Section 1: Recent Rule Changes and Reminders
What changes have occurred since you got your license, or last renewed it?
Below is a summary of those significant changes. This section also includes issues the DMV is currently monitoring more closely to insure your compliance.
If you have not done so already, we strongly suggest subscribing to the DMV email alerts to stay on top of all industry updates.
Recent Changes – 2018 and newer:
• Sales Tax due at time of transfer.
Effective January 1, 2021, vehicle dealers licensed to sell used vehicles are required to remit to the Department of Motor Vehicles (DMV) any sales tax due on the sale of a vehicle at the time the dealer submits the vehicle transfer/registration application to DMV.
• Occupational Licensing Industry News: OLIN 2020–05; IBCs open by Appointment Only
DMV announced effective May 19, 2020, that all Industry Business Service Centers (“IBC’s”) will begin to reopen with “appointment-only” service for dealers. This process allows DMV to manage the flow of customers entering offices and ensures proper physical and social distancing. Dealers can also drop off, or mail in, work to be processed. However, dealers will no longer be permitted to sit in waiting areas at the IBC for the documents to be processed.
Dealers can schedule an in-person appointment by phone through their local IBC:
Bakersfield IBC — (661) 282-2350
Fairfield IBC — (707) 864-4763
LA Metro IBC — (626) 974-7150
Mountain View IBC— (650) 429-3295
Placentia IBC — (657) 315-4092
Rancho San Diego IBC — (619) 456-6851 Sacramento IBC — (916) 262-3253
San Bernardino IBC — (909) 501-3173
San Marcos IBC — (760) 916-9282 Winnetka IBC — (818) 702-2828
Dealers can also drop off transactions, without an appointment, during normal business hours. Contact your local IBC for hours of operation. These transactions will be processed in the order received and completed within 5 business days from the date received. Completed items will be mailed back to the dealer.
In addition, dealers can mail transactions to their local IBC. Transactions will be processed in the order received and completed within 5 business days from the date received. Completed items will be mailed back to the dealer.
• Online Vehicle Sales and Offsite Deliveries Now Permitted
Due to the Covid 19 pandemic, the State Public Health Officer has stated that workers critical to the manufacturing, distribution and sales of vehicles are essential critical infrastructure workers, subject to adhering to the public health guidelines issued by the California Department of Public Health (CDPH). DMV Documentation
On May 5, 2020, DMV issued an Occupational Licensing memorandum clarifying the requirements for online vehicles sales and off-site delivery of a vehicle to a purchaser during this pandemic period. The memorandum provides as follows:
“Online Sales Transactions and Off-Site Vehicle Delivery
The Vehicle Code (VC) requires vehicle sales be conducted through a licensed location. This requirement applies to brick and mortar vehicle dealerships transactions and to online sales transactions conducted through brick and mortar dealer licensees. The vehicle offered for sale by the dealership must be present at the dealership’s licensed location at the time of the sales transaction or be available to the dealer directly from the manufacturer or distributor of the vehicle at the time of the advertisement or the offer of the vehicle for sale. The sale takes place at the licensed location and meets the requirements of VC §11714(b). Accordingly, the dealership is permitted to deliver the vehicle to the customer at an off-site location in order to complete the sale through the licensed location as required by VC §5901(d). The dealer and salesperson must comply with all sales related requirements of the VC before, during, and after the sale of the vehicle.
- All products must be contracted for sale prior to the delivery of the vehicle.
- All terms of the transaction must be agreed upon prior to the delivery of the vehicle at an off-site location. Negotiations may not be conducted at the purchaser’s delivery location.
- All contracts must be signed by the dealership before delivery of the vehicle at the off-site location. The purchaser may sign the contract at the time of delivery.
- Any person engaged in the negotiation and sale of the vehicle must be a licensed salesperson.
- A copy of all notices to the consumer required by the VC and the Civil Code must be provided to the purchaser before the purchaser executes all sales related documents, such as the notice of the right to inspection, etc.
- All Regulation Z disclosures must be provided to the purchaser and the purchaser must be given an opportunity to review prior to purchaser’s execution of sales related documents.
- All state and local social distancing requirements must be adhered to at the time the vehicle is delivered.
- Adherence to social distancing requirements and sanitization of the vehicle is required if a test drive of the vehicle occurs.”
• 2020 Updates/changes in vehicle registration fees:
Reg. Fee Increases for 2020 (click here to open in a new window so you can save this doc.)
• Temporary License Plates (TLP) Attachment Problems and Solutions. VIN 2019-09
Problem: Some dealers have been improperly attaching TLP’s to vehicles. This is causing the TLP to swing around, making them difficult to read, and causing them to tear and fall off. Other dealers have been using incorrect TLP paper, causing additional TLP failures. These situations have resulted in lost revenue from bridge tolls, as well as traffic citations for the new owners of the vehicles.
Solution 1: Proper TLP paper material must be used. It can be obtained from one of the authorized TLP providers. Below is the list of DMV approved providers:
Fairfax Imaging: fairfaxsoftware.com
American Driving Records: caevrreg.com
Automated Vehicle Registration Services: avrs.com/temptags
Motor Vehicle Software: dmvdesk.com
Solution 2: TLP must be securely attached to the vehicle. To be securely attached, DMV requires dealers to attach the TLPs to the vehicle using all four perforations in the corners of the TLP paper. If a vehicle does not have four points of attachment, then the dealer must attach the TLPs in a manner that will prevent the TLP from swinging and flapping.
Assembly Bill 516 (“AB 516”), effective January 1, 2019, requires dealers to prepare Reports of Sales electronically (on line), and to print Temporary License Plates when vehicles are sold.
DMV will no longer accept the hard copies of the Reports of Sale issued by DMV to dealers prior to 2019. DMV will also not allow dealer promotional paper plates to be placed on vehicles at the time of sale. As of January 1, 2019, dealers must electronically generate Reports of Sale at the time of sale. Dealers will also print Temporary License Plates (“TLP”) to put on the vehicles in situations where the vehicles do not already have California plates. The processing of the Reports of Sale electronically, and the printing of the TLP can be done either through the Business Partner Automation Program, or through Fairfax Imaging. Both procedures are described below.
Business Partner Automation Program:
Dealers can process their vehicle licensing and registration paperwork electronically using DMV’s Business Partner Automation Program. This can be done at the moment of sale, avoiding most paperwork, missed time deadlines, and storage of old documents. The BPA program has been used by many dealers for a number of years now and has been well received. You can use your current BPA provider to comply with AB 516, or you can sign up with a BPA provider. The following are the four DMV-approved BPA providers:
Contact: Chris Triana – Phone: 860-235-4725
MOTOR VEHICLE SOFTWARE CORPORATION
Contact: Eddy Partida – Phone: 818-706-1949
AUTOMATED VEHICLE REGISTRATION SERVICES
Contact: Mark Kithcart – Phone: 707-790-8504
AMERICAN DRIVING RECORDS
Contact: Scott Faulds – Phone: 916-288-6616
Note that the document preparation fee that BPA dealers are permitted to charge buyers will increase from $80.00 to $85.00 starting January 1, 2019.
Fairfax Imaging has been approved by DMV to implement the electronic Report of Sale and TLP processes for dealers who are not part of the BPA program discussed above. Fairfax describes their process as follows:
“The Report of Sale will be printed at the end of each transaction. The registration procedures that dealers currently follow will not change. With this system, dealers will print out the Report of Sale forms using a local computer and printer and process registration of vehicles sold in the same manner as currently processed, by utilizing a First Line Business Provider, through DMV Industry Business Centers (IBCs), a registration service or by mail to the department.”
This means that instead of DMV providing dealers with hard copies of Report of Sale Forms, dealers will print their own using the Fairfax system. With this system DMV will have the Report of Sale information as soon as the dealer puts inputs it into the Fairfax system. The dealer can then print out the completed Report of Sale, and will still have up to 30 days to send the hard copy application to DMV as they have in the past.
Fairfax will also provide dealers the capability to print Temporary License Plates (“TLP”). These paper plates will have the Report or Sale numbers printed on the plates, so the plates match up to the Reports of Sale. The TLP program, already used in other states, is designed to help cut down on vehicle theft. Fairfax calls their system “Quick Tags.”
Fairfax conducts training sessions in person or online, and can be contacted at: fairfaximaging.com
Note that the document preparation fee that Fairfax Imaging dealers are permitted to charge buyers will increase from $65.00 to $70.00 starting January 1, 2019.
For additional specific details on the changes and new procedures, please see DMV VIN 2018-20
AB 1274: Smog Exemption Extended to 8 Model Years
Effective January 1, 2019, AB 1274 exempts motor vehicles that are 8 or less model-years old from being inspected biennially upon renewal of registration. This is up from the former law which exempted vehicles 6 or less model years old. An annual smog abatement fee of $25 will be assessed on the motor vehicles that are 7 or 8 model-years old.
Special Plate fee-related increases for 2019
Effective January 1, 2019, the registration fee, and CHP fee, will increase for the following dealer-related plates: dealer, manufacturer, dismantler, distributor, remanufacturer, and vehicle transporter. The registration fee will increase from $55.00 to $57.00, and the CHP fee will increase from $25.00 to $26.00.
2018 Transportation Improvement Fee
Registration renewals, with fees due on or after January 1, 2018, were increased by an additional “Transportation Improvement Fee.” This fee was imposed to provide additional funding for infrastructure repairs and road maintenance. The actual fee amount is based upon the current market value of the vehicle as shown below.
2018 Increase in vehicle value registration fee
$0.00 to $4,999 – $25.00
$5,000 to $24,999 – $50
$25,000 to $34,999 – $100
$35,000 to $59,,999 – $150
$60,000 and higher – $175
Continue to registration transfers and renewal applications as normal. The online registration calculators have been programmed to include the appropriate Transportation Improvement Fees. Exempt vehicles include commercial vehicles with an unladen weight of more than 1,000 pounds, and vehicles with historical plates.
Reminders – 2018 and older:
California Dept. of Tax and Fee Administration (“CDTFA”)
On July 1, 2017, the California Department of Tax and Fee Administration (CDTFA) took over the majority of Board of Equalization (“BOE”) duties regarding collecting state sales and use taxes. So dealers now will submit their sales and use taxes to the CDTFA, not the BOE as we used to do. If you are not already submitting your sales and use tax to the CDTFA, or have questions about how to best do this, please go to the CDTFA website at CDTFA.
In addition, November 21, 2018, DMV issued the following update regarding frequently used dealer forms and applications, and the CDTFA:
“Frequently used applications and forms have been revised to reflect CDTFA. For example:
CDTFA–106 Vehicle/Vessel Use Tax Clearance Request.
CDTFA–111 Certificate of Vehicle, Mobilehome or Commercial Coach Use Tax Clearance.
CDTFA–123 California Fuel Trip Permit.
CDTFA–1138 Certificate of Excise Tax Clearance.
All Department of Motor Vehicles (DMV) reference materials, manuals, and publications are in the process of being revised to reflect CDTFA. CDTFA’s new contact information for questions and issues as they pertain to use taxes: California Department of Tax and Fee Administration Consumer Use Tax Section PO Box 942879, MIC:37 Sacramento, CA 94279-0037 1-800-400-7115″
Legacy black & gold license plates
The California Legacy License Plate program permits the purchase of replica black and gold California license plates, similar to those issued in the 1960s. Only the 1960s style plates reached the required 7,500 orders before January 1, 2015, so only those black and gold plates will be issued as Legacy Plates. They can be ordered for any year model automobile, commercial vehicle, motorcycle, or trailer. The fee is $50.00. Your customers can also order their own personalized Legacy Plates by using the REG 17 form online at the DMV’s website, or mailing the REG 17 with $50.00 to:
DMV Special Processing Unit, MS D238
PO Box 932345
Sacramento, CA 94232-3450
In 2016, AB 265 amended Section 2983.37 of the Civil Code to increase the time period a Buy-Here-Pay-Here dealer must warn a buyer before using a starter interrupt system. Under the prior law (AB 1447 discussed more fully below), a BHPH dealer was required to provide a written disclosure to the buyer at the time of sale informing the buyer that the dealer would warn the buyer no less than 48 hours before the use of starter interrupt technology to shut down the vehicle remotely. The dealer was also required to disclose the manner and method in which that warning would occur. AB 265 changes the time period to the following:
- 5 days before the use of starter interrupt technology for weekly payment contracts;
- 10 days before the use of starter interrupt technology for all other contracts; and
- A final warning must be provided no less than 48 hours before the use of starter interrupt technology for both types of contracts.
- Failure to provide the notice in the proper amount of time is a misdemeanor, and AB 265 increases the fine from a maximum of $1,000.00 to $2,000.00.
AB 1447: 30 Day or 1,000 mile warranty requirements, and GPS use limitations for buy here-pay-here dealers
AB 1447 requires Buy Here Pay Here (“BHPH”) dealers to issue a 30-day or 1,000 mile warranty, and to limit the use of GPS or starter interrupt devices on every BHPH vehicle sold.
Who Is a BHPH Dealer?
A BHPH dealer is one who does BOTH of the following:
- Enters into conditional sales contracts, pursuant to Civil Code section 2981, or lease contracts pursuant to Civil Code section 29857(d), which are subject to Title 14 of Part 4 of Division 3 of the Civil Code. However, a “conditional sales” contract does not include contracts for the sale of vehicles if all amounts owed under the contract are paid in full within 30 days.
- Assigns less than 90% of all un-rescinded conditional sales or lease contracts to unaffiliated third-party finance or leasing sources within 45 days of the consummation of those contracts.
A BHPH dealer IS NOT:
- A lessor who primarily leases vehicles that are two model years or older
- A dealer that certifies 100% of its vehicle pursuant to V.C. 11713.18, AND
- Maintains an on-site service and repair facility licensed by the Bureau of Automotive Repair, AND
- Employs five or more master technicians certified by the National institute for Automotive Service Excellence.
AB 1447 Details
BHPH dealers must provide a 30 day,or 1,000 mile warranty, covering at least the following components:
- Engine, including all internally lubricated parts
- Transmission and transaxle
- Front and rear wheel drive components
- Engine cooling system
- Alternator, generator, starter, and ignition system, not including the battery
- Braking system
- Front and rear suspension systems
- Steering system and components
- Inflatable restraint systems installed on the vehicle as originally manufactured
- Catalytic converter and other emissions components necessary for the vehicle to pass a California emissions test
- Seals and gaskets on components described in this subdivision
- Electrical, electronic, and computer components, to the extent that those components substantially affect the functionality of other components described in this subdivision.
Any Buyer’s Guide displayed on a vehicle offered for sale or lease by a BHPH dealer shall list each of the above systems and components and shall specify that the BHPH dealer will pay 100 % of the cost of parts and labor for repairs covered by the warranty. The BHPH dealer shall make the repair, or provide a refund notwithstanding the fact that the warranty period has expired, if the buyer or lessee notified the BHPH dealer of the failure of a covered system or part within the warranty period. This section shall not apply to any defect or nonconformity caused by the unauthorized or unreasonable use of the vehicle following the sale, or to any property damage not to the vehicle arising out of the failure of a covered part.
Safety Equipment Requirement
A BHPH dealer shall not sell or lease any vehicle unless the vehicle meets all of the safety equipment requirements of Division 12 (commencing with Section 24000) of the Vehicle Code. (However, do remember that vehicles sold at wholesale to other dealers do not have to meet the retail sale safety standards.)
Rights may not be waived
Any agreement between a BHPH dealer and a buyer or lessee that disclaims, limits, or waives the rights set forth in this section shall be void as contrary to public policy. If a BHPH dealer fails to give a buyer a written warranty pursuant to this section, the BHPH dealer shall be deemed to have provided the warranty as a matter of law.
Requiring payments in person
AB 1447 prohibits requiring a buyer to make payments in person. In addition, it prohibits repossessing a vehicle, or charging a penalty, following a timely payment of a deferred down payment as specified in the purchase agreement.
Electronic tracking or disabling devices
AB 1447 prohibits BHPH dealers from using electronic tracking or disabling devices after the sale, except as specified below. Violations are misdemeanors, and are punishable by fines of up to $1,000.
A BHPH dealer shall not do any of the following:
A BHPH dealer shall not utilize electronic tracking technology to obtain or record the location of the vehicle, unless the buyer is expressly made aware of the existence and use of the tracking technology by the BHPH dealer, the buyer’s written consent is obtained, and either (A) or (B), or BOTH, apply:
- (A) The electronic tracking technology is used solely to verify and maintain the operational status of the tracking technology, to repossess the vehicle, or to locate the vehicle to service the loan or keep the loan current.
- (B) The electronic tracking technology is used solely for any optional service to the buyer and both of the following conditions are met:
- The agreement to utilize electronic tracking technology for the optional service is separate from the purchase and sale agreement, is not a condition of the purchase or sale agreement for the vehicle, and is executed after the completion of the purchase or sale agreement for the vehicle, AND
- The buyer is permitted to cancel the optional service at any point in the future without affecting the sale of the vehicle, and is informed of his or her ability to do so.
The dealer may not disable the vehicle by using starter interrupt technology, unless the BHPH dealer complies with all of the following provisions
- Notifies the buyer in writing at the time of the sale that the vehicle is equipped with starter interrupt technology, which the BHPH dealer can use to shut down the vehicle remotely; and
- The written disclosure provided to the buyer at the time of sale informs the buyer that a warning will be provided no less than 5 days before the use of starter interrupt technology for weekly payment contracts, and 10 days for all other contracts.
- A final warning of no less than 48 hours must be given before the use of starter interrupt technology for both types of contracts. The notice must also disclose the manner and method in which that warning will occur. The dealer shall offer the buyer a choice of warning methods, including warning from the device, telephone call, email, or text message, if available, provided that the warning method does not violate applicable state or federal law.
- In the event of an emergency, the buyer will be provided with the ability to start a dealer-disabled vehicle for no less than 24 hours after the vehicle’s initial disablement.
AB 1534: Reasonable market value label for BHPH Dealers
AB 1534 requires BHPH dealers to prominently display a label on all used vehicles for sale that states the Reasonable Market Value (“RMV”) of that vehicle.
The RMV is the average retail value of a used vehicle based on the condition, mileage, year, make, and model of the vehicle, as determined within the last 60 days by a nationally recognized pricing guide that provides used vehicle retail values, or pricing reports, to vehicle dealers or the public. “Nationally recognized pricing guide” includes, but is not limited to, the Kelley Blue Book (KBB), Edmunds, the Black Book, or the National Automobile Dealers’ Association (NADA) Guide.
AB 1534 requires the RMV labels meet the following standards
- The RMV label must contain the heading: “REASONABLE MARKET VALUE OF THIS VEHICLE” in 16 point bold print, and text in at least 12 point print.
- The RMV label must be located next to any window sticker identifying the equipment provided with the vehicle. If there is no such window sticker, the RMV label must be otherwise prominently displayed and readily readable.
- The RMV label must include the information used to arrive at the value, including but not limited to the use of a nationally recognized used vehicle value guide.
- The BHPH dealer shall provide prospective buyers a copy of any information obtained from a nationally recognized pricing guide that the buy-here-pay-here dealer used to determine the reasonable market value of the vehicle.
- The RMV label must include the date the reasonable market value was determined.
- The RMV label must indicate the RMV provided is only for comparison shopping purposes, and is not the advertised, or retail sales price, of the vehicle.
AB 1215 – “NMVTIS” (National Motor Vehicle Title Information System) and the Electronic processing of documents.
California law AB 1215, effective July 1, 2012, and AB 516, effective January 1, 2019, did the following:
- Increased the fees that dealers can charge for licensing
- Required new dealers, and encouraged used dealers, to use electronic lien and electronic titling (“ELT”) services
- Regulated dealer disclosure of damaged used vehicles
Under AB 1215, and AB 516, dealers are able to charge a document preparation fee of up to $85.00 for each used vehicle purchase transaction if the dealer uses the Business Partner Automation program. If the dealer uses the Fairfax Imaging program, the dealer may charge a $70.00 document preparation fee.
AB 1215 further required California new and used dealers to obtain a National Motor Vehicle Title Information System (NMVTIS) report on each used vehicle before offering it for sale. Dealers can do this by using a sanctioned NMVTIS Consumer Access Provider such as instaVIN, Auto Data Direct, or VinAudit.com. Note: If you sign up with VinAudit, you can use the promo code “MotorsportsMarket” to get their discounted rate.
The NMVTIS report contains the most up-to-date (usually updated every 24 hours) title information from all states. The report contains vehicle history information from state DMV’s, salvage auctions, junkyards, and insurance companies. If the NMVTIS report reveals a branded title, such as “Salvage,” “Flood Damaged,” or one of approximately 50 other state branding terms, that information must be disclosed to the consumer. This is done by attaching a red 4” x 5” window sticker to the vehicle that warns potential buyers about the branding on the title. The dealer must also provide a copy of the NMVTIS-based car history report to the buyer. Only official NMVTIS Access Providers can be used to provide the reports to dealers. A complete list of NMVTIS Consumer Access Providers is available on the NMVTIS Web site, at NMVTIS Access Providers. For more specific information about the sticker and the NMVTIS reporting requirements, see the “NMVTIS” section below.
Further AB 1215 Details
Below are more AB 1215 rules, and how they changed prior laws & regulations. These rules became effective July 1, 2012, unless otherwise indicated below:
Temporary Operating Permit:s No longer issued as of January 1, 2019
Effective January 1, 2019, the Temporary Operating Permit, aka Used Vehicle Dealer Notice, will no longer be issued by dealers. The AB 516 requirement that all dealers submit their Report of Sales electronically at the time of sale, removes any need or requirement for Temporary Operating Permits. Instead, dealers will attach Temporary License Plates to vehicles. See the beginning of this section for further information on AB 516.
$65.00 and $80.00 Document Preparation Fees increased to $70.00 and $85.00 by AB 516 as of January 1, 2019. Effective January 1, 2019, AB 516 and V.C. 4456.5(a)-(c) authorizes a dealer using an approved DMV Business Partner Automation provider to charge a document processing fee not to exceed $85.00. Dealers who use Fairfax Imaging shall not charge more than $70.00. The EVR filing charge may not exceed the actual amount the dealer is charged by a first-line service provider. No fee in this section shall be represented as a governmental fee.
Two Day Cooling Off Period Amendments: V.C. 11713.21(2)(D) Authorizes USED VEHICLE dealers, when offering a Contract Cancellation Option after OCTOBER 1, 2012, to charge 1% of the purchase price if the vehicle has a cash price of more than $30,000, but less than $40,000. The term “cash price” has the same meaning as subparagraph (A) of paragraph (1) of subdivision (a) of Civil Code 2982. Cash price” excludes registration, transfer, titling, license, California tire, and optional business partnership automation fees.
Conditional Sales Contract Amendments: Civil Code Section 2982, which applies to both new and used vehicle dealers, is amended as follows.
The term “Cash Price” for Conditional Sales Contracts is the price of the vehicle excluding the following:
- Document processing charges,
- Charges to electronically register or transfer the vehicle,
- Taxes imposed on the sale,
- Pollution control certification fees,
- Prior credit or lease balance on property being traded in,
- The amount charge for a service contract,
- The amount charged for a theft deterrent system,
- The amount charged for a surface protection product,
- The amount charged for an optional debt cancellation agreement, and
- The amount charge for a contract cancellation option agreement.
The Cash Price excludes the charge to be retained by the seller for document processing authorized pursuant to Section 4456.6 of the Vehicle Code. The Cash Price excludes the charge to electronically register or transfer the vehicle authorized pursuant to Section 4456.5 of the Vehicle Code. The Cash Price also excludes the subtotal representing the sum of the amounts described above. If the minimum finance charge provided by subparagraph (B) or subparagraph (C) of paragraph (1) of subdivision (j), if either is applicable, is greater than the earned finance charge as of the date of prepayment, the holder shall be additionally entitled to the difference. This subdivision shall not impair the right of the seller or the seller’s assignee to receive delinquency charges on delinquent installments and reasonable costs and fees as provided in subdivision (k) or extension or deferral agreement charges as provided in Section 2982.3.
If the seller imposes a charge for document processing, or to electronically register or transfer the vehicle, the contract shall contain a disclosure that the charge is not a governmental fee. “Cash price” means the amount for which the seller would sell and transfer to the buyer unqualified title to the motor vehicle described in the conditional sale contract, if the property were sold for cash at the seller’s place of business on the date the contract is executed, and shall include taxes to the extent imposed on the cash sale and the cash price of accessories or services related to the sale, including, but not limited to, delivery, installation, alterations, modifications, improvements, document preparation fees, a service contract, a vehicle contract cancellation option agreement, and payment of a prior credit or lease balance remaining on property being traded in.
Lease Contracts: Civil Code Section Amendments: Section 2985.8 of the Civil Code, which is applicable to both new and used dealers, is amended as follows: (4) A brief description of each vehicle or other property being traded in, and the agreed upon value of the vehicle or property, if the amount due at the time of signing the lease, or upon delivery, is paid in whole or in part with a net trade-in allowance; or if the “Itemization of Gross Capitalized Cost” includes any portion of the outstanding prior credit or lease balance from the trade-in property. (5) The charge, if any to be retained by the lessor for document processing authorized pursuant to Section 4456.5 of the Vehicle Code, which may not be represented as a governmental fee. (6) The charge, if any, to electronically register or transfer the vehicle authorized pursuant to Section 4456.5 of the Vehicle Code, which shall not be represented as a government fee.
V.C. 11713.26(a)-(h) requires dealers to obtain a National Motor Vehicle Title Information System (NMVTIS) history report for all used vehicles for sale. If the vehicle has a branded title, such as “salvage,” dealers must also attach a warning sticker on the vehicle advising the buyer. The specific requirements of V.C. 11713.26 are outlined below.
What is included in an NMVTIS Vehicle History Report?
According the Department of Justice (“DOJ”), NMVTIS Vehicle History Reports are intended to only provide data on five key indicators associated with preventing auto fraud and theft. They are listed, and explained, by the DOJ below.
Why is brand information important to consumers? Brands are descriptive labels (applied by state motor vehicle titling agencies) regarding the status of a motor vehicle, such as “junk,” “salvage,” and “flood.” NMVTIS keeps a history of brands that have been applied to the vehicle by any state. Brand information helps protect consumers from purchasing a damaged vehicle that is presented for sale without disclosure of the vehicle’s real condition. Without knowing the brand history, a consumer may pay more than a vehicle’s true value or purchase a vehicle that has not been adequately repaired and is not safe to drive.
3. Odometer Reading
If a NMVTIS vehicle history report for a used vehicle indicates that the vehicle is or has been a junk automobile or a salvage automobile or the vehicle has been reported as a junk automobile or a salvage automobile by a junkyard, salvage yard, or insurance carrier pursuant to Section 30504 of Title 49 of the United States Code, or the certificate of title contains a brand, a dealer shall do both of the following:
(1) Post the red label disclosure (see below) on the vehicle while it is displayed for sale at retail in at least 14-point bold black type, except for the title “Warning” which shall be in at least 18-point bold black type, on at least a 4 x 5.5 inch red background in close proximity to the Federal Trade Commission’s Buyer’s Guide:
(2) And provide the retail purchaser with a copy of the NMVTIS vehicle history report upon request prior to sale
The above sections do not apply to a used vehicle for which NMVTIS does not have a record.
As used in this section the following terms have the following meanings:
“NMVTIS” means the National Motor Vehicle Title Information System established pursuant to Section 30501 et seq. of Title 49 of the United States Code.
“NMVTIS vehicle history report” means a report obtained by a sanctioned/licensed NMVTIS data provider. No other vehicle history reports are sufficient.
This section shall not create any legal duty upon the dealer related to the accuracy, errors, or omissions contained in a NMVTIS vehicle history report that is obtained from a NMVTIS data provider or any legal duty to provide information added to NMVTIS after the dealer obtained the NMVTIS vehicle history report.
This section does not apply to the sale of a recreational vehicle, a motorcycle, or an off-highway motor vehicle subject to identification under Section 38010.
Dealers are permitted to post copies of salesperson’s licenses at their dealerships, instead of only original licenses which were required under the old rules. The original license must still be surrendered to the dealer while the salesperson is employed there. At such time as the salesperson is no longer employed by the dealer, the dealer must return the original license to the salesperson, and destroy the remaining copies. A salesperson may work for more than one dealership only if all of the dealers share a common controlling ownership (50% or more) of all the dealerships where the salesperson works.
Notification of Consumer Credit Score
When a dealer obtains a consumer’s credit score for use with a consumer’s credit application, the dealer must provide the potential buyer a summary of the credit information report in compliance with Federal credit score reporting requirements. The following form may be used to comply with these requirements: Credit Summary Form
Federal Trade Commission Identity Theft Red Flag & Address Discrepancies
All vehicle dealers engaging in finance activities must have a written Identity Theft Protection Program in place. The “Red Flag Rules” require the program to include, at a minimum, the following four “reasonable policies and procedures:”
- Identify what are Red Flags for a covered account.
- Detect Red Flags when they appear
- Respond to the Red Flags to prevent and mitigate identity theft
- Periodically update the program to reflect changes in risks to customers or the safety and soundness of the dealer against identity theft.
The Federal rules also require the following:
- Approval of the written program by either the board of directors, or a committee of the board (if you have either one of these), or a designated employee at the senior management level.
- Continued oversight/monitoring of the development, implementation, and administration of the program and training your staff.
The Red Flag rules do not specify an exact process for your program. You only need a program that is appropriate to the size and complexity of your financing activities at your dealership. The following are a few examples of ways to identify, detect, and respond to identity theft, and to update your program after you create it.
Identifying Red Flags – Look for the following:
- An application that appears to be forged or altered
- A consumer report that contains an address discrepancy, fraud alert, or credit freeze
- A change of address notice quickly followed by an application for a new credit card
- A Social Security number that has already been provided by another
- An address or phone number that has been provided by several others
- A creditor has been notified that the customer is not receiving statements
- A long inactive account is being used
Detecting Red Flags
- Verify the identity of applicant
- Authenticate your applicant by verifying their other existing accounts
Responding to Red Flags
- Monitor the suspect account
- Contact the customer
- Change passwords
- Notify law enforcement if you suspect identity theft
Failure to Comply
- Potential penalties included but are not limited to: Civil penalties for each violation
- DMV enforcement action – potential suspension or revocation of your dealer license
You need to be able to justify that the written policies and procedures that you put into place are reasonable and adequate to minimize the risk of identity theft at your dealership.
Federal Identity Theft Red Flags Rules Link
To review the actual Federal Red Flag law, go to Federal Red Flag Rules