February 2016 Issue

Serving the Dealers of the Vehicle Sales Industry
Side by Side UTV
$700,000 fine for small dealer in Colorado
February IN THIS
2016
ISSUE
DEQ Newer Model Year Vehicles
Do I have to keep all my records in Oregon?
The CarLawyer: Federal and State information
Published by the Oregon Vehicle Dealer and Oregon Power Sports Associations. PO Box 4290, Salem, OR 97302
503-399-9199, Fax: 503-763-1233 Articles are not legal advice. If you want legal advice, contact an attorney.
Calendar of Events and Education
All classes start promptly at 8:30 AM and end at 4:30 PM. Classes are usually
held one a month on Friday’s. Call the office for the latest updates.
Calendar & Schedule
Feb 20-21
10th Annual Salem Roadster Show, Oregon State Fairgrounds. www.salemroadstershow.com
March 11
Wilsonville Holiday Inn, 8:30am to 4:30 pm. North Wilsonville I-5 Exit 286, on
West side of Freeway. 25425 SW 95th Ave, Wilsonville, OR 97070
April 8
Wilsonville Holiday Inn, 8:30am to 4:30 pm. North Wilsonville I-5 Exit 286, on
West side of Freeway. 25425 SW 95th Ave, Wilsonville, OR 97070
April 10-12
2016 Consumer Financial Services Conference. Baltimore Marriott Waterfront Hotel.
Call 877-212-5752
April 10-11
Special One-Day Program with Merchant Cash Advance and Small Business Lending sessions.
Also at 2016 Consumer Financial Services Conference. Baltimore Marriott Waterfront Hotel.
Call 877-212-5752
April 28
Oregon Dealer Advisory Committee at DMV Headquarters 9am to 12 noon.
May 13
Wilsonville Holiday Inn, 8:30am to 4:30 pm. North Wilsonville I-5 Exit 286, on
West side of Freeway. 25425 SW 95th Ave, Wilsonville, OR 97070
May 24-26
National BHPH Conference in Las Vegas. At the Wynn. Call OVDA about the members
Discount. Call 832-767-4759
June 10
Wilsonville Holiday Inn, 8:30am to 4:30 pm. North Wilsonville I-5 Exit 286, on
West side of Freeway. 25425 SW 95th Ave, Wilsonville, OR 97070
July 8
Wilsonville Holiday Inn, 8:30am to 4:30 pm. North Wilsonville I-5 Exit 286, on
West side of Freeway. 25425 SW 95th Ave, Wilsonville, OR 97070
July 28
Oregon Dealer Advisory Committee at DMV Headquarters 9am to 12 noon.
Classes are usually held one a month. Call the office for the latest updates.
February 2016
DEALER Solutions
2
$700,000 SMALL DEALER FINE IN COLORADO
A dealer who had been selling cars with a BHPH process (about a 80 a month) was penalized $ 700,000
in customer restitutions with an extra $ 100,000 extra penalty that is suspended, for financing violations.
Basically, the dealer required BHPH customers to buy a GPS locator device so the dealer could find the
car if they had to repossess it, and required a customer to pay for a limited warranty required by the dealer, so
they would have their vehicle fixed if it broke down during the payment period.
The CFPB (federal government) said those were ‘finance charges’ the dealer should have shown as well as the
actual ‘interest’. Federal law requires all finance charges, including interest, to be displayed in certain ways,
and in a disclosure box on every contract.
The dealer is going to pay the fines and comply with the disclosures in the future, and has closed down
his BHPH operation.
Mostly, we agree with the CFPB. The dealer did deceive the consumers about the cost of financing. It
was NOT in the customer’s best interest to pay more money for a limited warranty
( $ 1,650) and a
GPS device ($ 100), but it was certainly great for the dealer to make his life easier. With those requirements, the
finance charge was much higher than the 9.99% interest rate advertised.
In Oregon, we know this type of deceit is being watched for by the state agencies, but are surprised the CFPB is
involved in a local problem the Colorado AG should have dealt with. But, there was likely a complaint that
started their investigation.
The CFPB said: The dealer used abusive practices in their financing scheme to ‘lure’ consumers with
misleading advertising and kept them in the dark about the actual cost of financing; Hid finance charges that
stemmed from a refusal to negotiate car prices. They negotiated cash prices downward but did not negotiate
credit prices downward.
Some of these issues are new. Most are not, and have been the rule of disclosure in Oregon for many
years. We believe they hit this dealer in Colorado because they want to send a signal, loud and clear, that they
will go after smaller dealers, not just the big franchise dealers for deceptive practices.
Members of associations, both here and in Colorado and other states, learn things like this through their
association. If you are a BHPH dealer in Oregon, have you ever attended one of the BHPH conventions? You
might want to. They are awesome. It is an investment in yourself. OVDA and OPSA members get discounts to
go to them. There are likely a few things you are missing, as far as compliance. And, you might want to be buying a subscription to ‘Spot Delivery’ the nation’s premier monthly legal newsletter authored by Thomas Hudson,
Hudson Cook, LLP. Every OVDA and OPSA member gets a copy of his newsletter once a year. They also allow
us to put small sections in our magazine Dealer Solutions as well, but it is not a replacement for the full newsletter. You might want to step up and get a subscription. They are very good.
LIMITED LICENSE OF VEHICLE RENTAL COMPANY AS LIMITED LICENSE FOR DESIGNATED AGENT
OF RENTAL COMPANY
Existing rules of the Insurance Division establish the steps that a rental company with a limited license to sell rental insurance must take to educate and monitor employees selling insurance under the limited license.
Enrolled House Bill 2958(2015 Legislative Session) now allows a rental company to identify a
"designated agent" to sell rental insurance under the limited license of the rental company. The rental company must provide the same training and oversight to a designated agent as the rental company provides
for employees. These proposed rules define "designated agent" and include designated agents in the description of the individuals who must be educated and monitored to sell rental insurance under the limited
license of the rental company.
These proposed rules will replace temporary rules adopted on September 15, 2015 and are identical to the temporary rules with the exception of the addition of the new definition of "designated agent."
The agency requests public comment on whether other options should be considered for achieving
the rule's substantive goals while reducing the negative economic impact of the rule on business.
Filed: October 15, 2015, Public hearing: November 30, 2015, 2:00 p.m.
Last day for public comment: December 7, 2015, 5 p.m.
February 2016
DEALER Solutions
3
SMALL BUSINESS ADVICE
OVDA noticed several articles about small businesses in the press this last month.
Make Your Business Look Big, by Rhonda Abrams of Gannet newspapers gives impressive advice on how small businesses can look bigger, and more legitimate with the proper marketing.
Also, Marcia Bagnall, of Chemeketa Community College Small Business Development Center and an instructor gave
the following good advice on a marketing strategy.
Check with the community college in your area to see if they also have a small business development center.
No Magic Bullet when it comes to Marketing
Wouldn’t it be great if there were one best way to market, and all you had to
do was find it and use it in order to be wildly successful? Sorry to break it to
you, but it doesn’t exist. Business owners who spend time looking for that one
magic bullet waste their resources and come away disappointed.
What everyone wants is a surefire way to develop customer relationships that
lead to high sales, revenues and profits. And who wouldn’t want this? The
truth is that there’s no one single way to do this. Rather, the most successful
marketing uses a combination of approaches. That means it takes more time,
more thought, and is more complex. (Sorry.)
Your products and services are multidimensional, as are your clients. One
approach couldn’t possibly fit all. And different marketing tactics work differently for your company as it grows and changes. Reality is always more complicated than we might like it.
So why do we continually seek the Holy Grail, or magic pill of marketing success? Perhaps for the same reasons we buy fast food, enjoy instant gratification, and think we can lose weight without
exercising. Add to that the continual sales efforts of advertisers and sham company owners who are willing to sell you
the one-true-solution, and it seems like if we just search hard enough we’ll find it.
But if it were that easy we would all be doing it already.
So what to do instead? Give up the search for that one perfect marketing solution, and get down to creating a plan that
has at least several pieces to it. Stop wasting your time wishing for what’s not out there and start working on a tangible, reasonable plan that will get you to where you want to go.
Commit to the idea that marketing is multifaceted and ongoing. Look at it as a long term prospect with lots of contributing factors and then get to work.
Marcia Bagnall is Director of the Chemeketa Small Business Development Center and instructor of Small
Business Management Program. The Small-Business Adviser column is produced by the center and appears each Sunday. Questions can be submitted to [email protected]. Visit the SBDC at 626 High St.
NE in downtown Salem or call (503) 399-5088.
MAKE SURE VEHICLE IS STILL TITLED IN OREGON
An Oregon dealer recently purchased a vehicle at an auction using their dealer flooring. The purchase order from the
auction indicated that the vehicle was titled in Oregon. The Oregon registration plates were on the vehicle and displayed valid registration stickers. The Oregon title was mailed by the auction directly to the flooring company that
provided the inventory financing. The dealer later paid the flooring company and received the title but did not notice
that the Oregon title had been converted to an Indiana title in the name of the flooring company. The dealer sold the
vehicle but only collected the title transfer fee, assuming the Oregon registration still was valid. Once Oregon receives
notice that a vehicle has been retitled in another state, the Oregon title and registration are invalidated. In this case,
the buyer was driving a vehicle with invalid registration. Fortunately, the buyer was not stopped and cited by law
enforcement.
The buyer subsequently had to take the vehicle to DMV for a VIN inspection and apply for registration.
Dealers using inventory financing should be aware of this and check titles they receive from flooring companies. If the
title received has been converted to another state’s title and the vehicle has not been sold, the Oregon registration
plates should be removed and destroyed because they are no longer valid. When the vehicle is sold, the dealer will need
to collect title, registration, plate, and VIN inspection fees. A VIN inspection must be performed and submitted along
with the application since the vehicle is now new to Oregon.
– Rick Parsons
DMV Business Regulation
February 2016
DEALER Solutions
4
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BUY HERE PAY HERE CONVENTION MEMBER BENEFIT
If you are a member of OVDA, you can save $ 100 on the seminar cost for each attendee when you sign up for the
BHPH convention in Las Vegas in May.
We’ve been to the convention a couple of times and are considering attending again in May. IT is without a doubt the
best investment a dealer can make for themselves if they are doing BHPH. 500-600 dealers will be attending, and the
speakers and seminars are gripping. It is all about making money, legally and having a good system to know how you
are doing, training staff, disclosures and more.
These are the experts, and they don’t fool around. Seminars for 2 ½ days. No banquets, no awards ceremonies, no association officers glorifying themselves. You learn as much as you can and do hat you want for the meal times and the
evenings.
The Vendor fair is worth attending the convention, even without the seminars. But, watch out, some of their products
are illegal in Oregon. Call me (if you are a member) if you have questions about those products if you have doubts.
See the ad in this issue, and call them to get more information.
DEQ NEWER MODEL YEAR VEHICLES  The Department of Environmental Quality does not require emissions testing of newer model year vehicles. These vehicles typically have lower mileage
and are less likely to experience problems with their emissions control systems.
Starting February 1, 2016, use the model year of the vehicle to determine if a vehicle being titled
and registered is subject to DEQ emissions testing. Each year, the oldest model year will drop off
the exempt list and the new model year is added. For example:
During calendar year 2016, the following model years qualify as a “newer model year vehicle:”
Model Year 2013 (unless the 2013 vehicle has a DMV registration expiration date that is after
December 31, 2016)
Model Year 2014
Model Year 2015
Model Year 2016
Model Year 2017
If the vehicle you are titling and registering is a “newer model year vehicle” as described above, the
vehicle does not need to go through DEQ. DMV Note: If for some reason you take a Newer Model
Year Vehicle to DEQ, DEQ has been and will continue to issue a free certificate as determination of
meeting the Newer Model Year Vehicle exemption. But again, you do not need to take a Newer
Model Year Vehicle through DEQ.
DMV related questions may be directed to (503) 945-5000 or (503) 299-9999 (Portland Metro Area),
or visit the DMV website at http://www.oregondmv.com.
DEQ related questions may be directed to (877) 476-0583, or visit the DEQ website at http://
www.DEQToo.org/nmy.
February 2016
DEALER Solutions
5
OREGON LAW
Recently we heard an Arizona dealer had been suspended, and barred from being a dealer in Arizona by the state of Arizona. The good news for Oregon dealers and consumers
is he likely won’t be headed for Oregon to be a dealer here, because Oregon has a rule
that because he is suspended in Arizona, he may not apply to be a licensed dealer in Oregon. Of course, he could just open up as a curber, right? If you see him or his spouse (?)
operating in Oregon, you might want to tell somebody. Names are Joseph and Gina Colombo, DBA Uncle Joe’s Auto Sales and Uncle Joe’s Auto Consignment Shop, owned by
Front Line Auto Auction LLC. Information from Used Car News 12-15
Note from a Southern Oregon Dealer
‘Just a little thank you note for putting together such a good association. I recently
had the DMV show up and they seemed to use my records as a training tool to
show the new investigator what files should look like as they didn't look at just
three files of my inventory and then sales as they first stated, but 10- 12 of them
apiece. Rick Parsons was very pleasant and helpful along with the new southern
Oregon investigator.
QUESTION FROM A DEALER 2: Question: I have a customer who tried to retitle a
vehicle to remove our lien after we signed off. We wrote our dealer's name and
signed in the first box in the front of title. Customer went to the DMV branch at NE
82nd Ave, Portland. DMV personnel sent the customer back to us for a ‘release of
interest’ stamp. This caused inconvenience to our customer. Would you please review to see if it is required dealer to have a stamp to release lien holder interest of the
title?
QUESTION FROM A DEALER 1:
Question: If we have to manually
process a deal because there is a
problem that blocks the deal from
being processed electronically (which
does happen a percentage of the
time). Customer decides he wants
vet plates after the fact etc. What is
the amount we have to refund the
customer? Our branch would collect
the $150. We manually process the
deal at the DMV so we are refunding
them the $25 for the integrator fee,
or do we refund the $35 for the nonintegrator charge to get it back to the
$115.
Answer: – if a dealer charged $150 for
doc prep fee, but didn’t submit via
EVR, then the dealer would be required to refund $35 so their doc
prep fee does not exceed $115.
(OVDA/OPSA note: We vetted this
answer with DMV Investigations just
to be sure of our answer.)
Answer: DMV Investigations says you should have been OK with just signatures releasing your security interest. They will contact the DMV office and check in on them
about this difference in policy.
QUESTION FROM A DEALER 3: Questions: Do I have to keep all my records in Oregon?
Answers: The answer is ‘Yes’. However, DMV has some flexibility and under certain circumstances is willing to work with dealers
on how they store paperwork, and how they get access to paperwork when there is an investigation. Some dealers keep the original paperwork out of state, but have scanned everything and that is available to the DMV for investigations at the Oregon dealership. Technically, DMV should require originals, but have not seen any problems with the electronic version of record keeping.
DMV is not willing to allow dealers to keep records outside of Oregon without DMV ability to access them in a reasonably rapid
manner. If you feel the need to store your records somewhere other than your Oregon business location, be sure to contact your
DMV investigator and receive written authorization before making any changes.
Suggestions include:
"Make a copy of the current insurance card indicating the valid coverage of your new buyer.
Good idea. At least you should ‘SEE IT’ and it would be good to have a copy of it.
Check with their insurance agent to determine coverage on the vehicle you sold them
No, unless you have a bad feeling about them.
Are we now required to charge $115 for paperwork or can we continue to charge less
You can charge UP TO $ 115.
February 2016
DEALER Solutions
8
QUESTION FROM A DEALER 4: Question: In the Fall 2015 Dealer Details from DMV in the article ‘Chart offers Useful
tool’, it says "Make a copy of the current insurance card indicating the valid coverage of your new buyer. Check with their
insurance agent to determine coverage on the vehicle you sold them."
I can see making a copy of their insurance card, but calling their insurance agent to "determine coverage"?! Is this really
what the DMV now wants us to do?
Answer: No. The way the article is written was not done right. Those are ‘Best Business Practices’ not DMV requirements.
When a person buys a vehicle and already has a vehicle, the new vehicle is covered automatically by their insurance for 30
days (unless the policy is canceled or expires). When you are processing, they must say their policy and agent information.
For a ‘trip permit’ they need to show you the card and sign the permit.
FROM A MEMBER ON RENEWAL OF MEMBERSHIP Unsolicited comment from Southern Oregon Dealer:
“Monty, Thank you for your services. I’m greatful to have you in the dealer’s corner.”
QUESTION FROM A DEALER 5: Question:
Are we are now required to charge $115 for paperwork (processing fee) or can we continue to
charge less. I like the idea of making more
money but I think a lot of our customers are
going to balk at the price.
Answer: No. You can charge $ 115 or less.
Remember, most dealers will charge $ 115.
Some states have a fee of up to $ 300. Ours
is not bad at all.
QUESTION FROM A DEALER 6: Question: We received your
‘Alert’ email that the retail installment contracts have changed for
2016. We don't sell enough cars to buy them in a pack of 100. Is
there an option for buying fewer? We only need about 20.
Answer: Yes. Call the office. As far as we know, we are the only
ones who will split up a bundle. $ 1.25 each, plus shipping.
QUESTION FROM A DEALER 7: Question: We were at a DMV office and did 5 processing deals, and they forgot to
charge us for the VIN inspections and we had to go down again with another check. They missed it, not us,
but that’s OK. What was different, was they called us and said we needed to fill out the grey boxes for fees on
the top right of the 735-226 form. We’ve never done that, as the form says not to. Are we supposed to fill in the
$ on the grey boxes?
Answer: Yes, or no. We checked in with one of the investigators, and they said it depends on the local office of
DMV, what they want their staff to require. Check back with them and do it their way unless there is a further di-
NOT WHAT WE NEED IN OREGON
The Washington state AG announced a lawsuit against Monte L. Masingale (no relationship to Monty King, President of OVDA
and OPSA) a Spokane area car salesman, for a pattern of Sexual Harassment against female employees and prospective employees.
Masingale works at Greenacres Motors dealership. The dealer is also named in the suit because the owner and staff
knew, or should have known, about Masingale’s conduct.
The complaint alleges that Masingale frequently posted help-wanted ads for a secretary in newspapers and on websites,
like craigslist. Masingale refused to hire males for the position, and allegedly sexually harassed young women who applied.
OVDA NOTE from Shawn Lindsay, OVDA/OPSA Attorney: Vicarious Liability is a major issue in employment law. In the workplace context, an employer can be liable for the acts or omissions of its employees, provided it can be shown that they took place
in the course of their employment and, especially, if the employer knew about it or should have known about it. If you’re an employer, make sure you have great insurance because it’s not a matter of if an employee goes rogue. It’s a matter of when.
February 2016
DEALER Solutions
9
The CARLAWYER© By Thomas B. Hudson and Nicole Frush Munro
We start this year by featuring developments from the Consumer Financial Protection Bureau, the Federal Trade Commission and Congress we
thought might interest those in the auto sales, finance or leasing business. We also recap some of the auto sale and financing lawsuits we follow
each month. Remember – we aren’t reporting every recent legal development, only those we think might be particularly important or interesting to
industry. Note that this column does not offer legal advice. Always check with your own lawyer to learn how what we report might apply to
you, or if you have questions.
This Month’s CARLAWYER© Compliance Tip
What is the name of your compliance officer? Your privacy officer? Your red flags administrator? Can you produce a copy of your policies and
procedures, training, and audit materials that make up your compliance management system? Can you produce records of board involvement in
and adoption of the CMS? Do you have a privacy notice and written safeguarding procedures? Where is your written red flags program? How
about a furnisher policy? If your response to these questions is a deer-in-the-headlights look, you’d better resolve to make 2016 the year you get
serious about compliance!
Federal Developments
What Do Consumers Think of Dealers? On December 29, the FTC issued a notice seeking public comment on a proposed survey of consumers
to learn about their experiences buying and financing vehicles at dealerships. The FTC invites comments on whether the proposed survey, which
will include consumer interviews and receipt of consumers' purchase and finance documents, is necessary and useful, the accuracy of estimates of
the burden on consumers to be surveyed, ways to enhance the quality of the information to be collected, and ways to minimize the burden of collecting information.
Do You Engage in Native Advertising? On December 22, the FTC issued a policy statement concerning online advertising and promotional
messages that are deceptively formatted to look like surrounding non-advertising content. The policy statement notes that online advertising known
as "native advertising" or "sponsored content," which may be indistinguishable from news, feature articles, product reviews, editorial, and other
regular content, has become more prevalent. The policy statement sets forth the general principles the FTC considers in determining whether a
particular advertising format is deceptive and violates the FTC Act, and reaffirms the FTC's view that "advertising and promotional messages not
identifiable as advertising to consumers are deceptive if they mislead consumers into believing they are independent, impartial, or not from the
sponsoring advertiser itself." The policy statement explains that if the source of an advertisement or promotional message is clear, consumers can
make informed decisions about whether to interact with the advertising, the weight to give the information conveyed in the advertisement, and the
credibility of the advertisement. The FTC also released a guide for businesses on native advertising to help companies comply with the policy
statement.
Do You Engage in In-Person Collections? On December 16, the CFPB issued a Compliance Bulletin to provide guidance to creditors, debt
buyers, and third-party collectors about compliance with certain sections of the Dodd-Frank Act and the Fair Debt Collection Practices Act when
collecting debts from consumers. Specifically, the bulletin notes that in-person debt collection visits to a consumer's workplace or home may violate
these statutes. In a recent enforcement action, the CFPB alleged that the disclosure or risk of disclosure of debts to third parties during in-person
collection visits, as well as going to a consumer's place of employment when the creditor knew or should have known that personal visitors were
not permitted or that going to the consumer's place of employment was inconvenient to the consumer, was unfair, in violation of the Dodd-Frank
Act. The CFPB has also found during recent examinations certain unfair acts or practices with respect to in-person collection visits at a consumer's
workplace. In addition, the CFPB notes in the bulletin that third-party debt collectors and others subject to the FDCPA who engage in in-person
collection visits may violate a variety of FDCPA provisions.
Your Federal Government Makes Your Life Easier. Really! Section 75001 of the Fixing America's Surface Transportation Act creates an exception to the Gramm-Leach-Bliley Act requirement that financial institutions deliver annual privacy notices to their customers spelling out how the
institutions use and disclose their nonpublic personal information ("NPI") and whether customers can limit the sharing of their NPI. Under the
amendment, institutions will not have to send an annual privacy notice to their customers if: (1) the institution only shares NPI with nonaffiliated
third parties in a way that does not require the institution to give customers the choice to opt out (i.e., information shared under the joint marketing
exception or servicing exceptions); and (2) the institution has not changed its policies since its most recent annual privacy notice to consumers.
Continued on next page
February 2016
DEALER Solutions 10
If the institution changes its policies regarding the use and sharing of NPI in a way that requires it to offer customers the right to opt out, it must
send the revised privacy notice to its customers before implementing the change. This change comes after a 2014 CFPB amendment to the GLB
Privacy Rule allowing financial institutions to publish their annual privacy notices online rather than send them by mail, provided they satisfy several requirements.
Litigation
U.S. Supreme Court Upholds Enforceability of Class Waivers in Arbitration Agreements: The U.S. Supreme Court reversed a California
Court of Appeal's refusal to enforce an arbitration agreement waiving the right to bring class arbitration claims. The arbitration agreement at issue
included a class arbitration waiver specifying that the entire arbitration agreement was unenforceable if the "law of your state" made class arbitration waivers unenforceable. The agreement also declared that the Federal Arbitration Act (“FAA”) governed the arbitration provision. At the time
the agreement was signed, California law made class arbitration waivers unenforceable as a result of the decision in Discover Bank v. Boehr.
Thereafter, the Supreme Court held in AT&T Mobility LLC v. Concepcion that the FAA preempted California's Discover Bank rule. The trial court
denied the satellite service provider's request to order the matter to arbitration. The California Court of Appeal affirmed. The state appellate court
thought that California law would render class arbitration waivers unenforceable, so it held that the entire arbitration provision was unenforceable.
The fact that the FAA preempted that California law did not change the result, the appellate court stated, because the parties were free to refer in
the contract to California law as it would have been absent federal preemption. The appellate court reasoned that the phrase "law of your state"
was both a specific provision that should govern more general provisions and an ambiguous provision that should be construed against the drafter.
Therefore, the appellate court found, the parties had in fact included California law as it would have been without federal preemption. The Supreme Court ruled that because the FAA preempted the California Court of Appeal's interpretation, that court must enforce the arbitration agreement. See DIRECTV, Inc. v. Imburgia, 2015 U.S. LEXIS 7999 (U.S. (Cal. App.) December 14, 2015).
Car Buyers Unsuccessful on Warranty and TILA Claims against Assignee of Finance Contract: Used car buyers sued the dealership where
they bought the car and the assignee of their finance contract, claiming that the car suffered serious defects after purchase and repairs were unsuccessful. The assignee moved for summary judgment on the claims against it for breach of express and implied warranty, breach of contract,
and violations of the Magnuson-Moss Warranty Act and the Truth in Lending Act. In addition, the assignee counterclaimed for breach of contract
and requested that any damages against it be limited under the FTC's Holder Rule. The buyers moved for summary judgment on the assignee's
breach of contract claim. The federal trial court granted summary judgment to the assignee on the breach of express warranty claim, finding that
neither the dealership nor the assignee made an express warranty or adopted the manufacturer's warranty, and they expressly disclaimed all warranties. The court similarly granted summary judgment to the assignee on the buyers' implied warranty claim, rejecting the buyers' claim that the
disclaimer of implied warranties was inconspicuous and the language was ambiguous. The court found that the placement of the disclaimer on the
back of the contract did not render the waiver inconspicuous where three places on the front of the contract refer to the back of the contract, the
disclaimer is in bold type, and the heading is in all capital letters. Although the disclaimer stated that there were no implied warranties unless the
seller enters into a service contract with the buyers, the court found that the fact that the buyers entered into a service contract with a different
party did not render the disclaimer language ambiguous. For similar reasons, the court found that the buyers did not state a claim for an MMWA
violation.
The MMWA prohibits a supplier from disclaiming an implied warranty if the supplier enters into a service contract with the buyer. Because the buyers' service contract was not with the dealership, there was no MMWA violation.
Arbitration Agreement Signed in Connection with Original Financing Rescinded When Buyers Signed Alternate Financing Documents
without Arbitration Agreement: Truck buyers signed a bill of sale, a spot delivery agreement, an agreement to arbitrate, and a retail installment
sale contract. Two days later, the dealership told them that their original financing had fallen through, but it found alternate financing, so they had
to return to re-sign paperwork. They executed a new bill of sale, spot delivery agreement, and retail installment sale contract but did not sign a new
arbitration agreement. The buyers sued the dealership, and the dealership moved to compel arbitration. The federal trial court denied the motion.
The buyers argued that the agreement to arbitrate was no longer in force because the original transaction had been rescinded, and they did not
sign a new agreement to arbitrate in connection with the second transaction. The dealership argued that there was a single transaction because
the buyers only had to re-sign certain documents due to a change in financing. The court found that there were two separate transactions - not
only had the financing changed, but there was a different total sale price, and the buyers bought different insurance and warranty products. Because there were two separate transactions, the arbitration agreement the buyers initially signed did not remain in force, and they were not required to arbitrate their claims. See Mooneyham v. BRSI, LLC, 2015 U.S. Dist. LEXIS 154906 (W.D. Okla. November 17, 2015).
So there’s this month’s roundup! Stay legal, and we’ll see you next month.
Tom ([email protected]) and Nikki ([email protected]) are partners in the law firm of Hudson Cook, LLP. For information, visit
www.counselorlibrary.com. Copyright CounselorLibrary.com 2015, all rights reserved. Single publication rights only, to the Association. (1/16).
HC# 4852-1311-0828.
February 2016
DEALER Solutions 11
NEW OREGON LAWS ON RETALIATIONS One of the new laws in effect now is a prohibition on retaliation against an employee
that wants to use sick leave he was granted by law, either new rights or existing rights.
This is the new rule dealing with that. Remember, if you lose an unlawful trade practices lawsuit, you pay 100% of the attorney fees
(yours and theirs) and triple damages. Not a great situation.
OAR 839-007-0065
Unlawful Employment Practice
(1) It is an unlawful employment practice for an employer or any other person to deny, interfere with, restrain or fail to pay for sick time to which
an employee is entitled.
(2) It is an unlawful employment practice for an employer or any other person to retaliate or in any way discriminate against an employee because
the employee has:
(a) Inquired about the provisions of OL Ch. 537, 2015;
(b) Submitted a request for sick time;
(c) Taken sick time;
(d) Participated in any manner in an investigation, proceeding or hearing related to OL Chapter 537; or
(e) Invoked any provision of OL Ch. 537, 2015.
(3) It is an unlawful employment practice for an employer or any other person to apply an absence control policy that includes sick time absences
covered under OL Ch. 537, 2015 as an absence that may lead to or result in an adverse employment action against the employee. Stat. Auth: OL
Ch. 537, 2015
Stats. Implemented: OL Ch. 537, 2015
# 1 ISSUE FOR THE FUTURE OF INDEPENDENT DEALERS
A survey in late 2015 by DealerSocket, called ‘Independent Dealership Action Report’ had a comment by the author about one
survey result that said ‘44% of independents turn to other dealers for inventory and those are mostly franchised stores’: He also
said:
“This trend is going to decline. As franchised dealers shift their focus to used cars, they will likely retain more of their used car inventory rather than sell to independent dealers.” Autoremarketing Magazine Dec 1-14, 2015
2ND CHANCE MOBILE APP
Manheim is offering a new program in the spring for dealers, called ‘2 nd Chance Sale’, a mobile app that allows auction customers
to access and make offers on unsold vehicles after they are off the auction block and out of the lanes.
Please note the offers can only be made on day of sale. Dealers can make those offers on their Manheim app, or by accessing
http://2ndchance.manheim.com/. Both the app and the website will require a Manheim.com username/password.
Survey Says:
Consumer Reports says safety features and fuel economy were heavy factors in their ratings. 10 most satisfying cars are:
Tesla S
Chevy Corvette
Porsche Cayman
Porsche Macan
Porsche 911
Acura MDX
Ford Mustang
BMW 2 Series
Subaru Outback
NATIONAL AUCTION NEWS
Jerry Hinton, General Manager of Brasher’s Portland Auto Auction was elected President-Elect of the
NAAA in October.. Mike Browning was elected President, and Hinton will take over October 2016.
Browning is General Manager of Manheim San Antonio auction
February 2016
DEALER Solutions 12
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THOUGHTS FROM MONTY KING
OVDA & OPSA PRESIDENT
SELLING A UTV?
The Business Licensing unit recently had to deal with a question about side by side vehicles, and what license was needed to sell them in Oregon, as far as dealer licensing was concerned. After looking at the
laws, it turns out a dealer with a DM license CANNOT SELL ‘Side by Side’ vehicles (called UTVs). The DM
license is only for selling motorcycles and Class I ATV’s. The UTVs are defined in statute as Class IV ATV’s, so are not allowed to be sold under a DM. If you want to continue selling UTV’s, you must have a DA
or you could be facing a fine of up to $ 1,000 for each one you sell. (Rumor has it that DMV is trying to
change this so DM dealers can sell side by side UTVs.
This brings up the question of why do we have two licenses, DM and DA? The DM only has a $
2,000 bond, and that dates back at least to the 70s for when it was implemented. When the bond for DA
licenses was increased from 15,000 to $ 20,000 and then gradually increased to $ 40,000 (consumer only
over $ 20,000) no action was taken on the motorcycle bond amount. Is a $ 2,000 bond the right bond
amount for a DM license? Probably not. DMV reported to the ODAC last month that DM license numbers
are continuing their decrease.
Time for the DM dealers to check in about this issue. The real world is showing up also, as the number of DM licenses have dropped in recent years as dealer realize the benefits of a DA license over the very
restrictive DM license. The small plate for DA dealers has also meant a big reduction in the numbers of DM
licenses, and the number of dealers who have both. Having both licenses is unnecessary in the current licensing and dealer plate environment. What do you think – should the industry and DMV do away with the
DM license and just have one class of license for all vehicle sales?
TRAILERS IN OREGON ARE AGAIN AN ISSUE
Should Oregon clean up the titling and registration of trailers in Oregon? ATVs and trailers are being stolen
right and left in Oregon and they are difficult, if not impossible, to find and give back to the real owners.
Most states have simpler and saner rules for trailers and how they are let onto the highways. Most states
also want some $ for the use of the highways trailers travel on. Other dealers are talking about how stolen
vehicles from other states are being sold in Oregon without titling, like ATVs. Hard to know if an ATV is stolen, when there is not an easy way to look it up.
Some of our members want changes in the industry, and how trailers are titled and registered. Are
you for or against changes on trailers? Should the industry and DMV require title and registration of all trailers?
Monty King, OVDA, OPSA & AAO President
February 2016
DEALER Solutions 14
KMI
AGENCY
[email protected].
Kelly Martin, President/Owner
One of Oregon’s Largest Agencies
Exclusively Devoted to Serving Used Vehicle Dealers
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Print BOLI Posters for Free
or order an All-in-One poster for $ 12.50 + shipping
Required for businesses in Oregon
Do NOT order from anyone else!
http://www.oregon.gov/BOLI/ta/pages/Req_Post.aspx
Go to this web site and scroll down
Print each poster that applies to your business. There could 7 or 9 different posters that apply to you, depending on
how many employees you have.
If you want an all-in-one Poster, you can order it from BOLI for $ 12.50 + shipping. Do not pay more than that to a
private vendor.
This poster is in English and Spanish, show the side you want depending on your employees.
BOLI Phone # for questions is 971-673-0824. They have English or Spanish speaking help personnel available.
Also on the site:
2016 Seminar Schedule
Posters in English and Spanish
Q. What is Oregon Sick Time?
A. Beginning January 1, 2016, all employers with more than 10 employees (6 in Portland) in Oregon must provide up to
40 hours of paid leave per year. Employers with less than 10 employees (less than 6 in Portland) must provide 40 hours
of unpaid protected sick time.
Q. How does Oregon Sick Time accrue?
A. Employees accrue 1 hour of sick time for every 30 hours worked or 1-1/3 hours for every 40 hours worked.
Q. When are employees eligible to take Oregon Sick Time?
A. Employees are eligible for Oregon Sick Time on their 91st day of employment.
Q. What if I have 11 employees but only for a short period of time as seasonal employees?
A. For counting purposes, all employees (full-time, part-time, and temporary) will be looked at for determining the number of employees an employer has. The number of employees is calculated based on the number of employees an employer has per day during each of 20 workweeks in the calendar or fiscal year immediately preceding the year in which an
employee's sick time is to be taken.
Q. What is meant by a Year? How is it measured?
A. "Year" includes any consecutive 12-month period, such as a calendar year, a tax year, a fiscal year, a contract year or
the 12-month period beginning on the anniversary of the date of employment.
Q. How much is an employee paid for Oregon Sick Time?
A. Their regular rate of pay. If an employee is paid on a commission or piece-rate, the employee needs to be paid at
least Oregon minimum wage.
Q. Does an employer have to pay sick time out when an employee leaves employment?
A. No. The statute is specific. An employer does not have to pay out for accrued unused sick time.
Q. What if an employer has an existing sick time or PTO?
A. If this plan is, "substantially equivalent" or more generous to the employee than the minimums of the law, this policy
shall be deemed, "in compliance."
GLACIAL LIKE PROGRESS STILL TO COME – A WARNING A measure contained in the PROPOSED federal fixing America’s
Surface Transportation Act *FAST ACT) will aid paperless vehicle sales.
Language contained in the 1,300 page transportation bill allows states to move forward with programs to implement electronic
odometer disclosures, notices and related materials as long as those processes provide appropriate authentication and security
measures. Existing federal law requires odometer disclosures to be hand written. While a provision in the 2012 federal transportation bill called on the federal National Highway Traffic Safety Administration to implement new rules to allow for electronic odometer
disclosures, the agency has yet to propose those rules.
Sen. Steve DaInes (-Montana) authored the measure.
OVDA NOTE: This is a proposed bill, but some movement on the issue is welcome. It has been a long time coming, and we’ll have
to see what they mean by ‘provide appropriate authentication and security measures’. At the January ODAC meeting it was discussed after a question to DMV from OVDA about the timing of the federal rules still to be put out. They intimated its going to be a
while before anything concrete is done. Oregon dealers will hear about the results as soon as there are any. Information from Used
Car News 12-15
FROM THE PRESS Statesman Journal quote of antique typewriter repair person Dan Read on a 1938 Underwood. “Unfortunately,
there’s no odometer on old typewriters. You really don’t know until you look at the condition.” from SJ Article, (1-31-2016, P. 1D)
OVDA Note: Odometer readings are part of the American transportation system, values and understanding life. DMV needs to
understand they are an agency Oregonians look to to keep their odometer history available for many reasons. Denying that legacy
will only hurt DMV and it’s employees as well as the people of Oregon. It is good there will be a new computer system in Oregon
in a couple of years, but it needs to be developed correctly and maintain the records people want, and that definitely includes at
least 2 odometer readings for each vehicle, but even better, all odometer readings in a vehicle’s history.
February 2016
DEALER Solutions 16
Brad Avakian, Commissioner
REQUIREMENTS OF OREGON’S SICK TIME LAW
Effective January 1, 2016, employers that employ employees in the state of Oregon are required to implement sick time policies
and provide sick time to employees. Employers are also required to provide employees with a notice of the law’s provisions. This
notice is intended to summarize the major provisions of the law, but should not be relied upon as a full and complete summary of
the law. The full text of the law and administrative rules adopted by the bureau are available at www.oregon.gov/boli.
How much sick time does the law require? Employees begin accruing sick time on the first day of employment
and earn one (1) hour of sick time for every 30 hours worked or 1 1/3 hours for every 40 hours worked. Employees
may use accrued sick time on the 91st calendar day of employment and may use sick time as it is accrued.
Employers may choose to simply give employees (“front load”) 40 hours of sick time at the beginning of the year
rather than track the number of sick time hours accrued. Employers may also select the 12-month period to be used
as the designated “year”, e.g., calendar year, fiscal year, employee anniversary date, etc.
Employees may carry over up to 40 hours of unused sick time from one year to the next; however, employers may
adopt policies that limit employees to accruing no more than 80 hours of sick time or using no more than 40 hours
of sick time in a year.
Paid time off (PTO) policies that include time off for other purposes (such as vacation and other personal time off)
comply with the sick time law as long as the policy is substantially equivalent to or more generous than the
requirements of the law. “Substantially equivalent” means that employees are allowed to use at least the same
number of hours for the same purposes under the same or more generous rules as outlined in this notice.
Employees must use accrued sick time in hourly increments unless to do so would pose an undue hardship to the
employer, in which case the employer may require sick time to be taken in minimum increments of four hours if the
employer allows employees to use at least 56 hours of paid leave per year for absences covered by this law.
When must sick time be paid? Employers with 10 or
For what purposes may sick time be used?
more employees in the state (6 or more if the employer
maintains a location in Portland) must pay employees
for sick time taken at the employee’s regular rate of
pay. All other employers must provide unpaid sick
time.
The number of all employees employed by the
employer in Oregon must be counted – including fulltime, part-time and temporary employees.
Employees are entitled to use sick time for the
following purposes:
 For an employee’s or family member’s mental or
physical illness, injury or health condition or need for
medical diagnosis of these conditions or need for
preventive medical care.
 To care for an infant or newly adopted child under
18, or for a newly placed foster child under 18, or for a
child over 18 if the child is incapable of self-care
because of mental or physical disability.
 To care for a family member with a serious health
condition.
 To recover from or seek treatment for a serious
health condition that renders the employee unable to
perform at least one of the essential functions of the
employee’s job.
 To care for a child of the employee who is suffering
from a non-serious illness, injury or condition.
 To deal with the death of a family member by
attending the funeral or alternative, making
arrangements necessitated by the death of a family
member, or grieving the death of a family member.
 To seek medical treatment, legal or law enforcement
assistance, remedies to ensure health and safety, or to
obtain other services related to domestic violence,
sexual assault, harassment or stalking incidents to the
employee or employee’s minor child or dependent.
 To donate sick time to another employee for
qualifying purposes if the employer has a policy
allowing such donations.
 For certain public health emergencies including
closure by a public official of the employee’s place of
business, school or place of care of the employee’s
child, or a determination by a public health authority or
health care provider that the presence of the employee
or a family member presents a health risk to others.
Notices and Verification: In addition to providing a
notice to employees of the requirements of the law,
employers are required to provide quarterly
notifications to employees of the amounts of accrued
and unused sick time.
Employers may require employees to provide notices,
verifications and certifications for using sick time under
certain circumstances. For example, if the need for sick
time is foreseeable, employers may require employees
to provide up to 10 days’ notice of the need to use sick
time. Refer to the law and rules for more information.
Discrimination/Retaliation
Prohibited:
It is
unlawful for an employer to deny, interfere with,
restrain or fail to pay for sick time to which an
employee is entitled; or retaliate or in any way
discriminate against an employee because the
employee has inquired about the provisions of the law,
submitted a request for or taken sick time. Complaints
may be filed with the Bureau of Labor and Industries.
Collective Bargaining Agreement Exception: The
sick time law does not apply to certain employees who
are covered by a collective bargaining agreement,
employed through a hiring hall and whose benefits are
provided by a joint multi-employer-employee trust or
benefit plan.
Provision of this notice to employees complies with the requirement in the sick time law for employers to provide written notice
of the requirements of the law to employees. For more information, visit our website at www.oregon.gov/boli, or contact us at
971-673-0761 or [email protected].
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DEALER AUCTIONS–OREGON
ABS Auto Auctions Medford
800-378-0227 Ext 185
Brasher’s Portland Auto Auction
800-300-3200
Off I-84
Cross Point NW Auto Auction
503-594-2800
Portland
Northwest Auto Auction
800-905-3901
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Portland Auto Auction (Manheim)
503-286-3000
Off I-5
DEALER AUCTIONS–Western
ADESA Seattle
253-735-1600
Brasher’s Fresno AA
800-921-4336
Brasher’s Idaho AA
800-346-7938
Brasher’s Reno AA
775-828-2437
Brasher’s Sacramento AA
916-991-5555
Brasher’s Salt Lake AA
801-322-1234
Brasher’s San Jose AA
408-890-2990
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509-244-4500
DAA Seattle
253-737-2200
National Powersport Auctions
888-292-5339 (Motorcycle)
Open Lane Auction (Internet)
866-969-0321
South Seattle Auto Auction
206-762-1600 Manheim
PUBLIC AUCTIONS
A-1 Auction Company LLC
541-472-0952
Auction Company of So Oregon
541-267-5361
Auction Sales Co, the Dalles
541-296-1012
Commercial Industrial Auctioneers
503-467-4846
National Powersport Auctions
888-292-5339
BONDING AND INSURANCE
SERVICES
Hecht & Hecht Insurance
800-609-0979
Kelly Martin Insurance
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Ext 6125
CAR RENTALS COMPANIES
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503-692-8400
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Priority Payment Systems West
503-501-2415
FINANCING
Car Financial Services, Inc.
800-252-7411
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640-667-8765
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People’s Credit Co. Inc
800-531-4420 ext. 202
Reliable Credit Association
503-462-3022
Vehicle Acceptance Corp.
1-800-380-3882
Western Funding, Inc
503-786-5911
FORMS
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Black Book
800-554-1026
Kelly Blue Book
800-854-0585
NADA Books
800-966-6232
Skywerks.com
866-534-3194
INSURANCE & GAP PRODUCTS
Dealer Net Solutions
503-810-1181
Also see Bonding and Insurance
LEASING & FINANCE
Oregon Roads (Eugene)
1-800-944-0227
LEGAL SERVICES
Shawn Lindsay, Attorney, ‘Harris
Berne Christensen LLP’
503-596-2928 Lake Oswego
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503-585-4075
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503-233-3580
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888-963-5369
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Skywerks.com (Versidata)
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F&I Central
866-219-0926
Finance Express
630-667-8765
REPOSSESSING
American Lenders Service
503-978-0356
SERVICE CONTRACTS
Auto Services Co.
503-810-1181
Dealer Net Solutions
503-810-1181
Rock Solid Vehicle Protection
503-267-5848
Zurich –
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Eugene 541-461-9160
Terrorist Watch List
Skywerks.com
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TRAINING
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