GNYADA September 2015 Newsletter

Keep Your Dealership out of the AG's Crosshairs Check out our attorneys' aftermarket-product do's and don'ts

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The New York Attorney General’s recent actions against dealers who sold consumers the credit repair serv- ice Credit Forget It indicates that lawmakers intend to investigate all aftermarket products and practices. To help our members stay compliant, we spoke with a few automotive law specialists to compile some aftermar- ket-product ground rules for your dealership. Make a Menu “More and more dealers are creating menus that list all aftermarket prod- ucts they sell,” says Stevan H. LaBonte of LaBonte Law Group. Such a list shows you’re being con- sistent in how you present your after- market offerings, which goes a long way toward discrediting any claims about deceptive trade practices. Never “Payment Pack” Do not add unrequested products to a deal, thereby increasing the cost of the transaction. Shawn Mercer of Bass Sox Mercer stresses that sliding in extra after-market products in this way, without clearly identifying them to the consumer, is an unethical move to be avoided. Charge What the Product is Worth Make sure the prices of your F&I products are set at a competitive level. William M. Pollak from Putney, Twombly, Hall & Hirson also recommends, “Do some due dili- gence to make sure the product per- forms as advertised and is compliant with applicable federal, state and local regulations.” Explain Packaged Products Many dealers offer sales packages that lump aftermarket products, such as tire or road hazard contracts, into one sum. If you’re selling such a package to a customer, be very clear

Don’t hide the price of the add-ons, within the price of the vehicle,” says Pollak. Individually itemizing all aftermarket charges on the final bill of sale gives customers full knowl- edge of what they’re purchasing. Be “In the Know” Stay on top of federal, state and local restrictions on the sale of F&I prod- ucts and services, by consulting with your in-house attorney or a knowl- edgeable dealer lawyer. “Dealer associations, including GNYADA, NADA, etc. are also tremendous resources,” says Mercer. Transparency is Key One disgruntled customer has the potential to cause problems, whether it’s complaining to regulatory author- ities or just negative word-of-mouth. It doesn’t always matter if all the right pages have been initialed; the goal is to prevent a buyer from claiming certain charges were hid- den. GNYADA thanks Stevan H. LaBonte, Esq. from LaBonte Law Group, William M. Pollak from Putney, Twombly, Hall & Hirson and Shawn D. Mercer from Bass Sox Mercer for contributing to this article. The Association will be holding an AFIP certification course, for sellers of F&I products. The class and exam will take place in March of 2016. Stay tuned for details.

about what it includes, LaBonte says. The cost breakdown may be findable deep in the paperwork, but don’t force customers to dig, particularly if the final sale amount is higher than they expect. Be Wary of Anti-Theft Plans VIN-Etch plans that offer discounts on replacements for stolen vehicles are also scrutinized. Dealers are required to offer customers a dis- count up to either the cost of the pol- icy or the dealer’s profit on the replacement (whichever is greater). “If the cost of the policy is not sub- stantially less than the discount amount the customer can receive, the AG may find the policy deceptive,” says LaBonte. For example, if the customer can only get a $2,500 dis- count, and the dealer is charging $2,000 for the policy, then its bene- fits are suspect. Know the Customer Every customer has specific needs. Conversation is the best way to determine whether the consumer needs a given aftermarket product or service. Put it on the Bill “Clearly disclose the base price of the car, and separately show the spe- cific cost of each optional add-on.

Greater New York Automobile Dealers Association • www.gnyada.com

The Newsletter • September 2015 5