MV Board

CADA Proposes: Motor Vehicle Dealer Board-Sunset Review Recommendations
by Lee Payne, LPC Sunset Review Group Chair

Issue: Should the DLB continue to exist?

Position: Absolutely yes. While there are certainly problems that can be addressed to make the MVDB more effective, it has done a great job of obtaining consistent regulatory compliance among dealers, ultimately achieving strong consumer protection.

Issue: Splitting the positions of Executive Director of AID and Executive Secretary of the MVDB.

Position: Generally agree in that it is difficult to serve two masters. In circumstances where there is a hearing before the Board, the Executive Director acts as both the Supervisor of the prosecutor and the advisor to the judge (the MVDB) creating an inherent conflict of interest. If for no other reason the two positions should be split.

Issue: Utilization of Administrative Law Judges (ALJ) for dealer disciplinary cases and Hearing Officers for Salesman licenses. ALJ/Hearing Officers would tender their findings to the MVDB, which would grant both Assistant Attorney General and dealer/salesperson time for oral arguments and ratify decision and ratify or alter penalties.

Position: This is a great idea that should be implemented. It would achieve several objectives:

  • Provide for more consistent rulings that are based on law and not the sometimes skewed reaction of individual MVDB members.
  • Provide more credibility for the MVDB from a public perspective, so that decisions are not made from a Board dominated by dealers.
  • Reduce the workload on Board members allowing them to focus on more substantive issues.

    Issue: Direct that Conflicts Counsel be present at every Board meeting and hearing.

    Position: There are many times in a board meeting or hearing where there is a clarification on a point of law that is necessary. In the past the MVDB was taking legal advice from the Assistant AG who would then be conducting a hearing before the MVDB against a licensee. This is an inherent conflict of interest and may render a fair hearing for the licensee impossible. This may not be necessary if the legislature decided to separate the Executive Director of AID from the Executive Secretary of the MVDB, and the new Executive Secretary of the MVDB happened to be an attorney.

    Issue: Change make-up of the MVDB from current structure of 3 new dealer members, 3 used dealer members, and 3 public members.

    Position: Believe the current make-up is not an issue in practice, even though it maybe in public perception. Based on the behavior of the MVDB, public members tend to look to the expertise of the dealer members. Additionally, the dealer members have historically had keen interest improving the image of the industry and make sure there is no perception of favoritism displayed toward the dealer, particularly when a consumer has been harmed. One important measure would be to compare the make-up of other regulatory boards and the percentage of industry members versus public members.

    Issue: Raise the dealer bond amount to more adequately cover potential loses to consumers and dealers.

    Position: Based on the cases where there have been loses to consumers or dealers and there was a finding by the MVDB that allowed a claim to be made against the bond, the $30,000 bond is rarely enough to cover the actual loses. The consensus of opinion is that the bond should be some where around $100,000 in order to cover most cases. The problem with this higher amount is that it would require stricter underwriting guidelines on the part of bonding companies and, in the opinion of CIADA; many used car dealers would not qualify under the new standards. This would force long term, reputable used car dealers out of business and compel many others into unlicensed activity. That said, this is where the majority of the claims against bonds are originating.

    CIADA has conceded that a $50,000 bond would probably be of little impact on dealers but a higher amount would impact smaller dealers. Even though it would impact dealers, the fact remains, that in order to fix the problem the bond should be at least $100,000. A good compromise that would allow smaller dealers time to catch up would be a phase in for the entire industry. Something like:

     

    Year 1---------------$50,000

    Year 2---------------$65,000

    Year 3---------------$80,000

    Year 4---------------$100,000

    Issue: Salesman bonds should be increased or eliminated.

    Position: At the current level, salesperson bonds are not worth having. The time and expense it takes to prosecute a salesperson does not justify the small amount a party would receive under the bond. All parties seem to agree that the salesperson bond should be raised to make it practical to access. Numbers have ranged from a low of $15,000 to a high of $30,000. We are currently waiting on information from the bonding companies in order to determine the best amount.

    Issue: Initial and continuing education is currently inadequate.

    Position: Current one time open book test is clearly inadequate. Initial education needs to be greater for both salespeople and dealers. We would propose that CADA and CIADA would be allowed to develop DLB approved training courses to fulfill this requirement. Upon completion of the annual education requirement, online testing available to demonstrate comprehension.

    Issue: Term limits for MVDB members.

    Position: DORA supports as a general policy. We should recommend no more than 2 consecutive terms and no more than 4 lifetime terms.

    Issue: Staggered terms with 1 of each type of member (new, used and public) expiring every year.

    Position: Agree.

    Issue: Provide ability for MVDB to enter into executive session for deliberation.

    Position: Agree.

    Issue: AID Investigators packing guns.

    Position: We should propose strict rules for investigators carrying guns and which situations they can be utilized. Carrying a gun while interacting with a licensee can only be interpreted as an intimidation tactic used by an AID investigator. Given the fact that AID has done background investigations on all licensees (if AID has done their job properly, there should be no hardened criminals in the business), there should never be the need for the use of a gun when interacting with a licensee on day-to-day business. The carrying/use of guns should be strictly restricted unlicensed activity and under the direct written consent of the MVDB in a situation where a dealer/salesperson has demonstrated willful disregard for the MVDB.

    Issue: Repeal of Sunday closure laws.

    Position: Opposed. There is a sense that this will be included in the report to the legislature based on pressure from un-named "consumer groups". It is important that we are unwavering on this position. This has been in front of the legislature on 6 occasions in the last two years and we have retained Sunday closure each time with the margin of victory growing in recent trips to the floor of the Colorado legislature. This issue has been discussed and settled and really does not belong as a part of this legislation.

    Other topics of interest that we will want to discuss and may want to include in our final recommendations to Mr. Holden:

     

  • Consensus issues from CIADA and the Powersports Dealers Association of Colorado.
  • Power balance between MVDB and Auto Industry Division.
  • Saleperson licensing that is statewide and not dealership specific.
  • Standardized purchase agreements or Buyer's Order.
  • Elimination of temp tags and issuance of hard plates by dealerships.
  • Response, if any, to 1997 Sunset review. Remember Mr. Holden's view is that it is a reference point but not a driving factor at this time.
  • Budgetary issues to provide for all we are proposing.

    We may want to cover these at another meeting depending on how quickly we get through the attachment.