MD MVA advisory sets forth agency view on how dealers are to make required vehicle history disclosures to buyers

MD MVA advisory sets forth agency view on how dealers are to make required vehicle history disclosures to buyers

Growing confusion arising from plaintiffs lawsuits against Maryland dealers over the past two years for alleged violations of the law relative to disclosures to consumers on vehicle sales has prompted the Motor Vehicle Administration (MVA) to publish a dealer advisory confirming longstanding dealer practices when making required disclosures. The MVA Bulletin from Brenda Scheydt, manager of dealer licensing (How Required Vehicle Disclosures Can Be Made, June 21, 2012), followed a number of high level meetings MADA and WANADA had with the MVA administrator and the attorney general to gain clarity on the mandated rules of engagement on auto sales; note, too, that the MVA Bulletin is important as much for what it doesnt say as what it does.

At the outset, the MVA sets the record straight on legal advice MVA Administrator John Kuo received in an April 11 letter from an assistant attorney general that had been systematically misconstrued (by plaintiffs lawyers) to suggest that disclosures required of dealers needed to appear in the retail installment sales contract (RISC) in financed vehicle sales when, in fact, the April 11 letter reported only on some recent federal court decisions that arbitration clauses in financed vehicle sales need to be in the RISC to be enforceable.

Plaintiffs lawyers in lawsuits with dealers, pointed to the April 11 letter as authority for the absurd premise that all contractual terms of a financed vehicle transaction, to include required disclosures, must be in the RISC to be effectual. Connecting the dots, plaintiffs lawyers have argued that dealer disclosures to consumers not in the RISC, but on another paper as part of the vehicle sales contract, are failures to disclose vehicle history that are violative of the law and actionable against the dealer.

Reflective of MVAs time honored regulatory position, the Bulletin significantly states in part that MVA does not limit which documents must contain the required disclosures; then states further that best practices are to provide disclosures in a writing that is attached to the sales order (sic) and may be attached to the RISC, if there is one. (emphasis added)

As mentioned above, dealers should note that there is a lot of positive substance in yesterdays MVA Bulletin, stating and restating, as it does, the rules of engagement dealers are to follow, while at the same time removing the April 11 letter as ammunition for plaintiffs lawyers who would twist the law for the purpose of gaining the upper hand in suits, of the class action variety, they bring against dealers.

Beyond the single document, multi-document subject matter of the MVA Bulletin is the substantive side of the recent plaintiffs suits against dealers, that being the longstanding Maryland requirement of dealers to take care that prior use is disclosed when a used vehicle offered for sale has had commercial use, such as short term rental car service ” a recurring predicate in the class action suits. Other prior use that a Maryland dealer must disclose in writing to a used vehicle consumer is use as a taxi, driver education car, demonstrator, executive driven car, or a public sector/government official vehicle involving multiple drivers. (See COMAR 11.12.01.14(M))

A dealer is on solid legal ground when prior use disclosure is made in writing and, per the MVA Bulletin, is on a separate document or in the buyers order. It is important after that for the dealership to keep a copy of the prior use disclosure in the customer deal jacket should it later become necessary to prove that the discourse was made.

The final positive piece of the MVA Bulletin was MVAs assertion that it is working to update the regulations of what type of vehicle history must be disclosed. WANADA leadership joins MADA in applauding MVAs pledge to update the regulations and looks forward to actively participating in the process. We also appreciate, on behalf of the industry, MVA setting the record straight on Marylands regulatory rules of engagement on vehicle sales.

For a copy of the June 21, 2012 MVA Bulletin, click here.