Pub. 1 2012-2013 Issue 1

N E W J E R S E Y C O A L I T I O N O F A U T O M O T I V E R E T A I L E R S 5 new jersey auto retailer W W W . N J C A R . O R G Consumer Fraud Spot Delivery and the mythical “yo-yo” tactic. State and federal regulators are showing interest in regulating what they call “yo- yo sales,” more accurately, contingent or “spot” deliveries. They seem to be on a quest to slay a mythical beast, as their perception of spot delivery practices bears no relation to the reality. Consumer protection advocates have put out numerous articles and white papers criticizing “yo-yo sales,” in which, they claim, dealerships engage in an elaborate scheme to send people home with a car, sell their trade-in, and force them to accept changed terms. As we all know, no dealership would choose to spot-deliver a vehicle, with all the risks involved, if they could possibly avoid it. Spot delivery is an accommodation for the convenience of the customer, and not some diabolical scheme. NJ CAR recently wrote to the New Jersey Attorney General, opposing a proposal that regulations are needed to govern spot deliveries, on the grounds that the supposed “abuses” the AGwas concerned about are already illegal. In order to avoid the kinds of claims that sometimes arise when a spot delivery goes wrong, NJ CAR recommends that members use a clearly written contin- gency agreement which specifies the finance terms contemplated, and sets forth the parties’ respective rights in the event those terms cannot be obtained. Lease Buy-out Fees. Captive lease companies make it a practice to refer their lease customers back to the original dealership to arrange lease buy-outs or purchases at lease end. Dealerships in many cases are not compensated for their role in such buy-outs. In these cases, there is some confusion over the roles of the parties. For example, which party is the seller: the lease company which holds title, or the dealership arranging the purchase? Which party is obligated to provide warranties? What fees and charges can a dealership impose for its services? Consumer advocates argue that no fees whatsoever can be charged, except as allowed in the lease agreement itself. Consumer Fraud plaintiffs’ lawyers feed on ambiguity and uncertainty in the law. NJ CAR is keeping a close watch on this area. Rent-to-own Rent-to-own is a new type of transaction which is still very rare in New Jersey (among franchised dealerships, at least), though it is growing rapidly in other parts of the country. Right now, there are no federal or State regulations governing automotive rent-to- own transactions. No one wants more regulations, but when there is no regulation at all, it is harder to see where the line between forewarned is forearmed  continued on page 7 Forewarned is Forearmed: Be Prepared For 2012’s Legal and Regulatory Threats BY PATRICK COX Between the many complicated laws and regulations, government regulators, and plaintiffs’ lawyers always ready to cry “gotcha,” franchised automotive retailers are surrounded by legal and regulatory perils. NJ CAR has its ear to the ground, hearing from its members on a daily basis as issues emerge. The following is a selection of the issues which are becoming more prominent in the current year.