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Prequalifying Customers Dealers can use their websites to market credit terms and prequalify customers even before taking a full credit application. Whether a prequalification is treated as merely an inquiry or a credit application depends on what you communicate to the consumer. Please note that the distinction between inquiries and applications in the prequalification context is complicated and fact specific. A consumer can securely provide personal information (e.g., name, address, birth date, Social Security number) over a secure webpage (an https page or by using encrypted data transfer) and give consent allowing the dealer to access their credit report, including their credit score, for prequalification purposes. If a dealer responds by indicating the types of credit programs offered for which the consumer may qualify and indicate how the consumer can submit a complete credit application, the prequalification process could be treated as an inquiry which could subsequently may trigger risk-based pricing or adverse action notice requirements. You can also communicate to the consumer that your dealership has many credit programs available and that you need additional information from the consumer to be able to prequalify them for one of the programs. Either way, suggest that the consumer come to the dealership or call your Internet sales manager. If the dealer responds that there are no programs for which the consumer can qualify, then the dealer may be considered as having made a credit decision instead of treating it as an inquiry. In that case, the dealer would be required to send the consumer an adverse action notice. If you respond with information that indicates the consumer qualifies for specific financing, you have also made a credit decision and must provide the Risk-Based Pricing Notice or alternative Credit Score Disclosure Notice. Dealers should work with legal counsel to ensure that their communications with consumers in the prequalification process do not inadvertently cross over from an inquiry into a credit application. Sweepstakes Sweepstakes or“games of chance”present additional challenges and are regulated principally by state laws and the FTC. To minimize risk of a state law violation, sweepstakes must generally contain one of the following elements: a prize, an element of chance, and the giving of a consideration to enter. The easiest element to eliminate is the giving of a consideration to enter. To do this, a sweepstakes must give consumers the right to enter without making a purchase (such as by mailing in a postcard). For example, running a sweepstakes open only to consumers who purchased or leased vehicles. Some states require bonding for certain consumer sweepstakes. Promotions for sweepstakes must clearly disclose the rules (for example, the method of entry, eligibility, method of determining the winner, prizes, and odds of winning). The promotion should also state that no purchase is necessary to enter and that making a purchase will not improve chances of winning a prize. The sweepstakes provider must provide a notification system that allows consumers to have their names removed within 60 days from the mailing lists of that provider. In addition, the provider must report to the IRS the amount of prizes received by certain winners. Dealers that use prize promotions should consider seeking advice from an attorney familiar with the laws of the states where the sweepstakes will be conducted or with the appropriate government agencies in those states. The laws can be complex.

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167 2020 MEMBERSHIP DIRECTORY & SERVICES GUIDE