GNYADA 2019 Membership Directory & Services Guide

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. State Attorneys General, emboldened by Mulvaney’s directive to be more aggressive in enforcement (see Chapter 2), continue to bring UDAP claims against dealers for a variety of allegedly unfair and deceptive practices, often relating to the advertising and disclosures made by the dealer. This year, one state even filed a complaint against a dealer’s lender for facilitating perceived deceptive practices by the dealer in the selling of inoperable vehicles by providing the financing of the vehicles. 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. Make sure your advertising and other communications with customers are true, accurate, and clearly state the terms of any offer you are making. Many dealerships get into trouble when 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. 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. 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

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