Today I perused the table of contents for Automotive News, as I try to do every Monday, to see if any articles caught my attention. For those who may not be that involved with the automotive industry, Automotive News is the trade publication of record, more or less. While typically focusing on news related to manufacturing, Automotive News has lately broached topics more pertinent to what’s on the mind of many owners of dealerships these days; online advertising and sales. Today was no exception, and the article, titled The Wild West of Online discussed how new efforts to advertise online were running afoul of state and local laws in many jurisdictions. The dealer quoted in the article, Mike Duman of the Duman Auto Group, hails from my home state of Virginia. The Commonwealth (as many Virginians like to refer to the state) has particularly stringent laws regarding automobile sales and advertising. For example, sales associates in Virginia are licensed by the state’s Department of Motor Vehicles. Virginia also does not allow ‘bird dog fees’ which, in industry parlance, are fees paid by a dealer to an unaffiliated or unlicensed third-party as commission for a referral. In contrast, my adopted state of New York forgoes such requirements, neither requiring sales associates to obtain licenses nor forbid bird dog fees. As one may expect, variances between state to state regarding what is and is not permissible gives dealers and vendors problems.
To me, this issue really isn’t that complicated. Unless otherwise stated by applicable law or administrative rules, you should evaluate the legality of online advertisements in the same manner and using the same tools you would for advertisements placed in “traditional” media such as television, radio and direct mailing. If you’re talking about a particular deal in a Facebook post, you should be prepared to offer disclosures required in your state. If it looks like an ad, and it sounds like an ad, your state’s regulatory agencies are probably going to treat it like an ad. Don’t rely on the vendor to tell you what is and isn’t kosher. Merely doing something online does not shield you from requirements to comply with the law. To the contrary, as more state and federal agencies catch on that the real action is happening online, they will examine your online activities with close scrutiny. Don’t be caught unaware of what kinds of advertisements vendors are placing on your behalf and whether or not these advertisements comply with the law.
Worth noting, but largely absent from the Automotive News article cited above, is what happens with disputes arising from cross-border sales and what actions trigger your dealership finding itself within the jurisdiction of another state’s courts. The circumstances triggering conflict of law and jurisdictional questions are not as far-fetched as you may think. Suppose you have a dealership in Virginia and advertise a vehicle on eBay, a national listing website. A customer in Illinois sees the vehicle and contacts your dealership. You exchange emails and telephone calls, and the customer eventually agrees to purchase the vehicle. What happens when the customer takes the vehicle back to his home in Illinois and a problem arises? Do you answer to Illinois courts now regarding jurisdiction, or would the plaintiff have to bring suit in Virginia? The answer is, as most are, complicated and depends largely on the facts of the transaction. Needless to say the law is in a state of flux as more and more people shop in different states than their home states. But, that’s a discussion for another post.
Source: Automotive News
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