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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. 2. Know your state’s law on the amount of “doc fees” a dealer can collect, and if the law permits such a fee, but does not prescribe a specific amount, be sure you can reasonably defend your “doc fees” in relation to your cost of preparing documents and titling work for vehicles you sell. Many states permit “reasonable” doc fees but do not give any guidance on what constitutes “reasonable” for this purpose. And other states have limits on the amount and type of fees that can be charged, and related disclosures in connection with their imposition. 3. Make sure your advertising and other communications with customers are true, accurate and clearly state the terms of any offer you aremaking. Many dealerships get into troublewhen their advertising goes beyond simple puffery. We all know that the advertising needs to drive customers through your doors, but you need to stand behind promises and offers you make. And, you need to make sure you are transparent about the required terms of the offer to avoid claims that you deceived the public. 4. Establish a consumer complaint resolution process and include timelines for a quick and efficient resolution. Keep track of your complaints and note any trends. For example, if a number of consumers complain that they did not know they were being charged for an aftermarket product, consider improving your communication strategies so that consumers only purchase the products they intend. Where disputes cannot

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183 2020 MEMBERSHIP DIRECTORY & SERVICES GUIDE