Texas Dealer January 2015 by Texas Independent Auto Dealers Association

The 84th Legislative Session: The Next Step Includes You

In This Issue: – TIADA Dealer Member Survey Results – Michael W. Dunagan on Liability Insurance Claims – Are You Sure You Want to See Your Name in Lights? – Employment Practices Liability Insurance: What’s Your Exposure?

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2015 TIADA Board of Directors President Brent Rhodes/Fiesta Motors 5150 Industrial Way Drive Buda, TX 78610 Office: 512.312.2201 Email: brent@fiestamotors.net chairman of the board Michael Thomasson/Mike Carlson Motor Company 264 Exchange St. Burleson, TX 76028 Office: 817.366.9578 Email: mthomasson@mcmcauto.com President Elect HL Hensley/Automax of Lubbock 1908 Avenue J Lubbock, Texas 79411 Office: 806.744.3533 Email: hl@gospac.com Secretary Kathrine Tolsch/CICO Auto Sales 11050 Harry Hines Blvd. Dallas, TX 75229 Office: 214.352.9282 Email: cicoauto@verizon.net Treasurer Greg Zak/Dixon Motors 7902 North Freeway Houston, TX 77037 Office: 281.931.1300 Email: gzak@windstream.net Vice President, West Texas (Region 1) James Hobson/H-Town Motors 3714 Dyer Street El Paso TX 79930 Office: 915.564.9797 Email: htownmotors@sbcglobal.net

Volume XV

Issue 1

J a n u a r y 2 015

texasDealer

5 Officers’ Message

contents

by Michael Thomasson, TIADA Chairman of the Board

8 Legal Corner: Law Protects Lienholders in Liability Insurance Claims by Michael W. Dunagan

12 2015 VIP Card Auction Directory 14 On The Cover: The 84th Legislative Session: The Next Step Includes You by TIADA Staff

20 TIADA Dealer Member Survey Results by TIADA Staff

Vice President, Fort Worth (Region 2) Tommy Gregory/Abilene Used Cars Sales Inc. 497 E.S. 11th Abilene, TX 79602 Office: 325.676.8000 Email: aucsinc@sbcglobal.net

29 TIADA Annual Conference and Expo 30 Employment Practices Liability Insurance: What’s Your Exposure?

Vice President, Dallas (Region 3) Kevin Mims/VP Auto Sales 2921 S. Garland Ave. Garland, TX 75041 Office: 972.864.1300 Email: kevinm@vpautosales.com

34 Regulation Matters: Doc Fee: Second Verse, Same as the First

Vice President, Houston (Region 4) Juan Sabillon/Mi Tierra Auto Sales 7935 Gulf Freeway Houston, TX 77017 Office: 713.644.2446 Email: brentfordct@yahoo.com Vice President, Central Texas (Region 5) Robert Beck/Stop N’Drive Motors 711 N. General McMullen Dr. San Antonio, TX 78228 Office: 210.432.1101 Email: stopdrive@texas.net Vice President, South Texas (Region 6) Dan Keetch/Keetch Motors 1010 S. Staples Corpus Christi, TX 78404 Office: 361.882.3541 Email: dankeetch51@yahoo.com Vice President At Large Ryan Winkelmann/BJ’s Autohaus 5005 Telephone Road Houston, TX 77087 Office: 713.641.0980 Email: ryan.winkelmann@sbcglobal.net Vice President At Large Trey Crouch/Trey Crouch’s Wheels On Credit 636 E. Business 83 McAllen TX 78501 Office: 956.972.0700 Email: trey@wheelsoncredit.com TIADA Executive Director Jeff Martin 9951 Anderson Mill Rd., Suite 101 Austin, TX 78750 Office Hours M-F 8:30am - 4:30pm 800.442.5944 • Fax 512.244.6218 jeff.martin@txiada.com

by Ann Mullen-Martin

by Danny Langfield

35 Upcoming Events 36 Are You Sure You Want to See Your Name in Lights? by Les McCook

40 TIADA Member Application 43 Local Chapters

46 Behind the Wheel by Jeff Martin

What’s happening at w w w . t x i a d a . c o m ? Expired members can no longer view member-only content published on the TIADA website, such as links to previous issues of Texas Dealer. However, you can still log in with your username and password to renew your membership for 2015. It only takes a minute!

The Editor of the Texas Dealer magazine is Jenny Kroening, Special Projects Director of TIADA. To change your address for subscription and/or for other TIADA products, call the TIADA state office at 800.442.5944, 512.244.6060 or fax 512.244.6218. E-mail: info@txiada.com. New Membership/Subscriptions: If you are a member of TIADA, you may receive this magazine free of charge. Membership year runs from Jan 1 to Dec 31. Back issues are available for $20 each subject to availability. Send a check or money order, along with your name and mailing address to TEXAS DEALER, Attn: Back Issues, 9951 Anderson Mill Rd., Suite 101, Austin, TX 78750. Sorry, no billing. Notice to all members concerning services and products: TIADA was established in 1944 to develop professional standards of service and conduct for the independent auto industry. Opinions expressed herein are not necessarily those of the TIADA management, the Board of Directors or the membership. Likewise, the appearance of advertisers or their indemnifications of TIADA does not constitute endorsement of the products or services featured.

officers’ message Representation from Texas to Washington D.C.

by Michael

Thomasson

Mike Carlson Motor Company (Burleson) TIADA chairman of the board

ou want to know a pretty well-kept secret? Over the last couple of years, NIADA, our national counterpart, has been making some significant strides in representing buy here, pay here dealers. My knowledge of this comes first-hand. Back in November, I joined a few hundred of our fellow independent dealers, including TIADA Past Presidents Keith Hagler and Scott Allen, in Washington, D.C. for the NIADA Leadership Conference and Day on Capitol Hill. Over the course of three days, we had the opportunity to hear from representatives of the Consumer Financial Protection Bureau (more on that shortly) and the Federal Trade Commission, among others, and also had the chance to meet with United States congressmen and their staff. From the left, Michael Thomasson with U.S. Senator Tim Scott and This was my second time to attend this event, TIADA Executive Director Jeff Martin at the NIADA Day at Capitol Hill. and this was the second time I came away with the strong feeling that our industry’s representation at across the country appointed to help represent the BHPH the federal level is getting better every year. In my industry within NIADA. While in D.C., as part of our opinion, this has not always been the case. So, kudos work on that commission, we discussed a rule recently to the NIADA legislative staff, especially Executive proposed by the CFPB defining “larger participants” in Vice-President Steve Jordan and Legislative/Regulatory the automotive finance space who would be subject to Counsel Shaun Petersen for a job well done. the CFPB’s supervisory authority. This rule action, as I serve as chairman of the NIADA Buy Here Pay proposed, would not affect the average BHPH dealer. Here Commission, a group of BHPH dealers from all

TIADA members should know that you are all also NIADA members by virtue of your TIADA membership. As such, you have a national organization looking out for you on federal issues. January 2015

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However, NIADA found a footnote to the following excerpt: “…BHPH finance companies do not focus on a particular auto manufacturer unlike captives whose primary purpose is to extend credit to consumers who want to purchase or lease a specific manufacturer’s vehicles.” The footnote read as follows: “The BHPH segment of the market primarily serves deep subprime borrowers. BHPH automobile dealers generally are indifferent to the consumers’ automobile choice.” As you might guess, NIADA and the BHPH Commission objected strongly to the general characterization of BHPH dealers as “indifferent” to the vehicle choices of their customers. This objection was made clear in the written

comments submitted to the CFPB by NIADA. So, why all of this talk about federal issues in a Texas magazine? Two reasons. First, TIADA members should know that you are all also NIADA members by virtue of your TIADA membership. As such, you have a national organization looking out for you on federal issues. Second, this federal discussion begs the question: What about Texas? As you’ll read in the cover story of this issue (page 14), your state association works hard to advocate for your best interests and to provide you with resources to become more informed and more involved in the political process that ultimately guides your business. I’ll continue the conversations I started with my federal officials in D.C. when I’m in Austin meeting with my state legislators at the 2015 TIADA Lobby Day

From left: U.S. Representative Steve Stivers and Michael Thomasson.

this month. It’s my hope that I’ll also have the chance to meet a TIADA member who is attending Lobby Day for the first time. Maybe that member will be you.

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January 2015

legal corner

Law Protects Lienholders in Liability Insurance Claims by Michael

Dealer Question: I just found

out that my customer has received and cashed a settlement check from a third-party’s liability carrier that covers damages to the vehicle for which I hold a lien. My customer has spent the money and refuses to pay the balance on the vehicle, which has been totaled. Do I have any recourse against the insurance company?

Answer: Yes.

s the average wholesale cost of used cars spirals upward, and the amount of risk dealers put on the street increases, the importance of vehicle insurance coverage to lienholders grows. Thus, more and more secured creditors are requiring full coverage and are actively monitoring lapses and cancellations and, in some cases, responding to lack of insurance coverage by repossession and forced placement of single interest coverage. Buy here, pay here dealers that, a few years ago, never seriously enforced the full coverage provisions of their contracts are realizing that a few total losses at today’s prices can severely impact the bottom line. One particularly frustrating situation for vehicle lienholders is when a liability claim for property damage to a vehicle

is paid directly to the debtor. A common example of this situation: A third party, who has liability coverage, causes an accident that damages a lienholder’s collateral. The liability carrier, ignoring the lienholder, negotiates a settlement directly with the debtor, and issues a check payable to the debtor without mentioning the lienholder. The lienholder subsequently finds the vehicle, a total wreck, in a pound or wrecking yard. The debtor has by now purchased another vehicle, probably using the insurance proceeds, and refuses to make further payments to the lienholder. Several years ago, TIADA was able to convince the Texas Legislature

W. Dunagan

TIADA general counsel

One particularly frustrating situation for vehicle lienholders is when a liability claim for property damage to a vehicle is paid directly to the debtor.

that this situation was extremely unfair and needed to be corrected. A bill was passed that placed a lien on

liability insurance proceeds in favor of the holder of a perfected motor vehicle lien. That law, which appears at Section 61.001 of the Texas Property Code, has probably saved vehicle lienholders millions of dollars since its passage. (A copy of this statute can be obtained from TIADA.) The change in the law was motivated by the experience of some lienholders that insurance adjusters were purposely trying to keep the lienholder out of settlement discussions. In some (cont’d on pg. 10) T e x a s

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Legal Corner (cont’d from pg. 8)

cases, the insurance adjustor would tell the debtor that he or she had no obligation to talk with the lienholder and no obligation to see that the insurance proceeds were payable to the lienholder. The typical response a lienholder received, after finding out that the debtor had been paid and had absconded with the money, was something to the effect that the liability insurance carrier has no obligation to check for recorded liens and no obligation to include the lienholder as a payee. As further indication that lienholders were being intentionally excluded from the settlement process, many insurance companies were contracting with the debtor to allow the debtor to keep the salvage, deducting the salvage value from the settlement. This way, the insurance company didn’t need to obtain a released title certificate from the lienholder. Of course, the debtor never claimed the salvage and it was usually sold to satisfy the storage lien. Now, if a liability carrier goes around the recorded lienholder, it can be sued and forced to pay again. We still encounter cases where debtors are paid directly.

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When confronted, the insurance agency or adjuster often still claims no obligation to the lienholder. Some claim that they aren’t obligated to include lienholders as payees on settlement checks when the amount at stake is under a certain level (we’ve found that some liability insurance carriers impose their own internal minimum amount, under which lienholder contact is not required, but the law contains no such limit). Whether they are ignorant of the change in the law or just bluffing, we don’t know. In every such case, however, we’ve been able to force the company to pay the lienholder. Under the law, the recorded lienholder’s claim extends to the lesser of (a) the fair market value of the vehicle before the damage; (2) the reasonable cost of repair to the vehicle; or (3) the balance owed to the lienholder by the debtor. The liability carrier can satisfy its obligation by making the settlement check jointly payable to the debtor and the lienholder. If the debtor forges the lienholder’s name on the check and cashes it, the insurance company has no further liability, although the lienholder would probably have recourse against whoever cashed the check with the forged endorsement. It is very important to note that to be protected under this law, the lienholder must have filed an application for transfer of title to the buyer reflecting its lien. All third parties are legally on notice of the lien when it is filed, even if the state hasn’t yet processed the new title certificate. On the other hand, the law offers no protection to the lienholder who has not transferred the title, as an unrecorded lienholder would not fit the definition of “mortgagee.” If a lienholder becomes aware of an accident in which the liability insurance of a third party will likely be involved, the dealer should contact the liability carrier, give lien information, and request (in writing) that the lienholder be included in the settlement negotiations as they relate to the property damage to the vehicle. The identity of the liability carrier can often be obtained from the accident report filed by the police. In the event that the debtor is paid directly, the lienholder is entitled under the law to bring action against the insurance company for payment.

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2015 TIADA VIP Auction Card Directory

Manheim Manheim DFW Dallas Manheim Manheim San Antonio El Paso Manheim Manheimn Texas Hobby Housto ADESA ADESA Austin San Antonio ADESA ADESA Houston Dallas

Alliance

w Alliance

AA Longvie

Alliance

AA Abilene

AA Waco

Alliance

AA Dallas

’s America AA Austin/ San Antonio

’s ’s America America AA Dallas AA North Houston

Houston

AA AA Metro Austin

Texas Heart of AA El Paso dent AA Waco Indepen Can! America Kids for Texas Lone Star AA Cars Arlington Carrollton CM Dealers y Compan s of OKC Auction

Big Valley AA Donna

Corpus

Austin

Permian

Houston

Basin Dallas

Houston

w North Longvie

McAllen

DFW

abilene

corpus Christi

Insurance Auto Auctions*

Alliance Auto Auction Abliene

Insurance Auto Auctions*

204 Mars Road Wilmer, TX 75172 972.525.6401, Fax 972.525.6403 General Manager: Henry Valenzuela Wednesday, 9:00 a.m.

www.allianceautoauction.com

6657 US Highway 80 West Abilene, TX 79605 325.698.4391, Fax 325.691.0263 General Manager: Jimmy Compton Friday, 10:00 a.m.

C.M. Company Auctions, Inc. www.cmauctions.com

2258 S. Treadaway Abilene, TX 79602 325.677.3555, Fax 325.677.2209 General Manager: Gregory Chittum Thursday, 10:00 a.m.

austin Adesa Austin

www.adesa.com

2108 Ferguson Ln Austin, TX 78754 512.873.4000, Fax 512.873.4022 General Manager: Steve Swanson Tuesday, 9:00 a.m.

America’s AA Austin / San Antonio www.americasautoauction.com

16611 S. IH-35 Buda, TX 78610 512.268.6600, Fax 512.295.6666 General Manager: John Swofford Tuesday, 1:30 p.m. / Thursday, 2:00 p.m.

Insurance Auto Auctions* www.iaai.com

2191 Highway 21 West Dale, TX 78616 512.385.3126, Fax 512.385.1141 General Manager: Geoffrey Rabb Tuesday, 9:00 a.m.

Metro Austin Auto Auction www.metroautoauction.com

8605 Cullen Ln. Austin, TX 78748 512.282.7900, Fax 512.282.8165 General Manager: Brent Rhodes 3rd Saturday, monthly

* VIP card accepted for sell fees only 12

Christi

El Paso

Lubbock

San Antonio

Get up to $200 off a buy or sell fee at these participating auctions using your TIADA VIP Auction Card!

www.iaai.com

4701 Agnes Street Corpus Christi, TX 78405 361.881.9555, Fax 361.887.8880 General Manager: Adriana Serrano Wednesday, 9:00 a.m.

DALLAS / Ft.Worth Metroplex Adesa Dallas

www.adesa.com

3501 Lancaster-Hutchins Rd. Hutchins, TX 75141 972.225.6000, Fax 972.284.4799 General Manager: Brad Garrett Thursday, 9:30 a.m.

Alliance Auto Auction Dallas New! www.allianceautoauction.com

9426 Lakefield Blvd. Dallas, TX 75220 214.646.3136, Fax 469.828.8225 General Manager: Christopher Dean Wednesday, 1:30 p.m.

America Can! Cars for Kids www.charitycarauctions.org

1911 E. Division Arlington, TX 76011 972.274.5437, Fax 214.944.1950 General Manager: Jennifer Kitchens Saturday, 9:00 a.m.

America’s AA Dallas New!

www.americasautoauction.com

219 N. Loop 12 Irving, TX 75061 972.445.1044, Fax 972.591.2742 General Manager: Robert Hammonds Tuesday, 1:00 p.m. / Thursday, 1:00 p.m.

Insurance Auto Auctions*

www.iaai.com

Manheim Dallas

www.manheim.com

5333 W. Kiest Blvd. Dallas, TX 75236 214.330.1800, Fax 214.339.6347 General Manager: Jeff Modjeski Wednesday, 9:00 a.m.

Manheim Dallas Fort Worth www.manheim.com

12101 Trinity Blvd. Fort Worth, TX 76040 817.399.4000, Fax 817.399.4251 General Manager: Nicole Graham-Ponce Thursday, 9:30 a.m.

Texas Lone Star Auto Auction www.tlsaa.com

2205 Country Club Drive Carrollton, TX 75006 214.483.3597, Fax 214.483.3814 General Manager: Jeff Dunning Tuesday, 1:00 p.m. / Thursday, 2:00 p.m.

El Paso Manheim El Paso

www.manheim.com

485 Coates Drive El Paso, TX 79932 915.833.9333, Fax 915.581.9645 General Manager: Brian Walker Thursday, 10:00 a.m.

Insurance Auto Auctions* www.iaai.com

14651 Gateway Blvd. W El Paso, TX 79927 915.852.2489, Fax 915.852.2235 General Manager: Jorge Resendez Friday, 10:30 a.m.

www.iaai.com

El Paso Independent Auto Auction

4226 East Main Street Grand Prairie, TX 75050 972.522.5000, Fax 972.522.5090 General Manager: Jennifer Wesner Tuesday, 9:00 a.m.

7930 Artcraft Rd El Paso, TX 79932 915.587.6700, Fax 915.587.6700 General Manager: Lori Pidgeon Wednesday, 1:00 p.m.

www.epiaa.com

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January 2015

Insurance Auto Auctions*

san antonio

2535 West. Mt. Houston Houston, TX 77038 281.847.4700, Fax 281.847.4799 General Manager: Michelle Casper Wednesday, 9:00 a.m.

Adesa San Antonio

www.iaai.com

Manheim Houston www.manheim.com

Harlingen / McAllen Big Valley Auto Auction www.bigvalleyaa.com

4315 N. Hutto Road Donna, TX 78537 956.461.9000, Fax 956.461.9005 General Manager: Lisa Franz Thursday, 9:00 a.m.

Insurance Auto Auctions* New! www.iaai.com

900 N. Hutto Road Donna, TX 78537 956.464.8393, Fax 956.464.8510 General Manager: Ydalia Sandoval Tuesday, 9:00 a.m.

houston Adesa Houston www.adesa.com

4526 N. Sam Houston Houston, TX 77086 281.580.1800, Fax 281.580.8030 General Manager: Mark Lindenmuth Wednesday, 9:00 a.m.

America’s AA North Houston www.americasautoauction.com

1440 FM 3083 Conroe, TX 77301 936.441.2882, Fax 936.788.2842 General Manager: Buddy Cheney Monday, 6:30 p.m.

Houston Auto Auction

www.houstonautoauction.com

6767 North Freeway Houston, TX 77076 713.644.5566, Fax 713.644.0889 General Manager: Joe Lavigne Tuesday, 1:00 p.m.

14450 West Road Houston, TX 77041 281.924.5833, Fax 281.890.7953 General Manager: Eddie Pope Tuesday, 9:00 a.m. / Thursday 6:30 p.m.

Manheim Texas Hobby www.manheim.com

8215 Kopman Road Houston, TX 77061 713.649.8233, Fax 713.640.6330 General Manager: Rich Curtis Thursday, 9:00 a.m.

longview Alliance Auto Auction Longview www.allianceautoauction.com

6000 East Loop 281 Longview, TX 75602 903.212.2955, Fax 903.212.2556 General Manager: Jeff Loftin Friday, 10:00 a.m.

Insurance Auto Auctions* www.iaai.com

5577 Highway 80 East Longview, TX 75605 903.553.9248, Fax 903.553.0210 General Manager: Robert Dunning Thursday, 9:00 a.m.

lubbock Insurance Auto Auctions* www.iaai.com

5311 N. CR 2000 Lubbock, TX 79415 806.747.5458, Fax 806.747.5472 General Manager: Lori Davee Tuesday, 9:30 a.m.

midland / odessa

Insurance Auto Auctions*

16602 East Hardy Rd. Houston, TX 77032 281.443.1300, Fax 281.443.4433 General Manager: Louis Cappi Thursday, 9:00 a.m.

701 W. 81st Street Odessa, TX 79764 432.550.7277, Fax 432.366.8725 General Manager: Barbara Hallmark Thursday, 11:00 a.m.

www.iaai.com

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www.iaai.com

www.adesa.com

200 S. Callaghan Rd San Antonio, TX 78227 210.434.4999, Fax 210.431.0645 General Manager: Sam D’Amato Thursday, 10:00 a.m.

Insurance Auto Auctions* www.iaai.com

11275 S. Zarzamora San Antonio, TX 78224 210.628.6770, Fax 210.628.6778 General Manager: Brian Sell Monday, 9:00 a.m.

Manheim San Antonio www.manheim.com

2042 Ackerman Road San Antonio, TX 78219 210.661.4200, Fax 210.662.3113 General Manager: Mike Browning Wednesday, 9:00 a.m.

waco Alliance Auto Auction Waco www.allianceautoauction.com

15735 I-35 Frontage Road Elm Mott, TX 76640 254.829.0123, Fax 254.829.1298 General Manager: Darren Darnell Friday, 10:00 a.m.

Heart of Texas Auto Auction www.heartoftexasautoauction.com

2508 Old Marlin Hwy. 6 Waco, TX 76705 254.755.7713, Fax 254.755.7746 General Manager: Allan Wichkoski Thursday, 7:00 p.m.

Oklahoma city, OK Dealer’s Auto Auction of OKC, Inc. www.daaokc.com

1028 South Portland Oklahoma City, OK 73108 405.947.2886, Fax 405.943.8370 General Manager: Gary Smith Thursday, 8:30 a.m.

on the cover by TIADA Staff

The 84th Legislative Session: The Next Step Includes You O

ver the last 14 months TIADA members have been moving their grassroots legislative campaign forward, focused on growing the influence of independent automobile dealers around the state. Dealer members have been reaching out to local legislative candidates, getting to know them and sharing the story of the valuable role used car dealers play in their communities. “It’s an ongoing process,” said Phil Lathrop, TIADA Legislative Committee Chair. “We are continually working to strengthen relationships and build new ones.”

All told, the association met with almost 100 legislators who will be making their way to Austin for the 84th Legislative Session, beginning January 13. While all agree this is just the first step in an effective group lobbying campaign, it’s an important one. “We had three legislators come to our chapter meetings this year,” said Michael Zak, Houston local chapter President. “They really want to get to know our issues and understand the challenges small businesses are facing.” Just around the corner is TIADA Lobby Day which will take place January 27 at the Capitol. This

will be the fourth year TIADA has hosted the event, which continues to grow in attendance. Last session, over 50 dealers made the trek to the Capitol and spent five hours walking the halls, visiting with various legislators, discussing specific bills and reviewing the legislative program. “Legislators want to hear from ‘We the people,’ not just the lobbyists,” said Phil Lathrop.

Legislative Action Center The next step in growing TIADA’s legislative influence is designed to get all members T e x a s

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January 2015

Blake Ingram during his pre-session visit with Representative Toni Rose.

daily to check on the stainvolved. It starts tus of specific legislation. with TIADA’s online However, the engine beLegislative Action hind the LAC will enable Center (LAC). This area TIADA to contact specific of the TIADA website members directly with an can be found in the “Action Alert” when a key Advocacy section of piece of legislation is being www.txiada.com. considered by a committee The Legislative Action that includes the member’s Center features sumlegislator. The Action Alert maries of relevant bills, will notify the member of tracks progress of bills as the situation, describe the they move through the bill and TIADA’s position, legislative process and and enable the member to shares TIADA’s position respond with one click. on bills. Anything can happen during a legislative session. The tides can Bills in Motion turn overnight on a bill During the last session, that, if passed, would have TIADA members used the an immediate impact on Legislative Action Center your business. By checkto send hundreds of emails The Legislative Action Center of the TIADA website ing in at the LAC, you’ll to legislators and track imalways be up-to-speed on the latest news. portant bills. This session, two bills have already been filed But in addition to being informed, the Legislative Action that are being tracked in the Legislative Action Center. Center provides a platform for members to take action. By First, members will find HB 335 (Thompson). This bill entering your address, the LAC will display the list of legwould eliminate “named-driver only” insurance poliislators who represent you and allow you to contact them cies. TIADA has been working on this issue throughout directly to share your perspective on bills moving through the interim and will need member support for it to pass. the process. The other bill is HB 385 (Keogh). This bill would inTIADA understands that the demands of your business crease the number of vehicles an individual could sell anmay not allow you to visit the Legislative Action Center nually without obtaining a GDN. TIADA recently elected January 2015

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From left, Kevin Mims, Sharon Lathrop, Phil Lathrop, Representative Robert Alonzo and Kathrine Tolsch.

to oppose this bill and will be looking for member support to stop the legislation.

Grassroots Advocacy

Member involvement in the legislative process positively affects TIADA’s efforts to promote our legislative agenda and defend the interests of independent car dealers

From left, Greg Zak, Harris County Tax Assessor-Collector Mike Sullivan and Shane Rhodes at a Houston IADA chapter meeting.

at the Capitol this session. Whether your involvement is by way of donations to INDEPAC (TIADA’s political action fund), personal visits to your legislators’ offices during Lobby Day, or emails and phone calls to committee members in response to Action Alerts, you will contribute to the effectiveness and strength of TIADA at the

Capitol this legislative session. “All independent auto dealers in Texas will benefit from TIADA’s legislative efforts whether they know it or not,” said TIADA President, Brent Rhodes. “But the members who stay informed and get involved in the legislative process are the real champions of the independent auto industry.”

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January 2015

TIADA Dealer Academy 2015 Keeping Your Dealership Legal and Compliant a seminar with

Michael W. Dunagan, TIADA General Counsel

Author of the standard-setting books, “Dealer Financing of Used Car Sales” and “Texas Automobile Repossession: A Lien Holder’s Legal Guide.”

Michael W. Dunagan’s ongoing quarterly compliance seminar features updates on both federal and state regulations with a focus on advanced dealership financing issues. This is the practical side of compliance from the association that understands you have a business to run — and you want to run it right. The seminar will focus on advanced financing concepts, with special emphasis on in-house financing, repossession & bankruptcy issues, OCCC compliance and federal regulations. • Customer ID requirements – what is acceptable? • Privacy Notice requirements – do we need a new, custom form? • Risk-Based Pricing – what does the rule require? • Credit Card Convenience Fees – what is allowable? • Adverse Action Rule – who is affected? • Consumer Financial Protection Bureau (CFPB) – what can dealers expect? • Bankruptcy – when do we have to give the vehicle back? • Repossessions – When does the 60% rule apply? Is repo notice required? Do we have to return custom wheels? Do we have to disclose a GPS unit?

• OCCC Audits – what are the most common mistakes dealers make? • TxDMV Enforcement – advertising violations, title management issues & more

PLUS:

• Texas Legislative Session – an update on bills that will affect the industry • Q & A – don’t leave until you get all your questions answered by the top industry expert in Texas, Michael W. Dunagan

Thursday, February 12, 2015 Sponsored by: Collateral Protection Insurance www.cpiai.com

Austin, Texas

Seminar will be held from 9:00am - 4:00pm Embassy Suites Austin Central • 5901 North IH-35 • Austin, TX 78723 512.454.8004

discount pricing for multiple attendees! MeMbers – First registrant $149, each additional $99 www.autozoom.com

(Must be from same dealership)

NON-MeMbers – $299 Register online at w w w . t x i a d a . c o m or by phone at 800.442.5944. www.passtimeusa.com

Texas Independent Automobile Dealers Association

One Second Locate (no spinning) Reduce Repossessions Impound Notiﬁcations Schedule Reports

Address Veriﬁcation Scheduled Reports Stops Report

feature TIADA Dealer Member Survey Results by TIADA Staff

ast Spring, TIADA conducted its first dealer member survey.* The results of the survey have already been used to help inform legislators and state

agencies about the contributions TIADA members make to the Texas economy.

How long has the business been in operation? Less than 2 years

10%

14%

2-5 years

19%

6-10 years

12%

11-15 years

10%

16-20 years

More than 20 years

35% 0%

10%

20%

30%

40%

50%

60%

70%

80%

90% 100%

*The survey group included all TIADA dealer members who were current in their membership at the time the survey was conducted. This totaled 909 dealers, of which 362 responded. The results shown here are accurate +/- 4 percentage points.

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956.461.9000 T e x a s

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Approximately how many total employees work at the dealership? 26%

1-2

34%

3-5

21%

6-10

11-15

16-20

21-30

31-40

41-50

<1%

51-75

<1%

76-100

<1%

More than 100

<1% 0%

10%

20%

30%

40%

50%

60%

70%

80%

90% 100%

On average, how many total vehicles do you hold in inventory? 9%

10 or less

13%

11-20

37%

21-50

13%

51-75

11%

76-100

13%

101-200

201-300

301-400

>1%

401-500

<1%

More than 500

>1%

January 2015

T e x a s

10%

D e a l e r

20%

30%

40%

50%

60%

70%

80%

90% 100%

Is your primary line of business buy here, pay here?

69%

Yes

31%

10%

20%

30%

40%

50%

60%

70%

80%

90% 100%

Approximately how many vehicles do you retail in an average month? 28%

0-10

11-15

15%

16-20

15% 11%

21-25

26-30

31-40

41-50

51-75

76-100

101-200

201-300

<1%

301-400

401-500

More than 500

<1% 0%

10%

20%

30%

40%

50%

60%

70%

80%

90% 100%

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What is the average retail price per unit sold? 8%

$4,500 or less

11%

$4,501-$6,500

17%

$6,501-$8,500

23%

$8,501-$10,000

25%

$10,001-$15,000

12%

$15,001-$20,000

$20,001-$25,000

More than $25,000

1% 0%

10%

20%

30%

40%

50%

60%

70%

80%

90% 100%

What is the average ACV per unit purchased (before reconditioning expenses?) 17%

$2,500 or less

18%

$2,501-$4,000

21%

$4,001-$6,000

15%

$6,001-$8,000

12%

$8,001-$10,000

10%

$10,001-$15,000

$15,001-$20,000

More than $20,000

2% 0%

January 2015

T e x a s

D e a l e r

10%

20%

30%

40%

50%

60%

70%

80%

90% 100%

On average, how much is spent per unit on reconditioning? 10%

Less than $250

36%

$251-500

16%

$501-$600

$601-$700

$701-$800

9% 5%

$801-$900

15%

More than $900

10%

20%

30%

40%

50%

60%

70%

80%

90% 100%

To see the complete survey, which includes specific questions for BHPH operations, visit the Links section of www.txiada.com (login required).

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T e x a s

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c r o s s w o r d

Across 1. Beetle alternative 5. One of the BMW series 7. Oil-producersâ&#x20AC;&#x2122; org. 10. VW compact 12. They get shifted 14. College credits 15. Checked out 17. Dodge sedan 20. Nissan minivan 21. The Buckeyes, briefly 22. Desirable tree 24. Former Ford SUV 26. Clancy subject, for short 27. Medical diagnostic procedure, abbr. 28. Honda __-V 29. Honda minivan 30. It affects price 35. Toyota model 36. Some German models 38. Lotus sports-car model

3. Roadwork material

24. A uction call

40. Make defective

4. Braking system

25. S haft of sunlight

41. Buick sedan

5. Compact Honda

26. C ivic competitor

43. Ford crossover

6. Extra work time, abbr.

31. E ngine seals

45. Draft choice

8. Gave a car a new coat

32. D ark time, briefly

46. URL part

9. One kind of buyer

33. H onda model

47. Connective word

11. Adjust an engine for better functioning (2 words)

34. D rain fluid from

13. Toyota S.U.V.

39. P art of AAA

16. France and Germanyâ&#x20AC;&#x2122;s economic bloc, abbr.

42. N eighbor of GA

Down

18. Hyundai model

48. __Lorean

1. XK8, for one

19. Spacious

2. Exchange a car, with in

23. Mercury ____

49. BMW ___ B7 50. Transmission or ignition, for example

37. S tand out

44. I nterstate sign

T e x a s

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January 2015

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feature Employment Practices Liability Insurance: What’s Your Exposure? by Ann Mullen-Martin

President of Mullen Insurance Agency Inc.

few years back, EPLI hit the insurance market with a bang. Dozens of companies introduced their individual versions of Employment Practices Liability Insurance protection. Many carriers designed products directed toward specific industries, while others proposed a more universal product with the hope of finding their marketplace. I reviewed numerous coverage forms and found several that provided coverage I believed applicable to my niche—Texas independent auto dealers. After some investigation and study, I jumped on the bandwagon, discussing the risks of not carrying the coverage with various dealers and writing articles for different local association newsletters. The reception among Texas Independent Auto Dealers has been lukewarm at best. To stretch the analogy to the max, one might compare the reaction to the new Apple iPhone 6 and the response to the Samsung Galaxy Note that came out a few

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years ago. The first large cell phone was less than warmly welcomed, yet now the Apple iPhone 6 is all the rage! Since 2010, a few of the larger dealers have seen the need for EPLI and some have had experiences that proved them wise in their purchase. There have been others who recognized the need too late for their own situation. Today the market is heating up among the mid to large buy here, pay here dealers, and a number of dealers have called me to discuss their operation and whether or not EPLI might be in their best interest. My stock answer is: “If you have employees, you should consider EPLI. If you have ten or more employees, that consideration should move to a front-burner.” Let’s talk about what exposure is lessened by the purchase of EPLI. EPLI contracts respond to employee claims involving discrimination, harassment, retaliation, wrongful termination, workplace torts and negligent violations of certain employment laws. The legal maze faced by independent auto dealers, and every other small business owner, seems to be laced with land mines. Charges against employers for discrimination are up by over 15% and harassment claims have climbed by 22%. I am aware of specific instances where dealers experienced employee lawsuits that would have fallen under the EPLI umbrella. Without attributing the circumstances to any particular dealer, let’s look at four actual claims submitted to United States Liability Insurance Group by car dealers. (1) H ostile Work Environment. An auto dealership received a formal complaint from an employee alleging he had been subject to a hostile work environment and sexual orientation discrimination during his employment. The plaintiff alleged his supervisor made hostile comments about same sex relationships; changed his hours which reduced his sales; and treated him in a hostile manner during sales meetings. The plaintiff said he reported these incidents to higher management, who refused to look into the matter or take any action. The plaintiff was constructively discharged immediately after he complained. The plaintiff alleged six causes of action: hostile work environment, discrimination based on sexual orientation, retaliation, intentional infliction of emotional distress, defamation and negligent training and supervision. The defense T e x a s

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January 2015

and settlement of this case exceeded $300,000. (2) Americans with Disabilities Act. A mechanic in the shop of a small auto dealership who voluntarily admitted having a substance abuse problem won his wrongful termination case. Finding the termination was a violation of the Americans with Disabilities Act (ADA), the jury awarded over $105,000 in past earnings, as well as another $250,000 for mental anguish. Defense costs of $100,000 brought the total claim to $455,000. (3) Sexual Harassment and Wrongful Termination. After reporting to the owner multiple incidents of repeated sexual harassment by a sales manager that ranged from comments about her appearance to pressure to date, a female employee who worked in the dealership’s financing department alleged the sales manager began a systematic campaign to force her to resign. The employee settled for $150,000. Defense costs of $75,000 brought the total claim to $255,000. (4) D iscrimination. An auto dealership was sued by an employee for national origin discrimination in violation of Title VII which prohibits employment discrimination based on race, color, religion, sex and national origin. The employee alleged he was harassed by co-workers who made disparaging remarks relating to his ethnic background and was wrongfully terminated when he complained to his supervisor. The plaintiff was awarded $250,000 in damages.

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Sometimes we tend to believe that we know our employees and our operations are too small to attract the kinds of exposures EPLI would help to eliminate. The facts disprove this false feeling of safety. Employment practices risks are real and more than half of the claims filed are against small businesses. Even though three quarters or more of the claims are groundless, the time involved to resolve the issues can take up to a year. Approximately 10% of claims result in an early settlement, but even that costs the employer an average of $7,500 per claim. About 2% of claims result in trials, which can have a devastating economic impact of $1 million or more. Of course, the majority of EPLI claims fall somewhere between the two extremes. The median compensatory award for all plaintiff verdicts is $325,000. The loss of productivity, creativity and time devoted to building one’s business is much harder to quantify. So, let me emphasize again — If you have employees, you have an EPLI exposure that should be addressed and evaluated. Some of the things dealers should discuss with their agents are: Does the policy have a broad definition of the Wrongful Employment Act? Are the defense funds limited or unlimited? (cont’d on pg. 45)

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January 2015

T e x a s

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S I N C E 1972.

ATTENTION STUDENTS!!!

$1,000 TIADA

Texas I n d epen d ent A utomob i l e D ea l ers A ssociation

SCHOLARSHIP

SCHOLARSHIP APPLICATION

DEADLINE

May 1, 2015 {Applications and/or any required documents received after May 1, 2015 will NOT be accepted.} Criteria and Guidelines 1. Each applicant must be entering or currently enrolled in an accredited college or a trade school. Proof of enrollment must be included with this application.

Date: Name:

DOB:

Address: City:

State:

Zip:

State:

Zip:

Telephone Number: High School Last Attended: Address:

2. Each applicant must provide a letter from their TIADA member sponsor that includes the sponsor’s address and Saturday phone number.

City:

3. Each applicant must complete the application form.

Other High Schools Attended (Names and Addresses):

4. Applicant must be in the top 25% of class. If applicant is currently enrolled, provide college transcripts with official university imprint. In addition, a copy of high school transcripts is required for applicants who are college freshmen. 5. Provide a detailed description of participation in any academic, honorary, civic or extracurricular activities in college. In addition, a detailed description of high school activities is required from college freshmen along with a college acceptance letter. 6. Compose an essay of no more than two typed, double-spaced 8 ½” x 11” pages. The essay should discuss the applicant’s relationship with their TIADA scholarship sponsor, current education goals and future aspirations as it relates to the applicant’s subject/training area. 7. Provide at least two (but no more than three) letters of recommendation, no older than one year, from college/high school faculty, employers or other appropriate sources (not related).

Dates of Attendance: Date of Graduation:

College(s) you are attending or plan to attend for admission:

Parents Name(s): TIADA Member Name (Sponsor): TIADA Member Company Name: TIADA Member Address: City:

State:

Zip:

Sponsor Signature Should you have any questions, please contact TIADA at 800.442.5944. Please return the completed application with all required documents to: TIADA Attention: Scholarship Applications 9951 Anderson Mill Rd., Suite 101 / Austin, TX / 78750

T e x a s

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January 2015

e-Tag Supplies —

In Stock for Immediate Shipment!

MOTO

R VEH

ICLE R

ETAIL

INSTAL

LMENT

SALES

REDITOR SELLER/C : ADDRESS ZIP: CITY, ST,

CONTR

ACT DAT E:

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on Total Sale purchaseof ent cost of my The totalwith down paym credit $

purchased. vehicle being the motor interest in NT(S ) a security NPA YME Due I give you Date ED DOW owe you, DEF ERR or in the future charge of owe you Amount a late debt I now I will pay any other it is due, ses in it and days after my promi ct and all within 15 payment Charge. on this contra ce sts, owe entire I all ve my of the Finan lt, security intere p this To secure d of part do not recei Security: defau (1)Kee writing. get a refun t nonpayment, ge: If you ises in paym ent. so, I can NO.: Late Char n abou $ all prom sched uled . If I do ds. STOCK put....... informatio % of the er to........ I owe early yment refun ment for deal........ the ........ and prepa pay all that refer to this docu Ask........ rce. ........ nt: I can uled date, I will ............... DATE: to enfo Prepayme l Information: e the sched cult........ REDITOR: diffi........ full befor are........ SELLER/C ises........ Additiona repayment in .$ D prom........ ER : red ................ ................ FINANCE : Spo VIN NUMB ces) ken ADDRESS any requi servi ................ ANT AMO UNT ... $ ORT s, and ................ IMP sorie , ST, ZIP: ION OF ................ ........ acces CITY IZAT ........ ITEM YEAR ................ uding any ................ form. ........ER: ..$ e) ........ ........BUY PHONE: price: (Incl Color: ................ (2) R:abov box 1. Cash ................ UYE L .............. ment follow ing: CO-B(s) ment ....$ ................ MODE........ fied, the Downpay ................ 2. Downpay ........: ........ .....$ RESS tions speci l:(3) Deferred ......... $ ........ payment ........ADD ................ r to the Mode ................ terms $and condi ZIP: Cash down LE MAKE ent (Refe VEHIC........ ................ ................ ................ under the E CITY, ST, ............ ........ downpaym ................ ................ase from you, VEHICL ................ $ Deferred ................ ) ................ ................ y purch........ ........ belowE: -in........... Make: PRICE hereb 4.A.PHON ................ : I/We........ .... ........ (Optional) (St. & No.): Gross trade see Line to License NUMBER ........ ........ ........ G: SOLD........Year: ICLE “0” and by seller STOCK VEHBEIN ................ amounts.): - payoff tive, enter DEALER ........ ........ ........ THIS VEHICLE........ .. $ ge: ........Milea ........ TIES FOR -in (if nega ................ part of these No.: ........ ........ trade ........ keep Stock er may = net ............... .$ ................ WARsRAN ................ lf (Sell ................ payment ................ minu 2) my beha price (1 ................ ................ Total down others on of cash ............$ ................ ................ paid to .: balance ss ................ ................ V.I.Nany.................. amounts 3. Unpaid y) ........ regardle company.. including ance ance comp Services tive equit repairs charges insurs, r and insur to any (nega to Othe $ ff 4. ... y for paid payo ance paid Accessorie insur trade-in onsibilit insurance Options,or companies damage A. Net $ damage no resp ...mes physical TOTAL company of physical er assu $ rages with CE $ insurance B. Cost ... nal cove . The deal paid to CASH PRI of optio REPAIRS t insur ance C. 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Offic of Cash ................ ................ tory tax... hand ........ $ Addr ................ ........ess: the part the nt: rs for ................ er’s inven % of Amou ................ ................ .......... ........ to buye _ired by law. Lienged G. Deal y of ................ Dealer's $ copal ................ ________ ................ a ada tration fees. requ for ............$ berchar and r taxes........ er's ntory Tax may er ................ ................ notice is ...... ........ : ser cargantid labo but deal $ e and/or regis ad deal ........ ........ Inve H. Othe se This ........ the the law, pued the ........ c licen Dated by % of parti es. Ask and una ................ ................ ns, rnment the period. ts. ____ required la ley, pero of title fee... usioer to by e exced ................ Tax ................ is not I. 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Documents relating $ gati (4) ón ment ... Fee icaciir obli docu de manejo docu Mileage: repa of Title s rario de Esta notif Year: purpose) (5) ... $ Un hono r como gasto las partes. ........ $ describe mentary $ ........ D: and Docu e: ........ compradoe acordada por ERE ** is paid (6) ................ Phon............... $ S COV for Fee ify who razonabl identTEM ................ ........ V.I.N.: SYS (7) $ (Seller must ................ ................ for ............. r charges ................ ................ ................ N. Othe sed ........ sed ........ asses ......... $ ff To: .......... ........ ge isPayo ge is asses ................ to ce Char ce Char ................ ........ $ Finan ........ Finan .... ........ on, ...... ........ which the ................ which the to ................ ................ sthestateinspecti ges Upon ges Upon ................ ................ IftheSellerperformts,andothercharges. ssed) ess: ................ zed Char zed Char . ge is Asse Addr ........................ ................ contrac mentagency. Plus Itemi Total Itemi ce Char ................ athirdpartyorgovern oftheinsurance,service Balance $ TAL ................ h No Finan Unpaid ................ Seller to SUB-TO than $ retainparts ................ 5. Total insurer By: (Upon Whic ................tion fee will be paid by theSellermayalso nt not more have. The ................ Quoted loss. Sales Tax ................ inspec Seller and I already damage ornot been ctible amou 6. Total (5 + 6) ........ ered of has Sales Tax) agencies. Any statefee will be retained by $ of insura in:nce with a dedu Financed e proof trade ment in the eventtime andATION OF Cash Tend ssed Upon service : nt I owe, or provid to any 7. Amount the policy ing at this (Not Asse paid by Seller to govern fee and deputy Good Until e I want regaberdpaid under in the amou TO entary anyon has not eter is workTHE ITEMIZ andSED Charge with will be ge or loss nce from ants CAU IN 8. Financefee, and license fee inspection fee. Docum person to . The odom company st dama DUE $ the rty anceAGE and warr ts insura ED prope youis as ed again insur stated aboveINCLUDED byTY ge. DAM as TOTAL an esen name obtain insur Taxes, title retain $7.00 of each dama ge le repr may r FINANC IS teral PER ed to flood airab will ct. Ihase ed nce. I mustl milea the colla PRO Purc or unrep the Seller this contra expos law, You rty insura and actua INSURANCE loss AND byfigur I must keep Rate. ired a total not been owe under proof of prope URY 1. The trueBIL H SALE to red ntage ctnot INJ RANCE: not requce CAS and has ced. 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This A 90 days ose. date of this in parti for shand by Un hono were de mane LIA ITY INS the thersTexa dad razonition s s any l. trac blan an extr S CONTRA rate from the particular purp eter t with ents by is mentary Fee: at buye to canti ed gasto days oficia THI to d paym a 90 una LIABIL T FINANCED, Docu ed n cond IN lable act defin all conr como rarioicerado agree s for ED nt if as charg exceder conteains and/or odom be as TED act withi or of fitnesthe certain The contr ** t is avaies buy un hono amou Price a serv may od trac mileage the prior owner Salecon al comp no puedand und er but meth it or if it AMOUN IS NOT INCLUDNCE CHARGE: llment earnings service contrhantability Totalnable es.aciónIfno sing youcarga E INSaPEC a reaso ice dand Idaread ment ied by charg ICL ley. serv I owe ents, ts. mentación excee In disclo e ser enters into antie A s of merc docu de docu deexcl righ por la pued befo usions. CT.retur S VEH of Paym ned check alre anty, or ed CT provide. vehicle suppl OTHERS FIGURE THE FINAthe scheduled insta all that rario rario warr AND registered. ract TRAUn ition Total E THI ts.writt ley, pero or honoe, requerida en warr no impli and rer may reading of the cont la this ing CON Un hono was last n es ance . add HAV Charge, es, factu por in adv you pric CON TRA sales tax, eteror venta vehicle YOU officació will S be makes a there erido sign una MAl Yrigh le manu ge by apply the Finance HOW YOU notif SERVICE r odom my lega pay CT, requ notmay seller uctible, charg which the Esta YOU os congive e majin and THI motor vehic ce Char TRA willionad ge and/o ER. es" protect righs.t to - Irelac som Unless the mileaof MSle,OF the S CON :IF de the laterage, ded er anti toLER r vehic the Finan Charge. 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regulation matters

Doc Fee: Second Verse, Same as the First by Danny

appy New Year! Many regular readers will be pleased to learn that my New Year’s resolution was to NOT mention the doc fee one single time in this column in 2015. After all, with so many regulations in a seemingly constant state of flux (I reasoned), why continue to flog our loyal readership with the same old, same old? Better to reveal some new scary monsters instead of raising the tired specter of the ghost of doc fees past. Well, however well-intentioned, like many New Year’s resolutions, mine didn’t make it to February (considering press deadlines, actually not even to January). But the reason for this failure was pretty sound: I got a couple of doc fee questions from a member that I didn’t know the answer to. Stumping me wasn’t the impressive part (members do it daily); the stunner was that someone thought of a doc fee question that we had somehow never addressed.

Langfield

TIADA deputy director

Before we get to those questions, it has come to my attention, much to my chagrin, that not everyone memorizes this column every month. Also we had over 400 new members join the association in 2014 who very well may not have seen previous articles on this matter. Therefore please excuse this very brief doc fee recap: By statute, the doc fee may not exceed a reasonable amount agreed to by the retail seller and retail buyer for the documentary services. The retail seller must charge the documentary fee to cash buyers and credit buyers. If a dealer charges a doc fee in excess of $50, he must notify the OCCC. A “safe-harbor” amount of $125 has been established by administrative rule (TAC §84.205). Doc fees submitted in excess of that amount will require very significant supporting evidence from the dealer to be approved. If a doc fee in any amount is charged, the amount of the fee as well as the following language must be included on the retail installment contract and buyer’s order/bill of sale. Additionally, the following language must be posted in all areas where sales are finalized: A DOCUMENTARY FEE IS NOT AN OFFICIAL FEE. A DOCUMENTARY FEE IS NOT REQUIRED BY LAW, BUT MAY BE CHARGED TO BUYERS FOR HANDLING DOCUMENTS RELATING TO THE SALE. A DOCUMENTARY FEE MAY NOT EXCEED A REASONABLE AMOUNT AGREED TO BY THE PARTIES. THIS NOTICE IS REQUIRED BY LAW. So the questions asked were: Can a doc fee be charged on some sales but not on others? And can a doc fee be negotiated? Let’s take the second question first. Can a doc fee be negotiated? The answer to this one is really very straight-forward. Maybe. Ha ha ha, regulatory jokes

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January 2015

are hilarious! The simple answer is YES, the doc fee can indeed be negotiated down. However, there are some things to keep in mind if the doc fee amount is not always the same, which we will discuss below. The answer to the first question (Can a doc fee be charged on some sales but not others?) is also technically, YES. I say technically because there is no statutory or admin rule prohibition on such a practice. However, we would nonetheless discourage dealers from charging the doc fee on some sales and not others. Why? Well, if a regulatory agency (CFPB, FTC, OCCC, etc.) were to identify some pattern or practice where a specific cohort group is charged for the fee and another group is not, and conclude the dealer was thus discriminating on a prohibited basis, that could be a big problem. And the same holds true for the other question above. If, for instance, it appeared that most Asian customers were being charged a doc fee of $125 while the majority of other customers were able to “negotiate down” the doc fee to $50, discriminatory bias might be alleged. Whew, that was a long way to go for a simple, short recommendation from your association: If you charge a doc fee, it is a good idea to keep it consistent. Each dealer must make his/her own decision as to an appropriate doc fee amount. Therefore my new New Year’s resolution is to use fewer words to get my point across. For a more complete explanation of this resolution, please turn to page 52…

Upcoming Events TIADA Dealer Academy

January 2015 14 Dealer 101: Nobody Told Me That!

DoubleTree by Hilton Houston Hobby Airport 8181 Airport Blvd., Houston, TX 77061 Online registration available www.txiada.com

February 2015 12 Keeping Your Dealership

Legal and Compliant Embassy Suites Austin Central 5901 North IH-35, Austin, TX 78723 Online registration available www.txiada.com

March 2015 24 Dealer 101: Nobody Told Me That! Best Western Plus 100 Alta Mesa Blvd. East Fort Worth, TX 76134 Online registration available www.txiada.com

April 2015 23 Keeping Your Dealership

Legal and Compliant DoubleTree by Hilton Houston Hobby Airport 8181 Airport Blvd., Houston, TX 77061 Online registration available www.txiada.com

May 2015 7 Dealer 101: Nobody Told Me That! Hilton San Antonio Airport 611 Northwest Loop 410 San Antonio, TX Online registration available www.txiada.com

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June 2015 16 Keeping Your Dealership

Legal and Compliant Best Western Plus 100 Alta Mesa Blvd. East Fort Worth, TX 76134 Online registration available www.txiada.com

other TIADA events

January 2015 26 TIADA Board of Directors Meeting

Austin, TX

27 Lobby Day

Texas Capitol 1100 Congress Ave., Austin, TX 78701 Online registration available www.txiada.com

April 2015 20 TIADA Board of Directors Meeting

Austin, TX

August 2015 9 TIADA Board of Directors Meeting Austin, TX

9–12 TIADA Annual Conference and Expo J.W. Marriott Hill Country Resort and Spa San Antonio, TX

feature Are You Sure You Want to See Your Name in Lights? by Les McCook

Executive Director of American Recovery Association, Inc.

buy here, pay here dealer made the headlines recently in some very big ways—in fact, $8 million of them. It turns out that the Consumer Financial Protection Bureau (CFPB) is interested in the BHPH industry after all. So how do you stay out of the headlines? You do not have to be one of the “big guys” in the industry to draw the attention of the CFPB or an attorney familiar with their guidelines. They will address every consumer complaint made to the agency. So if you have a customer who complains about some aspect of the repossession process, you may find yourself responding to the CFPB. There are steps you can take to mitigate the risk to you and your company. The most important step is to thoroughly vet the business you choose to represent you in the recovery process. You are responsible for the actions of those you hire to perform services on your behalf. In April 2012, the CFPB issued a bulletin about the subject of service providers. In the bulletin, the CFPB laid out its expectation that, before retaining a business to perform your repossessions, you verify that the service provider understands and is capable of complying with federal consumer financial law. Request and review the provider’s policies, procedures, internal controls and training materials to

ensure they have appropriate training and oversight of employees and agents who have consumer contact. It sounds daunting, but this is as important to your 36

There are steps you can take to mitigate the risk to you and your company. The most important step is to thoroughly vet the business you choose to represent you in the recovery process. business as all of the other compliance guidance you receive about the financing process. I know of several TIADA members who wish they had heeded this advice prior to partnering with a recovery service provider. There is a recovery company in my area that always rises to the top of the Google search results, yet I know of at least 23 dealers who have lost vehicles that were repossessed by them, while others paid exorbitant fees to get their cars back. Customers were quoted a reasonable recovery fee, but the contracts they signed authorized investigations, “should they be required.” In every case I saw (even the ones where the cars were recovered within hours at the address provided) investigation fees were assessed that amounted to an average of 70% of the book value of the T e x a s

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recovered car. In these cases, there was little that the dealers could do to have their grievances heard. In addition to fully vetting a service provider prior to contracting their services, the CFPB expects that once services have commenced, dealers have a process for monitoring and evaluating providers to ensure they are complying with federal consumer financial laws. Moreover, the dealer is expected to take prompt action to address any problems identified. There are tools available to help make the process of vetting and selecting a recovery service provider less daunting. The American Recovery Association (ARA) is a trade association for certified and compliant recovery professionals. The ARA has a very strict set of requirements for membership. These include criminal and financial background checks; having an office that is open to the public; and having been in business for two years. You can visit the ARA website, www.repo.org, to find member profiles containing the types of documentation the CFPB suggests you gather prior to partnering with a provider.

Better Business Through Superior Customer Service!

SALE SCHEDULE

Les McCook is the Executive Director of American Recovery Association, Inc. and can be reached by email at les@americanrecoveryassn.org and by phone (972) 755-4755.

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Ignorance is no defense. Know the law. Repo and financing issues are among the most common violations found by the OCCC. If you own a previous edition of these books from 2008 or earlier, it is recommended that you upgrade to the 2013 editions.

Dealer Financing of Used Car Sales This comprehensive book covers all aspects of the complicated world of seller-financing in Texas, including Maximum Finance Rates; Retail Installment Contracts; Contract Amendments; VIT; Repair Charges; Federal Disclosures and more.

TIADA Member Price: $125 (non-members $175)

Texas Automobile Repossession: A Lien Holder’s Legal Guide Everything you need to know about repossessions is addressed in this book, including Notification Requirements, Post-Repo Procedures, Private Sale vs. Strict Foreclosure, Bankruptcy, Post-Disposition Accounting, Tracking and Shut-off Devices, the 60% Rule and more. PLUS – includes all required forms.

TIADA Member Price: $125 (non-members $175) Now available for purchase online at www.txiada.com under “Legal Resources” or call 800.442.5944 to order by phone. When ordering online, login with your TIADA username and password to receive the discounted rate. All prices include shipping. Orders are shipped in 3-5 business days.

Attorney Michael W. Dunagan is the author of the two must-have books for every Buy-Here, Pay-Here dealer in Texas. Mr. Dunagan has been General Counsel to TIADA for over 35 years. His law firm specializes in the representation of independent Texas car dealers.

3 Texas America’s Auto Auction Locations

HAPPY NEW YEAR! BUY ONLINE AT

www.americasautoauction.com TUESDAYS & THURSDAYS AT 1PM

Dallas

219 N. Loop 12, Irving, Texas 75601 Phone: 972.445.1044

MONDAYS AT 6:30PM

North Houston

1440 FM 3083,Conroe, Texas 77301 Phone: 936.441.2882

TUESDAYS AT 1PM & THURSDAYS AT 2PM

Austin/San Antonio

16611 South IH 35, Buda, Texas 78610 Phone: 512.268.6600

America’s Auto Auction Austin Features 200+ Units Twice A Month From:

John Swofford TX. Auctioneer License #13679

Auction Credit is located within each of our Texas facilities for all of your auction financing needs! www.auctioncredit.com

TIADA Membership Application

2015

Business Name: ____________________________________________ Select one:

Dealer Member

Associate Member

Contact Person: ____________________________________________ Address: __________________________________________________ City: _________________________________________

2015 TIADA Membership Dues:

State: _______

Zip: __________________ County: _____________________________

$425 (Dues include NIADA membership)

E-mail address: _____________________________________________ Phone: _______________________ Fax: ________________________ Dealer P Number: ___________________________________________ Who referred you to TIADA? __________________________________ Mailing Address (if different from above): __________________________________________________________ City: _________________________ State: _______ Zip: ___________

PLEASE INDICATE PAYMENT METHOD: Check or Money Order payable to TIADA Check # __________ Credit Card Card Number: __________________________________________________ Expiration Date: ____________ Monthly Payments - $100 initial payment & $29.50 per month Via Credit Card (Please enter card information above. Authorization Agreement required - contact state office) Via Bank Draft (Authorization Agreement & voided check required - contact state office)

Mail or Fax Application To: TIADA Membership Services, 9951 Anderson Mill Rd., Suite 101, Austin, TX 78750 FAX 512.244.6218

www.txiada.com

512.244.6060

800.442.5944

Dues are not deductible as charitable contributions for income tax purposes but may be deductible as miscellaneous itemized deductions, subject to IRS restrictions. It is estimated that 20 percent of your dues dollars is used for lobbying activities and is therefore not deductible.

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DEALER CAPITAL WITHOUT THE HASSLE. Why SDS?

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Why SDS Line of Credit? DEALER RETAINS ALL COLLECTION ACTIVITIES FLEXIBLE TERMS UP TO 36 MONTHS NO AGING OR SEASONING REQUIREMENTS

Why SDS Bulk Purchasing Program? OVER 30 YEARS COMBINED BULK PURCHASING EXPERIENCE COURTEOUS, FAST AND EFFICIENT PRICING MODEL AGGRESSIVE PRICING STRUCTURE TO BENEFIT DEALERS EFFICIENT CLOSING PROCESS AND DEDICATED REPRESENTATIVES TO SERVE YOU

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FEX

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Manage, automate and schedule your actions and your tasks—your way Intelligent Tasking is the newest addition to our complete web-based Dealer Management System. FEX IT allows you to organize accounts, deals and inventory into task groups. Communication is seamless, automated and integrated throughout the FEX DMS system. All inbound and outbound communication is automatically saved in history. Discover feature-rich inventory management, sales, BHPH and loan processing tools—along with powerful queueing and reporting—with no long term contracts. Call FEX DMS at (949) 635-5892 or log on to FEXDMS.com/FEXIT Sign in and view a demo at FEXDMS.com/FEXIT

MANAGE YOUR DEALERSHIP, NOT YOUR SOFTWARE.SM FEXDMS.COM

resource guide The TIADA Website:

www.txiada.com Members can log in with their username/password and access our Dealer Member Directory, Legislative Action Center, Legal Consultation Service and much more. Register for all upcoming TIADA events online at the Calendar of Events; access our online membership application; find contact information for all our Local Chapters, and find many additional resources at our Links page. Texas Department of Motor Vehicles 888.368.4689 www.txdmv.gov Office of Consumer Credit Commissioner 800.538.1579 www.occc.state.tx.us

Texas Comptroller 800.252.1382 www.window.state.tx.us NIADA 800.682.3837 www.niada.com

Repossessions

American Recovery Association 972.755.4755 www.repo.org or contact TIADA state office

Forms

Burrell Printing 800.252.9154 www.burrellprinting.com

lubbock

Auction Listings

Lone Star Auto Auction www.lsaalubbock.com

2706 Slaton Hwy Lubbock, TX 79404 806.745.6606 , Toll-Free 888.299.6606 General Manager: Dale Martin Wednesday, 10:00 a.m.

lufkin Lufkin Dealers Auto Auction

2109 N. John Reddit Drive Lufkin, TX 75904 936.632.4299 General Manager: Wayne Cook Thursday, 6:00 p.m.

tyler Greater Tyler Auto Auction

11654 State Higway 64 W Tyler, TX 75704 903.597.2800 General Manager: Wayne Cook Tuesday, 5:00 p.m. – Repo Lane Tuesday, 6:00 p.m. – Consignment

January 2015

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Local Chapters Victoria Dennis Schroller Victoria Autos Direct 361.578.0530 Dennis@victoriaautosdirect.com Meeting – 1st Monday (Monthly) Fort Worth Jerry Smith HJ Smith Automobiles 817.282.0102 hjsmithauto@yahoo.com Meeting- 4th Thursday of December, February, April, June, August and October Dallas County Kevin Mims VP Auto Sales 972.864.1300 kevinm@vpautosales.com Meetings as needed/TBD Houston Michael Zak Dixon Motors 281.931.1300 houstoniada@gmail.com Meeting – 2nd Monday (Monthly) Waco-Heart of Texas Bill Miller Bill Miller Used Cars Meeting – 2nd Monday (Monthly) For more information contact Eddie Massey, Massey Motors 254.753.6661 San Antonio Robert Beck Stop N’ Drive Motors 210.432.1101 stopdrive@texas.net Meetings quarterly (dates announced at www.txiada.com) El Paso Ricardo Gardea Cars Plus 915.778.8285 cars_plus@att.net Meeting – 3rd Friday (Monthly) 43

Employment Practices Liability Insurance (cont’d from pg. 31)

Are the defense funds within or outside of the pri mary policy limits? Does the insuring company have a duty to defend? Does the carrier offer a hot-line to answer human resource questions? Does the policy provide coverage only for actual acts of discrimination, harassment, retaliation, wrongful termination, etc. or does it also include alleged acts? Are front and back pay both included in the defini tion of loss? Are independent contractors included in the defini tion of employee? As always, when it comes to insurance protection, your first defense and best resource is your agent. I encourage you to bring up the subject with your agent even if he/she fails to mention it to you. Getting the facts could save you money and contribute to your peace of mind. Ann Mullen-Martin is the president of Mullen Insurance Agency Inc. and can be reached by email at amullen@mulleninsurance.com and by phone at (800) 7836297.

Come for the cars, stay for the

CIPG Insurance Issued by

Vehicular Service Insurance Company, RRG* Insured/Reinsured

Limited Warranty Program (LW) ceded for Thirteen Dollars

($13) Per LW

Insured/Reinsured

Vehicle Service Contract Program (VSC)

ceded for Sixty Nine Dollars

($69) Per VSC

BHPH/LHPH “Pay-As-You-Go” Programs Available Please call 1-844-542-6217 and leave a message with your call back number or Please Visit

www.theCIPG.net

*Texas Department of Insurance License # 13764570

FEBRUARY 11

4th Anniversary Sale

MARCH 18

Sunland Park Derby Days

Go to epiaa.com to view our 2015 promotional sale schedule EPI EL PASO 7930 Artcraft Road - El Paso, TX 79932 P: 915.587.6700 - www.epiaa.com

January 2015

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Experience one of our core values: 45

behind the wheel Take a Closer Look

n pages 12-13 you will find a list of the auctions participating in the TIADA VIP Auction Card for 2015. I couldn’t be more excited about the top notch auctions whose names are proudly displayed on the VIP card. TIADA and participating auctions saved members thousands of dollars last year and with the addition of a few new auctions, members stand to save even more in 2015. One member reported using his card at four different auctions last year, saving $800 dollars. Another member who joined last April called the state office in May with a compliance question. After a brief visit, we were winding down our conversation and he ended by saying, “By the way, I made money on you, buddy.” He had used his card at three participating auctions and his $425 membership investment had already saved him $600 — that’s a pretty good value. Every year we reach out to auctions asking them to support you and the association. Auctions that understand the value of TIADA and appreciate the dealer relationship are always looking for opportunities to help strengthen the association.

by Jeff

Martin

Manheim Manheim Dallas DFW

Manheim Manheim El Paso San Antonio

tiada executive director

Manheim Manheim Houston Texas Hobby ADESA ADESA San Antonio Austin ADESA ADESA Dallas Houston

Alliance AA Longview Alliance AA Waco

Alliance AA Abilene Alliance AA Dallas

America’s AA Austin/ San Antonio America’s America’s AA North AA Dallas Houston

Houston AA Metro AA Austin Heart of Texas El Paso AA Independent AA Waco Texas Lone America Can! Star AA Cars for Kids Carrollton Arlington CM Company Dealers AA Auctions of OKC Big Valley AA Donna

Austin Corpus Christi

Lubbock El Paso

San Antonio Houston

Permian Basin Dallas Houston North Longview

McAllen DFW

Take a close look at the VIP Auction Directory page and you’ll find a group of true friends there. Auctions from El Paso to Houston and Amarillo to Donna participate in the VIP card, so there is an auction for everyone. Even though you might see your go-to auction listed on the card, I want to challenge you to visit as many auctions on the card as possible through 2015, even those you’ve never visited previously. First, it will increase the money you can save with the card, but also, we owe these partners our support — think about the investment they’re making by offering this discount to every TIADA member! While you’re at the auction, I’m even going to ask you to go the extra mile and make it a point to thank the GM for participating in the VIP Auction Card and supporting the association that represents the industry. And if you find yourself at an auction that doesn’t participate in the card, I encourage you to ask them why not. If you haven’t already done so, renew your membership at www.txiada.com/renew to receive your 2015 VIP Auction Card.

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NOT ALL PROGRAMS ARE CREATED EQUAL Debt Cancellation Coverage Voluntary Debt Cancellation Coverage (DCC) is an alternative to requiring Comprehensive and Collision Insurance.

Benefits NEW PROFIT CENTER REDUCES EXPENSES

DCC provides debt forgiveness in the event of a Total Loss and is offered at the point of sale.

COLLATERAL PROTECTED

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INCREASED CASH IN DEAL

“Our Debt Cancellation Program, serviced through AVP, was one of the best financial decisions our company has ever made in its 21 year history.” Michael Brill, President B&B Automotive Inc.

INCREASED CSI FINANCED WITH CONTRACT FORMS REVIEWED by OCCC

AVP DEALERS MAKE MORE MONEY PERIOD! www.avpadmin.com

816.756.5430

*Substantial Discounts for TIADA Members

Texas Independent Automobile Dealers Association 9951 Anderson Mill Rd., Suite 101 Austin, TX 78750

PRSRT STD

U.S. Postage

PA I D Jefferson City, MO

Permit No. 210

IT’S YOUR LOCAL

AUCTION

LANE. BUT IT’S THE WORLD’S LARGEST

Texas Auctioneer Barry Roop License 6003