According to the National Automobile Dealers Association (NADA), the list of car dealer compliance regulations that dealerships need to comply with tops 85! Add a smattering of state regulations on top, and that list gets pretty overwhelming.
Car Dealership Regulations: The more you know the smarter you grow.
Auto Dealer Today wrote a great article a while back that details 19 laws and regulations that impact auto dealer compliance.
“It’s no secret (or exaggeration); the topic of compliance is ridiculously huge. Auto dealers have so many different laws, rules and regulations to contend with, it’s easy to get confused. In fact, it’s almost impossible to not get confused when dealing with the sea of compliance headaches dealers must face today.”
We’ve bumped their number up to 21. The simple act of maintaining a workforce brings a host of regulations for your business to follow, regardless of your industry. Here’s a quick overview of each regulation, along with where you can go to dig in and learn more. Keep it in your back pocket as a useful resource.
21 Laws, Rules & Regulations That Can Cost Car Dealers More Than Money
- Americans with Disabilities Act (ADA)
- Gramm-Leach-Bliley Act
- Disposal Rule
- Magnuson – Moss Warranty Act
- Used-Car Rule
- Regulation M
- Regulation Z
- Occupational Safety and Health Administration (OSHA)
- Equal Credit Opportunity Act
- Fair Credit Reporting Act
- Adverse Action Notices
- Wage and Hour Laws
- Discrimination and Harassment Laws
- Credit Practices Rule
- Federal Advertising Laws/Truth-in-Advertising
- Red Flags Rule
- Telemarketing Sales Rule
- Family and Medical Leave Act (FMLA)
- Fuel Economy Advertising for New Automobiles
- Form 8300 and Reporting Cash Payments of Over $10,000
- Office of Foreign Assets Control (OFAC)
Overwhelmed? Completely understandable – it’s a lot to keep on top of.
Once you tally up the number of auto dealer compliance initiatives your company’s on the hook for, the reality sinks in that managing these initiatives manually is an exercise in futility. Successful car dealerships stay up to speed by automating as much of the process of keeping compliant as possible.
They work with smart content providers, whose role is to keep your organization current on the variety of legal updates on your behalf. Smart dealers think through their workforce compliance playbook once, put it into practice, and measure and refine as needed.
Lastly, they monitor their compliance activities through a unified dashboard to report on status and identify gaps. This gives you the real-time score for each initiative as well as your organization as a whole.
1. Americans With Disabilities Act (ADA)
It’s been around a while now, and most dealerships have the right accessibility features built into their showrooms. But are all of your barriers truly removed?
Check out these links for more information on the ADA:
ADA Guide for Small Businesses
Information and Technical Assistance ADA
2. Gramm-Leach-Bliley Act
This Act comes into play when you’re at the point of success; you’ve closed a sale and are offering financing to your customers!
The Act was set up to protect the privacy of consumer information, and sets the standards for privacy notices, opt-out notices, and how nonpublic personal information can be used or disclosed.
The more successful your dealership is, the more you’ll have to know here.
FTC: Gramm-Leach-Bliley Act
3. The Disposal Rule
It’s not often the government asks businesses to “burn, pulverize or shred” something, but in this case, your customers’ sensitive information derived from consumer reports must be securely destroyed.
Check out other colorful information here:
FTC Tips for Disposing of Consumer Report Information
4. Magnuson – Moss Warranty Act
Again, this Act hits you right at the moment of success! It requires dealerships to provide clear warranty instructions, and be extremely clear about the integrity of your vehicles and about your commitment to correct problems when your vehicle fails in any way. Both for express and implied or “as is” warranties.
A little dryer than The Disposal Rule, the Warranty Act details are here:
https://www.ftc.gov/tips-advice/business-center/guidance/businesspersons-guide-federal-warranty-law
5. Used-Car Rule
Are your car Buyer’s Guides up to snuff? Do they have the proper additional disclosures? Are they language-specific to your sales process?
Grab more information here:
https://www.ftc.gov/enforcement/rules/rulemaking-regulatory-reform-proceedings/used-car-rule
6. Regulation M
Regulation M is set up as a part of the Truth in Lending Act, which covers exactly how your consumer leasing provisions are spelled out in your process. Are they clear? Easily understood? We’ve made plenty of progress, but are you keeping up?
Read Regulation M here:
http://www.federalreserve.gov/boarddocs/caletters/2008/0805/08-05_attachment2.pdf
7. Regulation Z
In addition to Regulation M, Regulation Z requires you to ensure that credit terms are disclosed so consumers can compare credit terms more easily and more knowledgeably. Plain language. Specific language. We’re pretty sure you’ve got this covered, but if there’s any question, you may be exposed. Read more here:
http://www.federalreserve.gov/boarddocs/supmanual/cch/200601/til.pdf
8. Occupational Safety And Health (OSHA)
There are quite a few OSHA regulations that impact employees across your car dealership, particularly your service department and your body shop. These can involve things like wearing protective equipment and logging workplace industries.
The rules are here:
https://www.osha.gov/law-regs.html
9. Equal Credit Opportunity Act
This regulation prohibits practices that discriminate and was enacted to promote the availability of credit to all creditworthy applicants without regard to race, color, religion, national origin, sex, marital status, or age (provided the applicant has the capacity to contract). Pretty sure your team is all over it.
If not, check out how the FTC describes consumers’ rights when buying a car:
https://www.consumer.ftc.gov/topics/buying-owning-car
10. Fair Credit Reporting Act
This Act covers privacy and security around the ways your dealership protects information from – and reports information back – to Consumer Reporting Agencies. The intricacies of the FCRA also cover how you handle employee background checks.
Protect your dealership and customers by exploring more here:
https://www.ftc.gov/tips-advice/business-center/privacy-and-security/credit-reporting
11. Adverse Action Notices
The Equal Credit Opportunity Act (ECOA) has restrictions around exactly how you report refusing credit or granting (and having people accept) credit in “a different amount or on other terms.” Within 30 days of any “Adverse Action,” you are required to notify, using very explicit terms, your consumer, in writing.
Get more information here:
https://www.fdic.gov/regulations/laws/rules/6500-260.html
12. Wage & Hour Laws
These cover minimum wage and overtime pay standards and exemptions. You’ll need to keep an eye on state wage and hour regulations as well, as they can vary from state to state.
Get more information here:
Federal: https://www.dol.gov/WHD/foremployers.htm#reglibrary
State: https://www.dol.gov/whd/state/state.htm
13. Discrimination & Harassment
Are you up speed on what constitutes a protected class? How about your employees? These are easy regulations to get tripped up on.
Make sure you know the rules:
https://www.eeoc.gov/laws/types
14. Credit Practices Rule
Do your contracts have unfair contract provisions? Do you know what’s considered “unfair?” Do your co-signers clearly understand their liabilities? You’re responsible for making sure they do. And are you absolutely clear when your dealership can and when you can’t charge late fees? The Credit Practices Rule spells out – in detail as only the FTC can – your responsibilities.
Learn more here:
15. Federal Advertising Laws/Truth-In-Advertising
Advertising must be non-deceptive and truthful. And any mention of financing or terms must trigger certain disclosure statements. Advertisers must have evidence to back up any claim. The burden of proof for advertising claims is on the dealer. And advertising cannot be “unfair.” Unfair advertising is described as that which would “…substantially injure customers, violate established public policy, be unethical or unscrupulous.”
Protect your dealership from unscrupulous marketing mistakes here:
https://www.ftc.gov/news-events/media-resources/truth-advertising
16. Red Flags Rule
Your dealership must have an identity theft program in place, as a creditor. Your dealership must implement a written identity theft prevention program designed to detect the “red flags” of identity theft in your day-to-day operations, take steps to prevent the crime, and mitigate its damage.
Want to better understand how to comply? Learn more here:
17. Telemarketing Sales Rule
You may, or may not, have telemarketers at your dealership. If you do, this Rule “requires disclosures of specific information” and “prohibits misrepresentations.” Protect yourself from vague understandings before you have anyone pick up the phone…
Read more here:
https://www.ftc.gov/tips-advice/business-center/guidance/complying-telemarketing-sales-rule
18. Family And Medical Leave Act (FMLA)
FMLA covers employees’ right to take limited unpaid leave for personal and family medical emergencies. It also covers leave related to military service.
Learn the rules and details on what information you need to display in your dealership:
19. Fuel Economy Advertising For New Automobiles
Basically, you can’t advertise a Fuel Economy ranking for a vehicle that isn’t exactly the vehicle you’re selling. Nor can you advertise a Highway MPG as a City MPG. Seems simple, but we all know someone affected by the very public EPA violation scandal.
Here is a reminder of the basics:
https://www.gpo.gov/fdsys/pkg/CFR-2003-title16-vol1/xml/CFR-2003-title16-vol1-sec259-2.xml
20. Form 8300 And Reporting Cash Payments Of Over $10,000
In order to protect your dealership from accusations of “money laundering” by the IRS, anyone taking a cash payment of $10,000 or more is required to file a Form 8300. Every time. And you must file Form 8300 by the 15 day after the cash payment occurs. Every time.
Protect yourselves from IRS scrutiny here:
21. Office Of Foreign Assets Control (OFAC)
And, in support of freezing terrorists’ assets, you are required to check your customers’ names against the Specially Designated Nationals List (SDN List). The SDN List, sometimes referred to as the OFAC List, is comprised of “individuals and companies owned or controlled by, or acting for or on behalf of, targeted countries. It also lists individuals, groups, and entities, such as terrorists and narcotics traffickers designated under programs that are not country-specific.”
Learn more here:
https://www.treasury.gov/resource-center/Sanctions/SDN-List/Pages/default.aspx
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