Pub. 1 Issue 3

23 e salespeople at our dealership o en post vehicles for sale on their social media accounts. ose posts are advertisements and, if improper, the dealership and the salesperson can both be held responsible by the Motor Vehicle Dealer Board. TRUE • Social media posts by your employees are advertising, and they are illegal advertisements if they include prices, discounts, or o ers not in compliance with the law. • MVDB has begun imposing civil pen- alties on the dealer for ad violations in social media posts by employee(s). • Have a written social media policy with the Dos and Don’ts of employee use of social media. • Goal – use social media posts to drive prospects to dealer’s website where full o ers and disclosures are available. Social media posts by your employees are advertising, and they are illegal advertisements if they include prices, discounts, or offers not in compliance with the law. FALSE Some critical points: • Itemizing deductions fromprice is not an excuse for advertising prices that are not available. For example, if itemized deduc- tions are for o ers that cannot be used together – customer loyalty and rst-time buyer incentives or lease and nance incen- tives – the resulting net prices are not legal. • Purpose of itemization is to tell customers what they must do to qualify – the bot- tom-line price must be available to some- one who can qualify for all deductions. • e same principles apply to “savings” ads – customers must understand what they must do to qualify, and total savings cannot include incentives that are incompatible. When we advertise the annual percent- age rate of the nancing we o er we must make full follow-on disclosures under the Truth in Lending Act. FALSE Simply advertising an annual percentage rate without further disclosures is not a violation of the Truth in Lending Act, provided you use either the abbreviation APR or the term “annual percentage rate.” e problem for dealers arises because they sometimes qualify the availability of the APR by limiting the termwith a disclaimer such as “available for nancing up to 48 months.” e duration of the nancing is a trigger term since trigger terms are the amount of a downpayment, the amount of an installment payment, the number of installments (term), or the amount of any nance charge. If a trigger term is used, then the following must be disclosed: • e amount of the installment payment • e amount or percentage of down payment; • e number of installments (term); and • e annual percentage rate. e customer signed the retail install- ment sale contract in the wrong place. I have run a new one, and there is no change. I can sign it for the customer. FALSE • Signing a document for a customer, unless there is a power of attorney that speci cally allows this, is a crime. It is forgery. It can cost you jail time and your salesperson’s license. And it will render any retail installment sales contract or lease void, meaning that the nance source can demand that the dealership repurchase it. • Protect against an employee forging a customer’s signature on a recontract. With pressure to “turn” paper, it is easier to do the wrong thing – sign a revision for the customer. • Review deal paperwork once forwarded to the o ce for signatures. • When a customer comes in to re-sign, have another manager greet the custom- er and note that in the deal le. • When papers are taken to the customer’s house, follow up with a phone contact. I have heard that the Department of Defense has invalidated the December 2017 announcement that selling GAP to active duty service members and their dependents subjects the transaction to the Military Lending Act. I can resume sales activities of GAP products bene t- ing those customers. FALSE • There has been no action to change the official Department of Defense Policy that sale of GAP or credit insurance, or cash-out financing, subjects the trans- action to the Military Lending Act. • A transaction covered by the Military Lending Act can lead to severe prob- lems, including rendering the finance contract void. • Dealers should still avoid selling GAP and credit insurance, and not do cash- out financing, with active duty mili- tary personnel and their dependents until something is officially published changing the December 2017 DoD position. I signed a contract with a vendor for three years. It has a provision that it will roll over for another three-year term at expiration. We need not worry about that. State public policy invali- dates such roll over provisions. FALSE • There is a common misperception that there is some public policy against rollover provisions for similar terms. There is no such policy. Rollover pro- visions are enforceable. • The best thing to do is to avoid a rollover term. Your contract should provide that once your initial term is over, it converts to a month-to-month contract. • However, before you sign for an initial term of a lengthy duration, ask why. What is it about your supplier’s busi- ness that makes it worthwhile for you to have a long-term contract? • Insist on a month-to-month contract and, if you cannot do that, then have an initial term of the lowest number of months you can with a rollover on a month-to-month basis. In my 20 group, several dealers in other states are having great success in advertising prices and then adding to them other fees. For all sales they are adding salesperson compensation fees. For used car sales they are adding vehicle reconditioning fees. In VA these fees are not permitted even if the fees are prominently disclosed in the advertisements.