of
the best FIADA member benefits. Most networking happens at FIADA meetings, such as the quarterly Board Meetings
or the Annual Covention, but now you have the opportunity to connect with fellow FIADA members online, through
www.FIADA.com. It is easy, convenient and just another way your business can benefit from membership.
Last month, we showed you how to update and edit your profile information and how to access the features of your account at
www.FIADA.com from the profile menu. This time, we are going to show you how to make connections with other members,
how to create sub-accounts for your employees so they may access the benefits of www.FIADA.com
Making Connections
Sign into www.FIADA.com with
your username and password. There
are two ways you can search for other
members to connect with:
1. If you know the name or
business name of who you are
looking for, type it into the
search window at the top of
the page.
2. Click on the Resources menu
tab and then click Find an
FIADA Dealer. Enter in your
search information. You can
do a generic search this way
as well by searching for just
the city, zip or county and
generating a list of dealers that
match the criteria.
After your search generates results,
click on the name of the member you
would like to make a connection with.
Click on the icon that says “Connect”
to request a connection. A pop-up
screen will give you the option to send
a personal message to the person you
are trying to connect with. Click send
request and, similar to adding a friend
2
1
3
1. Search for members by typing in a name, business name or information you know about them.
2. Search for members to connect with. Can search for specific cities, zip codes and/or counties.
3. Click on a dealer’s profile page and click the “Connect” link to request a connection. The
same menu bar will toggle to a communications center when you click on the Connections tab
from your profile menu. Manage connections and approve or decline connection requests from here.
12 — Independent Dealer — December 2012
on Facebook, your new connection
will be sent an email message to ther
recorded address notifying them of the
request.
When you receive a connection
request, you will be notified by email
in the account listed in your profile
information. Follow the link from
the email, or sign in to your www.
FIADA.com account and click on
the “Connections” tab in your profile
menu. Click on the “Received” link
at the top of the page and choose to
accept or reject the connection.
www.fiada.com
Don’t Miss FIADA’s Finance Forum & Dealer Panel!
Meet with several Prime and Sub-prime Finance Companies
Learn how to get your deals bought by the lenders who want to do business with you. Let the lenders show you
how to get more customers financed and sell more cars.
This finance panel will focus on:
Understanding Dealer/Lender agreements
THIS
NG IS
Reading and understanding consumer credit reports like a lender
L MEETI
L
A
H
N
TOW
See how lenders evaluate a dealer’s portfolio performance
REE!
F
Y
L
E
T
The elements of a dealer agreement
ABSOegLisUter online act all
R
Structuring a finance deal
or
DA.com 8
A
I
.F
w
ww
Debt to income (DTI) calculations
7.044
800) 23
(
What inventory works best for certain lenders
Chance to meet with lenders for individual consultations
FIADA Group rate $189/night. Reserve your room at (888) 421-1442
www.fiada.com
December 2012 — Independent Dealer — 13
BACK TO THE BASICS
Remember
December
Scheduling time to explore the things you don’t know about your
business is essential for success. Don’t forget to make time for the
all important annual review.
By TERRY MYERS
A
s a licensed professional
you are responsible to keep
up with changes that affect
your business and ultimately, your
livelihood. Having a set time each
year to ‘catch-up’ is a smart move.
Remember December and find a
time before the end of the month to
schedule a review into your calendar.
During these days revisit the multiple
resources you have accumulated and
update yourself and your employees.
While you are reading this article
somebody is changing the rules
or thinking of changing the rules.
Unfortunately, those who change the
rules don’t always go out of their way
to directly communicate the changes
A few resources you may want to
revisit:
Used Car Rule:
www/ftc.gov/bep/edu/pubs/business/
autos/bus13.shtm
Florida Department of Financial
Services:
www.fldfs.com
to the businesses and people the
change affects.
Florida Department of Revenue:
www.myflorida.com/dor
Contact your Division of Motorist
Services Compliance Officer and ask
what changes they might be aware
of and want to share with you. Open
the many Web links and search for
new dates. Open the many resources
available on the Internet. A few
are included below. Review your
federal requirements to protect your
customer’s information. What about
the Red Flag Rules, $10,000 cash
reporting and Specially Designated
Nationals requirements? Remind
your employees of how things are
to be done here at ABC Auto Sales.
Continuing Education requirements
$10,000 cash reporting rule
Publication 1544 at www.irs.gov
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14 — Independent Dealer — December 2012
may still need to be met. ‘CE’ is a great
resource for updating and gathering
valuable knowledge.
DMV Procedures Manual and Forms:
www.flhsmv.gov/dmv/Proc/
FIADA member website:
www.fiada.com
NIADA member website:
www.niada.com
We have all heard, “Ignorance of the
law is no excuse.” As professionals
it is our duty to stay abreast of
the laws and rules that affect our
business and the customers we serve.
Members of the FIADA/NIADA
are fortunate because membership
dollars go toward attorneys, lobbyist
and resources to watch and report
changes. Awesome information flows
constantly to members.
As business owners we take
responsibility for the actions of our
employees and/or our Independent
Contractors. Once you have updated
yourself, your are responsible to
update-train your employees.
To keep yourself and them informed Remember December!
Terry Myers is an instructor for the
FIADA Dealer Training School and
owner of Florida Auto Dealer School.
www.fiada.com
MARK OF
SERVICE
We wear our commitment to dealers proudly
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Contact your
nearest ADESA
location:
www.fiada.com
December 2012 — Independent Dealer — 15
FIADA stands up for
dealers with judicial
action intending to
protect lienholder’s
rights.
By Rob sickles
F
ollowing the legal panel
discussion at the FIADA annual
convention in Boca Raton this
past October, I was approached by
an attorney that works for a member
of the Association to discuss a legal
issue that the dealer had relating
to repair shop liens. The dealer in
question had received notice of
intent to sell from a repair shop that
was claiming a mechanic’s lien on
a vehicle for which the dealer was
a lienholder. As many of you know,
assertion of mechanic’s liens by repair
shops is becoming a growing problem
for dealers engaged in buy here/pay
here transactions throughout Florida.
As is often the case, the dealer that
approached me at the convention had
questioned the legitimacy of the lien
16 — Independent Dealer — December 2012
and the repair bills in question, so the
dealer posted the amount claimed for
the repair bills and storage charges
with the Clerk of Court. Once the
bond was posted, the Clerk of Court
issued a legal document to the repair
facility advising it that the bond
had been posted and instructing it
to release the vehicle to the dealer.
Generally speaking, under Florida
law when personal property is being
held pursuant to a possessory lien, the
posting of a bond sufficient to cover
the amount claimed to be due transfers
the lien to the bond and the party
holding the property as security for the
debt is required to release the property.
In the situation at issue in this dealer’s
case, the repair facility refused to
release the vehicle and sold it to a third
party despite the posting of the bond.
Upon learning of the sale, the
dealership took legal action against
the repair facility and ended up with
a Court Order finding the repair
facility and its owner in contempt of
court for their actions. The Court
further held that the contempt
could be cured by compensating the
dealership for the value of its lien on
the vehicle. The repair facility and its
owner disagreed with this ruling and
sought appellate review of the Court’s
decision.
After reviewing the Appellate Court
filings, FIADA decided to try and get
involved in the appeal because the
repair facility was not only attacking
the contempt order that had been
entered under the facts of its case,
Continued on Page 18.
What is acceptable proof of
ownership in Florida, other
states and/or
countries?
Processing title paperwork correctly translates
into faster processing by the tax collector’s
office, helping dealers complete deals quickly and efficiently.
In FIADA’s new Title & Registration Training seminar students will use
a manual, examples and case studies to help clarify ownership transfer
starting with the MCO, ‘new’ title through the ‘used’ title. Training is hands
on and students will get the opportunity to complete their own sample title
paperwork. Special $79 rate for FIADA members if you register now.
When is notarization
acceptable/required?
When and how does a
lien get added/removed?
Where do I find proof
of present and past
ownership, odometer readings
and brands?
Upcoming Seminars:
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ING
Higher Advance than Factoring
TAKING ON THE BAD GUYS continued from Page 16.
The repair facility was not only attacking the
contempt order, but also challenging the ability of
all lienholders to post bonds and secure the release
of vehicles under the Motor Vehicle Repair Act.
but it was also challenging the ability
of all lienholders to post bonds and
secure the release of vehicles under the
Motor Vehicle Repair Act. Because
an adverse ruling on that issue would
effect all lienholders statewide, FIADA
authorized the filing of an Amicus
Brief, also known as a “friend of the
court” brief, in support of the dealer’s
position. The purpose of an Amicus
Brief is to afford parties that could be
affected by the outcome of a case an
opportunity to explain their positions
to the court or to support a position
taken by a litigant in the case. The
only restriction on an Amicus Brief
is that it must deal with the facts and
issues as framed by the litigants and
thus, a party filing an Amicus Brief is
prevented from presenting new issues
to the Appellate Court.
The repair facility raised numerous
attacks on the validity of the Trial
Court’s Order, but FIADA’s Brief was
limited in that it could only address
the ability of a lienholder to post a
bond when a repair shop was asserting
a mechanic’s lien. In attacking the
ability of a lienholder to post a bond
to release a motor vehicle, the repair
shop attempted to focus the Appellate
Court’s attention on the language of
the bond provision and the definitions
contained within the Motor Vehicle
Repair Act. The provision which
authorizes the posting of the bond
states that only a “customer” may
post a bond to secure the release of a
vehicle being held to secure payment
for repairs. Amazingly, the term
“customer” is narrowly defined within
the Motor Vehicle Repair Act as “the
person who signs the written repair
18 — Independent Dealer — December 2012
estimate or any other person whom
the person who signs the written
repair estimate designates on the
written repair estimate as a person
who may authorize repair work.”
Applying this definition to the
bond provision of the Repair Act
would create absurd situations. As
we argued in FIADA’s Brief, a strict
interpretation of this definition
would prevent the registered owner
of a vehicle from posting a bond and
retrieving possession of his vehicle in
the event that he was not the person
that delivered the vehicle to the repair
shop for repairs and if he was not
listed on the repair order as being
authorized to agree to repairs. The
example used in our Appellate Brief
was the situation where the parents of
a child with a driver’s license own a
vehicle that is dropped off at a repair
shop by the child for repairs. The
parents, under the interpretation of
the statute argued for by the repair
shop in the appeal, would not be able
to post a bond and secure the release
of the vehicle, unless the child listed
them on the repair estimate as being
authorized to agree to repairs. Surely
the Legislature did not intend to
preclude owners from retrieving their
vehicles in these circumstances. We
also argued that this interpretation
ignores other areas of the law
which allow interested persons to
post bonds to secure possession
of property being held under a
possessory lien.
We also called to the Court’s attention
a prior decision which it had made
and in which it found that the term
“customer” could not be read to exclude
lienholders. When it made this decision,
the Appellate Court was interpreting a
different portion of the Motor Vehicle
Repair Act, however, we argued that the
logic should still apply. Specifically the
same Appellate Court had held that a
repair shop that was trying to recover
on a bond posted by a lienholder was
limited to the $100 cap on exposure for
unauthorized repairs even though it was
seeking recovery from the lienholder
and not the customer. The Appellate
Court reached this decision despite
the fact that the limitation within
the statue says that the “customer’s”
liability is limited to $100 and the
statute is silent on a lienholder’s liability
for unauthorized repairs. The Court
reasoned that to exclude lienholders
from those whose liability was capped at
$100 would frustrate the purpose of the
Motor Vehicle Repair Act.
We are hopeful that the Court addresses
the merits of our issue, however, I
should point out that there are some
unusual circumstances in this appeal
which the Appellate Court could find
as being a sufficient reason to overturn
the trial court’s order. Among these
issues are the fact that the lienholder
did not obtain court approval prior to
posting the bond and the lienholder
did not file a lawsuit against the repair
facility in order to present the Court
with a basis to assert jurisdiction over
the repair facility. Because these issues
were also raised in the repair shop’s
Appellate Brief they could form the basis
for the Court to dispose of this case
without addressing the issue of whether
a lienholder can post a bond.
We will keep you informed of the
progress of the case and circulate any
opinion rendered by the Appellate Court
to all members. If you would like a copy
of the Amicus Brief filed by the FIADA
or additional information, please contact
Lisette Mariner at 800-237-0448.
www.fiada.com
PAID ADVERTISING
www.fiada.com
November 2012 — Independent Dealer — 19
HOW TO MAKE
TAX TIME WORK FOR YOU
Your customers are counting on a refund. Make sure you are ready
to help them make the most of their money, and maximizing your
ability to cash in.
By CHRIST Y TAYLOR
D
id you know that the average
Special Finance customer
receives 20% to 30% of their
annual income in ONE paycheck? That is the power of tax season. More
than $200 billion will be hitting the
market in late January.
Now the second question that all
independent car dealers need to ask
themselves is “How am I maximizing
my ability to cash in?”
Tax season is alive and better than
ever. Many dealers are already
8 weeks into the 2012-2013 tax
refund selling season. Starting in
October, thousands of customers are
committing a portion of their tax
refund in January for a car that they
need in the fall.
Early Tax Season:
The 4th Quarter process includes
getting the down payment that the
customer can afford, starting the
weekly or bi-weekly payments, and
filling the gap between what the dealer
20 — Independent Dealer — December 2012
wants and what the customer can
afford when the tax refund arrives
after the beginning of the year.
Instead of extending the life of a loan
from 24 to 30 months (for example)
to compensate for a customer’s
low down payment, savvy dealers
are banking on tax time, deferring
a portion of the down payment,
and cashing in come January and
February. This is not a zero down
promotion or some other dangerous
gimmick. This is a great way to put
the customer into a vehicle they can
afford without breaking the bank
ahead of the holidays.
Keep in mind, you are not expecting
to make loans or sell cars that you
normally would not approve. Tax
season is an opportunity to fund the
gap between what you want down and
what the customer has to put down.
For instance, if you want $1,500 up
front and the customer only has
$1,000 to put down, you can take that
first payment and get the remaining
$500 when the tax refund arrives. This can help keep your risk in check
while helping the customer during
this expensive time of year.
This prevents you from having to
write the loan with a lower down
than you would normally like.
Here is the catch though…once
the refund money arrives, you get
a second chance to sell. With an
average of nearly $5,000 sitting in
front of you, show the customer the
benefits of putting down more than
the agreed upon $500. “Wouldn’t your life be easier with $60
per week payments instead of $80?”
Play with the numbers. Show the
benefits of a higher down.
What is the difference of the
customer has $4,500 to spend or
$3,800?
It is not too late to begin stealing
market share and taking tax refund
customers out of the market before
the checks start rolling in.
Tax Season Facts:
Do you know exactly how much
free money is out there for your
customers who live paycheck-towww.fiada.com
paycheck? The money you paid out
in taxes gets recycled back to your
potential customers every year. You
only get one chance to capitalize and
reclaim some of this cash.
The rule of thumb is that a family
with 2 or 3 children making $18,000
or less a year will get half of that back
as a refund. That comes to $8,000
to $9,000 in refund money, mostly
coming from the Earned Income Tax
Credit, for incomes up to $48,000 a
year.
Now remember, $18,000 is their
reported, taxable income. This
does not include last year’s refund,
rent assistance, food stamps, or
child support. The customer in this
example can actually be bringing in
up to $30,000.
Back to the tax refund itself, the
customer knows this money is
coming. Your demographic is already
planning on how they are going to
spend it. And most of your customers
are already spending it, right now,
before it even hits their hand.
Money is being borrowed from Mom
with the promise of re-payment
when the refund arrives. Bills are
getting put off with the expectation
of catching up in late January. The
special finance customer shows their
true brilliance and budgeting skills by
planning their entire life around this
one check. It happens every year.
Successful dealers make themselves
the first stop in the customer’s
spending spree.
The bottom line is that this windfall
is not a surprise to the customer.
This is an expected annual payout.
As a result, money is borrowed,
obligations are made, arrangements
are reached, and credit cards get used.
Once the tax refund check arrives,
that money is gone within 24-48
hours.
www.fiada.com
Tax Time Benefits:
Don’t forget about collections.
Lower risk, fewer repos, and fewer
costs create higher profits.
Delinquencies or chronic late-payers
are in the same position with their
other creditors too. Bet on it that
their utility bills, cable, cell phone,
and rent are late as well. Tax time is
when this is all supposed to be caught
up.
W-2 Time:
It never fails. Every March and April,
a handful of dealers in Tampa start
advertising tax season and tax refund
specials.
Don’t wait! Only people who owe the
IRS money file in April.
Dealers can be the light at the end
of the tunnel in such situations.
Call your delinquent customers in
December to let them know that you
have a solution.
W-2s start coming out on January
2nd. The latest date that W-2s arrive
should be around February 5th. The
Super Bowl is a good rule of thumb.
You can also negotiate 2nd down
payments or balloon payments. One
dealer in Kentucky has found that
customers can be very receptive to
Even though the IRS does not open
until mid-January, tax returns can still
be filed before then. The second the
IRS turns their computer system on,
Keep in mind, you are not expecting
to make loans or sell cars that you
normally would not approve. Tax
season is an opportunity to find the
gap between what you want down and
what the customer has to put down.
making an extra payment of $800
with their tax refund in order to
lower their weekly payments.
The Buy Here Pay Here industry is all
about relationships, listening to your
customer, and providing solutions.
Not all customers are receptive to a
helping hand, but think about the
ones that are. How much additional
cash can you bring onto your lot
during tax season without having
to replace a single vehicle in your
inventory?
Balloon payments, planned or
unplanned, give you the ability to
lower your risk of repossession by
lowering customer payments and
shortening customer contract terms.
the first-filers
get processed.
Timing is one of the most common
misconceptions of tax time. If you
wait until late January to start, half of
the tax returns will already have been
filed.
Contact a reputable tax refund
service provider who specializes in
automotive retailers. If you miss the
boat now, you will have to wait until
next year to make up for that mistake.
Written by Chip Wiley is the Marketing
Director for Tax Refund Services Tax
Max (www.taxmax.com). Contact
Email: [email protected]
December 2012 — Independent Dealer — 21
INTRODUCING THE FIADA
GIFT MEMBERSHIP PROGRAM
During my acceptance speech, I pledged to increase our FIADA membership
by 20%. One way we are working to achieve this goal is through our new
FIADA Gift Membership Program.
As an association, our membership is our strength and lifeblood. By
choosing to sponsor member for one year,you can introduce a new Florida
Dealer to FIADA member benefits like training, networking, and legal
counseling while ensuring all of our voices are represented in our legislative
efforts. Plus, you will receive a$50.00 discount on your own annual
membership. I challenge you to find a friend from the auction or even in
your own market, and offer to sponsor their FIADA membership for one
year. If we all sponsored one member we would double our membership.
By marching together with FIADA, we will all benefit from a stronger
voice and larger legislative presence. To sponsor one Florida dealer’s
membership for one year, fill out the form below and return it to FIADA
along with a check for $325.00. Your new sponsored
member will receive a letter notifying them that they are
now members of FIADA.
Thank you for your generosity and support.
Christopher Leedom,
FIADA President
I, _______________________________________, of __________________________________
(Sponsor Name)
(Sponsor Dealership Name)
agree to sponsor one year of FIADA membership for ________________________________.
(New Member Name)
Credit Card Authorization
Name on Card
Card Number
Exp Date
Billing Phone
Security Code
Billing Address
Authorized Signature
City
State
Zip Code
X
Return this form to FIADA by mail at 1840 Fiddler Court, Tallahassee, FL 32308 or Fax (850) 385-3251.
22 — Independent Dealer
— November 2012
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December 2012 — Independent Dealer — 23
LEADERSHIP PROFILE
T
he FIADA Executive Committee is always a unique mix of dealers with different backgrounds, business models,
leadership styles and experience. Even though their demographics may differ, they all have at least one thing in
common: bringing value to FIADA members. Get to know this group better with a few questions and answers into
their philosophies, outlooks and vision for the future.
Meet the Treasurer:
Paul Matton, Park Auto Mall
What is your history with the auto
business?
I’ve been in the car business since
Moby Dick was a minnow. It has
been 34 years and I’ve held every
position from sales manager to
finance manager to general manager
to used car manager--you name it,
I’ve done it. I have done just about
everything excepting owning a
franchise.
I am currently the Operations
Manager at Park Auto Mall and have
been filling in for the GM. I take
care of the daily operations of the
dealership and service the wholesale
operations. I also do buying, selling,
whatever it takes to get the job done.
Can you share your best advice for
making it in this business?
Basically it all boils down to having
dedication. You have to have solid
dedication if you are going to do it.
I am still working 12 hours a day,
6 days a week, so for a long-term
career you need to be dedicated and
committed. Even though it is hard
work, this is still the best business
to be in, I think. The automobile
industry paved the way for my
children, and my grandchildren
and hopefully it will offer me a nice
retirement when the time comes. It’s
24 — Independent Dealer — December 2012
still a lot of work to stay on top of the
game every day, but you have to have
that mindset if you want to make it. If
you snooze you’re going to lose. I tell
everyone to pick up the dollars and
forget the pennies, so make sure you
are working hard and seeing results.
Also, don’t let other people run your
business for you; you have to run it
and make decisions for yourself. If
you have good people to help you,
though, it is easy. Fred (the owner
at Park Auto Mall) is a good owner;
one of the best car owners I’ve ever
known.
What is the best part about being an
independent dealer?
It gets in your blood. I started
over 30 years ago, and by choice, I
can’t get out of it. You can try, but
you can’t. It’s locked in your blood
system. It’s almost like a high when
the adrenaline gets flowing and you
are out there with the competition,
taking on challenges. I live for when
something comes up gives you a
challenge and you have to figure out
how to solve it. I love sales, too. Sales
is about three things: features, benefits
and advantages. You have to give the
customer enough info so they will say
to themselves, “this guy knows what
he’s talking about.” I don’t care if its
Paul Matton has also served as FIADA President
in 2007 and on the Board of Directors.
cars or a can of green beans, if you
are good at explaining the features,
benefits and advantages to someone
else you will sell it every time.
When did you become a FIADA
member, and why did you join?
We believe it’s a code of ethics
everyone should have. It is always
important that your business
standards coincide with what an
organization is trying to do, and for
independent dealers that is FIADA.
We try to educate customers and
everybody else, even independent
dealers, because like I said about the
features, benefits and advantages,
membership can help you improve
your business. You should want to be
partners with an organization that will
get you somewhere. FIADA has the
same values and trustworthy people
that you are trying to prove to your
customers that you are, so you need
your membership as a credential. If
you don’t belong, you are telling your
www.fiada.com
customer and everyone else that you
don’t have ethics or rules or a code
that you operate by. You are just
flying by seat of the pants, and who
wants to do business with someone
that feels that way?
My best advice is to go ahead
and write the check for membership,
because you may not think you need
FIADA now but I guarantee there
will be a point somewhere during
you career that you will. You think
you are all set right now and you
are doing everything the right way,
but that can all change with one law
that’s passed and you aren’t aware
of it. Even for the little aggrivations
you’ve got, you may need some advice
or need to talk to another member
and network outside of your area.
You never know when you’re going
to have a problem and you need to
talk to someone in another part of
the state or even the country. When
I was president a few years back I
had the chance to sit on the National
Council and meet a lot of other state
presidents and other organizations.
So now, if we have a problem in
Arizona or Texas or wherever, I know
who to call. Being a member does
pay off. One little question you can
get answered by FIADA can end up
saving you $100 or $1000.
What are some benefits to being an
FIADA member?
Networking and building
relationships with other dealers and
vendors can be very helpful for you.
Going to convention, I spend most
of my time talking to vendors and
picking their brains for ideas. If I
can bring back one or two ideas and
implement them in our business here
and it lets me sell one or two more
cars a month, then the membership
and the trip to convention pays for
itself. If I can sell just two extra cars a
month, then it is worth every penny.
Do you feel that being a member
of FIADA has contributed to your
success? If so, how?
It has! When you get involved the
behavior breeds behavior, success
breeds success. The more you get
involved with FIADA the more your
behavior changes and now your
involved and a part of something that
you want to do your best to help out.
The knowledge you can pick up
from talking to guys who have been in
business for 10, 20, 30 or more years
is priceless. We’re not reinventing
the wheel here by any chance but we
sometimes need new ways to think
about solving the same old problems.
Listening to how other people
in different areas or in different
situations handle their problems
someone else only helps you.
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December 2012 — Independent Dealer — 25
LEGAL ROUND-UP
A Look At Current Legal Issues
BY Thomas B. Hudson and Nicole Frush Munro, Hudson Cook, LLC
H
ere is a monthly collection of selected legislative and
enforcement highlights, and a recap of some of the
many auto sale and financing lawsuits Hudson Cook,
LLC follows each month. (Note that this column does not offer
legal advice. You should consult your dealership lawyer with
any legal questions.)
Federal Law
Inflation Alert! On November 21, the Consumer Financial
Protection Bureau and the Federal Reserve Board published
final rules amending Regulation Z (TILA) and Regulation M
(Consumer Leasing Act) by increasing the dollar threshold for
exempt consumer credit and lease transactions. The DoddFrank Act provided that the dollar amount thresholds for
TILA and the CLA must be adjusted annually by any annual
percentage increase in the consumer price index. Based on
the adjustments, TILA and CLA protections generally will
apply to consumer credit transactions and consumer leases
of $53,000 or less in 2013. Although the Dodd-Frank Act
generally transferred rulemaking authority under TILA and
the CLA to the CFPB, the Federal Reserve retains authority to
issue rules for certain motor vehicle dealers – that’s why they
were involved with this. The adjustments to the thresholds
will take effect on January 1, 2013.
CFPB’s Report Card. On October 31, the CFPB released
its first Supervisory Highlights report. The CFPB will
periodically issue a Supervisory Highlights report to inform
the public and the financial services industry about its
examination program. The CFPB visited banks with more
than $10 billion in assets, their affiliates, and nonbank
lenders from July 2011 through September 2012. The
CFPB reported problems with certain credit and lending
disclosures, including creditors increasing credit card
limits without notifying co-signers in some instances. In
addition, the CFPB highlighted that creditors have reported
inaccurate information to credit bureaus. The CFPB also
assessed institutions’ efforts to develop and maintain effective
compliance management systems.
Dealer Targeted for Privacy Violations. On October 26,
the Federal Trade Commission announced that it accepted
a final settlement with Franklin’s Budget Car Sales, Inc., a
Georgia car dealership, resolving allegations that it illegally
exposed the sensitive personal information of consumers
by allowing peer-to-peer (“P2P”) file sharing software to
be installed on its computer systems. Franklin’s allegedly
26 — Independent Dealer — December 2012
compromised consumers’ sensitive personal information
by allowing P2P software to be installed on its computer
network as well, in violation of the FTC Act, the Safeguards
Rule, which implements Section 501(b) of the Gramm-LeachBliley Act, and the Privacy Rule, which implements Section
503 of the GLB Act. Franklin’s also allegedly failed to provide
annual privacy notices and failed to provide a mechanism
by which consumers could opt out of information sharing
with third parties, in violation of the GLB Privacy Rule. The
settlement bars misrepresentations about the privacy, security,
confidentiality, and integrity of any personal information
collected from consumers, and Franklin’s must establish and
maintain a comprehensive information security program.
State Developments
We have only one state development to report this month.
The Texas Department of Banking and Securities amended
the bulk of the rules in Chapter 84 concerning motor
vehicle installment sales to improve consistency, grammar,
punctuation, capitalization, and formatting and to provide
clarification, more precise legal citations, and improved
references to other state agencies.
LITIGATION
Vehicle Buyer in Ordinary Course of Business Has Priority
over Floor Plan Lender: A collector of classic automobiles
engaged a company to help him locate, buy, sell, and trade
cars. The collector bought three vehicles, but they were titled
in the company’s name for marketing purposes. After the
company defaulted on its floor plan agreement with a bank,
it transferred title to the three vehicles to the collector for a
nominal purchase price, but continued to store the vehicles for
the collector. The bank sued the company and seized the three
cars. The collector sued the bank in the U.S. District Court for
the Southern District of Ohio, seeking possession of the three
vehicles. The collector moved for summary judgment, arguing
that he had a superior interest as a “buyer in the ordinary
course.” The court noted that a perfected security interest will
often prevail over a subsequent motor vehicle purchaser unless
the purchaser is a “buyer in the ordinary course of business,”
who takes the vehicle free and clear of any lien on the seller’s
property. The bank argued that the collector did not fall within
the definition of a “buyer in the ordinary course” because he
never took possession of the vehicles, and the issuance of the
titles occurred only after the company defaulted on its loan
obligation. The court disagreed. It found that the statute does
www.fiada.com
not necessarily require that the buyer have possession, so long
as the buyer has the right to possession, which the collector
had. The court then found that the late titling of the vehicles
was insignificant because the collector clearly used his own
funds to purchase and insure the vehicles and had complete
control over the manner in which they were restored. See
Hockensmith v. Fifth Third Bank, 2012 U.S. Dist. LEXIS
154036 (S.D. Ohio October 26, 2012).
Car Buyer Must Show Injuries to Recover against
Repossessing Lienholder for Violations of Maryland Law:
An individual executed a retail installment sale contract in
connection with her purchase of a used car from a Maryland
dealership. When the buyer defaulted, the assignee of the
contract repossessed the car and sent the buyer a notice
stating that the car would be sold by a private sale. The
assignee sent the buyer a notice informing her that the car
had been sold at a private sale and that a deficiency balance
remained. The buyer sued under a number of theories,
including that the notices violated state law governing the
extension of credit and the Maryland Consumer Protection
Act. The U.S. District Court for the District of Maryland
dismissed these two counts of the complaint because the
buyer did not show any actual injury. While the assignee
charged the buyer for the costs of the sale, her payments and
proceeds from the sale would not cover the principal of her
debt, and the assignee had already promised not to seek a
deficiency. The court allowed the buyer to proceed on her
breach of contract claim for which no actual damages were
required because nominal damages are available for breach of
contract. See Epps v. JPMorgan Chase Bank N.A., 2012 U.S.
Dist. LEXIS 153549 (D. Md. October 22, 2012).
amount of credit provided to you or on your behalf,” and a
brief description of the Finance Charge, such as “the dollar
amount the credit will cost you.” The U.S. District Court
for the District of Nevada granted the individual summary
judgment on this claim. The court concluded that the
contract’s term “unpaid balance – amount financed” did not
sufficiently describe that this amount was the amount of credit
provided and that the contract’s term “finance charge” did not
sufficiently describe that this amount was the dollar amount
the credit would cost the individual, even though the contract
provided that the individual would pay no finance charge. The
individual also claimed that the creditor violated the Nevada
version of the Uniform Commercial Code by failing to use the
correct form of notice of disposition. The court granted the
individual summary judgment on this claim as well, where
it determined that the creditor’s notice of disposition did not
include a statement that the individual was entitled to an
accounting of the unpaid indebtedness, as required by Nevada
law. See Limtiaco v. Auction Cars.com, LLC, 2012 U.S. Dist.
LEXIS 148474 (D. Nev. October 15, 2012).
Tom ([email protected]) and Nikki (nmunro@hudco.
com) are partners in the law firm of Hudson Cook, LLC. For
information, call 410-865-5411, 410-865-5430, or visit www.
counselorlibrary.com. Copyright CounselorLibrary.com
2012, all rights reserved. Single publication rights only, to the
Association. (10/12) HC# 4849-1314-9969.
Creditor Liable for Non-Compliant Credit Contract and
Notice of Disposition: An individual signed a retail
installment contract to buy a used truck, with no finance
charge. After she stopped making payments, the creditor
repossessed and sold the car. The individual sued for
violations of the Truth in Lending Act and Nevada law. The
individual claimed that the creditor failed to disclose the
Amount Financed and the Finance Charge as required under
Regulation Z. Reg. Z requires that the credit contract include
a brief description of the Amount Financed, such as “the
Car dealers, boat dealers, RV dealers–all businesses that sell
personal property on credit–are subject to a bewildering
thicket of federal and state laws and regulations. Responsibility
for compliance usually falls on the general manager of the
dealership or the manager of the “finance and insurance”, or
“F&I” department. Sometimes the person responsible for sales
and credit compliance has received some training dealing with
these legal issues. But sometimes, the person shoved into the
deep end of the pool as the compliance officer doesn’t have a
clue what he or she is responsible for, and doesn’t know where
to start.
Ed Bobit, Publisher
Bobit Business Media
“Ignorance of the law is no excuse. And given the penalties for violating even
one of the many legal obligations facing today’s auto dealer, including stiff
fines and even imprisonment, a dealer must be well informed to make sound
business decisions. There has never been a reference book for auto dealers and
their professional advisors ... until now. This book is extremely well written
and easy to read. It should be on the desk of every car dealer. It’s on mine.”
Adam Goldfein, Host of the Nationally Syndicated Talk Show
AutoScoop—The Inside to Car Buying
“If a dealer had to decide between renting an inflatable gorilla for his dealership’s
rooftop or purchasing this book for every single sales manager and office manager in
the dealership, I hope the dealer would make the business decision that could save him
or her thousands of dollars in unnecessary legal fees.... Put the gorilla on hold and insist
that every manager read this book and keep it on their desks. I’m making it required reading
for every Northwood University Automotive Marketing major.”
Joseph J. Lescota, Chairman
Automotive Marketing Department
Northwood University
“The F&I Legal Desk Book is the official course text for the AFIP Certification Program. Hudson
Cook, LLP, is now the course authority for the applicable state and federal regulations. I can count on
one hand the law firms in the United States who could have met our curriculum requirements. The
F&I Legal Desk Book will dramatically reduce the time required for candidates to prepare for the
200-question final exam. Hudson Cook, LLP, has made a major contribution to AFIP’s efforts to raise
the bar for regulatory compliance and ethical conduct within the F&I trade.”
David N. Robertson
Executive Director
Association of Finance and Insurance Professionals
“A unique exploration of the Do’s and Don’ts for dealers without the legal maze.”
Independent Dealer Now Offers
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The Answer Book for
Finance and Insurance
Professionals
360 things to know about
auto dealer finance
“This new book may be called a ‘guide’ but it’s more likely a ‘bible’ for every
dealer, F & I manager, and trainer in the country. A timely and invaluable
reference that covers all legal and regulatory touch-points in a dealership’s
purchase transaction by a consumer. AFIP’s endorsement confirms that the
stable of authors know the ‘rights’ to follow and the ‘wrongs’ to avoid. It is
on the recommended list by F&I Magazine.”
Charles F. Arrambide
Assistant Vice-President
Universal Underwriters Group
F&I Legal Desk Book
Michael A. Benoit is a partner with Hudson Cook, LLP and
the author of “A Dealer’s Guide to Red Flags Compliance,” a
comprehensive resource tool to help auto dealers create and
maintain their internal Identity Theft Prevention Programs. His
practice focuses on the practical application of a wide range of
consumer financial services and dealer laws and regulations to
the operational realities of auto dealers, finance companies,
technology providers and financial services vendors. Mr. Benoit
is a member of the DealerTrack Compliance Council, the
National Association of Dealer Counsel, and is a regular speaker
at industry events, including the NADA Annual Conference,
National Vehicle Leasing Association Annual Conference, and
numerous other national programs and private client-funded
engagements. He is frequent contributor to a number of trade
publications and journals, including Auto Finance News and
F&I Management and Technology magazine, and was the
principal author of the NADA’s Management Guide to
Information Safeguarding. Mr. Benoit can be reached at
[email protected].
Third
Edition
F&I Legal Desk Book
The Answer Book for Finance and Insurance Professionals
Thomas B. Hudson has practiced consumer vehicle sales,
finance and leasing law since 1973. Mr. Hudson chairs the law
firm of Hudson Cook, LLP.
He is President of
CounselorLibrary.com, LLC, and is the Founder and
Editor-in-Chief of CARLAW®, an Internet service that reports
auto finance and lease legal developments. He has served as
President of the American College of Consumer Financial
Services Lawyers, and Chair of the American Bar Association
Consumer Financial Services Committee’s Personal Property
Finance Subcommittee. He represents the National Automotive
Finance Association, Reynolds & Reynolds, auto finance
companies, major banks and independent finance companies
and many companies who supply services to the auto finance and
lease industry. He is a frequent writer and speaker on topics
relating to vehicle finance and leasing. He is also author of the
book: CARLAW® ~ A Southern Attorney Delivers Humorous
Practical Legal Advice on Car Sales and Financing! Mr. Hudson
can be reached at [email protected].
F&I Legal
Desk Book
3rd Edition
● The Truth in Lending Act and Regulation Z
● The Consumer Leasing Act and Regulation M
● The Equal Credit Opportunity Act and Regulation B
● The Fair Credit Reporting Act
The Answer Book for
Finance and Insurance
Professionals
Thomas B. Hudson
and the Attorneys of Hudson Cook, LLP
Edited by
Michael A. Benoit
CARLAW® F&I Legal Desk Book: 360 Things to Know About
Auto Dealer Finance provides a compliance roadmap for “green
pea” and seasoned compliance officers alike. Each chapter
addresses a topic of crucial interest to dealerships. The topics
cover the compliance waterfront, and include:
● The Federal Trade Commission’s Used Car Rule
● Federal Advertising Rules
● The Magnuson-Moss Warranty Act
● Arbitration
● and more . . .
Each chapter is authored by lawyers who deal with that
chapter’s subject every day and in detail. The authors present
their information in an easy-to-follow, Q&A format, with as
little “legalese” and as much useful and practical information
as possible. The goal each time is to give the reader a solid, basic
working knowledge of the topic covered.
For years, dealers have needed a source for comprehensive,
no-nonsense information on the legal requirements they face.
Now they have one that quickly will become their principal
resource for credit compliance information:
Thomas B. Hudson
CARLAW ® F&I Legal Desk Book:
360 Things to Know About Auto Dealer Finance.
Call us at (800) 237-0448 to reserve yours!
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December 2012 — Independent Dealer — 27
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Obamacare: Are
You Prepared?
The wait is over, employers have run out of time to
examine their new requirements under health care
reform laws. Landrum Human Resources answers
the questions to help you get ready.
If you are an employer with 10 fulltime and one part-time employee
plus two officers, it seems clear
you are under the “50” member
equivalent. Why would you continue
to supply company health insurance
if the employees will, as citizens, have
their own coverage now from the
government?
At the heart of this question is the
talent issue. If you are currently
offering company benefits it is
probably because you need to
make these benefits available to be
competitive with other employers as
you seek to attract and retain the best
employees. That likely will not change;
in fact, employer sponsored plans
may become even more important
to employees in the future. There
was an increase in the number of
employer sponsored plans offered in
Massachusetts in the five years after
reform was implemented there.
How does this affect Small Business
covered under the Service Contract
Act as it relates to applicable wage
determinations published by the
Department of Labor?
To the best of our knowledge, there are
no specific provisions in the ACA that
relate to the Service Contract Act.
www.fiada.com
Please explain the difference
in grandfathered and nongrand fathered plans.
Here is a section from the website
maintained by the US Department
of Health and Human Services that
addresses your question:
Grandfathered health plans will be
able to make routine changes to their
policies and maintain their status.
These routine changes include cost
adjustments to keep pace with medical
inflation, adding new benefits, making
modest adjustments to existing
benefits, voluntarily adopting new
consumer protections under the new
law, or making changes to comply with
State or other Federal laws. Premium
changes are not taken into account
when determining whether or not a
plan is grandfathered.
Plans will lose their
grandfathered status if they choose
to make significant
changes that reduce
benefits or increase costs to
consumers.
Could you discuss the employer
mandate fines of $2,000 and $3,000
and how they are calculated?
Examining the two penalties in more
detail, we’ll first look at the employer
who offers no plan at all. If any
employee goes to an exchange and
receives a subsidy, then the employer is
subject to a $2,000 annual penalty for
every full-time equivalent employee.
The first 30 employees are exempted,
so the penalty begins with the 31st
full-time equivalent employee.
Continued on Page 30.
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L
andrum Human Resources
held a post-election webinar on
Health Care Reform earlier this
month and had a record number of
attendees participating. Following are
their answers to questins asked during
the webinar.
December 2012 — Independent Dealer — 29
OBAMACARE: ARE YOU PREPARED? continued from Page 29.
How much is the Inadequate
Coverage Penalty?
We have two tests to be concerned
with. First is the affordability of
the plan. If the employee’s portion
of the health insurance premium is
more than 9.5% of their household
income, the plan is deemed to be
unaffordable and the employee would
be eligible for the exchange subsidy.
The Internal Revenue Service is
considering a safe harbor provision
that would allow W-2 wages to be
used in lieu of household income.
Stay tuned.
The second test is the adequacy of
the coverage. We are awaiting further
guidance, but generally speaking if the
coverage offered does not provide an
actuarial value of at least 60% of the
total allowed cost, the plan is deemed
to be inadequate and the employer is
subject to the penalty. The inadequate
coverage penalty is $3,000 multiplied
by the number of employees who
receive a federal subsidy. This penalty
cannot exceed the penalty you would
have paid for not offering coverage at
all.
The plan must provide “essential
health benefits.” States do have some
degree of flexibility and are required
to submit their list of “essential health
benefits” to the federal government.
We await further guidance on this
issue.
Since the proposed IRS form for
Individual Mandate is on a monthby-month basis, what would
prevent a person from opting-out of
Obamacare while they are healthy
and opting-in when they become ill?
They would be in violation of the law
unless the individual qualified for an
exemption.
Some employers are already talking
about paying the fines instead of
complying. They say it would be
cheaper. What are the fines, again,
for individuals and for employers?
We covered the employer fines above.
The individual penalties start small
but increase over time. It is the greater
of a flat dollar amount or a percentage
of income over the taxpayer’s filing
threshold (2014 $95 v. 1%).
The Flexible Spending Amount
maximum is $2500 per enrollee, but
that is per family as well, right? You
couldn’t elect $2500 and your spouse
also elect $2500, because it is $5000
max for us as a family, correct?
The limit is on a per participant basis.
It is a $2,500 limit per participant.
In this example if your spouse also
had a Flexible Spending Account, he
could also contribute $2,500. If only
one of you had a FSA, the maximum
contribution is $2,500. (www.irs.gov/
pub/irs-drop/n-12-40.pdf)
The Landrum HR Blog (landrumhr.
com/blog) is designed to keep you
updated and informed on current
policies and/or changes in the field of
Human Resources.
Major Medical Coverage Available Through NIADA
This Health Insurance Program can help provide FIADA/NIADA members, their employees, and families with
comprehensive major medical insurance coverage. The program is brought to you by JLBG Health, the largest
health insurance provider to Associations in the US.
Highlights of the Plan’ Coverage and Benefits:
• A wide variety of choices for coverage from HSAs to PPOs for members, their employees or family.
• A shrinking deductible - a 20% deductible credit each year you do not meet your deductible.
• 10% healthy member discount & preferred rates.
• Optional free Health Savings Account.
• Optional PPO or traditional health plan with extensive networks.
• Plans with a $20, $25, $30 or $40 co-pay for doctor visits.
• Dental Insurance available with or without medical.
• Vision Insurance available with or without medical.
• Disability coverage available up to 15,000 per month benefit.
Note: Features are subject to state availability and may not apply to all physicians.
To learn more about the options available to lower your health insurance costs and maintain comprehensive
coverage, visitwww.NIADAHealthPlans.com for an INSTANT online rate or contact JLBG Health at 1-888-308-9340 for more details, physician rates, and a 15-minute phone application.
30 — Independent Dealer — December 2012
www.fiada.com
2012-2013 FIADA EXECUTIVE COMMITTEE:
CHRISTOPHER LEEDOM
DINO MERCURIO
BRANDI NOEGEL
President
Senior Vice President Chairman of the Board
AutoMaxx
Independent Credit, Inc. Noegel’s Auto Sales
Sarasota, FL
West Palm Beach, FL
Starke, FL
(941) 309-1111
(561) 686-8673
(904) 964-6461
FRANK FUZY
Regional Vice President
Century Motors of S. FL
Pompano Beach, FL
(954) 785-0369
DAVID COX, CMD
Secretary
Cox Motors, L.L.C.
Lakeland, FL
(863) 686-9300
PAUL MATTON
Treasurer
Park Auto Mall
Pinellas Park, FL
(727) 639-1112
JIM WINTERICK, JR.
STEVE MARBAIS
JIM WINTERICK, SR.
GEORGE HICKEY
Regional Vice President Regional Vice President Regional Vice President Regional Vice President
Marbais Enterprises, Inc. Gulfstream Motor Credit Gulfstream Motor Credit
Bond Auto Sales
Ocoee, FL
Miami, FL
Miami, FL
Tampa, FL
(407) 877-7422
(305) 253-2335
(305) 253-2335
(813) 238-7478
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December 2012 — Independent Dealer — 31
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32 — Independent Dealer — December 2012
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