Whether
you're a car sales professional, a manager, or a dealer
you're walking through a minefield every day.
There are 'Attack Attorneys', Prosecutors and States
Attorney General, Special Interest Groups, and Politicians
who are all looking to get a piece of you. They are watching
every move that you and your employees are making. They are
scrutinizing your advertising and monitoring your trade
practices.
I work with literally thousands of Dealers in virtually
every state. And; I can tell you that you are extremely
exposed to litigation and/or prosecution. You could lose
everything even if you are not aware that a law has been
broken.
How many Dealers or Managers are willing to risk everything,
including your freedom, on the behavior of your worst
employee?
Well, you'd better know what the law is to start
with...AND...most of you really haven't got a clue. Sorry,
but it's true. There are 'Deceptive Trade Practices'
happening regularly in virtually every dealership...even
those dealers with the most ethical intentions. You're not
even aware these things are against the law as you continue
to stack up liability exposure every day until someone
lowers the boom.
NOW, there is a way to inoculate your dealership and protect
yourself from the majority of the traps you might fall into.
You know I spoke on Legal Compliance at the 2003 NADA
Convention in New Orleans. It was one of the most highly
rated presentations at the convention. Actually, I consider
myself to be one of the most informed automobile retail
legal compliance experts from a layman (non-attorney)
viewpoint. One of the ways I have stayed ahead of the curve
is that I subscribe to 'Spot Delivery Newsletter'.
Why you need to do this right now!
Spot Delivery Newsletter is a monthly publication produced
by Washington Area attorney Tom Hudson and his staff. It
details every court action against dealerships
coast-to-coast, and offers advice how it might have been
handled. It discusses how the dealership was prosecuted or
sued...why...what the outcome was...and how it might have
been avoided. And, it's all in easy to read, plain English.
Tom Hudson and his team are among the most respected legal
firms in our industry and they are on top of every issue.
Spot Delivery Newsletter is my Bible on the subject of legal
compliance in our business. It will literally save your butt
over and over again.
AND when you subscribe to Spot Delivery, you will have
access to online archives of every back issue since the
beginning. We're talking about $250.00 here, that's all.
Every Dealer, Manager, and Employee needs to read it and
understand what we can and cannot do in the sale of
marketing of our products. I suggest you get several
subscriptions for key Management in various Departments of
your Dealership. AND, you need to have frequent meetings on
topics you read about.
Well, I have contacted Tom and his staff and we are proud to
be associated with them on distributing this product to the
dealerships.
Call My Offices @ (800) 726-0510 to order Spot Delivery
Newsletter for your dealership.
AND, for an additional $50.00 plus shipping be sure to order
CARLAW.
CARLAW is a 327-page hardcover book by Tom Hudson that
explains every law that affects our business. If your Sales
Manager and, especially your F&I Managers have not read this
book from cover to cover, you are critically exposed. I'm
telling you right now, and I've never steered you wrong. You
need to order the subscription to Spot Delivery Newsletter
and you need to buy at least one, if not four or five copies
of CARLAW for your key people.
Call my offices (800) 726-0510 and we'll get it handled
right away.
Are You Making 'Firm Offers'?
By Thomas B. Hudson
In 2001, an Illinois car dealer sent out a mailer to
potential customers whose names had been obtained from a
credit bureau. The practice of getting lists of potential
customers is one that is pretty heavily regulated.
Under the federal Fair Credit Reporting Act, you cannot get
such a list to use in any manner you please, but you can get
a list of people who meet certain criteria (for instance, a
credit score of 550-650 who live in a particular geographic
area) if you are willing to make them a "firm offer of
credit." That gives you a "permissible purpose" in FCRA-speak.
The Illinois car dealer came up with the bright idea of
obtaining such a list and then making a "firm offer of
credit" in the amount of $300. Now, $300 isn't much credit
when you're talking about buying a car, but the FCRA didn't
specify a minimum amount - it just required that the offer
be "firm."
Oneta Cole received one of the dealership's mailings. She
sued the dealer, objecting to the fact that her credit
report had been accessed by the dealership without a
permissible purpose, and claiming that the offer of $300 in
credit for the purchase of a car was a sham, and that the
real reason the dealer had accessed her credit file was to
sell her a car. Because of that, she argued, the sham offer
didn't qualify as a firm offer, and the dealership had no
right to access her credit report. Cole's case was filed as
a class action.
"Whoa, Nellie!" says the dealer. "There's no minimum credit
amount in the FCRA - we're permitted to access the credit
report provided that we are willing to shell out whatever we
say we're willing to shell out, which in this case is $300."
The U.S. District Court (the federal trial court, as opposed
to an appellate court) agreed with the dealership, finding
that it had a permissible purpose to access Cole's credit
report. Dissatisfied with this result, Cole appealed to the
U.S. Court of Appeals for the Seventh Circuit (the only
higher federal court is the U.S. Supreme Court).
The appellate court bought the argument that the trial court
had rejected, finding that the $300 offer was a sham and was
made in order to access Cole's credit report for marketing
purposes. Most lawyers knowledgeable of the law in this area
claimed that the appellate court had invented law where
there was none, since the FCRA required no minimum amount of
credit to qualify as a "firm offer."
The appellate court reversed the trial court's decision,
and, as we in the legal profession say, the compost hit the
cooling system. In very short order, copycat lawsuits were
filed all over the country.
Car dealerships, mortgage companies and credit card issuers
were all hit with "firm offer" cases, and, at one point,
there were over 250 class action firm offer cases pending
around the country. A regular cottage industry for
plaintiffs' lawyers had been created.
Well, those cases are slowly producing decisions of their
own. Some of the trial judges followed the decision in the
Cole case (indeed, those in the Seventh Circuit pretty much
had no choice but to do so), but other trial courts, and,
later, other appellate courts disagreed with the Cole
analysis. The result at the moment is a mishmash of cases
that come down both ways.
So what should a dealer do when the marketing company shows
up with a "firm offer" marketing program? Do you throw the
salesman out the door, or do you sign up?
Your call, Scooter, but if you are tempted to sign up, this
is one time you really, really need to listen to us when we
say your lawyer needs to review the program. After Cole,
these firm offer programs can still be used, but the legal
requirements are dicey and can change from jurisdiction to
jurisdiction. So fork over the money for the mouthpiece - he
needs a new boat anyway.
Thomas B. Hudson, Esq. is the author of:
CARLAW®
A Southern attorney delivers HUMOROUS PRACTICAL LEGAL ADVICE
on car sales and financing!
He is also the Editor/author of:
The CARLAW® F&I Legal Desk Book
The Answer Book for Finance and Insurance Professionals
He is also the publisher of:
Spot Delivery®
a monthly legal newsletter for auto dealers, and the Editor
in Chief of CARLAW®, a monthly report of legal developments
in all states for the auto finance and leasing industry (not
to be confused with the book).
He is also a partner in the Maryland office of Hudson Cook,
LLP. Spot Delivery, CARLAW and the books are produced by
CounselorLibrary.com LLC, For information, call 410-865-5411
or visit:
http://CounselorLibrary.com
Copyright 2007. CounselorLibrary.com, LLC, all rights
reserved.
This article appeared in Spot Delivery®. Reprinted with
express permission from CounselorLibrary.com, LLC.
Thomas B. Hudson, Esq. can be reached at:
TBHudson@Hudco.com
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