Legal updates, current and past compliance issues impacting our industry, news and relevant information


This section is sponsored by GIADA Legal Council Terry Franzen and Scott King
 
 
         
Contact Terry Franzen
 

Contact Scott King
 


ATTENTION ATTENTION ATTENTION!!

The Governors Office of Consumer Affairs
Understand the rules and avoid possible steep penalties

The Governors Office of Consumer Affairs, (G.O.C.A.) monitors and regulates how companies advertise their products. Since auto dealers routinely advertise in various ways including on-line, dealers are well advised to make sure that they understand the rules. Penalties for deceptive advertising can be rather severe. The G.O.C.A. and GIADA are working together to properly inform and educate dealers about acceptable and legal advertising. The G.O.C.A.'s just released information about he top 15 most common advertising violations and the new G.O.C.A. Auto Advertising and Sales Practices Enforcement Policies. Don't hesitate to call the GIADA office if you have any questions.

Advertising Traps For The Unwary, by Attorney Terry Franzen
Top 15 Most Common Advertising Violations For Car Dealers
G.O.C.A. Auto Advertising and Sales Practices Enforcement Policies



Scroll down the page starting with most current issues and back.

21) O.C.G.A. § 10-1-32 - Motor Vehicle Sales financing
20) The Governors Office of Consumer Affairs - Deceptive sales practices
19) Compliance with the Rules on Identity Theft Red Flags
18) Endangering Security Interest Statute
17) New Temporary Tag Laws Effective July 1st, 2005. HB 455 
16) Dealer Temporary (Drive-out) Tag Laws
15) Dealer Tag Usage Laws
14) House Bill – 22 Motor Vehicle Situs Bill
13) Notice from the DMVS
12) Beware of Persons Impersonating FTC Employees
11) Are You Complying With The G.L.B. Privacy Act?
10) The FTC Safe Guards Rule: Are You In Compliance?
  9) Executive Anti-Terrorism Order - Verify Customer I.D. & Check Blocked Persons List
  8) Drivers License Requirements to Obtain Title Transfer in Georgia
  7) Experts Urging Dealers to Stop Telemarketing Until They Understand The Law
  6) Georgia Abandoned Vehicle Laws - You Need to Know THE LAW!
  5)Spot Delivery Newsletter Service is a Great Resource for Dealers and Finance Companies
  4) Buy Here - Pay Here Issues Regarding the Cash Method of Accounting
  3) A Dealer's Guide to the Used Car Rule 
  2) Vehicle Emission Inspection - Clean Air Force Requirements
  1) Law Changes - Proof of Liability Insurance Coverage - Effect Tag Purchases
   


21)
TITLE 10.  COMMERCE AND TRADE  
CHAPTER 1.  SELLING AND OTHER TRADE PRACTICES 
ARTICLE 2.  MOTOR VEHICLE SALES FINANCING
O.C.G.A. § 10-1-32  (2009)
This statute also explains how late fees may be charged.
This statute also explains how late fees may be charged.


20)
The Governors Office of Consumer Affairs
Understand the rules and avoid possible steep penalties

The Governors Office of Consumer Affairs, (G.O.C.A.) monitors and regulates how companies advertise their products. Since auto dealers routinely advertise in various ways including on-line, dealers are well advised to make sure that they understand the rules. Penalties for deceptive advertising can be rather severe. The G.O.C.A. and GIADA are working together to properly inform and educate dealers about acceptable and legal advertising. The G.O.C.A.'s just released information about he top 15 most common advertising violations and the new G.O.C.A. Auto Advertising and Sales Practices Enforcement Policies. Don't hesitate to call the GIADA office if you have any questions.

Advertising Traps For The Unwary, by Attorney Terry Franzen
Top 15 Most Common Advertising Violations For Car Dealers
G.O.C.A. Auto Advertising and Sales Practices Enforcement Policies
19)
Compliance with the Rules on Identity Theft Red Flags
Provided by NIADA and GIADA 

November 1st, 2009 new deadline!

These documents are intended to explain, as well as provide compliance information. They are not intended to address the specific facts and circumstances of every motor vehicle dealership. Specific applications will vary depending upon how a motor vehicle dealership transacts business.

The Federal Trade Commission and the federal financial institution regulatory agencies have published final rules on identity theft “red flags” and address discrepancies. The Final Rules implement sections 114 and 315 of the Fair and Accurate Credit Transactions Act of 2003.

We have developed materials to assist Dealers in complying with the Rules. These materials are being provided to you for distribution free of charge.

Please keep in mind that these materials are designed to assist dealers in the development of a written dealership policy for the detection, prevention and mitigation of identity theft and are intended to serve as a guide. While not intended as a universal solution that every dealership can adopt, since they are drafted from a used motor vehicle dealer’s perspective, NIADA members should find that they are easy to use and customize for their dealerships. They may wish to consult with their legal counsel or other professional consultants to ensure that their dealership policies are appropriate and in compliance with applicable federal and state laws, rules and regulations. The information contained in this document and the additional materials provided are for general information purposes only and should not be considered as legal advice.

18)
Endangering Security Interest Statute: O.C.G.A Code 16-9-51 is a Georgia statute that was enacted to protect lien holders and their security interests. Specifically, this law may be used by you to get the court system involved to help you retrieve your financed vehicle when the customer has defaulted and refuses to allow you or your repo company to take back the vehicle. In many some counties you if they allow it, will let you swear out an arrest warrant for your customer. Check with your local authorities to find out if this Georgia statute can help you.
17)
New Temporary Tag Laws Effective July 1st, 2005. HB 455
Dealers are now required to hand write the vehicles VIN, year, make and model and master 12 digit dealer number on each Holographic sticker attached to a dealer drive-out tag at time of delivery, in addition to the expiration date. After January 1st, 2006, each holographic sticker will be required to have a unique number. All holographic stickers manufactured after July 1st, 2005 shall be numbered with a distinct number. All sellers of holographic stickers (images) are going to be required to maintain an inventory record of holographic images by number and Purchaser.

Remember, giving your customer another 30-day holographic sticker after their first one runs out is very illegal. Do not do it. We suggest that when purchasing future inventory, you be diligent in determining the status of the title and when you may receive it from the seller. If you make the decision to retail a vehicle before you get the title, you are always risking the possibility of not getting the title within the 30 day period of which you are required to transfer ownership and face the possibility of pricey fines assessed by the Used Car Board. Not to mention putting your new customer in an awkward situation when they’re driving around on an expired temp tag. For two years, we have been educating dealers and preaching that they understand and use the T-226 Form. This form is available to anyone on-line. At day 25, if you still haven’t received the customer’s title from whom you bought it from, have them come in, help them fill out the T-226 Form and send them to their tag office to obtain a legal 30-day extension temp tag from their tag agent. While this doesn’t completely eliminate the possibility of still being fined $500 for your inability to transfer title ownership within 30 days, it will buy you some time and earn confidence from your customer by making sure they are legal.

16)
Dealer Temporary (Drive-out) Tag Laws

There are clear laws for dealers issuing Temp Tags or Drive-Out tags. Do not issue more than one temp tag. It is illegal! Obtain a DMVS form T-266. Help your customer obtain another 30 day DMVS issued tag. Call GIADA for assistance if needed.


15)
Dealer Tag Usage Laws

Dealer Tag Usage Statute 40-2-38
DMV Dealer Tag Rules CODE: 40-2-38.
A dealer may use or permit to be used a dealer's number for private use on vehicles owned by the dealership, regardless of whether such vehicle has been issued a certificate of title or registered, when such vehicles are operated by an employee or corporate officer of the dealer which has been issued such number. A distinguishing dealers number used by an employee or officer for private use shall authorize such person to operate the vehicle to which the number is attached on the public highways and streets. For purposes of this paragraph, "employee" means a person who works a minimum of 36 hours per week at the dealership.

Instructions for Applying for Dealer Tags
Here is a recap of the new changes coming this renewal period for your dealer tags. In 2006 dealer tags for franchise dealers and independent dealers will be distinguishing different. Instead of a two-year renewal period, dealer tags will be renewed annually. A three (3) plate limit will apply, initially. One additional tag may be applied for every 20 annual sales that is certified by the department. The number of dealer tags issued will be determined based upon passed sales history through title registration. Individuals that can use dealer tags are limited to employees that work a minimum of 36 hours per week. The rules allow for private use by the dealer and officers of the company. Vehicles must be owned by the dealership. If a dealers tag is lost or stolen, the law requires that the dealer report the lost or stolen plate to local law enforcement agencies. If a replacement plate is sought, dealers will prove that they reported tag missing to local authorities.

14)
House Bill – 22 Motor Vehicle Situs Bill

Passed – Effective date July 1, 2005
This bill changes the point of sale for imposing sales tax on motor vehicle sales, and rentals or leases exceeding 30 days to Georgia residences to the county of motor vehicle registration without regard to the selling dealer's physical location. Example: A Fulton Co. Purchaser buys a car from a Cobb Dealer. The Cobb Dealer will be required to collect, report and remit the taxes imposed in Fulton County (4% State, 1% MARTA, 1% Local Option and 1% Educational Taxes). 7%. The only exception to this new rule is with sales to College Students and Military Service personnel temporarily residing in Georgia. The correct tax rate to charge these customers will be based upon the point of delivery, which means your county in which your dealership is based. The form “Affidavit of out of County Delivery” will no longer be required. However, when selling to out of state customers, the ST-6 or ST-8 will still need to be completed and kept in your deal jacket. The ST-6 is used to document when your dealership makes deliveries outside of Georgia. The ST-8 is used to document a sale to a nonresident that is immediately removing the vehicle from Georgia for use in another state.

If you have any questions about this new tax law change or the proper use of the ST-6 or ST-8 please contact GIADA. If you would like a copy of the new bill log onto http://www.legis.state.ga.us/ then select HB22.
12)
Beware of Persons Impersonating FTC Employees

May 28, 2004 By now, dealers should be aware of their obligations under the Gramm-Leach-Bliley Act's Privacy Rule and Safeguards Rule. Dealers are also likely aware that the Federal Trade Commission ('FTC') is the federal agency responsible for enforcing these rules.

We recently learned that two men purporting to work for the FTC visited a dealership to inquire about the dealership's compliance with the Safeguards Rule and other federal privacy regulations. According to the agency, its staff is not currently conducting on-site investigations of automobile dealers for privacy violations. Further, in general, it does not conduct on-site visits in connection with its privacy investigations prior to establishing contact with the company through written or oral communication.

If you receive a visit from persons identifying themselves as FTC employees investigating privacy compliance, please:

Ask for their names and telephone numbers.

Do not disclose any information and certainly not customer information unless you have confirmed that the visitors are in fact FTC personnel.

Notify NADA of this visit so that we can contact the appropriate authorities.

If you have further questions, contact the NADA Legal Office at (703) 821-7040.
11)
Are You Complying With The G.L.B. Privacy Act? More Information
For Free FTC Safe Guards Rule Dealer Compliance Kit - Call GIADA ~ AVAILABLE TO MEMBERS ONLY ~

Full Compliance with the Act and the FTC?s Final Rule by July 1, 2001 means that you have established a system for providing an initial notice to all new customers, have mailed the initial notices to all of your existing customers (those with whom you have a continuing relationship) and have afforded them the opportunity to opt out of any disclosures which are not otherwise permitted by law. In addition to complying with the notice and opt out requirements, your dealership and each of your affiliated entities must be capable of tracking whether an individual has opted out of a disclosure and following the opt out instructions. You must also have procedures and policies in place to ensure that nonpublic personal information is safeguarded and kept in a confidential manner.

10)
The FTC Safe Guards Rule: Are You In Compliance?

As of May 23, 2003, dealerships are required to have in place written policies and procedures to safeguard customer information under the Federal Trade Commission?s (FTC) Safeguards Rule. In order to appropriately comply, dealerships must develop, implement and maintain a written information security program that is appropriate to the dealership?s size and complexity, the nature and scope of its activities and the sensitivity of the customer information it collects.
Federal Trade Commission reportedly has begun probing dealerships in order to determine whether they were complying with the FTC?s new 'Safeguarding' privacy rule. The dealers reportedly had received letters demanding to see a long list of documents dealing with privacy compliance.
The Federal Trade Commission, which is the federal regulator of car dealerships for a number of laws and regulations, including the privacy regulations and buyer's guide enforcement, is the meanest cop in town when it comes to enforcement. Industry experts bet that the FTC will not be at all happy with the level of privacy compliance by car dealers, and that this 'inquiry' will turn into a vigorous enforcement effort.

If you don?t have a safeguarding policy in place, you?d better get one soon. The FTC can wield an $11,000 per violation, and they like to use it to make examples and grab headlines. The current probes of car dealers indicate that the FTC is serious about the new Safeguarding Rule. You?d better be serious, too.
9)
Executive Anti-Terrorism Order - Verify Customer I.D. & Check Blocked Persons List

With so much attention being directed toward the rules evolving under the Patriot Act, the requirements under Presidential Executive Order 13224 are often overlooked. The Executive Order prohibits U.S. citizens from entering into ?any transaction or dealing? with individuals or entities identified either in the Executive Order, by the Department of Treasury or by the Secretaries of State as posing a significant risk of committing terrorist acts or providing support to these organizations or individuals. The Office of Foreign Asset Control (OFAC) maintains an alphabetical master list of Specially Designated Nationals and Blocked Persons. Individuals who violate the Order by entering into a transaction with a ?blocked? person or entity can be fined up to $250,000 and serve up to 10 years in prison, while companies can be fined up to $500,000.

Office of Foreign Asset Control (OFAC) Click Here for Website and Q&A Section

Blocked Persons List - (SDN) Specially Designated Nationals - Suspected Terrorists

The law requires car dealers to verify their customers identity and check the SDN database. If you encounter a person who?s name appears on the SDN database, do not do business with him or her. Call local PHONE NUMBER BELOW. Call GIADA if you have questions. Link: Click here for access to (SDN) Blocked Persons List This link will take you to the U.S. Department of Treasury Website. Click on Specially Designated Nations (SDN) List. This is a rather large PDF file and approximately 180 pages. High speed Internet is highly recommended.
IMPORTANT: IN THE EVENT THAT A MOTOR VEHICLE DEALERSHIP SUSPECTS OR HAS REASON TO SUSPECT THAT AN INDIVIDUAL MAY BE INVOLVED IN MONEY LAUNDERING OR OTHER TERRORIST ACTIVITIES THE DEALERSHIP MAY REPORT SUCH ACTIVITY BY CALLING THE FINANCIAL INSTITUTIONS 'HOT-LINE' 866-556-3974 WHICH IS ALSO THE NUMBER TO CALL IF YOU FIND THAT YOUR CUSTOMERS NAME IS ON THE SDN-BLOCKED PERSONS LIST.
8)
Drivers License Requirements to Obtain Title Transfer in Georgia

GIADA Official Position - Effective July 1, 2003 Senate Bill 250 amended Official Code of Georgia Annotated 40-3-21(a)(1) and added the following additional requirements to the contents for an application for a first certificate of title:

“The full legal name, driver’s license number, residence, and mailing address of the owner;”
Senate Bill 250 and OCGA Code 40-3-21

OFFICIAL DMVS RULE
12/22/03 - MEMO From DMVS to All Tag and Title Offices
Clearly, Senate Bill 250 does not require the applicant for a first certificate of title to possess a driver’s license issued by the State of Georgia. No reference is made to the state of issuance of the driver’s license, and the DMVS interprets Senate Bill 250 to allow applications to be completed using the number from a driver’s license or state issued identification card. The purpose of this requirement is to facilitate the Department of Motor Vehicle Safety’s (DMVS) efforts to integrate the information contained on the driver’s license database with the tag and title database (GRATIS). By including driver’s license number and full legal name in the title application, the information on GRATIS can be matched with the owner’s driver’s license record. Eventually, the DMVS hopes to combine the two (2) programs into a single database. One of the benefits of combining the two (2) databases will be to unify the information contained therein. Further, the use of a single database will assist the DMVS in identifying non-resident applicants who are attempting to circumvent the prohibitions against titling their vehicles in the State of Georgia contained in Official Code of Georgia Annotated Section 40-3-4(3).
The DMVS has identified several situations in which the presentation of an out-of-state driver’s license or identification card is appropriate, including: Applicants who are residents of the State of Georgia for the purpose of motor vehicle registration, but ineligible to obtain a Georgia driver’s license or identification card; and Applicants who are non-resident military service persons living in Georgia pursuant to military orders; If a title application is rejected by a county tag agent because it does not include a Georgia driver’s license or identification number, the dealer or its representative may contact the DMVS via facsimile at (404) 362-6463. In order to facilitate the DMVS’ efforts to look into the situation, please provide the following information: Name of the county agent - (tag office and employee name) Date of rejection MV1 applicant – (customer name)
In addition to its responsibility for administering the laws and regulations relating to registration and titling of motor vehicles, the DMVS is also the agency primarily responsible for the administration of the laws and regulations relating to driver’s licenses. To that end, the DMVS cannot overlook situations where an applicant for a certificate of title uses an out-of-state license number, but is legally required to obtain a Georgia driver’s license.

GIADA’s position is that the county agent should only be concerned with verifying that the application includes a valid driver’s license number and not determining whether the applicant has complied with the laws pertaining to driver’s licenses.

GIADA and others are continuing to work with state representatives and the DMVS to insure the county agents do not disrupt the used car industry in their attempt to do their job to the best of their ability. The GIADA recognizes the need to improve the information contained in the State’s databases while protecting the used car industry as the dealers try to comply with the laws, rules and regulations in the daily operation of their businesses.
7)
Experts Urging Dealers to Stop Telemarketing Until They Understand The Law

The on-again, off-again federal anti-telemarketing “Do Not Call” registry is on again, and car dealers who use telemarketing sales techniques should immediately stop calling people on the list.
To Read Full Story - CLICK HERE To Access National Do Not Call Registry CLICK HERE
6)
Georgia Abandoned Vehicle Laws - You Need to Know THE LAW!

Click here for state code

O.C.G.A. Code 40-11-2

Any person who removes a motor vehicle from public property at the request of a law enforcement officer or stores such vehicle shall seek the identity of and address of all known owners and/or security initerest holder of such vehicle from the law enforcement officer requesting removal of such within three business days of removal. The local law enforcement agency shall furnish such information to the person removing such vehicle within three business days after receipt of such request.

The person removing or storing such motor vehicle shall, within seven calendar days of the day such motor vehicle was removed or one business day after the information is furnished to the remover or storer pursuant to subsection (a) or (b) of this Code section, whichever is later, notify all owners and security interest holders, if known, by written acknowledgment signed thereby or by certified or registered mail or statutory overnight delivery, of the location of such motor vehicle, the fees connected with removal and storage of such motor vehicle, and the fact that such motor vehicle will be deemed abandoned under this chapter unless the owner, security interest holder, or lienholder redeems such motor vehicle within 30 days of the day such vehicle was removed. Any person who does not provide the notice and information required by this Code section shall be guilty of a misdemeanor and, upon conviction thereof, shall be punished as for a misdemeanor, shall not be entitled to any storage fees, shall not be eligible to contract with or serve on a rotation list providing wrecker services for this state or any political subdivision thereof, and shall not be licensed by any municipal authority to provide removal of improperly parked cars under Code Section 44-1-13.
5)
Spot Delivery Newsletter Service is a Great Resource for Dealers and Finance Companies.

Dealers: GIADA subscribes to Spot Delivery monthly newsletter service and on-line access to plain and simple answers to legal questions and issues affecting our industry. You should check it out and sign up yourself. Click Here for More Information

Spot Delivery is a concise, easy-to-read, monthly legal update that you can depend on to provide timely answers to legal questions you face every day. Spot Delivery addresses complex legal issues from an industry perspective; it also keeps you informed on new legal developments affecting your business.

Spot Delivery provides authoritative, reliable information in easy-to-read, plain English. The newsletter provides familiar factual scenarios, identifies the legal issues involved and presents real court resolutions and suggestions on how you might avoid similar legal pitfalls. This practical, useful publication will provide you and your management team with valuable knowledge designed to increase awareness of legal consequences attendant to everyday business decisions.
4)
Buy Here - Pay Here Issues Regarding the Cash Method of Accounting
CLICK HERE FOR FULL STORY
3)
A Dealer's Guide to the Used Car Rule
How to Comply With The FTC Buyer’s Guide Rule Click Here to Access FTC Buyer's Guide Law

 

2)
Vehicle Emission Inspection - Clean Air Force Requirements
Georgia law requires that no person (dealers, auctioneers or individuals) sell a used vehicle, if such vehicle is to be registered in one of the 13 covered counties (Cherokee, Clayton, Cobb, Coweta, DeKalb, Douglas, Fayette, Forsyth, Fulton, Gwinnet, Henry, Paulding, and Rockdale), unless such vehicle has a valid, passing certificate of vehicle emission inspection at the time of sale (DNR Rule 391-3-20-.18(1)). The seller is not required to provide the buyer with a copy of the VIR. Please note: the Georgia Environmental Protection Division (EPD) can only investigate sales that have occurred within Georgia.

Vehicle Sale Information (Clean Air Website)

Sellers may print free copies of Georgia Vehicle Emission Inspection Reports (VIR) by clicking here.

Ga. Code 12-9-54
Ga. Code 12-9-55

 1)
Law Changes - Proof of Liability Insurance Coverage - Effect Tag Purchases

(GEICS) Georgia Electronic Insurance Compliance Sysytem
Motor Vehicle Liability Insurance Coverage Owner Responsibilities.

House Bill 191 of the 2003 Session of the Georgia General Assembly became law on May 28, 2003 when signed by Governor Perdue and it makes the following changes:

After December 31, 2003, a Georgia insurance information card will not be acceptable proof of liability insurance coverage when:

  • You are stopped by law enforcement; or when,
  • You are attempting to register and obtain a tag for your vehicle; or,
  • When you are trying to replace, transfer, or renew your existing Georgia tag.
For dealers who process tag work on behalf of their customers as a service or courtesy, DMVS offers dealers a new form. (MV18H) This new form allows dealers to confirm and document liability insurance has been transferred on recent vehicle purchase, before GRATIS has been updated. This new form accompanied with the MV-1 Title Application will allow tag agents to issue new tag or decal.

DMVS (MV18H) Insurance Verification Form. MV18H form can be obtained by ordering through GIADA.