– Michael W. Dunagan: Airbag Safety and Recall Issues Raise Liability Concerns for Dealers
– What Records Do You Need for a Compliance Examination? Spoiler: All of Them (Almost) – FTC and CFPB Post-Election
– Maximum Finance Charge Rates for 2025
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PRESIDENT
Greg Reine/Auto Liquidators 39670 LBJ Freeway Dallas, TX 75237
PRESIDENT ELECT
Greg Phea/Austin Rising Fast 8024 IH 35 North Austin, TX 78753
CHAIRMAN OF THE BOARD
Eddie Hale/Neighborhood Autos PO Box 1719 Decatur, TX 76234
SECRETARY
Russell Moore/Top Notch Used Cars 900 East Davis Conroe, TX 77301
VICE PRESIDENT, WEST TEXAS (REGION 1)
Cesar Stark/S&S Motors 7699 Alameda Ave. El Paso, TX 77915
VICE PRESIDENT, FORT WORTH (REGION 2)
Tyler Simmons/Abilene Used Car Sales, Inc. 2150 N. 1st Street Abilene, TX 79603
VICE PRESIDENT, DALLAS (REGION 3)
Chad Lancaster/Chacon Autos 11800 E. Northwest Hwy Dallas, TX 75218
VICE PRESIDENT, HOUSTON (REGION 4)
Lowell Rogers/11th Street Motors 1355 N 11th St, Beaumont, TX 77702
VICE PRESIDENT, SOUTH TEXAS (REGION 6)
Cesar Torres/Lofi Motors 4634 Ayers St. Corpus Christi, TX 78415
VICE PRESIDENT AT LARGE
Christina Sabillón/Mi Tierra Auto Sales 7935 Gulf Freeway Houston, TX 77017
VICE PRESIDENT AT LARGE
Lucas Ponder/Auto Smart 3202 Summerhill Rd. Texarkana, TX 75503
TIADA EXECUTIVE DIRECTOR
John Frullo
9951 Anderson Mill Rd., Suite 101 Austin, TX 78750
Office Hours M-F
TexasDealer contents
Dear Member,
I hope 2024 has been a successful year for you. At TIADA, we are gearing up for important initiatives in the coming year, particularly as we work to support independent dealers through the transition to metal temporary tags and address other pressing industry challenges. Your feedback and engagement with the association remain essential. Renewing your membership ensures that independent dealers continue to have a strong voice at the table.
TIADA’s strength comes from its members, and your support enables us to be your strongest advocates—whether at the Capitol or in maintaining close relationships with regulatory agencies. Your membership allows us to work on your behalf, and we are incredibly grateful for your continued commitment.
Your support makes it possible for TIADA to:
• Keep you informed through the Texas Dealer magazine, industry e-newsletter, social media updates, and website resources.
• Answer your compliance questions through our Compliance Consultation Service, which responds to over 850 dealer inquiries annually, helping you navigate both new and ongoing challenges.
• Connect members through events like the annual Conference & Expo, town halls, and meetings with key stakeholders such as state agencies and local Tax Assessor-Collectors.
TIADA is committed to helping your business succeed in 2025. To continue receiving essential updates and member benefits, visit www.txiada.org to renew online. You can also renew by mailing the bottom portion of this letter with payment in the enclosed envelope or by calling us at 512.244.6060.
Thank you for your continued support. Wishing you and your family a wonderful holiday season!
Sincerely,
John M. Frullo TIADA Executive Director
Membership dues paid or gifts given to TIADA are not deductible as charitable contributions for income tax purposes but may be deducted as miscellaneous itemized deductions, subject to IRS restrictions. It is estimated that 20% of your dues dollar is used for lobbying activities and is therefore not deductible.
Your renewal will ensure continued member benefits, including:
✓ Auction App – Access over $10,000 in savings at 50 auctions across Texas
✓ Compliance Consultation Service – Receive answers to your questions on industry-related matters throughout the year
✓ Full-time Legislative Consultant and political action committee (INDEPAC) – Know that there are people protecting your industry at the Capitol
✓ Industry updates affecting your business – Receive important communications from TIADA, from email alerts to the Texas Dealer magazine
✓ Member Directory – Connect with other TIADA members, network with dealers, and search for services for your business
✓ Membership to NIADA (National Independent Automobile Dealers Association)
✓ Substantial discounts on statewide education seminars
✓ And much more! Visit txiada.org/dealer_benefits
To Renew by Mail, please return completed form below.
2025 TIADA Membership Renewal: $499
Additional locations #______ x $275 = $___________
(Each additional location receives full member benefits, including an additional set of coupons on the TIADA Auction App.)
Company Name: __________________________________________ Contact Person: _____________________________________________
Address:
officers’ message
Press Forward
Running a business often feels like running a sports team or playing a high-stakes game. Success requires preparation — mentally, physically, and financially. Sometimes, you’re ahead in one area but lagging in another. Much like sports, business challenges can feel insurmountable at times.
I once watched a game where the halftime score was 20–0. It seemed like a done deal for the losing team. But by the end of the game, they pulled off a stunning victory. That resilience serves as a powerful reminder: no matter how steep the odds, the game isn’t over until it’s over.
Right now, the business climate can feel like we’re facing 3rd and 25 — an uphill battle with limited options. With high interest rates, rising floor fees, buy fees, curtailments, advertising costs, insurance, taxes, and licensing challenges, the pressure can be overwhelming. At times, it may even feel hopeless.
But here’s the truth: you can’t win if you don’t stay in the game.
As TIADA members, we have a significant advantage — each other. Our network is a resource unlike any other, one built on collaboration, trust, and shared experiences. As 2025 approaches, let’s tap into those
by Greg Phea
connections. Join a 20 Group, foster partnerships and friendships, and lean into the support that comes with TIADA membership, including ther various educational opportunities the association offers throughout the year.
For those of us who have been members for over 20 years, there’s an opportunity to mentor newcomers. Sharing our experiences and lessons learned can provide encouragement and stability to those just starting out. This isn’t about competition for the sake of beating one another — it’s about raising the bar together. By helping each other, we strengthen not only our businesses but also the TIADA community as a whole.
My theme for 2025 is simple but powerful: “We are better together.” Over the years, many of us have built bonds of trust, relying on each other during tough times. That trust, and the relationships we’ve cultivated, are what will carry us through the challenges ahead. Together, we can weather any storm.
Let’s press forward, not just as individuals but as a unified group. Let’s make 2025 a year where we lean on our shared strength, remembering that collaboration, not isolation, is the key to overcoming adversity.
We are better together. And together, we will win.
My theme for 2025 is simple but powerful: “We are better together.”
Austin Rising Fast (Austin)
legal corner
Airbag Safety and Recall Issues Raise Liability Concerns for Dealers
In 2017 a Texas woman died in a one-car crash when her vehicle’s airbag didn’t deploy. Investigators found a fake airbag cover over an assembly filled with silicon putty and a shop rag, covered with black tape.
In 2015, a Texas man was killed after being struck in the neck by shrapnel from an exploding Takata airbag.
In 2013, three members of a family, including a 90-year-old woman, were killed in an accident involving a wrong-way driver. The airbags in the vehicle they were in did not deploy.
Dealer Question: Am I obligated to replace defective or deployed airbags on a used car before selling the car, and do I have any liability if an airbag on a used car I sell fails to properly deploy in an accident?
Answer: While there is no requirement that used vehicles have working airbags when sold, a dealer would be a likely target of plaintiff’s attorney if the absence of a working airbag contributed to an injury in a subsequent accident. Also, there are state and federal laws that create offenses for selling or installing counterfeit airbags (defined as airbags that don’t meet federal standards) or representing that airbags are not counterfeit if in fact they are.
Federal law requires all new cars to have airbags, but once a vehicle is subject to its first retail sale, the federal mandate no longer applies. Some states have enacted laws that require replacement of deployed airbags, but Texas has no such law. Thus, there is no direct obligation for a dealer to check the condition or presence of the airbags, or to replace missing or defective airbags before selling a used car.
There is a provision in the Texas Transportation Code that makes it a crime to (among other things) knowingly install a counterfeit airbag in a vehicle or represent to someone that a counterfeit airbag is authentic. An amendment passed
by Michael W. Dunagan
COUNSEL
There is a provision in the Texas Transportation Code that makes it a crime to (among other things) knowingly install a counterfeit airbag in a vehicle or represent to someone that a counterfeit airbag is authentic.
in the 2013 legislative session increased the penalty for violation to a state jail felony. The penalty is enhanced to a felony of the third degree if a prior conviction exists; a felony of the second degree if someone suffers bodily injury as a result of the violation; and a felony of the first degree if a death results.
The sponsors of the bill had, during the legislative process, proposed making the standard for violation either “knowingly” or “recklessly.” TIADA and other industry groups expressed the concern that the “recklessly” standard could result in potential liability for vehicle sellers who didn’t know of an airbag issue, but might be found to have been
“reckless” on the basis that they should have known of the defect. Fortunately, the sponsors agreed to drop the “recklessly” language from the final version of the bill, so that the standard for liability would be actual knowledge.
The Texas legislation and recent federal prosecutions recognize the fact that a thriving industry has developed in the manufacture and sale of look-alike covers to restore the original look after a bag has deployed, minus the airbag. The cost savings of such a cover
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over replacing an actual airbag are significant.
Additionally, the National Highway Traffic Safety Administration (NHTSA) has issued a consumer safety advisory that warned both vehicle owners and repair professionals about the proliferation of counterfeit airbags being marketed primarily on the internet. The advisory warned that samples of counterfeit airbags had been tested and the results often demonstrated a greater potential of injury to a vehicle driver or passenger than there would have been without any airbag at all.
In 2013 a Washington state man was sentenced to a term in federal prison for selling counterfeit airbags from China, Hong Kong and Taiwan via eBay and Craigslist. The airbags were represented as being authentic, even though the price was typically in the range of $110, while actual original equipment manufacturer replacements go for much more.
sale (a costly option) or disclaim any knowledge of the operability of the airbags. Certainly, when the dealer has knowledge that the airbags are inoperable, that fact should be disclosed in writing with signed acknowledgment from the buyer. But even when the dealer has no such actual knowledge, unless the dealer can affirm that the airbags are intact and in working condition, a disclaimer should be used (a simple airbag disclosure form is available from Burrell Printing Company and many dealer management software packages).
Some of the companies that manu-
Federal law requires all new cars to have airbags, but once a vehicle is subject to its first retail sale, the federal mandate no longer applies.
Of concern to dealers is that a vehicle bought for resale that appears to have working airbags, could in fact contain counterfeit airbags, non-working airbags, or no airbags at all. The dealer won’t usually have actual knowledge of the condition of the airbags.
The risk in this situation is that the vehicle would be involved in an accident in which someone is injured or killed. The failure of the airbags to deploy will almost certainly be raised as an issue contributing to the injury, thus placing the dealer in the line of fire for having failed to advise the buyer of the inoperable airbags.
To minimize exposure, dealers should either undertake to confirm the condition of the airbags before
facture steering wheel and dash covers offer stickers that can be placed on the driver’s side door warning that the airbags are inoperable. The placement of such a warning would be advisable to inform subsequent purchasers (assuming the sticker is not removed) of the condition of the airbags. Obviously, the selling dealer has no control over whether his buyer passes on the information to any subsequent buyer of the vehicle.
It is possible that a dealer, even if he disclaims the airbag condition to his buyer, could be dragged into a suit over an injury that occurs somewhere down the line. Any evidence that the dealer did his best to make the facts known, not only to his buyer, but every downstream owner, would certainly enhance the dealer’s chances in court.
The discovery of the defective Takata airbags and the subsequent history of deaths and injuries from them, and the recall of approximately 34 million vehicles in the United States, raised another issue that dealers need to consider. The massive recall resulted in a backlog of replacement parts and delays in getting them installed. Additionally, many owners of vehicles subject to the recall have failed to have the remedial work performed.
Dealer Question: Can I sell a vehicle that is subject to an open safety recall?
Answer: While there is no federal or Texas state law that prohibits the sale of a vehicle that is subject to an open safety recall, there are potential risks, especially if the recall involves an item that comes into play in a subsequent accident. In addition to the possibility of being drawn into a personal injury or wrongful death lawsuit, there could be civil claims of misrepresentation under the Texas Deceptive Trade Practices Act.
The National Highway Traffic and Safety Administration has established a VIN-specific lookup tool that allows anyone to check on the status of safety recalls for any vehicle. The site is www.safercar.gov. By entering a VIN the user can find the government’s most recent information about the vehicle’s safety recall record.
The recommended course of action is to perform the check on all inventory vehicles, and have any open recalls properly addressed. Should it be impossible or impracticable to have the work done prior to sale, the buyer should be given a copy of the printout and informed of the issue. A signed copy of the printout should be kept in the sales file.
Conclusion: While a dealer has no duty to replace missing or
defective airbags in a used car, or to obtain verification that the airbags in the vehicle are authentic original equipment and fully operable, the dealer should have his purchaser sign a disclaimer acknowledging that the dealer either disclosed that the airbags were not functioning, or that the dealer has no knowledge and makes no representations as to the condition of the airbags. Prospective buyers should be given the opportunity to have airbags checked out by franchised dealers or other qualified professionals.
Any open recalls should be addressed prior to sale or disclosed in writing (preferably a printout from the federal government’s website) with proof of disclosure retained.
Michael W. Dunagan is an attorney in Dallas, Texas who has represented the Texas Independent Automobile Dealers Association for over 45 years. He has written a number of books and hundreds of articles for trade journals and law reviews. His clientele includes dealers, banks, finance companies, auto auctions and credit unions.
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TIADA Auction Directory
Abilene
ALLIANCE AUTO AUCTION ABILENE**
www.allianceautoauction.com
6657 US Highway 80 West, Abilene, TX 79605
325.698.4391
GM: Brandon Denison
Friday, 9:45 a.m.
$AVE : $200
IAA ABILENE*
www.iaai.com
7700 US 277, Hawley, TX 79601
325.675.0699
GM: Shaun Lemke
Thursday, 9:30 a.m.
$AVE : up to $200 Sell Fee
Amarillo
DAX of AMARILLO**
www.daxofamarillo.com
3208 SE 10th Ave., Amarillo, TX 79104
806.374.8982
GM: Kelsy Allen
Every Tuesday, 11:00 a.m.
$AVE : $200
IAA AMARILLO*
www.iaai.com
11150 S. FM 1541, Amarillo, TX 79118
806.622.1322
GM: Shawn Norris
Monday, 9:30 a.m.
$AVE : up to $200 Sell Fee
Austin
ALLIANCE AUTO AUCTION AUSTIN**
www.allianceautoauction.com
1550 CR 107, Hutto, TX 78634
737.300.6300
GM: Brad Wilson
Thursday, 9:15 a.m.
$AVE : $200
AMERICA’S AA AUSTIN**
www.americasaa.com
16611 S. IH-35, Buda, TX 78610
512.268.6600
GM: Jamie McCollum
Tuesday, 1:00 p.m. / Thursday, 1:00 p.m.
$AVE : $200
AMERICA’S AA LONE STAR AUSTIN
www.americasaa.com
8408 Shoal Creek Blvd., Austin, TX 78757
214.483.3597
GM: Sara Edgington
Friday and Every Other Thursday, 11:00 a.m.
$AVE : $200
IAA AUSTIN*
www.iaai.com
2191 Highway 21 West, Dale, TX 78616
512.385.3126
GM: Rick Hahn
Tuesday, 9:30 a.m.
$AVE : up to $200 Sell Fee
METRO AUTO AUCTION AUSTIN
www.metroautoauction.com
2221 Hwy 21 W., Dale, TX 78616
512.282.7900
GM: Brent Rhodes
3rd Saturday monthly, 9:00 a.m.
$AVE : $200
Corpus Christi
AMERICA’S AUTO AUCTION
CORPUS CHRISTI** www.americasaa.com
2149 IH-69 Access Road, Robstown, TX 78380
361.767.4100
GM: Rene Gandy
Friday, 10:00 a.m.
$AVE : $200
IAA CORPUS CHRISTI*
www.iaai.com
4701 Agnes Street, Corpus Christi, TX 78405
361.881.9555
GM: Patricia Kohlstrand
Wednesday, 9:30 a.m.
$AVE : up to $200 Sell Fee
Dallas-Ft. Worth Metroplex
ADESA DALLAS**
www.adesa.com
3501 Lancaster-Hutchins Rd., Hutchins, TX 75141
972.225.6000
GM: Eric Jenkins
Thursday, 9:30 a.m.
$AVE : $200
ALLIANCE AUTO AUCTION DALLAS**
www.allianceautoauction.com
9426 Lakefield Blvd., Dallas, TX 75220
214.646.3136
GM: Anthony Herrera
Wednesday, 12:30 p.m.
$AVE : $200
AMERICA’S AA DALLAS**
www.americasaa.com
219 N. Loop 12, Irving, TX 75061
972.445.1044
GM: Ruben Figueroa
Tuesday, 12:00 p.m. / Thursday, 12:30 p.m.
$AVE : $200
DAX of ROCKWALL**
www.daxofrockwall.com
1810 E I-30, Rockwall, TX 75087
972.771.9919
GM: Tim Clement
Tuesday, 6:00 p.m. / Thursday, 2:00 p.m.
$AVE : $200
IAA DALLAS* www.iaai.com
204 Mars Rd., Wilmer, TX 75172
972.525.6401
GM: Terrie Smith
Wednesday, 9:30 a.m.
$AVE : up to $200 Sell Fee
IAA DFW*
www.iaai.com
4226 East Main St., Grand Prairie, TX 75050
972.522.5000
GM: Julissa Reyes
Monday, 9:30 a.m.
$AVE : up to $200 Sell Fee
IAA FORT WORTH NORTH*
www.iaai.com
3748 McPherson Dr., Justin, TX 76247
940.648.5541
GM: Jack Panczyk
Tuesday, 9:30 a.m.
$AVE : up to $200 Sell Fee
MANHEIM DALLAS** www.manheim.com
5333 W. Kiest Blvd., Dallas, TX 75236 214.330.1800
GM: Rich Curtis
Tuesday, 9:00 a.m./Wednesday 9:00 a.m./ Friday 10:00 a.m.
$AVE : $100
MANHEIM DALLAS FORT WORTH** www.manheim.com
12101 Trinity Blvd., Fort Worth, TX 76040 817.399.4000
GM: Glenna Bishop Thursday, 9:30 a.m.
$AVE : $100
METRO AUTO AUCTION DALLAS** www.metroaa.com
1836 Midway Road, Lewisville, TX 75056
972.492.0900
GM: Scott Stalder
Tuesday, 9:30 a.m.
$AVE : $200
El Paso
AMERICA’S AUTO AUCTION EL PASO www.aaaelpaso.com
7930 Artcraft Rd., El Paso, TX 79932
915.587.6700
GM: Judith Ayub Wednesday, 9:30 a.m. MST
$AVE : $200
IAA EL PASO* www.iaai.com
14751 Marina Ave, El Paso, TX 79938 915.852.2489
GM: Hector Escobar
Wednesday, 9:30 a.m. MST
$AVE : up to $200 Sell Fee
MANHEIM EL PASO** www.manheim.com
485 Coates Drive, El Paso, TX 79932
915.833.9333
GM: JD Guerrero
Thursday, 10:00 a.m. MST
$AVE : $100
Harlingen/McAllen
IAA M c ALLEN*
www.iaai.com
900 N. Hutto Road, Donna, TX 78537
956.464.8393
GM: Ydalia Sandoval
Tuesday, 9:30 a.m.
$AVE : up to $200 Sell Fee
BIG VALLEY AUTO AUCTION**
www.bigvalleyaa.com
4315 N. Hutto Road, Donna, TX 78537
956.461.9000
GM: Lisa Franz
Thursday, 9:30 a.m.
$AVE : $200
Houston
ADESA HOUSTON**
www.adesa.com
4526 N. Sam Houston, Houston, TX 77086
281.580.1800
GM: Keyvan Nayeri
Wednesday, 9:30 a.m.
$AVE : $200
AMERICA’S AA HOUSTON**
www.americasaa.com
1826 Almeda Genoa Rd., Houston, TX 77047
281.819.3600
GM: Kyle Drake
Thursday, 1:00 p.m.
$AVE : $200
AMERICA’S AA NORTH HOUSTON**
www.americasaa.com
1440 FM 3083, Conroe, TX 77301
936.441.2882
GM: Buddy Cheney
Tuesday, 1:00 p.m.
$AVE : $200
AUTONATION AUTO AUCTION - HOUSTON**
www.autonationautoauction.com
608 W. Mitchell Road, Houston, TX 77037
855.905.2622
GM: Davis Cosmi
Friday, 9:15 a.m.
$AVE : $200
EBLOCK HOUSTON**
www.houstonautoauction.com
2000 Cavalcade, Houston, TX 77009
713.644.5566
GM: Rich Levene
Tuesday, 12:00 p.m.
$AVE : $200
IAA HOUSTON*
www.iaai.com
2535 West. Mt. Houston, Houston, TX 77038
281.847.4700
GM: Alvin Banks
Wednesday, 9:30 a.m.
$AVE : up to $200 Sell Fee
IAA HOUSTON NORTH*
www.iaai.com
16602 East Hardy Rd., Houston-North, TX 77032
281.443.1300
GM: Aracelia Palacios
Thursday, 9:30 a.m.
$AVE : up to $200 Sell Fee
IAA HOUSTON SOUTH*
www.iaai.com
2839 E. FM 1462, Rosharon, TX 77583
281.369.1010
GM: Roxy Castillo
Friday, 9:30 a.m.
$AVE : up to $200 Sell Fee
MANHEIM HOUSTON**
www.manheim.com
14450 West Road, Houston, TX 77041
281.890.4300
GM: Nick Hanson
Tuesday, 9:30 a.m.
$AVE : $100
MANHEIM TEXAS HOBBY**
www.manheim.com
8215 Kopman Road, Houston, TX 77061
713.649.8233
GM: Darren Slack
Thursday, 9:00 a.m.
$AVE : $100
Longview
ALLIANCE AUTO AUCTION LONGVIEW**
www.allianceautoauction.com
6000 SE Loop 281, Longview, TX 75602
903.212.2955
GM: Rocky Campbell
Friday, 9:30 a.m.
$AVE : $200
IAA LONGVIEW*
www.iaai.com
5577 Highway 80 East, Longview, TX 75605
903.553.9248
GM: Ulysses Else
Thursday, 9:30 a.m.
$AVE : up to $200 Sell Fee
Lubbock
AMERICAS AA LONE STAR LUBBOCK**
www.americasaa.com
2706 E. Slaton Road., Lubbock, TX 79404
806.745.6606
GM: Dale Martin
Wednesday, 9:00 a.m
$AVE : $75/Quarterly
IAA LUBBOCK* www.iaai.com
5311 N. CR 2000, Lubbock, TX 79415
806.747.5458
GM: Chris Foster
Tuesday, 9:30 a.m.
$AVE : up to $200 Sell Fee Lufkin
LUFKIN DEALERS AUTO AUCTION
www.lufkindealers.com
2109 N. John Reddit Dr., Lufkin, TX 75904
936.632.4299
GM: Wayne Cook
Thursday, 5:30 p.m.
$AVE : $200
Midland Odessa
IAA PERMIAN BASIN*
www.iaai.com
701 W. 81st Street, Odessa, TX 79764
432.550.7277
GM: Sheila Gray
Thursday, 9:30 a.m.
$AVE : up to $200 Sell Fee
San Antonio
AMERICA’S AUTO AUCTION
SAN ANTONIO**
www.sanantonioautoauction.com
13510 Toepperwein Rd., San Antonio, TX 78233
210.298.5477
GM: Brandon Walston
Tuesday, 9:00 a.m
$AVE : $200
ADESA SAN ANTONIO** www.adesa.com
200 S. Callaghan Rd., San Antonio, TX 78227
210.434.4999
GM: Clifton Sprenger
Thursday, 9:00 a.m.
$AVE : $200
IAA SAN ANTONIO* www.iaai.com
11275 S. Zarzamora, San Antonio, TX 78224
210.628.6770
GM: Paula Booker
Monday, 9:30 a.m.
$AVE : up to $200 Sell Fee
MANHEIM SAN ANTONIO** www.manheim.com
2042 Ackerman Road, San Antonio, TX 78219
210.661.4200
GM: Mike Browning Wednesday, 9:00 a.m.
$AVE : $100
Tyler
GREATER TYLER AUTO AUCTION**
www.greatertyleraa.com
11654 Hwy 64W, Tyler, TX 75704
903.597.2800
GM: Daylon Waynick Thursday, 2:30 p.m.
$AVE : $200
Victoria
VICTORIA AUTO AUCTION**
835 Industrial Park Drive, Victoria, TX 77905
361.576.0058
GM: Shelly Griffin Thursday, 11:30 a.m.
$AVE : $100
Waco
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by Daniel Avitia Executive Director, The Texas Department of Motor Vehicles (TxDMV)
Metal Plate Implementation Your Complete Guide To on the cover
It is time to put the pedal to the metal. Metal plates, that is! With less than a year to go until the provisions of House Bill 718 become effective, dealers should be preparing for one of the most significant operational changes for the Texas motor vehicle industry since “Two Steps, One Sticker.” The Texas Department of Motor Vehicles (TxDMV) is committed to providing the information and resources needed to make a smooth transition to new policies, procedures, and
logistics and help dealers meet these new requirements.
Fighting Fraud
The Texas Legislature passed House Bill 718 (HB 718) during the 88th Legislative Session in 2023 to address law enforcement concerns related to the fraudulent use of temporary tags. The law and associated administrative rules take effect July 1, 2025. Changes to dealer operations include the secure storage and issuance of metal
license plates and adjustments to the processing of vehicle sales transactions. A strong and productive partnership between TxDMV and the Texas Independent Automobile Dealers Association (TIADA) is critical to the successful implementation of HB 718.
New License Plates
When HB 718 takes effect, Texas dealers will no longer issue Buyer’s Tags, Internet Down Tags, Vehicle Specific Tags, and Agent Specific
Tags. Instead, dealers will issue metal plates at the time of sale. In most cases these plates will be the permanent plates that you register with the county on behalf of the buyer.
HB 718 created four new limiteduse metal plates to be used to cover specific temporary vehicle registration needs:
Buyer Provisional Plate:
Used when the requested plate type is not in inventory.
Dealer Temporary Plate:
Used by dealers for various business-related uses, such as test drives, loaner vehicles, or transporting the vehicle. These plates cannot be used by dealers for personal use of vehicles.
Out-of-State Buyer Plate:
Used for vehicles sold to out-ofstate buyers.
Temporary Registration Plate: Used for temporary registration, replacing one-trip and 30-day permits.
These new license plates will not replace metal dealer license plates, nor will they replace the standard, general-issue license plates that dealers will most frequently issue to individuals purchasing vehicles.
webDEALER Requirement
Does your dealership use the TxDMV webDEALER system? If not, now is the time to get started. HB 718 requires all Texas dealers to use webDEALER to process title and registration applications electronically beginning July 1, 2025. Dealers without webDEALER accounts on that date will not be able to complete vehicle sales transactions. Do not wait and risk being unable to process title work. Reach out to your county tax assessor-collector’s office to begin coordinating with them to receive system training and gain access to webDEALER. You will want to begin using the system before the mandate becomes effective next July to ensure you are comfortable with its operation and
have all the appropriate access and accounts set up for your employees. Current dealers are required to complete webDEALER training by April 30, 2025, unless they have had access to webDEALER for more than 6 months and submitted more than 100 transactions through the system as of October 1, 2024.
webDEALER Training
To support dealers and counties transitioning to the webDEALER system, TxDMV created an expanded webDEALER training program earlier this year. The department offers multiple webDEALER training sessions for dealers and county tax office staff each month, with online and in-person options. Beginning in October, TxDMV launched an on-demand video training option so dealers and their employees can complete the training on their own schedule. Look for training dates and registration information on the TxDMV calendar page at www. TxDMV.gov/calendar.
To make sure the system meets the needs of the many new users who will be added before July 2025, TxDMV staff identified more than 200 enhancements to improve webDEALER functionality. The department was assisted by many dealers and tax assessor-collectors in this process to ensure the system has the necessary functionality to implement HB 718.
Plate Distribution
Another significant operational change made by HB 718 implementation is how license plates will be distributed. TxDMV will transition from the current distribution model through county offices to a directto-dealer model for license plate issuance. Delivering license plates directly to dealers will streamline the process and ensure plates are available to dealers to support their sales activity without unnecessary delays.
The Texas Department of Criminal Justice (TDCJ) will continue producing license plates but will ship
them to an external, centralized distribution warehouse operated by a TxDMV contractor. Distributing plates from a warehouse outside of TDCJ will mitigate the impact of correctional facility security incidents that can delay plate shipments. The goal is to maintain a sufficient supply of plates at the contract distribution facility to ensure regular distribution of plates can be made at any time of the year.
Through a new inventory management system (IMS), dealers will be able to order, track, and assign plates easily and directly. The IMS will allow TxDMV staff to process plate order requests and manage replacement shipments, ensuring dealers have an appropriate supply of plates as sales volume fluctuates. Please be aware that dealers must complete webDEALER training or already be active users of webDEALER before they can receive plate shipments. The ordering and distribution of the new Dealer Temporary Plate will be managed directly by TxDMV, using the same process for current dealer metal plates.
Plate Storage and Security
Rules adopted by the TxDMV Board on October 24, 2024, include broad requirements for where and how dealers must secure license plates. Plates must be stored in a locked or secured room or closet, or in one or more securely locked, substantially constructed safes or steel cabinets bolted or affixed to the floor or wall. Dealers must also take proper steps to control employee access to plate inventories to ensure they are used only for legitimate vehicle sales purposes. Dealers will also be required to properly mark and destroy, recycle, or return to TxDMV all voided license plates.
Compliance Monitoring Services
The department is working to establish a new Dealer Compliance Services Section within our
Enforcement Division. Compliance analysts in this new section will be responsible for conducting inspections at licensed dealer locations, to verify that license plate inventories are managed according to department regulations, and document any deficiencies or violations related to license plate and premises requirements. This staff will work with dealers found to be out of compliance to offer education and direction on the new requirements as dealers become more familiar with the changes.
Changes for Customers
While change is not always easy, some changes will help save a step for your customers. Once dealers begin issuing metal license plates instead of temporary Buyer’s Tags, customers will no longer have to wait for their metal plates to arrive or return to the dealer to have them installed on the vehicle. Also under HB 718, license plates will remain with a vehicle when sold, except in limited circumstances such as
specialty and personalized license plates. Customers will also have the option to request the issuance of new plates when purchasing a vehicle. Dealers will be responsible for removing plates when they accept trade-ins and securely storing them until the vehicles are sold to a new customer and they are returned to the same vehicle. And dealers will be required to submit a Vehicle Transfer Notification (VTN) on behalf of their customers who trade-in vehicles.
Stakeholder Outreach
Outreach related to the implementation of HB 718 is a priority for TxDMV. We have partnered with TIADA and other key stakeholders to participate in industry conferences, town hall meetings, and other events to explain the provisions of the bill, obtain feedback, and answer questions. No one knows how these changes will impact dealers and their customers better than you, the dealers. This
input from your community has been instrumental in shaping the implementation and detailed requirements of this legislation.
Final Thoughts
The Texas Department of Motor Vehicles plays a broad-ranging role as a regulator of the motor vehicle industry. This work extends far beyond just issuing dealer licenses and investigating complaints. Compliance is best achieved through education and voluntary action, which is why TxDMV offers an array of training and other resources for dealers. This collaborative approach not only helps dealers remain compliant, but it also fosters a supportive partnership where together we can explore opportunities for positive change that further enhance the robust automobile industry in Texas. We are here to support the motor vehicle industry in Texas to achieve success while meeting the regulatory and public safety standards set by the legislature.
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2024 Dealer Proficiency Quiz
By TIADA Staff
Editor’s Note: The first ten questions have been taken from information that appeared in the “Legal Corner” section of Texas Dealer magazine in 2024. The five bonus questions at the end come from information that has appeared in our industry emails and/or blogs posted on the TIADA website this year.
Compliance Questions
1. The legal term for a court order that a secured creditor may seek to have a judge direct an officer to take possession of property is a writ of :
a) Possession
b) Replevin
c) Sequestration
d) Trover
2. True or False:
A car creditor does not have to halt all collection and repossession activities if informed by a debtor that he has hired an attorney to commence bankruptcy proceedings, but has not yet filed.
3. A lien on a vehicle becomes “perfected” at what point?
a) When the state issues a title certificate with the lien recorded on it.
b) When the county tax office accepts the assigned title and transfer fees.
c) When the buyer signs the motor vehicle installment contract.
d) When the buyer signs the Form 130U.
4. True or False:
The completed sale of a vehicle cuts off the seller’s liability for negligent entrustment in a case where the buyer causes an accident and has no liability insurance.
5. State legislators passed a bill in 2001 that would increase the “green slip” fee for vehicles imported into Texas from $1.00 to .
6. True or False:
If a car creditor leaves lien information off the Form 130-U (title transfer application) resulting in no lien being shown on the title certificate, the buyer’s debt is extinguished.
7. A straw purchaser, from a car dealer’s point of view, is:
a) A farmer buying a truck to haul hay
b) A soda shop supply agent
c) A scare-crow maker
d) A person purchasing a vehicle for intended use by another person
8. True or False:
Insurance companies offering automobile policies in Texas must use the standard loss-payee clause that appears in the Texas Insurance Code.
9. A valid mechanic’s lien is (inferior or superior) to a prior recorded mortgage lien on a vehicle.
10. True or False:
To claim a mechanic’s lien, a mechanic must give written notice to the County Tax Assessor-Collector.
Bonus Questions
1. What is the new maximum amount for the motor vehicle documentary fee, as recommended by the OCCC?
a) $150
b) $175
c) $200
d) $225
2. When will the requirement for Texas dealers to issue metal plates instead of paper temporary tags take effect?
a) January 1, 2025
b) June 1, 2025
c) July 1, 2025
d) December 1, 2025
Local Chapters
CORPUS CHRISTI
G.R. Moore
The Car Shack
(dates and times can be found at txiada.org/Calendar_List.asp, when scheduled)
EL PASO
Cesar Stark
S & S Motors
Meeting – 3rd Friday (Monthly)
FORT WORTH
Jerry Smith
H J Smith Automobiles
(dates and times can be found at txiada.org/Calendar_List.asp, when scheduled)
HOUSTON
Robert Edenfield
Mi Pueblo BRP
Meeting – 2nd Tuesday (Monthly)
SAN ANTONIO
Nory Pakravan
210 Auto Credit
(dates and times can be found at txiada.org/Calendar_List.asp, when scheduled)
Bonus Questions
3. What action did many dealerships take to manage transactions after the recent cyberattack on CDK Global?
a) Shifted to digital backup systems
b) Paused all operations until restoration
c) Utilized manual methods like spreadsheets and sticky notes
d) Partnered with alternative DMS providers
4. The CFPB’s new enforcement order registry, effective September 16, 2024, requires which of the following from nonbank entities like BHPH dealers?
a) Monthly compliance audits
b)Registration of all enforcement orders since January 1, 2017
c) Submission of quarterly revenue statements
d) No additional actions if the dealership has no prior enforcement orders
5. Which of the following is a key focus of the OCCC’s proposed amendments to rules for motor vehicle sales finance?
a) Increasing penalties for late payments
b) Streamlining the licensing process
c) Clarifying regulations on credit insurance refunds
d) Expanding the categories of allowable fees
(Answers can be found on pg. 39)
Please Welcome Our Newest TIADA Members
DEALER MEMBERS
Allegiance Motor Cars
Robert Hodges .
Always Auto
5757 Everhart Rd., Corpus Christi, TX 78413
Joshua Letsis 2213 Old Jacksboro Hwy, Wichita Falls, TX 76301
Auto Analytix Advisors
Geny Gutierrez 4215 Murwick Dr, Arlington, TX 76016
City Motor Company
David Broadway 3505 Franklin Ave., Waco, TX 76710
I&A Auto Sales
Ismael Arias ......................... 5326 Doniphan Dr, El Paso, TX 79932
Ikoon Auto Sales No2 LLC
Blanca Biffel ...................... 3705 E Loop 820 S, Fort Worth, TX 76119
Karr Automotive
Tammy Garcia 9747 Culebra Rd., San Antonio, TX 78251
LMJ Auto Motors Sales
Luis Nente 2733 Blanco Road, suite A, San Antonio, TX 78212
North Texas Auto Investors
Robert Hill 209 West Highway 67, Alvarado, TX 76009
Precision Interest LLC
David Wasson ............... 31614 Industrial Park Drive, Pinehurst, TX 77362
Pugville Auto Works LLC
Debra Davis ...................121 Pistol Road #101, Weatherford, TX 76085
Simple Auto DFW
Katy Gruner 11700 Garland Rd, Dallas, TX 75218
Texas Star Motors
Amin Harmouch 9006 Almeda Genoa Rd, Houston, TX 77075
New Member
Travel to Orlando, Vegas, or somewhere else!
Recruit 20 members and you will receive an all-expense trip for you and a guest to attend the 2026 NIADA Convention & Expo
Relax with the family and turn work into pleasure.
Recruit 10 new members by June 30th, 2025 and you will receive your hotel room for free (up to two nights) at the Gaylord Texan Resort & Convention Center in Grapevine during the TIADA conference.
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Receive top-notch education.
Recruit 5 new members by June 30th, 2025 and you will receive one free registration to the 2025 TIADA Conference & Expo. 2
Have a cup of coffee on us. Actually, have 4 cups. Recruit a new member and we will send you a $10 gift card — and we’ll do that for the first 4 members you recruit.
THE SALES PROCESS
“Expressed Informed Consent” EIC?
In other words:
Prove what you said during the sale. The answer is closer than you think...
your mandatory disclosure in every step of the sales process and closing.
regulation matters
Appointments to the Federal Government: FTC and CFPB Post-Election
For almost a month now, people have started to discuss what a second Trump presidency looks like for them. While most of that conversation is inappropriate for Texas Dealer, it is important for us to take a moment and talk about what this change means for dealers. Since presidents are required to make 4,000 politically appointed positions, including more than 1,200 that require Senate confirmation, this article focuses on a few key ones for our industry. Please keep in mind that predicting what Donald Trump will do in his second administration is beyond my expertise; these are my educated guesses. Also, any opinions expressed herein are those of myself and not necessarily those of TIADA.
The Federal Trade Commission (FTC) and Consumer Financial Protection Bureau (CFPB) are the most important federal regulators for dealers, and both are likely to see significant philosophical changes from Trump’s appointments.
The Federal Trade Commission (FTC)
To get an idea of the philosophical change that occurred at the FTC under the Biden administration, we can look at its changes to the strategic plan. For a long time, the FTC stated it would enforce its laws “without unduly burdening legitimate business activity.” That phrase was deleted by the FTC during the Biden administration without any reasoning as to why, and I think this is very telling of his appointees’ philosophical viewpoint. Trump has several opportunities to reshape the makeup of the FTC moving forward, including the rules still pending enactment.
The FTC is headed by five Commissioners, nominated by the President and confirmed by the Senate, each serving a seven-year term. No more than three Commissioners can be of the same political party. The President chooses one Commissioner to act as Chair. The current FTC chair is Lina Khan. While her term as a commissioner technically ended on September 26, 2024, commissioners may continue serving until their replacements are made. Although FTC commissioners cannot be terminated except for cause, the designation of which commissioner is chair is at the president’s discretion, and a Republican chair is almost certain, as well as a Republican appointment to replace Chair Khan,
by Earl Cooke TIADA DIRECTOR OF COMPLIANCE AND BUSINESS DEVELOPMENT
Although FTC commissioners cannot be terminated except for cause, the designation of which commissioner is chair is at the president’s discretion, and a Republican chair is almost certain.
which would shift the FTC majority from Democrat to Republican. After that appointment, based on Trump’s previous administration, for any of the Democrat appointees who leave or terms expire, Trump is likely to follow the tradition that the president respects the choice of replacement by the highest-ranking opposingparty senator in filling vacant minority party commission seat and make his appointments for majority party spots.
Based on all the information available, Trump will appoint people similar to those he had previously appointed. One previous appointee is former Commissioner Christine S. Wilson. Former FTC Commissioner Christine S. Wilson was sworn in on September 26, 2018, as a Commissioner of the Federal Trade Commission. She had a term expired on Sept. 25, 2025, but she stepped down with a noisy exit from her position on March 31, 2023, prior to her term expiring.
In her dissenting opinion for the CARS Rule, she stated, “Despite staff’s meticulous analysis and drafting, I have concerns about this proposal. It prohibits deceptive practices but also requires numerous disclosures related to offering price, add-ons, and monthly financing. Although staff endeavored to tailor these provisions to the deceptive practices challenged in our cases, I anticipate unintended but negative consequences. Several factors drive this concern. First, even APA rulemaking is cumbersome and lengthy, making it difficult to keep rules up to date. Politically charged topics (as this one may be) impose even greater delays on rulemaking. Second, historical experience demonstrates that complex regulatory frameworks stifle innovation, increase costs, raise prices, limit choice, and decrease output. . . Third, attempts to narrowly tailor rules are frequently unsuccessful. Technologies and markets evolve in ways regulators are unable to predict, leading either to mission creep — the expansion of regulatory regimes to address these unforeseen developments — or to ossification, given the opportunity cost of frequent updates to reflect emerging market realities.”
With that in mind, the automotive industry seems to be in a good spot to stop the enactment of the CARS Rule since the Trump administration is unlikely to defend the Rule in Court or take other measures not to
enact the Rule. For those not familiar with The FTC’s CARS Rule, it is a 2023 rule related to dealership advertising and optional vehicle protection products that is currently being contested by the Texas Automobile Dealers Association in the 5th U.S. Circuit Court of Appeals and is likely to be a target of the administration and one of the many things Trump gets rid of in a second term. If you want information on the Cars Rule, please see our May and February issues of Texas Dealer from earlier this year, as both extensively cover the Rule. While the CARS Rule is likely gone, other recently enacted Rules are likely here to stay because they cannot or will not be undone. Those rules include the Safeguards Rule, which requires dealers to ensure consumer information is protected from hackers as this has bipartisan support. Overall, I suspect the shape of the FTC will be a lot more dealer-friendly.
The Consumer Financial Protection Bureau (CFPB)
Although President Trump did not expressly state any details on his plan for the CFPB, we can look at his previous presidency to get an idea of what may happen. Unlike the FTC, the leadership of the CFPB can be removed at will by the President, and there is likely no chance that Director Rohit Copra will remain Director
of the CFPB. To get an idea of what the replacement may look like, we can look at Trump’s previous two appointees to the CFPB.
The first appointee by Trump was Mick Mulvaney. Prior to his appointment, Mulvaney said this about the CFPB: “It’s a wonderful example of how a bureaucracy will function if it has no accountability to anybody. It turns up being a joke, and that’s what the CFPB really has been, in a sick, sad kind of way, because you’ve got an institution that has tremendous authority over what you all do for a living.” Mulvany grabbed many headlines as head of the CFPB in his first two days when the CFPB reopened a final rule targeting payday lending and required that the CFPB publish a series of requests for information in the Federal Register asking for the public to weigh in on the agency’s enforcement, supervision, rulemaking, market monitoring and education activities.
Trump’s second appointment for the CFPB was Kathy Kraninger. Her focus at the CFPB was to protect consumers “through education, regulation, supervision, and enforcement,” likely in that order. She believed “the Bureau cannot be everywhere, with everyone, at every transaction — nor should it try to be. Therefore, empowering consumers to help themselves, protect their own interests, and choose the financial products and services that best fit their needs is essential to preventing consumer harm and building financial wellbeing.” During her time at the CFPB, enforcement actions hit the second-highest number of all time, but the amounts of penalties and consumer refunds were lower.
Overall, I suspect that the CFPB will be more focused on providing consumer and business education, and any enforcement actions will be against clearly egregious actors without advancing new policies.
board of directors meeting minutes
Cambria Hotel Austin Uptown | Austin, TX
October 28, 2024
by TIADA staff
Board Members in Attendance: Russell Moore, Greg Reine, Eddie Hale, Greg Phea, Lucas Ponder, Tyler Simmons, Cesar Torres, Cesar Stark, Christina Sabillón, and Chad Lancaster.
TIADA Staff in Attendance: John Frullo, Earl Cooke, Shelby Kawejsza, and Patty Huber.
At its meeting on Monday, October 28, 2024, TIADA took the following actions:
President Greg Phea called the meeting to order at 1:00 p.m.
Discussion on Resignation of Vicki Davis
Chairman of the Board Eddie Hale spoke to the Executive Committee on the vacancy created by President Vicki Davis selling her dealership and resigning from her position as TIADA President.
The Board unanimously recommended Treasurer Greg Reine as President-Elect.
A motion was made by Eddie Hale and seconded by Russell Moore.
Minutes of Last Meeting
Secretary Russell Moore presented the minutes from the last meeting.
A motion was made to accept the minutes.
Moved by Chad Lancaster, seconded by Greg Phea - PASSED
Treasurer’s Report
Executive Director John Frullo presented the Treasurer’s Report.
A motion was made to accept the Treasurer’s report.
Moved by Tyler Simmons, seconded by Russell Moore - PASSED
Officer’s Report
Eddie Hale discussed upcoming Abilene and Arlington town halls. Board members reported on their member outreach calls.
Executive Director’s Report
Executive Director John Frullo updated the board on the proposed NIADA Affiliate Agreement, updates to the TIADA Succession Plan, and the search for a new lobbyist.
Director of Business Development and Compliance
Earl Cooke presented an update on state agencies and governmental relations.
Executive Director John Frullo presented the FY’24 budget and reserves.
A motion was made to provide a resolution for investments with banking products, allowing Executive Director Frullo to make certain investments at the board’s directive.
Moved by Eddie Hale, seconded by Lowell Rogers.
New Business
A discussion took place regarding creating Texas Peer Groups and updating TIADA’s website.
A motion was made to adjourn the meeting.
Moved by Greg Phea, seconded by Cesar Torres - PASSED Greg Reine adjourned the meeting at 5:35 p.m.
Respectfully submitted, Russell Moore, Secretary
A complete copy of any reports referenced in this document and more detailed notes from the meeting are on file at the TIADA office and available upon request.
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feature
Maximum Finance Charge Rates for 2025
by Michael W. Dunagan TIADA Counsel
Dealer Question: What is the maximum finance charge rate I can use on a motor vehicle retail installment contract?
Answer: Dealers who hold vehicle finance licenses issued by the Office of Consumer Credit Commissioner (OCCC) are authorized to finance the sale of vehicles, and are allowed to add finance charge or time-price-differential to the amount financed (while the term “interest” is commonly used interchangeably with finance charge and timeprice-differential, “interest” actually is the amount charged on a loan of money, and should not technically be used in the context of financing the sale of a motor vehicle).
The legislature has established a sliding scale of maximum rates, with higher rates allowed on older cars. The maximum rate that sellers of older vehicles can add to the amount financed is $15 per $100 per annum or, stated another way, 15 percent add on (see accompanying chart). Depending on such variables as the length of the repayment period, the amount of each payment, and the frequency of payment (weekly, bi-weekly, semi-monthly or monthly), the annual percentage rate on 15 percent add on can exceed 26 percent.
Chapter 348 of the Texas Finance Code allows sellers of vehicles to finance any unpaid balance at rates that generally exceed the rates of interest that can be legally charged by banks and traditional lenders.
For purposes of setting maximum rates of finance charge, Chapter 348 establishes four classes of vehicles based of the vehicle’s model year. The attached chart shows allowable rates for calendar year 2025. These rates are valid on sales that take place between January 1, 2025, and December 31, 2025. The maximum rates “roll over” on January 1 of each year.
The maximum rates of finance charges are stated in the Finance Code as “add-on” rates. For example, for vehicles that fall into the class-four category, sellers can charge fifteen dollars per one hundred dollars financed per annum. These are maximum rates, and any rate lower than the maximum can be charged.
“Add-on” rates should not be confused with “annual percentage rates” which are the rates required to be disclosed on loans and retail installment sales by federal law. The Annual Percentage Rate (or APR), which appears in the so-called “Fed Box,” will usually be substantially higher than the add-on rate.
All financing sellers, with a few exceptions, are required by federal law to disclose the rate of finance charge as an annual percentage rate, or APR, on their contracts. Since Texas law sets maximum rates as add-on rates, it is necessary to first calculate the amount of finance charge the
“Add-on” rates should not be confused with “annual percentage rates” which are the rates required to be disclosed on loans and retail installment sales by federal law.
creditor chooses to assess within the legal limit, then determine the APR for disclosure purposes. Federal Truth-InLending requires that any finance charge rate be advertised or expressed to a consumer as an APR. It is thus improper to advertise or discuss add-on rates with customers.
The process of calculating the APR on contracts that provide for payments other than equal monthly payments is extremely difficult. Most dealers rely on specialized software (often referred to as dealer management software, or DMS) to perform this function. (For a list of reviewed programs, see the OCCC website at https://www.occc.texas.gov).
Without appropriate software, it is virtually impossible for a creditor who collects weekly, bi-weekly, or semimonthly payments to accurately calculate an APR and other required disclosures. Dealers should not guess at or estimate an APR as incorrect disclosures are the basis for claims for statutory damages and attorneys fees.
Note that the chart also includes a column for what is referred to as an “Alternate Rate.” This rate is 18 percent APR for all four classes. Many dealers have questioned what the alternate rate is, and how it affects the rates they can charge.
Maximum Finance Charge Rates for Calendar Year 2024
Class Year Models
One 2026 and 2025 new
Two Any new not appearing in Class One above; 2025, 2024 and 2023 used
Three 2022 and 2021
Four 2020 and older
The alternate rate is an optional rate. A dealer has the option to use either the standard or alternate rate. As an example, a dealer financing the sale of a 2019 modelyear vehicle can charge up to 15 percent add-on (since this year model falls into Class Four) or the alternative rate of 18 percent APR Since the 15 percent add-on rate translates to over 26 percent APR on a typical weekly payment contract, a higher legal return can be achieved using the standard rate than the alternative rate.
On the other hand, the sale of a class-two vehicle would be subject to a 10 percent add-on maximum. Since the actual yield on 10 percent add-on would be lower than 18 percent, the alternative rate would allow the seller a higher legal return.
APR
OCCC rules also require the disclosure of a “contract rate” which is different from the add on rate and APR DMS providers that comply with Texas requirements properly calculate and disclose the contract rate. The OCCC website has additional information about maximum rates and contract rates.
Remember that the so-called “add-on rate,” which is the rate used to calculate the finance charge added to a contract, shouldn’t be used on the contract documents or in any communication with consumers, such as advertising. In order that credit consumers can shop rates on an “apples to apples” basis, federal law requires all discussions about rates to refer to the chosen universal rate, or the APR.
Answers to the 2024 Dealer Proficiency Quiz
(Questions found on pg. 19)
1. c. The Texas statutory provision for such a court order is “sequestration.” In some states, it is called “replevin.” (January, 2024; Obtaining Court Orders To Enforce Liens)
2. True. It is the actual filing of the bankruptcy petition that triggers the automatic stay. A statement that a debtor is going to file in the future does not create any special legal duties. (March, 2024; Bankruptcy Planning Traps Car Dealers)
3. b. Texas law provides that the tender of all required forms, documents, and payment to the County Tax Office establishes perfection. (April, 2024; What to Do If Lien Is Dropped?)
4. True. The Texas Supreme Court has ruled that a seller, after a bona fide and completed sale, can’t be held liable under negligent entrustment. (February, 2024; What Is Negligent Entrustment and When Is a Dealer Liable for Accidents Caused By His Buyer?)
5. $225. (July, 2024; Industry’s Coordinated Effort Successfully Struck Down $225 Import Fee)
6. False. The buyer remains liable for the indebtedness under the terms of the contract entered into by the parties. The problem is that third parties may have purchased or loaned money against the vehicle without knowledge of a lien. (April, 2024; What To Do If Lien Is Dropped)
7. d. (September, 2024; This Straw Man Will Never Have a Brain, Dorothy)
8. False. After the legislature deregulated the insurance industry, companies were free to draft their policy terms, including loss-payee clauses. (November, 2024; Chasing Property Damage Insurance: A Broken Model)
9. A valid mechanic’s lien is superior to a prior recoded mortgage lien on a vehicle. (October, 2024; Fraudulent Mechanic’s Lien Claims Still Concern Car Creditors)
10. True. Texas law requires that mechanic’s liens be filed with the County Tax Assessor-Collector, who then sends notice to registered owners and lien holders that a claim has been filed. (October, 2024; Fraudulent Mechanic’s Lien Claims Still Concern Car Creditors)
Bonus Answers
1. d. $225 (January 31, 2024: OCCC Proposes Raising the Motor Vehicle Documentary Fee)
2. c. July 1, 2025 (February 15, 2024: TxDMV Provides Comprehensive Timeline for Temporary Tag Transition)
3. c. Utilized manual methods like spreadsheets and sticky notes (March 20, 2024: Cyberattacks Cripple Major DMS Provider)
4. b. Registration of all enforcement orders since January 1, 2017 (April 5, 2024: CFPB’s New Enforcement Order Registry: What BHPH and Independent Dealers Need to Know)
5. c. Clarifying regulations on credit insurance refunds (May 15, 2024: OCCC Plans to Amend Rules for Motor Vehicle Sales Finance)
can log in with their username/ password and access our Dealer Member Directory, Legislative Action Center, Compliance Consultation Service and much more. Register for all upcoming TIADA events online through the Calendar of Events, access our online membership application, find contact information for all our Local Chapters, and access many additional resources through our Knowledge Base.
The Power of Membership.
Since 1944, TIADA has been and continues to be the only statewide organization for independent automobile dealers. You are connected with more than one thousand independent automobile dealers across Texas, who are all committed to creating a better image for the industry, while protecting our rights as business owners and increasing our bottom line. Individually, you are strong, but together, as an association, we are powerful .
Get involved with the association’s advocacy efforts, find out what policies may be affecting used car dealers. Have a say, make a difference.
Join other successful dealers. Membership dues include full membership to TIADA and the national association, NIADA.
Connect with industry leaders. Attend the annual TIADA Conference & Expo, access the member-only online directory.
Education offerings designed with you in mind, your personal copy of the Texas Dealer magazine, twice monthly industry updates, exclusive access to industry articles—a wealth of knowledge at your fingertips.
The perks are many, starting with over $10,000 in auction and vendor savings through TIADA’s mobile app. Redeem just a few auction discounts and you’ve basically covered the cost of membership for the year.
Get quick answers on industry, regulatory or compliance issues.
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What Records Do You Need for a Compliance Examination? Spoiler: All of Them (Almost)
by Tom Traweek Financial Examiner Houston RegionTexas Office of Consumer Credit Commissioner
When the notification for a compliance examination lands in your inbox, the first reaction is often mild panic, followed closely by the question: “What records do I need?” While I’d love to tell you it’s just a single post-it note with a smiley face, the reality is a bit more… comprehensive.
1. Key Lists to Prepare
At the onset, an OCCC examiner will likely request several specific lists:
A list of all financed sales
A list of open accounts
A list of repossessions
A list of paid accounts.
These lists serve as the pool from which the examiner selects transaction files for review. It’s essential that dealers familiarize themselves with how to generate and print these reports through their Dealer Management Software (DMS). If you’re unsure, now’s the time to cozy up to your
DMS helpdesk — after all, that’s what they’re there for!
2. Transaction File Records: Proving Compliance
The heart of your preparation lies in the buyer’s transaction file, which should contain all records necessary to demonstrate compliance. A helpful rule of thumb? If a record was prepared during the sale or servicing of a retail installment sale, it’s probably required or may be necessary to prove your compliance.
Each component of the retail installment sales contract (RIC) must be backed by verifiable proof. Let’s break it down: Buyer’s Order/Purchase Agreement: Should align with the selling price.
Disclosure of Equity in Trade-in Vehicle: And proof of trade-in payoff.
Down Payment Receipt: Proof of the payment made by the buyer.
VIT Factor Notice: The county notice you receive annually establishing the rate of vehicle inventory tax.
Title Application Receipt (VTR-500-RTS):
Evidence of fees paid for sales tax, title, registration, and inspection replacement fee.
Inspection Station Receipt: If you’ve charged for inspection costs.
Ancillary Product Charges: Supported by product certificates (e.g., service contracts, GAP coverage).
Documentary Fee: Must be reasonable by rule, or accepted filings.
Using a GPS or starter interrupting device?
You’ll need documented buyer consent for installation. If protecting collateral using substitute insurance when a buyer fails to provide their own coverage: you’ll need to have copies of all notices and policies.
3. Account Records For Those Collecting Payments
If you’re collecting on installment sales, you’ll need a robust account record that tracks each fee, payment, charge, and balance change. Whether this is done through your DMS or by hand, it must provide a running history until the account closes. Be prepared to show records of:
Each payment, broken down into principal, finance charges, and fees, as applicable.
Proof of sales tax remittances if sales tax is deferred.
4. Repossession & Post-Sale Records
Repossession introduces additional recordkeeping requirements, such as notices of sale or acceptance of collateral, proof of out-of-pocket expenses, a vehicle condition report post-repossession (if prepared), notice of surplus or deficiency (as applicable), and documentation of account closure in your recordkeeping system.
For any repossession, all related records must be available.
5. Collection Contact Logs
It’s easy to overlook, but every collection contact must be documented. That means recording:
Date and method of contact
The party contacted
The person who initiated the contact
A summary of the conversation
You’ll also need copies of any collection notices or letters sent to buyers.
6. Rules & Regulations: Where to Find the Specifics
All required records, along with any additional
documentation necessary to prove compliance, must be readily available for examination. For specific guidelines, refer to these sections of the Texas Administrative Code: Indirect Lenders (auto finance companies):
7 TAC, Section 84.707.
Buy-Here-Pay-Here Dealers: 7 TAC, Section 84.708. Holders of RICs: 7 TAC, Section 84.709.
These can all be accessed through links on the OCCC website: www.occc.texas.gov/industry/ motor-vehicle-sales-finance.
FTC Safeguards Rule Amendments: What You Need to Know
The FTC Safeguards Rule amendments, effective June 9, 2023 (16 CFR pt. 314), introduce several critical requirements for financial institutions to enhance the protection of customer information. These amendments are particularly relevant for motor vehicle dealers who meet the specified criteria, and our examiners will be enforcing these new standards.
1. Designation of a Qualified Individual
All financial institutions, including motor vehicle dealers, must designate a qualified individual to oversee their information security program. This individual is responsible for ensuring that the program is comprehensive and effective.
2. Periodic Assessment of Service
Providers
Institutions are required to periodically assess their service providers to ensure they are capable of maintaining appropriate safeguards for customer information.
3. Implementation of Safeguards
The rule mandates the implementation of several key safeguards, including:
Encryption of customer information.
Multi-Factor Authentication (MFA) for accessing customer data.
Data Retention Procedures to ensure information is only kept as long as necessary.
4. Requirements for Institutions with Information on 5,000+ Customers
If a motor vehicle dealer maintains information on more than 5,000 customers over the cumulative 4-year record retention period, they must: Put risk assessments in writing. Conduct recurring monitoring or testing of their security measures.
Establish a written incident response plan.
Our office will be checking for compliance with these requirements. This includes verifying that a qualified individual is overseeing the safeguard program and that the program itself is sufficient to protect customer information.
Inspection Replacement Fee: What
You Need to Know
As you all know, vehicle safety inspections will be discontinued effective January 1, 2025. However, the fee will continue to be collected, but by law, it is not a registration fee. This fee may be labeled “INSPECTION REPLACEMENT FEE” on VTR-500 forms.
For used vehicles that are two years old or more, there may be a 1-year inspection replacement fee of $7.50. New vehicles may be charged a 2-year inspection replacement fee totaling $16.75. Upon renewal in the third year, they may begin paying the 1-year inspection replacement fee of $7.50.
Since this fee is not categorized as a “registration fee” or an “inspection fee to state,” it must be entered elsewhere in the itemization of the amount financed on the Retail Installment Contract (RIC). If the RIC does not have a designated line labeled “Inspection replacement fee,” such as on an “other fees” line, it must explicitly state that it is the Inspection replacement fee to avoid
violating Regulation Z, 226/1026.18(c)(1)(iii).
The model RIC will replace the two existing disclosure options with one that reads:
L. Government vehicle inspection program replacement fee $______
M. Vehicle emissions fee $______
If using an RIC with existing language, per 84.808(8)(E)(i), the “to state” should be marked as N/A, and “to station” may include any amount paid to the station (which will only be a charge incurred in emissions testing counties). The inspection replacement fee shown on the VTR-500 may be recorded on an “Other charges” line, identifying it as: to “state” for “Inspection replacement fee” $_____, or the inspection replacement fee may be placed on the Official fees paid to government agencies line.
If using an old RIC with the disclosure according to 84.808(8)(E)(ii), any station fee goes on the “Government vehicle inspection fees” line, and the inspection replacement fee to the state goes on line O: to “state” for “Inspection replacement fee” $_____, or line F: Official fees paid to government agencies. If “inspection replacement fee” or “Government vehicle inspection program replacement fee” will not
fit on a specific line, it may be abbreviated in a manner that is clearly understood.
As a reminder: OCCC examiners continue to see dealers rely on acceptance company websites and dealer portals when completing contract documents for those companies. You should never rely solely on others to make or keep you compliant. Software is great if it is properly set up to service your business model. Third-party financing platforms can make funding your contracts fast and efficient, but the provider is more likely concerned with their own compliance and not yours. They will not maintain records that should be in your possession for the required time.
Annual Reporting to begin in 2026
Beginning with 2026 annual motor vehicle sales finance license renewals, every licensee will be required to report the number of financed sales and the total dollar amount of those sales for the preceding calendar year. Every licensee should begin collecting that data and ensure that any software used can accurately report those totals.
As always, if you have any questions, please contact our office for help.
in memoriam
Remembering Paul Scott
Paul Richard Scott
September 8, 1948 – November 22, 2024
Lubbock, Texas
behind the wheel
That’s the Way We Have Always Done it!
As you well know, the independent automobile industry is an exciting way to make a living, provide for your family, and keep a great team of coworkers! It also provides exciting opportunities to meet great and interesting people like customers, vendors, and even competitors. Each of these groups will have their own reasons, desires, and goals for being involved in the automotive industry.
Complex laws are ever-changing from the local, state, and federal government agencies and their related elected officials with increased frequency. These changes can have a significant impact on your business operations, your bottom line, and the regulations you must adhere to.
Your association is at the forefront of working with governmental agencies to ensure these groups understand how these changes will or will not work when applied in the “real world,” the world in which we operate. Competing interests come from all areas with the intention of meeting a specific purpose as promulgated by that interested party. As we have seen, the resulting laws may benefit a particular interest while causing many difficulties to another interest or party.
There is no better example of this change than the temporary paper tag to metal plate transition we are working through. TIADA has held over a dozen town halls throughout the state in partnership with the Texas Department of Motor Vehicles. This complex and lengthy
by John Frullo
TIADA EXECUTIVE DIRECTOR
process of determining how this law will be administered and implemented is nearly two years in the making and has a start date of July 1, 2025. While one-half year away might seem like a long time, there is much that you should have already done or should be working one and more to be completed before this looming date of implementation.
TIADA, your member-owned and member-governed association, will continue to keep you informed through electronic, printed, and in-person events during this process. It is important to pay special attention to the events in light of the vast changes. Earlier this year, a dealer had his license revoked for not keeping up with the current rules. Had their company been a member of TIADA, they would have had the information available and the assistance to stay abreast of the latest developments. The old adage, “That’s the way we have always done it…” no longer works in our industry.
You can do your part by keeping up with the information from TIADA. Additionally, make plans to attend various events, including chapter meetings, town halls, in-person classes, and the best conference in the industry, tailored to Texas dealers: the TIADA Conference and Expo will be held next year at the Gaylord Hotel in Grapevine, July 27th–29th, 2025. Lastly, be sure to keep all the information coming to you by renewing your membership this month for continuously updated information.
The old adage, “That’s the way we have always done it…” no longer works in our industry.
