2018 GNYADA Membership Directory

• Violating the FTC’s Used Car Buyer’s Rule which requires a Used Car Buyer’s Guide to be affixed to the window of each used vehicle offered for sale or lease (remember that a federal law violation is automatically a UDAP violation under many state UDAP laws); • Hiding the cost of an “etch”product in the vehicle’s sale price; and • Imposing extra charges when customers who leased cars attempted to exercise their right to purchase at a previously determined price. UDAP plaintiffs may not be bound by contractual limitations of liability or merger clauses, or contributory negligence, and they often do not have to prove reliance on the act or practice. Arbitration clauses may not apply as well depending on state law and how the clauses are drafted. Also, courts have ruled that it is not a good defense that the seller acted in good faith under the advice of counsel. Unlike the FTC, most state courts adopt the least sophisticated consumer standard for assessing whether a practice could be unfair or deceptive and do not use a “reasonable consumer”standard. State UDAP laws are written very broadly and courts have held that they are to be liberally construed in favor of the consumer. This puts conceivably any selling or financing practice at risk from an enterprising plaintiff’s lawyer who finds a disgruntled consumer. As a “catch-all” for dealer misconduct, state UDAP laws offer consumers a powerful weapon in many states. Criminal Liability for Deceptive or Unfair Dealer Practices Criminal violations have been brought against auto dealers in extreme situations when their conduct meets the requirement of criminal fraud and related criminal statutes under federal or state law. A federal statute makes it a felony to make a knowing and willful misrepresentation to a federally insured financial institution. Under this statute, indictments have been brought and dealers have paid criminal fines, or been imprisoned, for defrauding banks in order to obtain financing. The federal odometer tampering statute has been a basis for indictments against dealers as well. Altering vehicle titles and documentation to reflect the inaccurate mileage only compounds the crime, and the Justice Department has indicted dealers for doing so. Recommended Practices 1. Adopt a dealership code of conduct emphasizing honesty and transparency with customers and train all your employees on it. While you can’t specifically prohibit every possible practice your employees should not do, you can establish a set of principles and guidelines to govern employee conduct. Your employees have to know how you want your business to be conducted, and each employee should sign their affirmation that they understand and will comply with the code of conduct to reflect well on your dealership. Your code of conduct and training should contain specific standards of behavior that exemplify the principles embodied in the code of conduct. Enforce your code of conduct by reviewing deal files, listening to customers, and stressing the importance of proper behavior. Make employees understand shortcomings and why it is necessary to immediately correct them. Make compliance with the code of conduct a part of compensation decision-making.

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