As the TrueCar debate rages on, one thing is certain: there is going to be increased scrutiny on auto sales practices by a number of state regulatory agencies. While TrueCar has a number of challenges to overcome and may be forced to alter their business model, the real concern is how these legal issues may affect dealers. Several state authorities have indicated that they will hold dealers responsible for any violations. It’s important that dealers are aware of these issues and protect…

Sweepstakes, contests, and giveaways have become increasingly popular among dealerships. These promotions can be a great way to get word out about your company, increase your social media presence and develop leads. However, entry into a poorly considered sweepstakes or contest can be a trap for the unwary dealer.  These promotions are governed by a variety of federal and state laws as well as social networking sites’ terms of service.  The FTC receives thousands of complaints from consumers…

It’s no secret that auto dealerships have frequently been forced to defend themselves against discrimination claims by employees and agencies such as the Equal Employment Opportunity Commission. As a result, many dealers have instituted comprehensive human resources programs to avoid potential problems. However, new technology brings new challenges.

As the use of social media grows, more and more dealerships are using the internet to screen potential employees. Many managers…

Chances are, since you’re reading this post, your dealership or company is involved in social media. That’s good - it’s hard to imagine how difficult it will be moving forward for organizations that have not embraced social networking. Although Social Media is relatively new (and certainly exciting), its meteoric growth has unfortunately caught the early attention of the legal powers-that-be.

Despite the widespread use and misuse of social networking at work, 45 percent of all…

I recently saw a vehicle advertised on a dealer website that caught my attention. This pre-owned car was advertised as a “CarFax One Owner”.  Upon further investigation, I discovered that the “one owner” was a rental car company.

Even though the “one owner” statement may have been technically true, the description of the vehicle blew my mind: “With just one previous owner, who treated this vehicle like a member of the family, you'll really hit the jackpot when you drive home…

There are a number of good reasons for operating an ethical and legally compliant dealership, not the least of which is staying out of a courtroom.  Perhaps the most important - and most often overlooked - reason is increased customer satisfaction.  There are times when an employee may feel that he or she came out the winner by bending the rules a little, but what about the dealership’s reputation?  What about the customers who were mislead?  It seems like there might be some losers in the…

The new federal regulations that went into effect this year have added to the never-ending compliance requirements that dealerships have to deal with. Fortunately, most dealers have found that the Risk Based Pricing Notice and updated Privacy Notice requirements are pretty easy to handle. Utilizing the Credit Score Disclosure exception to Risk Based Pricing Notices and using the New Model Privacy Notices is relatively simple – just a few more forms to add to the pile. The Red Flags Rule is…

A recently filed lawsuit against an auto dealership accused a sales manager of sexual harassment and sexual battery against a salesperson. According to the complaint, the employee was harassed continuously over a ten day period and ultimately quit due to the alleged behavior.  The complaint further stated that the dealership should have known what was going on and tried to correct it.

The dealership responded that the claims have no merit, that it has a zero-tolerance harassment…

Much of what employees learn in the car business is from watching and listening to their co-workers.  This type of education can be invaluable in many areas such as sales presentation, demonstration, and closing techniques. Of course, it can also lead to picking up bad habits like pre-qualifying customers by appearance or shortcutting the sales process.

An area that is frequently learned more by osmosis than by formal training is legal compliance.  Dealers often assume that their…

The vast majority of dissatisfied customers who threaten to call an attorney never do. For the few that follow through, the results can be devastating. While it’s true that many customers’ complaints have little or no merit, there can be a real danger if the wrong plaintiff’s attorney gets involved.

You may be thinking “we have lawyers of our own and insurance for that sort of thing, so bring it on”. Well, here’s the problem: many lawsuits that stem from seemingly…

Employee training can cost a lot of money. Not training your employees can cost even more. In lawsuits, courts and regulatory agencies sometimes impose after-the-fact training requirements in addition to large monetary penalties. Consider these actual cases:



A dealership faced a wide range of complaints, including failure to disclose material defects and misrepresenting sales and extended service contract prices, and was ordered to pay $1.5 million in restitution to victims, plus…

As I read through dealer websites, I’m often surprised at how many advertising violations I find. You would think that website providers would make sure that this doesn’t occur, right?

You should never assume that the company that creates and maintains your website follows all the laws and regulations governing advertising compliance. State advertising laws vary and the responsibility for compliance lies with the dealership, not the vendor. Here are some examples of what I’ve run into…