Dealer Operations and Compliance Flashcards
7 cards from real Motor Vehicle Division practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Dealer Operations and Compliance flashcards as text
What is 'yo-yo financing' in the context of dealer compliance?
Answer: A dealer allows a customer to take delivery, then calls back to say financing fell through and demands different terms
Yo-yo financing occurs when a dealer lets the customer drive off, then contacts them days later claiming the loan was not approved and requiring the customer to return and accept worse terms.
Which entity typically investigates consumer complaints against a licensed motor vehicle dealer at the state level?
Answer: The state Motor Vehicle Division or Department of Motor Vehicles
State MVD or DMV licensing divisions receive and investigate complaints about licensed dealers and can impose administrative sanctions.
A dealer 'packs' a payment by including an undisclosed add-on product in the monthly payment without telling the customer. This violates:
Answer: Truth in Lending Act disclosure requirements and state consumer protection laws
Payment packing misrepresents the true cost of credit and violates TILA as well as state unfair and deceptive acts and practices (UDAP) statutes.
A dealer must obtain a separate 'wholesale dealer' license primarily to:
Answer: Buy and sell vehicles exclusively to other dealers without retail selling to the public
A wholesale dealer license permits buying and selling vehicles only between licensed dealers, not to retail consumers.
Under the Red Flags Rule (FTC), what must a dealer's identity theft prevention program address?
Answer: Detecting, preventing, and mitigating identity theft in connection with covered accounts such as credit applications
The Red Flags Rule requires dealers who extend credit to have a written program to detect and respond to warning signs of identity theft in credit-related transactions.
A dealer who sells more than 25 new vehicles in a calendar year is typically required to comply with CAFE (Corporate Average Fuel Economy) reporting. Who sets CAFE standards?
Answer: The National Highway Traffic Safety Administration (NHTSA)
NHTSA sets and enforces CAFE standards, though EPA provides fuel economy test data used in the calculations.
What is the legal significance of a 'spot delivery' (also called a 'conditional delivery') in a dealer transaction?
Answer: The dealer delivers the vehicle before financing is finalized, which can expose both parties to risk if the loan is later denied
In a spot delivery, the customer takes possession before the lender fully approves the loan, creating risk that the customer may need to return the vehicle or accept different terms.