Staying on top of legal compliance is more than just a best practice—it’s a necessity for every dealership. The June 2025 issue of the Charapp & Weiss Newsletter is packed with essential updates and reminders to help dealerships navigate the evolving legal landscape. From advertising rules and employment policies to pay plan structure and telephone recording regulations, here’s what your store should be thinking about as we move into the second half of the year.
Sales Compliance: Arbitration, Spot Deliveries & Lending Practices
The latest case law still supports the use of predispute arbitration agreements, but they must be drafted fairly and exclude certain cases—like sexual harassment claims—which now fall outside the scope of enforceable arbitration due to federal law. Also, don’t forget: if a spot delivery fails to result in financing, you can’t keep the customer’s down payment. Rescission must return both parties to square one.
Fair lending compliance remains under scrutiny—even under a more relaxed federal administration. If you’re not using NADA’s Fair Lending and Voluntary Protection Product programs with consistent pricing, you’re putting your dealership at risk.
Advertising Pitfalls: APR & Lease Rate Disclosures
Using an APR or any “trigger term” in ads? Then you must disclose the down payment, terms of repayment, and use the term “APR.” If you’re advertising lease terms, never use “APR” or “Annual Lease Rate.” The Consumer Leasing Act prohibits this language, and improper advertising continues to be a top FTC enforcement area.
Employment & Pay Plans: Details Matter
Misconceptions about employee handbooks and commissioned pay plans can create serious legal risk. A handbook is not an employment agreement—it’s a critical tool for setting expectations and protecting your dealership. Pay plans should be written, signed, and detailed, with disclaimers, correction clauses, and clear definitions for bonuses and commissions.
Be aware that commission-only salespeople still need to record their hours to verify minimum wage compliance. Also, if you’re pulling credit reports for employment screening, you need a standalone authorization form—not just a signature on an outdated application.
Telephone Recording: Don’t Get Caught Off Guard
Recording calls? That’s fine in one-party consent states like Virginia, but if you’re calling into two-party states like Maryland, you need explicit consent from both parties. If your dealership does business across state lines, consider using a disclaimer for all outbound calls or pausing call recordings in two-party states.
FTC Safeguards & Privacy Rules: No, They’re Not the Same
A key misconception? That compliance with the FTC Privacy Rule means you’re also good under the Safeguards Rule. Not true. The updated Safeguards Rule requires a comprehensive information security program, including risk assessments, data encryption, multi-factor authentication, and a designated Qualified Individual to oversee implementation.
If your store hasn’t yet outsourced Safeguards compliance to a qualified third-party vendor, now is the time.
Final Thoughts
Compliance isn’t static. Laws shift, enforcement priorities change, and even a small oversight could result in big legal consequences. Use this newsletter as a mid-year checklist—and if you’re unsure where your dealership stands, contact Charapp & Weiss for trusted legal guidance tailored to the automotive industry.
