This article is the second installment in a two-part series focusing on duties and obligations under the Fair Credit Reporting Act. In the first installment, Credit Reporting and You: How…
Expertise in Ohio & Federal Auto Dealer Laws
Operating a motor vehicle dealership involves managing and mitigating numerous compliance risks. Automotive dealers must comply with many different state laws and numerous federal laws.
Our attorneys represent motor vehicle dealers’ interests in all facets of dealership operations including compliance, business transactions and disputes. We counsel clients on business issues that are unique to car dealers, whether it involves structure, finance, labor relations, advertising, and consumer sales, or other automotive law issues. We have successfully represented car dealers in civil consumer complaints and responding to Attorney General investigations.
Gertsburg Licata also offers a specially tailored internal audit service for auto dealerships. This service helps your motor vehicle dealership manage legal compliance proactively and implement necessary policies and processes.
Ohio Automotive Dealer Laws
Our Cleveland automotive-dealer lawyers understand the full range of Ohio laws that dealers must satisfy. You can rely on our team to help your dealership ensure compliance with:
- The Consumer Sales Protection Act. Among other things, this state law identifies: whether certain business conduct is legal; what companies can and cannot represent in their advertising; and the legal remedies when companies fail to comply with the act.
- The Retail Installment Sales Act. This Ohio law covers loans that will be paid over time and are typically covered by collateral. In the case of automotive dealers, the law governs appropriate dealer remedies, including repossession when the loan is in default.
- Ohio Motor Vehicle Title Law. This statute details the requirements for titling automobiles, transferring title, placing liens on the title, and many other legal issues that relate to the ownership of the vehicle.
Our lawyers review the dealer’s business, including business relationships with finance companies, customers, vendors, contractors and employees to fully understand which state laws apply.
Federal Automotive Dealer Laws
Our attorneys counsel automotive dealers on these and other federal laws:
- Gramm-Leach-Bliley Act (GLBA). This law, enacted in 1999, requires among other things that companies, such as automotive dealers, that offer financial products or services to consumers explain how the information the company obtains is shared and how sensitive information is safeguarded. Vehicle loans, insurance, and financial advice are covered financial products and services.
- Truth in Lending Act (TILA). The TILA protects consumers against untruthful and unfair credit card and credit billing practices. Lenders are required to provide certain information about the true cost of a loan. The TILA is part of the Consumer Credit Protection Act.
- Equal Credit Opportunity Act (ECOA). The ECOA was enacted in 1974. It protects qualified consumers from discrimination based on race, color, religion, national origin, marital status, age, or sex. Covered consumers include applicants whose income is based on public assistance or who have exercised a right under the Consumer Credit Protection Act. Any company that regularly handles credit decisions is required to comply with the ECOA. Companies that violate Regulation B of the ECOA can face substantial fines and punitive damages, especially if a class action lawsuit is successfully brought.
Automotive dealers must also comply with IRS cash reporting rules and other federal rules and regulations.
Connect with an Auto-Dealership Lawyer
Gertsburg Licata has a team of experienced lawyers that can help you navigate automotive laws. Please call us today at (216) 573-6000 or fill out our contact form to schedule a consultation.
Frequently Asked Questions
How do the laws differ for used vs. new car dealers?
The Federal Trade Commission’s (FTC) Used Car Rule necessitates that dealers who sell used vehicles must comply with certain requirements, such as displaying a Buyers Guide on every used car offered for sale. This guide provides crucial information about the car, including warranty details and whether the vehicle is being sold “as is” or with a warranty. Dealers selling more than five used vehicles in a 12-month period must adhere to this rule, which is applicable in all states except Maine and Wisconsin, due to their similar regulations. This rule does not apply to motorcycles, vehicles sold for scrap or parts, or agricultural equipment.
What are the penalties for non-compliance with these laws?
Ohio auto dealers must navigate a maze of state and federal regulations, with penalties for non-compliance ranging from fines to imprisonment. The Ohio Revised Code Chapter 4517 outlines specific operational requirements for dealerships, emphasizing the need for a valid license for selling new or used motor vehicles. Violations under this chapter could lead to serious repercussions, although the exact penalties are not explicitly detailed in the available sections.
Federally, the stakes are equally high. The Fair Credit Reporting Act and the Used Car Rule, for example, impose fines up to $2,500 and $40,000 per violation, respectively. More severe breaches, like those against the Office of Foreign Assets Control (OFAC), can attract penalties up to $10 million and prison time for willful violations. Other regulations, including privacy notices and risk-based pricing notices, set penalties at $10,000 per violation and higher.
How does the Ohio Lemon Law process work for dealers?
The process for handling a car deemed a “lemon” under the Ohio Lemon Law involves several steps aimed at protecting consumers. While the specific procedural details were not covered in the sources consulted, the Ohio Lemon Law typically provides remedies for consumers who purchase vehicles that fail to meet quality and performance standards. Dealers should be prepared to comply with these regulations, including offering replacements or refunds for defective vehicles. For detailed guidance on the Ohio Lemon Law process, it’s advisable to consult directly with an attorney.
