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IIADA complaint on curbstoningIowa Independent Automobile Dealers Association November 28, 2006 Mayor Roy Buol City of Dubuque 50 W. 13~' Street Dubuque, Iowa 52001-4864 Deaz Mayor Buol: Our association represents used caz dealers in the state of Iowa and we would like to bring an issue to your attention that is becoming a major problem for both new and used car dealers. The issue is curbstoning. There are several ways curbstoning is conducted. First, licensed used caz dealers allow independent contractors to work off of their dealer license. Sometimes these persons will purchase a vehicle from the general public or perhaps at a wholesale auto auction. Then, rather than displaying this vehicle for sale at the licensed dealership they will curbstone it from their private residence,or on the Internet and often times on vacant lots in well traveled azeas to bring attention to the vehicle and to encowage the purchase of a vehicle. First, a licensed dealer can not sell motor vehicles from any where except the licensed used caz dealership location If they would do so, it would be considered anoff-premise sale, which is illegal in Iowa, and most other states as well. Secondly, there aze members of the general public who aze what we call "pretend dealers" operating without a dealer license, but yet they try to make consumers believe they aze licensed dealers .Yet, they do not have the overhead and expense involved with becoming a licensed and bonded dealer. These individuals purchase vehicles from various sources and sit their vehicles upon vacant lots or infringe upon businesses by placing these vehicles on private business properties and violate the property rights of others. Most often these individuals do not have permission to park vehicles on private business properties. We witness often times, when a gas station or convenience store closes and the property is vacated, the curbstoner moves in vehicles and offers them for sale to the public. A curbstoner will letter the cars up and encourage the purchase often times by merely placing a cell phone number on the vehicle. Administrative Offices Educational Classes & Forms 607 East Market Street Phone: 641-755-4177 515 North Jefferson Way, Suite H Phone: 515-962-9202 P.O. Box 337 Fax: 641-755-3247 P.O. Box 551 Toll Free: 1-866-962-9202 Panora, Iowa 50216 Fax: 641-755-4534 Indianola, Iowa 50125 Fax: 515-961-8400 Email: iiadaQnetins.net Page 2 We have many members throughout the state of Iowa who are concerned about curbstoning as often times innocent consumers purchase an inferior grade of vehicle, are offered no mechanical warranties or any guazantee that a title will accompany the vehicle once it is purchased. Unscrupulous individuals will not disclose to the consumer if they aze selling salvaged title vehicles or vehicles that might have obtained substantial amounts of damage. The problem of curbstoning impacts all states and all communities. The motor vehicle industry contributes large sums of money to the tax base in all of our states and provides many, many jobs as well. Organizations such as ours work to educate the licensed dealer about the many laws, rules and regulations that a dealer must follow and we certainly do not advocate curbstoning. We aze finding that many communities are passing ordinances that prohibit curbstoning in their cities and towns. Current Iowa law requires that a person selling at retail more than six (6) motor vehicles during a twelve month period may be presumed to be engaged in the business of selling motor vehicles and is required to obtain a motor vehicle dealers license. Part of the requirements to obtain a motor vehicle dealers license in Iowa is to have a $ 50,000 bond, proper insurance on one's inventory and property, a facility approved by the DOT and proper zoning. Curbstoners, have few expenses, and often times their only overhead is a cell phone. Motor vehicle dealers aze governed by Chapter 322, Code of Iowa as well as Chapter 321, and by various DOT departmental rules. Curbstoners aze taking advantage of other dealers and most assuredly the consumer. They jump title, and pay no use tax on the motor vehicle they are selling, as only a licensed dealer may re-assign an Iowa title. Curbstoners encourage the abuse of use tax laws in our state and have little or no regazd for any type of legal requirements, whereas, licensed dealers are encouraged to follow all laws, rules and regulations. Specifically, Chapter 322.14 provides penalties for violations of the motor vehicle dealer laws and any law enforcement official can enforce the laws applicable to motor vehicle dealers. We are wondering whether your community has ever considered the creation of an ordinance that would require that vehicles placed upon private property for sale must be registered at the location upon which they aze sold. This could assist in the elimination of curbstoning or at least lessen it and provide local business persons an avenue to rid themselves of unwanted trespassers who aze using someone else's property for financial gain, without any respect for the liability they could be passing on to another business owner. Perhaps your community has something in place that would prohibit curbstoning and if you do, would you share that ordinance with us. Page 3 We aze enclosing some articles about curbstoning for informational purposes. Currently, approximately one-third of the used vehicles sold in the United States are sold by licensed new caz dealers, one-third are sold by licensed used caz dealers and the remaining one-third are considered as casual sales. The casual sales category would include vehicles sold from a persons residence and from curbstoning, and it is believed that curbstoning is a large portion of the third category. We would welcome your thoughts on our suggestions as we would very much like to get the dialogue rolling and encourage the leadership at the city government level to do everything possible to eradicate the eye-sore of curbstoning. B~est~R~ega'rcds, ~-- ~ LLL'~C r CL2~~ L -~ David A. Farmer, President IIADA DAF:jw ENCLOSURES ~ -J -O O YENN:LE NNKORY RE-riRYE ....6... ..... START YWR SEARCtlNOWt HELP LOGIN Curbstoning: Facts And Tips To Avoid Being Taken Herta Soman learned about Curbstoning the hard way when she fell for a curbstoner's story and wound up paying $15,000 fora '97 Honda only to find out the warranties were void because the vehicle had been totaled nearly three (3) years earlier. "I was angry-I was in shock," said Soman after discovering through CARFAX that the car she purchased from a private seller had once been salvaged. "I was speechless-I feel like I'm driving a fraud." Sadly, Soman is not alone. Law enforcement officials estimate that many of the cars advertised in classified ads or sold at the curb may be curbstoned vehicles- vehicles sold by scam artists who pose as private sellers. These curbstoners often sell vehicles reputable dealers won't touch because of hidden problems, such as salvage titles, that can affect both safety and value. Use CARFAX.. . The most trusted source of vehicle history information. Order CARFAX Vehicle History Reports: Enter a VIN Find a great car: Flnd used cars -backed by CARFAX -just listed for sale in your area: Year: , ~ ii tp Year: Make Models -~ [--,~ Show Only 1 Owner --~-' Vehicles ', Zip Code "Unfortunately, dishonesty sometimes is very profitable," laments John Creel, Consumer Investigator. Creel has been busting curbstoners for years. He explains how this scam works. curbstoners pick up bad cars-"cars that may have spun odometers or salvage vehicles" for example-from junkyards or wholesale auctions, then pass them off to unsuspecting consumers as quality family cars. "You don't tell him you got it a week ago, and you cleaned it up and now you're selling it," reveals a former curbstoner caught by Creel who requested anonymity. "It's possible even to hide the fact that a car has been totaled by registering it or changing the title in another state," he adds. Consumer safety advocates say you can't be too careful when buying a used car today since rebuilt wrecks are more likely to fail in the event of another crash. It is especially dangerous when the driver has no idea the vehicle has been in a major accident before. "Your chances of being in a serious auto crash in your lifetime are 1 out of 2," says Jackie Gillan of Advocates for Highway and Auto Safety. "Those are very high odds, so you want to make sure when you're buying a used car that it's not only going to provide the transportation you need, but is also going to provide you and your family with a safe driving environment." Creel always recommends that consumers do their homework before buying any pre-owned vehicle-especially from a private seller. "The first thing you want to do is get a CARFAX report," he says. http://vvww.cazfax.com/caz_buying/curbstoning.cfm 11 /14/2006 Herta Soman, who-because of a curbstoner-got stuck with a now failing rebuilt wreck echoes Creel's sentiment. "I wish I would have done that prior to purchasing my car-it would have saved me a lot of grief, and a lot of money." What Is Curbstoning? Curbstoners are scam artists. State laws prohibit private citizens from selling multiple cars or vehicles other than those titled to them. Curbstoning involves individuals who ignore these laws meant to protect consumers from unlicensed, unscrupulous sellers. Frequently, they sell vehicles reputable dealers won't touch-those with hidden problems in their pasts-problems that can affect both the safety and the value of these vehicles. All too often a consumer goes to a curbstoner thinking that they will get a better.deal. They may feel less intimidated approaching an individual seller they perceive to be a neighbor versus a professional salesman. They may think they can't afford a vehicle from a reputable, reliable dealer. Unfortunately, whatever the reason for going to a private seller, shoppers who buy from them without checking the vehicle's history can end up paying too much money for a poorly rebuilt wreck, a lemon or may be even stolen vehicle. Victims of curbstoners often end up making expensive repairs because a rolled back odometer led them to believe the vehicle was in better shape. Or, they may find themselves in a dangerous vehicle that has already been totaled due to a severe accident. According to Larry Gamache, Director of Communications for CARFAX, "Law enforcement officials agree that many of the cars advertised in classified ads may be curbstoned vehicles. Curbstoning is nothing new, but it is now reaching epidemic proportions, which is bad news for consumers and dealers, alike. Curbstoners weave elaborate, seemingly sincere, stories to gain a buyer's confidence or pity. Usually they're variations on the same stories, such as: a relative passed- away, they are sending a child off to college, a friend or relative has asked them to sell it for them, they are getting married, moving or getting a company car, etc. By recognizing these `tall tales,' consumers can know to say'no."' Looking at a specific vehicle? ~' Start here...enter its VIN for a free vehicle hrecord check. 1GBEK19R8TE23004 .' Guarding Against Curbstoners Buy from a reputable dealer -- More than 25,000 dealers nationwide subscribe to CARFAX to ensure that the vehicles they sell on their lots are safe and reliable. Through CARFAX, consumers can find a dealer and even find a car locally that meets their needs. Most CARFAX dealer subscribers even offer free copies of the Vehicle History Reports to their customers -all you neec to do is ask. But, if you still want to buy from an individual, there are ways to guard against curbstoners: Ask to see the driver's license of the seller along with the car's title. If the name on the title doesn't match the name on the license, don't buy it. . Ask the seller for a detailed CARFAX. Vehicle History Report to identify if the car has a http://www.carfax.com/caz_buying/curbstoning.cfm 11/14/2006 '..,officials estimate that many of the cars advertised in classified ads maybe curbstoned vehicles... " ..rj.. r va .~ salvage history, odometer fraud or flood damage. It will also show recent, frequent or excessive title transfers that may contradict the seller's story. • Take the car to a trusted mechanic. A professional inspection can uncover weld marks, water spots and uneven tire treads -all clues to a potentially unsafe vehicle. • Check the phone number. See if the same phone number appears in multiple ads, and make sure that you have a way to get back in touch with the car seller-not just a cell phone or pager number. curbstoners often use them to change their locations without being caught. • Always be a little leery if the price that seems just too good to be true. If something feels wrong, walk away. Let us do the work! Be the first to know about used cars just listed for sale in your area. ZIP code ~~ What Local Dealers Can Do To Curb Curbstoning Local dealers can also help actively combat curbstoners and protect their customers from harmful deals: • Be informed -Knowing what Curbstoning is and where curbstoners work in your area can help you combat them by educating consumers of this illegal practice, its risks and consequences. • Check the classified ads -Learn what cars are most popular and in demand. Plan to increase the visibility of similar cars on your lot to make Curbstoning less desirable in your community. • use CARFAX - If you aren't already, become a CARFAX Subscribing Dealer. It helps you keep undesirable vehicles out of your inventory and demonstrates to buyers that your cars are top notch. • Advertise - It seems simple, but a lot of dealerships are timid about placing ads. Advertising is a great way to reach consumers. • Participate -Getting involved in your local community lets consumers in your area get to know you, and builds a positive reputation for you and your business. Donations of cars to charity, volunteering at events and speaking to newspapers are all great ways to get involved and show your pride in the community. • Contact authorities -Finally, if you suspect there's a curbstoner in your area, contact the local authorities and encourage them to take action to protect consumers. These unlicensed sellers are breaking the law, plain and simple. FREE SERVICES: Lemon. Check*"' I Record CheckT" I Recall, Check•"'. I Problem Car Check I Safe Teen Driver Progra MORE CARFAX: Dealer Program I Aff_illete Program I Featured AUto_Links I USed_Car Ratings I Cdreers I $ite Map Copyright C~ 7999 - 2008, CARFAX, Inc Privacy Statement 1 Terms and Conditions! "fradem http://www.carfax.com/car_buying/curbstoning.cfm 11/14/2006 _. _.___ ___ _____.______a __ _______ ___ ______ Montana Cade An~ota~ed 2405 . use. a ~i a rrl.~~ , Preuous Section MCA Contents Part Contents Search Help Meat Section 61-4-143. Unlawful curbstoning of vehicle for sale. (1) Except as provided in 61-4-123, a person may not display or pazk a motor vehicle offered or posted for sale on real property in which the person does not have a legal interest if the primary purpose of displaying or pazking the vehicle on the property is to promote or effect the sale of the vehicle. (2) This section does not prohibit the display or pazking of a motor vehicle offered or posted for sale when: (a) the display or pazking of the motor vehicle is incidental to actual operation and immediate use of the motor vehicle by the motor vehicle owner; (b) the motor vehicle owner obtains the written consent of the real property owner, lessee, or agent of the owner or lessee on whose property the motor vehicle is displayed and posts the written consent or a copy of the written consent in the front or reaz window of the motor vehicle; or (c) unless otherwise prohibited by local ordinance, the motor vehicle is displayed on a public street that is adjacent to real property in which the person offering the motor vehicle for sale has a legal interest. (3) A person who violates subsection (1): (a) is subject to a written wazning for the first violation; and (b) for a second or subsequent violation, is guilty of a misdemeanor and upon conviction may be fined an amount not less than $250 and not more than $500. (4) Each violation of subsection (1) is considered a separate offense. History: En. Sec. 1, Ch. 385, L. 2001; amd. Sec. 170, Ch. 542, L. 2005. Pmviciad by A.~nfiana Lo'~grsrativrr Spra~.s http://data.opi.state.mt.us/bills/mca/61/4/61-4-143.htm 11/14/2006 ~.i~y uiiiviauy iiraKCS utuu~wiuuy ttteyeu - nuustuu nu~ute~~ Juuarat: YagC 1 oI 1 Houston Business Journal -January 11, 2006 ,~ l~~ tirtp://houSto n. bizjourn als.c omlhouston/storiQSl2006/01 /09ldaily27. htm I U ~~~~~~~o~~z __---~_ BUSINESS PULSE SURVEY: What.Should Rick Perry's. priorities be? City officially makes 'curbstoning' illegal Houston Business Journal -January 11, 2006 by Jenna_Colley Houston Business Journal Houston City Council voted unanimously Wednesday to outlaw "curbstoning" or the sale of automobiles on a street curb, right-of--way or in pazking lots by mostly unlicensed dealers. The ordinance makes selling vehicles under such circumstances a Class C misdemeanor. The la~~ does not apply to individual owners selling personal vehicles on their own properties. Local officials say curbstoning is a consumer protection issue that cuts into the business of licensed dealers and causes blight in neighborhoods. Curbstoners don't pay taxes on vehicle sales or transfer titles. The passage of the ordinance is the culmination of efforts by City Councilmembers Toni Lawrence and Ronald Green, the Houston Police Department and representatives from the automobile dealership, industry among others, (See: "Catch-22 prevents crackdown on 'curbstoning,' May 2, zoos.) The ordinance stems from new legislative authority given to the city by the State of Texas through the passage of House Bi1125o9. The law empowers cities to fight curbstoning by allowing city municipal courts to heaz violations on the matter. Previously, the city had no jurisdiction over the practice. Contact theEtlitor Need Assistance ;More Latest News i i Subscribe or_renew online .. All contents of this site ©American City Business Journals Inc. All rights reserved. http://www.bizjournals.com/houston/stories/2006/O1/09/daily27.html?t~rintable 11/14/2006 322.14 PENALTIES. 1. A person who violates any of the provisions of this chapter for which a penalty is not specifically provided is guilty of a simple misdemeanor punishable by a fine of not less than two hundred fifty dollars nor more than one thousand five hundred dollars or by imprisonment not to exceed thirty days. 2. Notwithstanding subsection 1, if a provision of chapter 537 is applicable to a retail installment contract and a violation of that provision is subject to a penalty under chapter 537, that penalty shall apply in lieu of a penalty provided in this chapter. [C39, ~ 5039.14; C46, 50, 54, 56, 62, 66, 71, 73, 75, 77, 79, 81, ~ 322.19] 97 Acts, ch 106, X37; 99 Acts, ch 13, X24 Previous Section 322.13 Next Section 322.15 -~~. ~.~ .zV:, . MORE INFORMATION REGARDING CURBSTONING CAN BE FOUND AT THE FOLLOWING WEBSITES: www. IndependentDealer.com ----- Consumer Corner www. niada.com - Curbstoning Problems www. curbstoppers.com http://coolice.legisstate.ia.us/Cool-ICE/default.asp?category=billinfo&service=IowaCode 11/14/2006