Top Legal Issues Car Dealerships Commonly Deal With (Plus Fixes)
If you’re a car dealership, you’re likely aware of the many legal issues that can arise. From any Nevada lemon law to FTC regulations, there are plenty of potential problems that you need to be prepared for. And, of course, these problems could potentially lead to hefty fines, penalties, and even lawsuits if mishandled. So understanding the common legal issues that car dealerships deal with and how to mitigate them can be essential in keeping your dealership running smoothly. So what are the top legal issues car dealerships commonly deal with? Let’s take a closer look:
Violations of State Lemon Laws
Car dealerships need to be aware of each state’s lemon law regulations to avoid violations. These laws have been created to protect buyers from faulty vehicles, and dealerships can be liable for any violations. In fact, did you know that dealerships can be held liable even after the sale of a car if it turns out to be a lemon? So, understand each state’s lemon law regulations and make sure that you’re following them accordingly.
Violations of FTC Regulations
The Federal Trade Commission (FTC) has put in place specific regulations that all car dealerships must adhere to. Failure to do so can result in hefty fines and other legal repercussions. Some common violations of FTC regulations include deceptive advertising, failure to disclose pertinent information such as loan terms, and even improper financing practices. Ensure your dealership’s policies are up-to-date with the latest FTC rules and regulations.
Discrimination Claims
Car dealerships should have a policy in place to prevent discrimination of any kind when it comes to customers or potential employees. This means that dealerships should be aware of any state or federal anti-discrimination laws and make sure to comply with them when dealing with customers or potential employees. Not only is it illegal, but discrimination can lead to costly lawsuits and reputational damage.
Failure to Maintain Licenses
To legally run a car dealership, dealerships must have the required licenses. As such, failure to maintain these licenses can create legal issues for the dealership. Being aware of all required licenses and staying up-to-date with them is essential for any car dealership. Otherwise, dealerships can face legal and financial repercussions. Many states also require dealerships to register any used vehicles sold in their state. So be sure to check with the DMV in your state for any registration requirements and make sure they’re followed accordingly.
Repossession Notices
Car dealerships may be required to send out repossession notices when a customer defaults on their loan payments. This can open up the dealership to potential legal issues if the proper procedures are not followed regarding the repossession process. So, it’s more than important for car dealerships to be familiar with their state’s laws and regulations regarding repossession and make sure to follow them.
By understanding the common legal issues car dealerships face, you can be better prepared to mitigate potential risks or problems. And when in doubt, consult with a lawyer to ensure that your dealership is up-to-date on all applicable laws and regulations. Doing so will help keep your dealership running smoothly and legally.
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