August 2019 - Greater Cincinnati Automobile Dealers Association

Your Uber-Driver Customer Wrecks Your Collateral. What Now?

By Catherine C. Worthington*

Finance companies, related finance companies, and buy-here, pay-here dealers have an intense interest in making certain that the vehicles securing their extensions of credit are properly insured. To that end, they include in financing documents a requirement that the car owner obtain and maintain insurance protecting the collateral.

What happens, though, when that insurance has a hole in the protection that it provides, leaving the creditor with a potential loss? Here’s an example of the problem.

Commerce Insurance Company issued a standard vehicle insurance policy to Marcio Rodrigues-Pessoa. First Help Financial, LLC, was listed as a secured lender on the policy.

The vehicle was involved in an accident when Rodrigues-Pessoa’s friend was driving it to transport Uber passengers. First Help submitted a claim for coverage under the Secured Lenders provision of the policy, but Commerce denied the claim on the ground that it was barred by the policy’s Vehicle Sharing and Public or Livery Conveyance Exclusion. That exclusion bars the named insured from recovering collision damages incurred while the vehicle is being used in connection with a transportation network company like Uber.

Commerce sued to, among other things, obtain a declaratory judgment as to whether First Help could recover under the policy.

The Superior Court of Massachusetts entered judgment for First Help. The court found that First Help was entitled to coverage for collision damages and was not barred by the Public Conveyance Exclusion, even though the collision occurred while the vehicle was being used to transport Uber passengers.

The policy provided that a secured party’s right of payment “will not be invalidated” by the named insured’s “acts or neglect.” The court found that Rodrigues-Pessoa’s decision to let his friend use the vehicle as an Uber driver was an “act” or “neglect” by the named insured that could not invalidate First Help’s coverage for collision damages.

With the advent of the “gig” economy and the rise of Uber and Lyft, we can expect to see a frequent replay of this fight. Secured parties need to address the question of whether and how any insurance on the vehicle will protect them and determine the steps they need to take to make sure that the fine print in a car owner’s policy doesn’t create a hole in coverage.

We don’t have the answers for this one. Reviewing the terms and conditions of each car owner’s insurance policy doesn’t seem like a practical result. Having the car owner expressly agree to obtain insurance that does not contain such loopholes might be helpful, but, without monitoring, is far from foolproof. Perhaps your company’s insurance carrier might offer a solution.

Commerce Insurance Company v. First Help Financial, LLC, 2019 Mass. Super. LEXIS 47 (Mass. Super. April 16, 2019).

*Catherine C. Worthington is a managing editor at CounselorLibrary.com, LLC. She can be reached at 410.782.2349 or by email at cworthington@hudco.com.

CPR Manikin Program extends to Oxford, Ohio with Fire Department donation

Our CPR Manikin Program continued last week with a four-manikin donation to the Oxford, Ohio Fire Department at Northgate Chrysler Jeep Dodge with Pete and Andy Pannier, GCADA’s Charlie Howard and Oxford, Ohio Fire Department Captain Chris Johns.
 
“We were awarded four manikins we’ll be able to use for the community CPR classes we offer. 
 
“We just held a large class last week with Miami Univ. Navy ROTC with about 22 students and we’ll use these quite a few times throughout the year,” Capt. Johns said.
(From left: Andy Pannier, Capt. Chris Johns, Pete Pannier and Charlie Howard

GCADA members have now donated more than $40,000 in equipment to more than 40 organizations through the manikin program since 2013.   The GCADA helps fulfill its mission of promoting public safety by providing members opportunities to donate manikins to Greater Cincinnati non-profit organizations such as hospitals, civic groups, fire departments, schools and American Red Cross chapters.   

Manikins are provided at no cost to enable organizations educate and train community members in CPR procedures for infants, children and adults.

GCADA complements its manikin program by partnering with Greater Cincinnati / Dayton Red Cross chapters and Spectrum to illustrate the importance of CPR training by producing an an annual Public Service Announcement that airs during CPR and AED Awareness Week. 

Winning with online reviews

By George Nenni

What is the most popular search term for a car dealership? Its name, of course!

What happens 100 percent of the time a person performs a Google search for a dealership name? The dealership’s Google My Business (GMB) listing displays front and center, along with the dealership’s online reputation star-rating.

GMB listings also display when a consumer searches for a vehicle make followed by a geographic location, for instance, “Ford dealer near me,” or “Jeep dealer in Chicago.” You get the idea, the dealership’s GMB listing has become the internet white or yellow pages and a dealership’s most important secondary website.

Few discount the importance of online reviews. For any of us who are buying products online, we know our confidence level is higher when we’re buying from a highly-rated buyer. Since most car shopping journeys start online using Google Search, we know that most consumers are seeing dealer reviews on Google.

We know there are many other automotive review sites on the web, but for the purposes of this article, our goal is to help dealers win with Google reviews.

If a dealership truly wants to win with online reputation, the best advice is to contract with one of the top providers such as Podium or Reputation.com. These companies will contact variable and fixed operations customers in an effort to drive more reviews across Google and other review sites. However, these reputation companies will only be able to influence a certain percentage of buyers to leave a review, so dealers shouldn’t stop there.

To further this effort, dealers should also take it upon themselves to drive additional reviews through one-on-one engagement.

What does that mean? The idea is for a car salesperson or service writer who has just successfully helped a customer purchase a vehicle or complete a repair to drive a review from a one-on-one request while the customer is still at the dealership. Best practice would be to target the customers who are very happy with their purchase process and are in the final stages before leaving the dealership.

The salesperson or service writer simply offers to text a GMB short-code that will allow the customer to leave a Google review.

The short-code is a new feature from Google that creates a direct link to a business’s GMB page. This one-on-one engagement and review request is far more likely to deliver a positive review.  

This approach has worked incredibly well in dealerships, especially when salespeople are incentivized (i.e. pay plans) to drive online reviews that mention the salespersons’ name. Dealers are driving about 10-15 new reviews per week, with most of them being 5.0 stars.

The key is targeting the best customers and messaging them by text (instead of email).

More about GMBs and digital initiatives is available at generationsdigital.com.

George Nenni and Digital Generations team also share ideas and news through Linkedin: linkedin.com/in/georgenenni, Facebook: facebook.com/generationsdigital/ and Twitter: twitter.com/generationsdig.

Should Auto Dealers Worry About South Dakota v. Wayfair?

By Stephen Estelle – Clark, Schaefer, Hackett

Does South Dakota v. Wayfair and newly-enacted state economic nexus laws (including Ohio’s) require auto dealers to collect other states’ sales tax if sales to residents of other states exceed the economic thresholds?

With respect to motor vehicle sales, auto dealers have little to worry about.  Each state requires payment of sales tax or a fee before a vehicle owner can obtain tags and title to the vehicle.  If a consumer wants to drive the vehicle lawfully, the individual must pay the tax.  For states, this requirement is adequate assurance the state will receive its money. 

The Wayfair decision addressed an entirely different situation—customers did not have to pay tax before they could enjoy the goods they purchased, and states were losing this revenue.  Wayfair changed this dynamic by allowing states to require out-of-state vendors to collect tax.

While technically, an auto dealer may have sales tax nexus with the state because sales to residents of that state exceed economic thresholds, if the vehicle was titled the dealer will be able to show that the tax was paid.  Thus, there’s little reason why a state would audit an auto dealer on that issue.

In addition, some states have agreements with others to require in-state auto dealers to collect sales tax from purchasers residing in the other states.  For example, Ohio auto dealers are required to collect tax on car sales made to residents of AZ, CA, FL, IN, MA, MI, and SC.

If an auto dealer sells items on-line (parts, for example), Wayfair and economic nexus laws might apply.  If online sales into a state exceed the state’s economic threshold, the auto dealer would have an obligation to register with the state and collect tax.  Thresholds differ by state, but most states (including Ohio, Kentucky, and Indiana) have chosen to use $100,000 or 200 transactions.

One issue that arises is when the threshold is met but some of the sales are exempt.  What then? 

Technically, the seller still has an obligation to register.  From a risk/benefit perspective, however, the seller might wish to weigh the cost of registering and filing returns against the risk of being assessed uncollected tax, interest, and penalties on audit.   

Dealers selling on-line who decide to register should charge tax unless the customer provides an exemption certificate.  When tax is charged, the customer’s receipt or invoice should clearly show the tax amount and the price used as the tax base.  The dealer’s internal records should as well and should tie to the sales tax return.

While the Wayfair case has had a significant impact on online retailers, motor vehicle sales will be unaffected.  Only if an auto dealer also functions as an online retailer should they have any concern.

Please contact Stephen at (614) 318-1465 for more information

Fiehrer Buick-GMC, Ohio Valley GTO Association September Show to Benefit Charities

Fiehrer Buick-GMC will welcome an Ohio Valley GTO Association car show open to all makes and models that will benefit three Greater Cincinnati charities Saturday, Sept. 1, at 6720 Gilmore Rd., Hamilton, Ohio 45011.

Show registration is $15 and will run from 9 a.m. to noon. An awards ceremony set for 3 p.m. The day of fun also will feature music from WGRR-FM and On Air Entertainment disc jockey J.D. Hughes.

All proceeds will benefit Cincinnati Children’s,  Hospice of Cincinnati and Matthew 25 Ministries.

The Ohio Valley GTO Association regularly displays at the Cincy Auto Expo and celebrates its 30th Anniversary this year. Monthly meetings convene the third Thursday of each month from 6:30 p.m. to 7:00 p.m. at 11083 Kenwood Rd, Blue Ash, Ohio 45242. Annual membership fees are $30.00 and do not require GTO Association of America membership.

Visit https://ovgto.com/ for more information.