VA Dealer Board Announces New Criminal History Process

VA Dealer Board Announces New Criminal History Process

At its September 11, 2006 meeting in Richmond, the Virginia Motor Vehicle Dealer Board (MVDB) announced that a new criminal history process will be used for applicants. Previously, the state police were responsible for running criminal history reports on applicants. However, this limited the criminal history reports to Virginia convictions.

A new private service will be used that will enable MVDB to do a nationwide check of convictions. In addition, the new service will be responsible for an OFAC check on applicants.

In other notable actions:

Revocation of License — MVDB considered the revocation of the sales license of a former manager of a franchised dealership who, according to the facts found at a hearing, had been responsible for false reports of vehicle sales to the manufacturer. These reports led to audit chargebacks by the manufacturer in excess of $1.5 million. Because of the serious fraudulent acts by this employee, MVDB voted to revoke the sales license of the employee involved.

Referrals — There were substantial conversations among MVDB members about a proposed newspaper advertising program that the newspaper claimed was –like Google”. Basically, the newspaper wants to print the inventories of dealers in a special section, and dealers will pay based upon contacts by consumers. The newspaper contended that this was similar to click pricing by internet search companies like Google.

One aspect of this program involves potential phone calls from consumers. A consumer interested in a listed vehicle can call the newspaper which will then direct the call to the dealership. MVDB members debated whether this constituted –referrals” for which the newspaper will be paid.

Because the information concerning the consumerês identity will not be transferred automatically, but must be volunteered by the customer if the customer agrees, this was not viewed as a referral relationship. The newspapers –click-pricing” was approved.

Dealers are reminded, however, of Virginia law concerning –bird dog fees”. It is illegal to pay a person who is not licensed as a salesperson with the dealership for the sale of a vehicle. Given the broad language of the Virginia statute, it has been the position of MVDB for some time that payments to a person who is not licensed to the dealership based on referrals are also impermissible bird dog fees. Unlicensed individuals or companies who are paid the improper fees are not subject to action by the Motor Vehicle Dealer Board. Only licensed dealers who improperly pay bird dog fees are subject to regulatory action by MVDB.

Fees — MVDB noted that it has been in business for more than ten years. Given current fee amounts, MVDB projects that in as little as two years, fees it is currently receiving may not be sufficient to support the activities of MVDB. Consequently, MVDB authorized the executive director to commence a proceeding to consider increasing certain fees paid by license holders and for dealer license plates. The precise increases will be dependent upon a proceeding pursuant to the Virginia Administrative Procedure Act that will take approximately 18 months.

The next meeting of the Virginia Motor Vehicle Dealer Board and its committees will be held Monday, November 13, 2006 at DMV headquarters in Richmond.