Pub. 15 2016-2017 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 I S S U E N O . 2 , 2 0 1 6 18 new jersey auto retailer COMPLIANCE PITFALLS  continued from page 17 Recalls A topic of particular importance recently is the issue of National Highway Traffic Safety Administration (NHTSA), safety recalls. There are tens of millions of vehicles in the United States that have been recalled based on defective Takata airbags and there is a lengthy backlog in the availability of parts to perform the required repairs. This leaves dealerships with both new and used vehicles in inventory that are subject to recall, and for which there will be no repair avail- able for months. Under the federal Motor Vehicle Safety Act, new vehicles subject to a safety recall may not be sold before the defect is remedied. However, there is no legal prohibitionagainst sellingusedvehicles that are subject to an open recall. Somemanufacturers have advised their franchisees not to sell such vehicles. Whether the manufacturers have the legal right to stop dealerships from selling used vehicles is debatable, par- ticularly if themanufacturer is unwilling to reimburse the dealership’s costs and expenses for holding these vehicles in inventory formonths. Under the New Jersey CFA, any open recall affecting a vehicle must be disclosed to the buyer. NJ CAR has recommended using the information available at the NHTSA website (www.safercar.gov ) to facilitate this disclosure. This website allows you to search by VIN for any recalls affecting a vehicle. Disclosure can be documented by printing out the information available and having buyers sign a copy, aloneorwithadisclosure acknowledgement formsimilar to the sample shown on the following page. Telemarketing Compliance Telemarketing compliance is of particular importance to the BDC element of a dealership’s sales team. There are layers of laws and regulations governing telemarketing, some issuedby theFederal Trade Commission (FTC), some created by the Federal Communication Commission (FCC), and some by the State of New Jersey. Different rules apply for outgoing calls and incoming calls, for callsmadewithin one state and interstate calls, and more rules govern email and SMS messaging (texts). “Telemarketers”, who cold-call consumers to try to sell products, must register with the FTC and the State of New Jersey and check all numbers they call to make sure they are not on the Do-Not-Call list. Compliance is a little simpler if a dealership makes it a policy to stay within the exceptions to the Do-Not-Call rule. Both the FTC and the FCC rules allow a business to call a person, even if they are on the do-not-call list, if you have an “established business relationship” (EBR) with them. EBR’s fall into two categories: 1. Anyone who has entered into a “purchase, rental, or lease of the seller’s goods or services”within 18months of the date of the call. 2. Anyone who has made an “inquiry or application” within 3 months of the date of the call. These exceptions would include anyone who has purchased or leased a vehicle or any other product, or has had a vehicle serviced, in the last 18 months. It also includes any potential customers who have contacted your dealership or who have visited your showroom in the last 90 days. The most common use of this exception allows dealers to call anyone who has made an inquiry online, through the dealer- ship’s website, or through a lead generator’s website, during the prior 90 days. There is also an exception that allows an individual to be called when a business has express written permission. Emails are less restricted. However, regulations require that com- mercial emails have truthful subject messages, identify themselves as commercial messages, identify the sender, provide address and contact information, and contain an “opt-out”mechanism. Requests to opt-out must be respected. Texts are more restricted. The new regulations governing texting prohibit the use of any automated system to send text messages for marketing purposes without prior written permission from the re- cipient. However, an individual employee is allowed to send a text manually to a customer or a contact without priorwritten permission. Further, textswhicharenot attempting topromote the saleof aproduct or service are not covered by the rules. For example, service advisors could use text messages to advise customers that their vehicle is ready with no issues; however, any request made at any time by a recipient of a text NOT to receive texts must be honored. This reviewof someof the compliance issues affecting the sales process is just the tip of the iceberg. Assisting its members with the array of compliance challenges they face is one of NJ CAR’s core missions. Watch for periodic memos and alerts for updates and compliance news, as well as seminars and training sessions conducted by the NJ CAR Academy on compliance topics. Patrick Cox is NJ CAR’s Director of Legal & Regulatory Affairs and can be reached at 609.883.5056, x350 or pcox@njcar.org . Under the New Jersey CFA, any open recall affecting a vehicle must be disclosed to the buyer.