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HOT TOPICS
2017
MEMBERSHIP
DIRECTORY
172
The Federal Odometer Law
This law requires sellers of motor vehicles to disclose to buyers in writing the odometer reading of the vehicle
being sold, and prohibits tampering with odometer devices. The buyer must review and sign the disclosure. For
used car sales, the odometer reading at the time of transfer must be disclosed on the title. Specific additional
disclosures are required by this law and other applicable regulations, plus there are recordkeeping requirements.
State laws also govern registration and titling requirements.
Internet Sales
This is an emerging area of the law as dealers increase sales to out-of-state buyers using a variety of web-based
tools. When a dispute arises, the buyer will attempt to sue the dealer in the buyer’s home state and claim that
the dealer should have been licensed in their home state and/or that the law of their home state (including
those laws addressing contract disclosures, and related consumer credit requirements and limitations) applies
to the transaction. Consult a knowledgeable attorney on how to minimize your risks when selling to out-of-state
customers through an Internet sale process.
State Law Restrictions on Fees
State laws also limit or restrict fees, especially “doc fees,” to a specific dollar amount or a reasonable amount in
relation to the actual costs of preparing and filing documentation. A great deal of litigation has occurred relating
to the propriety of doc fees charged by dealers in states where no specific amount is provided by law. Recently, a
state Supreme Court upheld a damages award of in excess of one million dollars in a class action filed against a
dealer for charging unfair doc fees. Although state consumer credit laws permitted a dealer to charge a “closing
fee”after meeting certain procedural requirements, state law did not expressly regulate the amount of the fee. The
court found that the closing fees at issue were unfair because they bore no relation to the dealer’s actual expenses
in closing a motor vehicle sale. Know your state law on permissible doc fees and consult your local attorney if no
specific amount is permitted, or the doc fees are limited to being “reasonable.”
Cash Sales
If a customer purchases a vehicle with cash or cash equivalents in excess of $10,000, you must file IRS/FINCEN Form
8300 within 15 days after receiving the cash payment. This form can now be filed electronically. For this purpose,
“cash”is not only currency but currency equivalents such as traveler’s checks, cashier’s checks, bank drafts, andmoney
orders, if they have face amount of $10,000 or less (n.b., monetary instruments with a face value of more than
$10,000 are not considered cash because the financial institution issuing the instrument is required to report the
transaction.). A personal check and a bank check representing the proceeds of an auto loan made to the customer
by the bank are not considered cash or cash equivalents because they are part of an ongoing relationship between
the customer and the bank. If the customer conducts a “related transaction” (another transaction within 24 hours
such as buying another vehicle for cash, or transactions more than 24 hours apart if you know, or have reason to
know, that each is one of a series of connected transactions), then you must total all the cash and cash equivalent
payments fromboth transactions for purposes of calculatingwhether you collectivelymeet the greater than $10,000
threshold for filing IRS/FINCEN Form 8300. By January 31 of the following calendar year, you must send a notice to
the customer informing him or her that you filed an IRS/FINCEN Form 8300 during the prior calendar year.