CAPSS Compliance Pathway Newsletter

CAPSS Compliance Pathway

Colorado Automobile/Powersport Support Services, LLC

October 2009

Greetings!

Welcome to our CAPSS fall newsletter. During a class in Craig this September, questions highlighted some confusion on the state requirement for finance rejection versus the federal adverse action requirements.

We have focused this newsletter on explaining these two issues and how to comply. Dealer's can combine these two required notices into one notice as long as it meets the requirements of both state and federal regulations.

Continuing education classes are available to help you with regulatory and compliance issues. These classes are offered on a regular basis in both Golden and Montrose, and we will take them on the road (minimum number of students may be required).

We offer the following classes:

Basic paperwork to complete a sale (Getting the Car Deal Rolling)
Title classes (Intermediate & Refresher Title Document Training)
State and Federal laws and regulations - including preparation for a compliance audit by the Auto Industry Division (The Well-Informed Dealer-Do You Think You Know It All?)
Red Flags/OFAC training (OFAC/Safeguards/Red Flags)
Pre-Licensing Certification - This class is a new Colorado requirement for used motor vehicle or used powersport dealers and wholesalers, and must be completed before the state will accept an application packet

Our upcoming classes are listed later in these newsletter - or you can always visit our Website for the latest information www.capss.biz . Call Connie at 970-209-7499 or Mary at 303-478-2538 if you have questions.

Thank you for allowing us to serve you.

Sincerely,
Mary Marvin & Connie Hatch
CAPSS LLC

	Finance 101

	Colorado State Statute 12-6-118 (3) (v) In 2004, Colorado enacted this statute, which states "a dealer's license may be suspended or revoked for failure to give notice to a prospective buyer of the acceptance or rejection of a motor vehicle purchase order or agreement within a reasonable time period, as determined by the Board". The Board promulgated Regulation 12-6-118(3)(v) which states "a dealer shall give notice of rejection of financing to the prospective buyer within ten (10) calendar days from the date of the purchase order or agreement on a finance or consignment sale". In the event a complaint is filed by a prospective buyer for failure to receive such notice in the required manner, the dealership shall provide indisputable proof that the notice was in fact received by the buyer or the dealership may be found in violation.

	Finance 102

	Adverse Action Notices The Adverse Action Notice required by the Fair Credit Reporting Act (FCRA) and the Equal Credit Opportunity Act (ECOA), must be sent whenever a dealership denies credit. An Adverse Action Notice must be provided orally or in writing or by electronic means be sent within 30 days of the adverse action notify the customer that his/her application was not approved contain the creditor's (or dealer's) contact information disclose the contact information for the Credit Reporting Agency, if used, along with other mandated information as follows Notice must be sent when Dealership denies credit based on information from a credit report - dealer must provide an Adverse Action Notice containing The name, address and telephone number of the Credit Reporting Agency (CRA) including a toll-free telephone number, if it is a nationwide CRA that provided the report A statement that the CRA did not make the adverse decision and is not able to explain why the decision was made A statement setting forth the consumer's right to obtain a free disclosure of the consumer's file from the CRA if the consumer makes a request within 60 days A statement setting forth the consumer's right to dispute directly with the CRA the accuracy or completeness of any information provided by the CRA Dealership denies credit based on information obtained from Third Parties, who are not Consumer Reporting Agencies (such as an employer, landlord, or another lending institution) - dealer must provide an Adverse Action Notice containing Notice that the consumer can request disclosure of the nature of the information that was relied upon (if the consumer makes a written request within 60 days of notification). Dealer must provide the disclosure within a reasonable period of time following the consumer's written request Dealership denies credit based on information obtained from Affiliates (an entity with common ownership or control), such as when the dealer spot-delivers a vehicle but the finance office cannot secure financing due to information provided on the credit application - dealer must provide an Adverse Action Notice containing Notice that the consumer can request disclosure of the nature of the information relied upon by making a request within 60 days of receiving the adverse action notice. If the consumer makes such a request, the user must disclose the nature of the information not later than 30 days after receiving the request. (If a consumer report is used, then the adverse action disclosure must be as stated above). Adverse Action Notices are also required When a deal is based on a consumer request with specific terms such as APR,down-payment, or specific repayment terms, and the dealership is unable to obtain financing based on those terms. Note: If a counter offer is accepted, then a notice does not need to be sent. When a consumer provides an incomplete credit application needed for approval, and has been unable to provide the missing information (after notified of a reasonable period to respond)

	Finance 103

	Conditional Approval & Trade Vehicles Don't sell that trade-in vehicle until your customer's new purchase financing (front end deal) has been approved. Conditional Approval is not Final Approval! Colorado State Statute states that a motor vehicle used as a trade-in on the purchase of another motor vehicle cannot be sold or leased before the purchaser or lessee has been approved for financing. The vehicle does not become part of the dealer's resale inventory until the financing has been arranged. Therefore, you must remember that the trade-in vehicle belongs to the customer until financing has been approved. If financing is conditioned upon receipt of additional information, the financing has not been finalized. Conditional approval is not final. Repairing the trade vehicle, before financing has been approved, may not be beneficial to the dealership. If financing is rejected and the vehicle is returned to the customer, the repairs may be considered unauthorized repairs, repairs not approved by the owner of the vehicle. The dealership may be required to assume the cost of those repairs.

	Legislative Update Reminders

	Emissions - Liens - Power sport Wholesaler - Low Powered Scooters and more.... EMISSIONS Effective January 1, 2010, the basic emissions program area shall consist of the County of El Paso. The enhanced emissions program area shall consist of the counties of Adams, Arapahoe, Boulder, Douglas, Jefferson, Larimer and Weld, and the cities and counties of Broomfield and Denver. A portion of Adams, Arapahoe, El Paso, Larimer and Weld are excluded from their respective areas and are outlined in Colorado State Statute 42-4-304. LIENS Effective October 1, 2009, the duration of liens shall remain valid and enforceable for a period of ten (10) years; liens may still be extended for three (3) years upon the filing of a certification of extension of a chattel mortgage. POWERSPORTS WHOLESALER Effective October 1, 2009 Powersports Vehicle Licensing 12-6-502, included to its class of licenses "Wholesaler" which means a person who, for commission or with intent to make a profit or gain of money or other thing of value, sells, exchanges, or offers or attempts to negotiate a sale, lease, or exchange of an interest in a new or new and used powersports vehicle solely to powersports vehicle dealers or used powersports vehicle dealers. LOW-POWERED SCOOTERS Effective October 1, 2009 the Motor Vehicle Industry Law defines a motor vehicle to include, without limitation, a low-powered scooter as defined in Section 42-1-102: "Low Power Scooter" means a self-propelled vehicle designed primarily for use on the roadways with not more than three (3) wheels in contact with the ground, no manual clutch, and either of the following: a cylinder capacity not exceeding fifty cubic centimeters if powered by internal combustion, or a wattage not exceeding four thousand four hundred seventy-six (4476) if powered by electricity. ADDITIONAL UPDATES: For more information consult your Colorado State Statutes or contact your local CAPSS representative. C.R.S. 42-6-115 - BOND REQUIREMENTS - Vehicles 25 years and older, notarized bill of sale changed to 24 months after date of sale. C.R.S. 39-26-105.4 - REMITTANCE OF TAX - determination of address - dealer held harmless C.R.S. 42-1-102 - LOW-SPEED ELECTRIC VEHICLES - self propelled utilizing electricity as its primary propulsion method, has at least 3 wheels in contact with the ground, does not use handlebars to steer, 17 character VIN, roadway speed equal to or less than 35 mph, not to be used on a limited-access highway.

	Titles & Registrations Form Changes/Updates

	The following revised forms have been updated due to legislation effective October 1, 2009, and have been approved for use by the State Registration Section. DR 2183 - Low-Power Scooter Monthly Report and Request for Decals/Forms (08/24/2009) DR 2228, Application for Low-Power Scooter Registration Agent (08/24/2009) DR 2579 Application for Low-Power Scooter Registration (09/09/09) For definitions of Low-Power Scooters and further information regarding registrations, please refer to the Colorado Division of Motor Vehicles at Colorado DMV-News & Announcements The following revised forms have been updated due to legislation effective September 1, 2009, and have been approved for use by the State Registration Section. DR 2810 Personalized License Plate Application (revised 08/28/09) DR 2813 Personalized Conversion Application (revised 08/31/09) The following forms are effective July 1, 2009 and will be available on the Revenue Website. DR 2393 - Statement of Repossession (revised 06/24/09) Previous version accepted through 10/01/09 DR 2394 - Bond State Guide & Older Vehicle In Lieu of Bond Affidavit (revised 05/18/09) 90 day grace period for Motor vehicles DR 2395 - Verification of Vehicle Identification Number (revised 06/30/09) Previous version accepted through 10/01/09 The following revised forms will be effective based on "Date of Impound" on and after 08/04/09 as stated on the DR 2008 and DR 2008A and will be available on the Revenue Website DR 2773 - Abandonment of Motor Vehicles Private Tow Requirements (revised 06/29/09) DR 2774 - Law Enforcement Public Tow Requirements Checklist (revised 06/30/09) DR 2173 - Secure Motor Vehicle Bill of Sale (revised 06/24/09) Previous version accepted through 11/04/09 NOTE: This form is a secured form and is not available on the Revenue Website For questions, contact the Colorado State Title Section: 303-205-5608 or Colorado State Registration Section: 303-205-5607

QUESTIONS ?

Do you have questions regarding odometer laws, salvage vehicles, repossessions, or more? Benefits of your membership include phone consultations - so don't hesitate to pick up the phone and ask those questions. Not a member? Call now to join, only $75 a year!

Our newsletters will advise you of form updates by the state, legislative changes, and other items of interest, including compliance tips for your review.

We also offer continuing education to dealers and their employees. We strive to give you the best education at reasonable prices. Classes are offered on the front range (Golden) and the Western Slope (Montrose) as well as occasional classes in other parts of the state.

For more about our seminars, check out the Upcoming Training Seminars section of this newsletter, or check out web site on-line at www.capss.biz.

If you have ideas on how we can better support you, please contact us!