With car showrooms in several states shut down by government public-health orders, many auto dealerships are relying on Internet sales and home deliveries to at least try to move a vehicle here and there.
But in pivoting to that relatively new approach during the coronavirus crisis, auto retailers should follow certain protocols – both to keep regulators at bay and avoid becoming a cybertheft victim.
So says Brad Miller, the National Automobile Dealers Assn.’s director-legal and regulatory affairs and senior counsel, digital affairs.
Dealers may think they are doing it right, only to learn a government regulator says otherwise, he says at a NADA webinar, “Legal and Regulatory Implications of Online Sales – What Dealers Need to Know.” (NADA's Brad Miller, left)
Some states have barred dealership sales completely during the pandemic. Others have ordered showrooms shut down but allow for remote sales.
“Some stay-at-home orders are broad and may prohibit all sales, including remote ones,” Miller says.
In states that allow online selling and home deliveries during the pandemic, salespeople from home can transact deals – including price negotiations – by email, video conferencing, phone, text and chat, webinar panelist Russell McRory, a partner at the Arent Fox law firm, says, adding that digital contracts can replace much of the paperwork.
But the salesperson who remotely does the deal shouldn’t deliver the sold vehicle to the customer’s home or essential business, says webinar participant Aaron Jacoby, managing partner at Arent Fox. “Only a person not involved in the sale should handle the delivery.”
It’s not illegal for the dealership employee who sold the car to also deliver it. But dividing up those two duties reduces the possibility of upselling or continued negotiations during the delivery process.
That could become an issue if a miffed customer subsequently beefs about it. “This is critical,” McRory says of the need for a division of labor in selling and delivering. “There should be no further negotiating or upselling” during the latter.
The delivery person should observe social distancing procedures, verify customer identity, get a signature and be done with it.
Online vehicle-selling regulations vary from region to region and state to state, note Miller, Jacoby and McRory. They encourage dealers to know their local laws.
“Sometimes, the local law enforcement has its own interpretations,” Jacoby says.
In addition to following the laws, dealers should guard against lawbreakers.
Public calamities can bring out the good in people, but also bring out the con artists. “Clever bad guys are out there,” Miller says. “Identity theft is a huge issue.”
He describes a case in which a crook tried to pass off a rental car as a trade-in.
Consequently, dealerships should make sure they are selling and delivering vehicles to legitimate purchasers, not thieves who may wear protective face masks. They may look like they are following public-health recommendations, but they’re also conveniently obscuring their identities.
Miller recommends asking out-of-wallet questions that don’t rely on
information that is often publicly available, obtained from a stolen billfold or garnered from social-media websites.
Dealers can work with lenders to thwart identity thieves. Questions lenders often ask (after earlier asking and recording the answers) include: What is your favorite sport? What is your favorite vacation spot? What was the make of the first car you owned? What’s your father’s middle name?
“Work with finance companies and clarify responsibilities,” Miller says of dealers.
Meanwhile, Jacoby urges dealers to stay copacetic by avoiding misleading coronavirus-related advertising.
“Marketing should be tasteful, such as noting that the dealership sanitized delivered vehicles,” he says. “But anything else – such as ‘Come on down for your COVID-19 bargain’ – is inviting regulator attention.”
Of the pandemic-related protocols involving online sales, home deliveries, identity verifications and straight advertising, McRory says: “All this stuff needs to be baked in stone.”
