Submission Number: 00087
Received: 3/10/2012 2:56:49 PM
Commenter: Dana Manner
Organization: Dana L. Manner, P.L.
Agency: Federal Trade Commission
Initiative: Public Roundtables: Protecting Consumers in the Sale and Leasing of Motor Vehicles; Project No. P104811
Attachments: No Attachments
Article posted at www.mannerlaw.com
FIADA and OFR Report: 70% of FL Used Car Dealers Failed to Renew Used Car Loan Licenses in 2010
The Executive Director of the Florida Independent Automobile Dealer’s Association (FIADA) reported on page 6 of the February 2011 issue of the Independent Dealer Magazine that according to the Florida Office of Financial Regulation (OFR) that 70% of used car dealers failed to renew their Motor Vehicle Retail Installment Sellers (MVRIS) Licenses, before the deadline of December 31, 2010.
According to the official records of the OFR, there were 665 Motor Vehicle Retail Installment Seller licensees during 2009-2010. Those statistics imply that only 200 of the 665 dealers renewed their licenses, as required under Florida law.
Florida Statutes Section 520.03(1) requires that: “A person may not engage in the business of a motor vehicle retail installment seller or operate a branch of such business without a license as provided in this section,” and Florida Statutes Section 520.12(1) makes the dealer’s violation a misdemeanor of the first degree.
Car buyers that are provided financing by unlicensed dealers with expired MVRIS licenses may be able to get relief from bad dealer financing arrangements because under Statutes Section 520.12(2) the buyer (borrower) may set-off or counterclaim in any action against the buyer by an unlicensed dealer, an amount equal to any finance charge and any fees charged to the buyer by reason of delinquency, plus attorney’s fees and costs incurred by the buyer to assert rights under this part.
It would seems obvious that FIADA lobbied the OFR to create an amnesty program since the article is entitled “FIADA & OFR Offer Amensty Program.“ The program gives Florida used car dealers that are operating illegally aonly a slap on the wrist, and allows them to avoid fines and criminal prosecution for engaging in the business of a motor vehicle retail installment seller without a license. Under the terms of the program the dealers to pay a small $175 “reactivation fee” instead of fines of $1,000 per contract written, if they renew their license before amnesty period expires on June 30, 2011.
While the OFR has rulemaking authority to enforce Florida Statutes 520, I have not been able to find any rule issued by the department that would authorize the OFR to waive the statutory fines, and impose a “reactivation fee” instead of taking enforcement action against the dealers who have failed to maintain their MVRIS licenses, and fine them $1,000 for each contract written without a license.
PRO FORMA FINANCIAL ANALYSIS OF THE AMNESTY PROGRAM – By implementing this amnesty program, the State of Florida waived $465,000 in potential fines that it might have collected (Based upon a very conservative estimate that 465 (665 x .7) dealers were unlicensed, and each dealer wrote at least one loan contract during the time that they were unlicensed, and would have been liable for a $1,000/loan fine). Instead, if all of the unlicensed dealers paid the “reactivation fee” of $175 according to the amensty program, the most the OFR would collect is $81,375 thus the FIADA/OFR amensty program saved Florida used car dealers from the exposure to the additional $383,625 in potential fines.
This so-called “amensty program” makes me wonder IF the Florida OFR is serious about regulating the financial industry and protecting consumer rights? The OFR touts that: “The Division of Finance is committed to protecting consumers by licensing and regulating non-depository financial service industries and individuals.“
In my opinion, based upon the actions of the Florida OFR in creating this amnesty program, the OFR appears to be more interested in protecting the needs of special interest groups such as FIADA and its members from being subject to enforcement of the laws of the State of Florida, than it is in protecting consumers from unlicensed dealers writing unlawful used car loans.