MARCH 2014 Volume 24 Issue 3 NEWS TRAX -...
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Introducing 2012-2014 Execuve Board PRESIDENT Jeanine McEntee Renick Cadillac Subaru 714-871-9300 VICE PRESIDENT Sue Wilschke Automotive Compliance Consultants 818-297-4168 SECRETARY Open Position TREASURER Sherri Johnson Allen Cadillac-GMC Hyundai 949-485-3700 ADOMA Office 714.832.5741 _________________ Commiee Service If interested in serving on the board or a commiee, please join us at an upcom- ing meeng. Contact the ADOMA office to parcipate at 714/832-5741. NEWS TRAX MARCH 2014 Volume 24 Issue 3 Forum for education and the exchange of ideas and information to improve the administration of the automotive industry. Government Enforcement Activity: Dealers in the Spotlight Johnathan Morris, Auto Advisory Services, Inc. For over a decade, enforcement activity against California’s new car dealers was primarily limited to true fraud schemes, or problems asso- ciated with dealers that went out of businesses during the recent eco- nomic downturn. In the past year, however, word about actual or threatened enforcement activity seems to bubble above the surface on a weekly basis. Less-than-subtle charges raised by the Consumer Financial Protection Bureau (CFPB); concerns made public by the fed- eral Department of Justice (DOJ); heavily-publicized enforcement ac- tions brought by the Federal Trade Commission (FTC) in participation with the Los Ange- les Department of Consumer Affairs; massive enforcement threats by several District At- torneys; and enforcement sweeps by the state Department of Motor Vehicles and Bureau of Automotive Repair have all taken place in the past year. What’s changed? The seeds that have given rise to the recent focus on dealership activity were planted in the latter stages of Congressional negotiations leading to passage of the federal Dodd- Frank Wall Street Reform and Consumer Protection Act of 2010. This law, which led to the creation of the CFPB as the primary agency governing (almost) all aspects of consum- er finance, was famously amended to eliminate CFPB enforcement and regulatory author- ity over most car dealers. The value of this hard-earned carve-out, championed by the National Automobile Dealers Association (NADA), cannot be overstated (imagine the nightmare we’d be facing if CFPB had direct rulemaking and enforcement authority over car dealers!), but it created a ripple effect that we’re feeling today. The consumer groups and trial lawyers who fought against NADA’s efforts took every opportunity to paint the FTC and state and local law enforcement agencies as weak, incompetent, or even cor- rupt—all while inventing ridiculous caricatures of unscrupulous dealership practices. While NADA was able to rebut these charges in Congress, the public perception of deal- ers was cast in a questionable light. The seeds sprouted. The allegations of widespread dealership impropriety was publically examined in a series of FTC-hosted Industry Roundtables and requests for public comment in 2011 and 2012, where industry experts, consumer groups, and law enforcement agencies all weighed in on dealership issues. While dealer advocates successfully defended the industry against the unsupported charges of industry-wide fraud schemes, the mere fact that the roundtables took place created additional bad press. “Fertilizer” was applied to the young plant. Finally, the ongoing and very public fair lending campaign by the CFPB has created an incredible amount of unjustified bad press surrounding indirect financing with negotiable dealer retail margins—despite the billions of dollars consumers have saved under this model. By painting dealer participation in lending as discriminatory (then later quietly clar- ifying that such discrimination is likely unintentional), the CFPB and others have again generated negative publicity about dealer activity. Continue page 5
Transcript of MARCH 2014 Volume 24 Issue 3 NEWS TRAX -...
Introducing 2012-2014 Executive Board PRESIDENT
Jeanine McEntee Renick Cadillac Subaru 714-871-9300
VICE PRESIDENT
Sue Wilschke Automotive Compliance Consultants 818-297-4168
SECRETARY Open Position
TREASURER Sherri Johnson Allen Cadillac-GMC Hyundai 949-485-3700
ADOMA Office 714.832.5741 _________________
Committee Service If interested in serving on the board or a committee, please join us at an upcom-ing meeting. Contact the ADOMA office to participate at 714/832-5741.
NEWS TRAX
MARCH 2014 Volume 24 Issue 3
Forum for education and the exchange of ideas and information to improve the administration of the automotive industry.
Government Enforcement Activity: Dealers in the Spotlight
Johnathan Morris, Auto Advisory Services, Inc.
For over a decade, enforcement activity against California’s new car dealers was primarily limited to true fraud schemes, or problems asso-ciated with dealers that went out of businesses during the recent eco-nomic downturn. In the past year, however, word about actual or threatened enforcement activity seems to bubble above the surface on a weekly basis. Less-than-subtle charges raised by the Consumer Financial Protection Bureau (CFPB); concerns made public by the fed-eral Department of Justice (DOJ); heavily-publicized enforcement ac-
tions brought by the Federal Trade Commission (FTC) in participation with the Los Ange-les Department of Consumer Affairs; massive enforcement threats by several District At-torneys; and enforcement sweeps by the state Department of Motor Vehicles and Bureau of Automotive Repair have all taken place in the past year. What’s changed? The seeds that have given rise to the recent focus on dealership activity were planted in the latter stages of Congressional negotiations leading to passage of the federal Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010. This law, which led to the creation of the CFPB as the primary agency governing (almost) all aspects of consum-er finance, was famously amended to eliminate CFPB enforcement and regulatory author-ity over most car dealers. The value of this hard-earned carve-out, championed by the National Automobile Dealers Association (NADA), cannot be overstated (imagine the nightmare we’d be facing if CFPB had direct rulemaking and enforcement authority over car dealers!), but it created a ripple effect that we’re feeling today. The consumer groups and trial lawyers who fought against NADA’s efforts took every opportunity to paint the FTC and state and local law enforcement agencies as weak, incompetent, or even cor-rupt—all while inventing ridiculous caricatures of unscrupulous dealership practices. While NADA was able to rebut these charges in Congress, the public perception of deal-ers was cast in a questionable light. The seeds sprouted. The allegations of widespread dealership impropriety was publically examined in a series of FTC-hosted Industry Roundtables and requests for public comment in 2011 and 2012, where industry experts, consumer groups, and law enforcement agencies all weighed in on dealership issues. While dealer advocates successfully defended the industry against the unsupported charges of industry-wide fraud schemes, the mere fact that the roundtables took place created additional bad press. “Fertilizer” was applied to the young plant. Finally, the ongoing and very public fair lending campaign by the CFPB has created an incredible amount of unjustified bad press surrounding indirect financing with negotiable dealer retail margins—despite the billions of dollars consumers have saved under this model. By painting dealer participation in lending as discriminatory (then later quietly clar-ifying that such discrimination is likely unintentional), the CFPB and others have again generated negative publicity about dealer activity.
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MARCH MEETINGS
Four Chapters Meet Monthly! Serving the Valley, Los Angeles,
Orange County and Inland Empire Counties
REGISTRATION DETAILS NEXT PAGE — RSVP directly with the chapter contact.
Inland Empire, Los Angeles and Orange County Chapters
Government Enforcement Johnathan Morris, Auto Advisory Services, Inc.
California’s new car dealers are mindful of recent concerns raised by government agencies. For example, the Consumer Financial Protection Bureau (CFPB) spreading negative publicity about what it calls questionable activities. Couple that with the recent spike in new car sales and suddenly dealers look hugely profitable. Fair lending is among the areas of concern for dealers. For example, CFPB’s negative campaign positions the Indirect Finance Model as unlawfully discriminatory. NADA recently released a sample Fair Credit Compliance Policy & Program to help dealers develop their own fair lending policies. Other concerns include dealership advertising. Since ads are interpreted subjectively, claims are made that certain ads are misleading, deceptive or unfair. Also, the FTC is cracking down on decep-tion and rebate practices are under state scrutiny.
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Valley Chapter
HR Policies and Procedures Yasmin Herbert, Paychex
Dealers must remember the importance of meeting DMV compliance and the im-pact of electronic vehicle registration non-compliance on their BPA permit. The results impact their ability to sell new cars in California.
Important topics you won’t want to miss! Join us!
Bio: Jonathan Morrison is the newly-appointed Presi-dent of Auto Advisory Services, Inc. Prior to joining AAS, Jonathan served as Director of Legal & Regula-tory affairs for the California New Car Dealers Associ-ation, leading CNCDA’s legal and compliance opera-tions since 2006. As a registered lobbyist for CNCDA, Jonathan played a leadership role in devel-oping CNCDA’s legislative and regulatory policy agenda, and led the association’s regulatory advoca-cy efforts before all California agencies, including the DMV, Attorney General, BAR, Air Resources Board, DTSC, Board of Equalization, and Department of Toxic Substances Control. Jonathan holds a bache-lor’s degree from the University of Pittsburgh, a law degree from the Notre Dame Law School, and a mas-ter’s degree from University College London.
Yasmin Herbert is an HR professional at Paychex. During her 20 year ca-
reer in the industry she has worked with clients to develop HR policies and
procedures to ensure compliance with federal, state and local require-
ments. Yasmin will be enlightening us with changes for 2014 along with
general information that applies to all different industries in California.
We are very excited to have someone with her expertise share her time
and experience with us. Please join us!
Register Today!
Registration Information for Chapter Meetings Here
INLAND EMPIRE (4thTuesday) Date: Tuesday, March 25th Time: Social 5:30 PM, Dinner & Program 6:30 PM Cost: $35.00 Members & Spouses, $45.00 Guests Location: Sizzler (Banquet Room) 6631 Clay, Riverside
(Van Buren & Clay)
Register by March 23rd by phone, fax, email or our
website at www.adoma.org All reservations not honored
will be billed for the full meal fee. Make checks payable
to ADOMA-IE:
ADOMA-IE c/o Kelli Day Victorville Motors Inc
14617 Civic Dr., Victorville, CA 92394 Tel: 760/245-7991 Email: [email protected]
ORANGE COUNTY (3rd Thursday) Date: Thursday, March 20th Time: Social 5:30 PM, Dinner & Program 6:00 PM Cost: $35.00 Members & Spouses, $45.00 Guests Location: Black Angus Restaurant 1350 N. Tustin Ave., Santa Ana, CA 92701 Register by March 17th by phone, fax, email or our
website at www.adoma.org All reservations not hon-
ored will be billed for the full meal fee. Make checks
payable to ADOMA-OC:
ADOMA-OC
c/o Sherri Johnson Allen Cadillac GMC 28332 Camino Capistrano, Laguna Niguel, CA 92677 Tel: 949/485-3700— Fax 949/364-0110 Email: [email protected]
LOS ANGELES (3rd Wednesday)
Date: Wednesday, March 19th
Time: Social 6:00 PM, Dinner & Program 6:30 PM
Cost: $35.00 Members & Spouses, $45.00 Guests
Location: Stevens Steak & Seafood House
5332 Stevens Place,
City of Commerce
Register by March 17th by phone, fax, email or our website at www.adoma.org All reservations not hon-ored will be billed for the full meal fee. Make checks payable to ADOMA-LA: ADOMA-LA c/o Margie Villegas Caruso Ford Lincoln Mazda 3600 Cherry Ave., Long Beach, CA 90807-4302 Tel: 562-308-4244 Email: [email protected]
VALLEY (3rd Thursday) Date: Thursday, March 20th **New Location Time: Social 6:00 PM, Dinner & Program 6:30 PM
Cost: $35.00 Members & Spouses, $45.00 Guests Location: Cisco’s
1712 E. Avenida De Los Arboles
Thousand Oaks, CA
Tel: 805-493-0533
Register by March 18th by phone, email or our web-
site at www.adoma.org All reservations not honored
will be billed for the full meal fee. Make checks paya-
ble to ADOMA:
ADOMA c/o Jackie Baker KIA of Ventura 6424 Auto Center Dr., Ventura, CA 93003 Tel: 805/644-2241 Email: [email protected]
ADOMA CHAPTER MEETING REGISTRATION Online RSVP and credit card payment available at www.adoma.org or contact the chapter directly.
Name: Guest: Company: Phone: Email: Chapter: ___Los Angeles ___ Orange County ___ Inland Empire ___Valley Check #____________ Amount $___________ Send payment to chapter contact noted above. Questions, contact ADOMA at 714.832.5741
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PLATINUM VENDOR—ADVERTISING
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1-888-SCFUELS
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These narratives, combined with the continuous and well-publicized increase in new car sales over the past several years, have created the perception of a hugely profitable industry with questionable practices without significant government enforcement. Heatlamps were applied to the budding plant, the strange, ripe fruit of which have been falling in the past year. With this background in mind, let’s take a look at the recent areas of concern, and briefly mention what deal-ers can do to reduce their exposure risks. Fair Lending: Over the past year the CFBP has launched the most dangerous, destructive, and unjusti- fied negative publicity campaign against the automotive industry in at least age generation. The indirect finance model, where a dealer obtains a wholesale rate from a lender and applies a limited and negotiable retail margin to the consumer, saves consumers an incredible amount of money compared to direct lending. The CFPB has applied dubious statistical and legal theories to create a perception of unlawful discrimination against consumers on the basis of race, gender, age, and other Protected categories. Their argument? That they can examine a finance company’s massive portfolio of loans purchased from all of their dealer clients, estimate the race of each customer by looking at proxy data like name and zip code, and find that some races are (on average) charged a tiny amount more than others in violation of the federal Equal Credit Opportunity Act. The stakes of such accusations can be highlighted by The fact that Ally Bank recently agreed to pay almost $100 million in fines and cash to settle such allegations. Make no mistake; this is part of an effort to eliminate the right of a consumer and dealer to negotiate finance terms. This campaign is particularly frustrating to those familiar with the retail automotive finance sector, since we understand that such discrimination is not only met with zero tolerance, but hurts the bottom line of both the dealership and F&I employees. Despite this knowledge, dealers should strongly consider imple-menting formal fair lending compliance policies and documentation strategies to defend against the inevita-bility of such claims in the future. While the CFPB has refused to provide the public with compliance guidelines, a previous settlement of similar claims between a Pennsylvania dealer and the federal Department of Justice (which enforces civil rights laws), can be used as a potential template for development of
Education Article Continued from cover page...
Government Enforcement Activity: Dealers in the Spotlight
such a policy. To assist dealers in developing their own fair lending policies, NADA recently released a sample Fair Credit Compliance Policy & Program for its mem- bers. This can be found on the NADA.org website. Advertising: With dealers in the spotlight, federal, state, and local law enforcement agencies have recently launched wide spread attacks against the easiest dealer- ship compliance target: vehicle advertisements. Not only are advertisements easy to obtain for evidence (buy a newspaper or print a screenshot of a dealer website), state and federal advertising laws are complicated, tech- nical, and provide for very broad enforcement authority. In addition to the ability to file an action for technical vio- lations, all law enforcement agencies have the right to file an action on the grounds that an advertisement is unfair, misleading, or deceptive. These “eye of the be- holder” violations are particularly troublesome given the fact that the FTC, DMV, Attorney General, and each of California’s 58 District Attorneys may have a different standard in mind when reviewing an advertisement.
The Federal Trade Commission- The FTC recently cracked down on ten dealerships for “deceptive” ad-vertising, announcing that this was merely the start of a widespread effort entitled “Operation Steer Clear.” In this first volley, the FTC focused on ads in which the prominent terms (price, payment, down-payment) were contradicted by the fine print. Types of advertisements that were subject to scrutiny con-tained balloon or teaser payments, false “no down-payment” claims, deceptive sweepstakes, unclear financing terms and false advertised purchase pric-es. Technical violations of finance and leasing laws were also alleged but they appear to be secondary to the contradictory fine print problems.
State Law Enforcement- To date, the offices of the Riverside District Attorney, the San Diego District Attorney and the Los Angeles City Attorney have issued warning letters to dealers about deceptive advertising, and have met with dealers who failed to heed these warnings about settling incipient enforce-ment action. . The crux of the concern is the improp-er use of rebates or discounts to reduce the adver-tised sale price. This is also known as “rebate stack-ing.” The problem is that some ads make it appear that a consumer can take advantage of the aggre-gate amount of the rebates or discounts listed but the fine print reveals that very few, if any, people will qualify for all of the promotions (i.e. college grad, veteran, senior citizen, first time buyer and conquest cash). The letters make it clear that the use of aster-isks in conjunction with small print disclosures is not sufficient to put consumers on notice about the lim-ited applicability of the rebates.
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ADOMA LOLA BELK SCHOLARSHIP FUND
Applications due May 1, 2014
The Lola Belk Scholarship Fund was founded in 2012 in memory of Lola Belk. Lola has served ADOMA as a local chapter President and on the Executive Board of ADOMA. Lola was always encouraging and reminding us that education in this industry is the “key to success.” In her honor, The Lola Belk Scholarship Fund awards scholarships to Automotive Personnel wishing to continue their education at the Annual ADOMA Conference and those with a financial need.
Criteria : Applicants eligible for assistance must be currently working in the automotive industry for at least 5 years
and current ADOMA members. Consideration will be given to individuals based on desire, financial need and commitment to attend conference. Letter of nomination from your peers (GM, BM, OM, Dealer, Col-league).
Award: Scholarships will be awarded in May of each calendar year. Each scholarship awarded will be for Confer-
ence registration valued at over $750. This credit will be applied to your account upon receipt of your reg-istration application.
Deadline: The application deadline is May 1, 2014. The deadline is the date after which applications will no longer
be accepted. Applications available online at www.adoma.org How to apply: Submit the Application Form, a 2 paragraph essay, and a letter of nomination. The first paragraph should detail who you are and your background. The second should be about why you should receive this scholarship. For consideration your essay should emailed to ADOMA Headquarters at [email protected] by May 1, 2014.
Educate - Connect - Network
& Lead!
Education Article Continued from page 5..
Government Enforcement Activity: Dealers in the Spotlight
Dealers should be extremely careful with advertising compliance and note that any advertisements bearing your name will be your responsibility, regardless of their source. With this in mind, be sure to heed the following warnings:
1. Don’t rely on the advertisements of your competi-tors in creating your own advertising campaigns;
2. Don’t rely upon your advertising agencies to create compliant advertisements;
3. Don’t rely upon your automaker or finance company to develop a compliant advertisement campaign.
4. Don’t assume that your website will be treated any different than your print advertisements when being reviewed for compliance.
Lastly, dealers should ensure that all advertisements are reviewed by a qualified ad review service or compe-tent law firm prior to publication. Dealers can subscribe to Auto Advisory’s advertising review service to have drafts, proofs and scripts reviewed on a weekly basis before your publishing deadline.
Message from the Incoming AAS President As I take on the role of President of Auto Advisory Ser-vices on St. Patrick’s Day, I’ll be working closely with Rob Cohen to address current and future industry con-cerns. For those of you who don’t know me, I want you to know what you’ll be getting: a dedicated and compe-tent professional who cares deeply about the retail au-tomotive industry and will work with you to provide the best possible compliance strategies. If you have any questions, comments, or concerns about the industry or Auto Advisory Services, please reach out to me person-ally at [email protected].
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PLAINUM VENDOR—ADVERTISING
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AUTO DEALERS OFFICE MANAGEMENT ASSOCIATION (ADOMA) is here to
support auto industry professionals by providing educational programs, leadership skill building, peer support opportunities, and the list goes on! We also offer sponsorship and promotional
opportunities to our members, vendors and sponsor firms!
Take a look at the opportunities that await you in 2014….and sign up today!
MEMBERSHIP: $125 Dealership or Associate Allied Member ($35 for second location) Discounts on attending and participating in monthly educational meetings. Topics have included:
Affordable Health Care Recycling: reduce dealership carbon footprint Super Reporting in the Service Dept. Handbooks and FMLA Labor and Employment Law Update HR Compliance Sales Tax and Unclaimed Property Best Practice Sharing Managing Work Comp Claims
Attendee discounts on the annual conference in June & mini-conference in the fall. Name and Company listing on the www.adoma.org website (Associate Allied members only) Listing in ADOMA’s annual printed directory (distributed at Conference) Join -- build peer networks with other industry professionals. Share best-practices!
Platinum Vendor Sponsorship for Service Firms: $500.00 - Designed to serve the marketing needs of our vendors. Benefits include the items listed below (limited to first 24 firms annually):
1 annual membership Discounts on attending and participating in monthly educational meetings. 1 full-page newsletter ad and 1 full-page web site ad highlighted 1 Education article for the newsletter (must be education based, not a solicitation) 1 acknowledgement as Vendor Sponsor of the Month at chapter meetings 12 month company listing on the vendor page of the web site Company listing in the membership directory distributed at the annual conference
ADOMA LAST CALL!
Membership Enrollment Open! Don’t miss out!
Renewal application available online along with credit card payment availability or complete an application that accompa-nies this newsletter.
www.adoma.org
MARCH 2014 ISSUE
Educational Meetings for Controllers, Business & Office Managers in the
Southern California Area.
ADOMA provides a forum for education and the exchange of ideas and information to improve the administration of the
automotive industry.
360 E. First Street, #914
Tustin, California 92780
Tel: 714.832.5741
Fax: 714.886.1614
Chapter Board of Directors
www.adoma.org
INLAND EMPIRE PRESIDENT / TREASURER SECRETARY Kelli Day Veronica Tafolla Victorville Motors Inc Metro Honda VICE PRESIDENT TREASURER Cherie Harris Pam Desrosiers Alvarez Lincoln Mercury Alvarez Lincoln Mercury
LOS ANGELES PRESIDENT VICE PRESIDENT Nellie Gabourel Steve Pedraza Community Chevrolet Total Service Program
SECRETARY TREASURER Margaret Wurster Margie Villegas Caruso Ford Lincoln Mazda
ORANGE COUNTY PRESIDENT VICE PRESIDENT Sherry Hosmer Kris Edwards Renick Cadillac Subaru Tustin Buick GMC SECRETARY / TREASURER Sherri Johnson Allen Cadillac GMC Hyundai
VALLEY PRESIDENT VICE PRESIDENT Kathy Lindsey Dawn Citera Simi Valley Ford Valley Team Nissan SECRETARY TREASURER Jackie Baker Martha Huerta Kia of Ventura Simi Valley Ford Valley
Membership in ADOMA
is value added!
$125.00 = Quality Education
and Peer Support!
$35.00 for second dealer locations.
What a deal!
$500 = Platinum Vendor marketing
benefits, see page 5 or online.
Join now and receive education/meeting
discounts, ADOMA directory and peer
support! Application available online at
www.adoma.org
Or call—714.832.5741
PLATINUM VENDORS OF THE MONTH
