handbook of automotive advertising rules and regulations - The ...

HANDBOOK OF 

AUTOMOTIVE ADVERTISING 

RULES AND REGULATIONS 

FOR NEW CAR DEALERS 

IN THE METROPOLITAN 

WASHINGTON AREA 

PRODUCED BY 

WASHINGTON AREA NEW AUTOMOBILE 

DEALERS ASSOCIATION 

5301 WISCONSIN AVE. N.W. SUITE 210 

WASHINGTON, D.C. 20015 

TELEPHONE: 202 237 7200 

FAX: 202 237 9090 

ALL RIGHTS RESERVED

FAIR DEALER ADVERTISING PROGRAM 

May 1, 2000 

Dear Member: 

Automotive advertising is an integral part of the purchase decision and here in the Washington 

Metropolitan area we are met with the unique distinction of complying with three or four local and 

regional jurisdictions plus the Federal Government. Some years ago WANADA established the Fair 

Dealer Advertising Program (FDAP) with the goal of keeping automobile advertising credible to the 

public along with reducing the need for enforcement by the various local, State and Federal 

regulatory agencies. 

It is now our pleasure to provide you with the second edition of the Automotive Advertising and 

Regulatory information handbook. The past two years have brought many changes in the advertising 

regulations, both Federal and State, such as The new regulation M regarding Lease advertising , the 

modifications and new interpretations of Regulation Z on Truth-in-lending disclosures and 

Virginia’s re-writing of the Motor Vehicle Dealer Board regulations concerning Advertising and, 

also in Virginia, There are new regulations for Internet Advertisers. In addition, we have added a 

category of additional information. This section contains details about various items such as the 

“used car rule” plus names, addresses and web sites of regulatory agencies and groups that can affect 

the operation of your business. 

With these changes, and the constant challenge of new ways of doing business in this 

marketplace, WANADA feels it is necessary to update this information. This handbook is geared 

towards enhancing your efforts to provide credible and fair advertising. 

We would like to express our sincere thanks to those advertising agencies who sponsored this 

handbook. These agencies are also an important part of the automobile advertising process and 

without their assistance WANADA would not have been able to publish this valuable resource. 

The Fair Dealer Advertising Program advisor and WANADA staff are always available to 

discuss any advertising concern with our members or their advertising resources. The FDAP advisor 

can be reached at the WANADA offices. 

Sincerely, 

Thomas Korengold 

Chairman 

Fair Dealer Advertising Program

The Automotive Consumer Action Program (AUTOCAP) is voluntarily sponsored by state 

and metropolitan franchised automobile dealer associations according to NADA's National 

AUTOCAP Standards. AUTOCAP is a third-party mediation program designed to improve 

dealer/customer relations by reviewing and mediating automotive disputes involving 

participating franchised new-car and truck dealers. 

AUTOCAP works to resolve automotive disputes in two ways. First, AUTOCAP staff will 

attempt to settle the dispute through informal mediation between the parties. If this is 

unsuccessful, disputes are mediated by an impartial panel consisting of consumer representatives 

and auto dealers; a minimum of 50 percent of the panelists must be consumer representatives. 

The panel recommends a solution based on the facts of the case. A majority of cases mediated by 

AUTOCAP are successfully resolved at the staff level; few require review by the 

consumer/dealer panel. 

AUTOCAP is a registered service-mark program of NADA. Of the AUTOCAPs sponsored 

by 

state and metropolitan dealer associations, some mediate disputes only between franchised 

new-car dealers and their customers. Others mediate new-car warranty and product reliability 

disputes involving participating manufacturers, as well as dealer/customer disputes. Unless a 

particular state or local program has obtained appropriate commitments from participating 

manufacturers and/or dealers, the decision to accept or reject an AUTOCAP recommendation is 

purely voluntary and at the sole discretion of the participating manufacturer or dealer. In all 

cases, panel recommendations are non-binding on consumers. Sponsoring associations should be 

contacted for details on a particular state or local program. 

AUTOCAP is neither designed nor intended to comply with the requirements of the Federal 

Trade Commission's Rule 703 (16 CFR Part 703) or of state "lemon laws." 

In the Washington Metropolitan area AUTOCAP is sponsored by WANADA. The 

AUTOCAP staff handles dealer/customer disputes and acts as a liaison with manufacturers. The 

Washington AUTOCAP is in the WANADA offices at 5301 Wisconsin Avenue N.W., 

Washington, D. C. 20015 and the telephone is (202) 237-7200, Fax (202) 237-9090.

ADVERTISING AGENCIES 

ADJ Advertising 

1204 Keithmonth Road, Suite 100 

Baltimore, Maryland 21228 

Artemes Agency 

3504 Randolph Road 

Silver Spring, Maryland 20902 

Assam Jordan 

305 Washington Avenue Suite 305 

Towson, Maryland 21204 

Auto Mart Magazine 

5701 K General Washington Drive 

Alexandria, Virginia 22312 

Automotive Marketing 

Services 

7317 Falmouth Street 

Springfield, Virginia 22150 

Brennan Advertising 

10153 York Road , Suite 101 

Hunt Valley, Maryland 21030 

BVB Advertising 

1420 Springhill Road, Suite 325 

McLean, Virginia 22102 

Cactus Creative Group 

13930 Williard Road 

Chantilly, Virginia 20151 

Demaine, Vickers 

427 Lee Street 


Denniberg Advertising, Inc. 

3204 Tower Oaks Blvd. 

Rockville, Maryland 20852 

Enten Associates 

11200 Rockville Pike 


George Skillman 

Advertising 

403 North Charles Street 


Harmon Autos 

11400 Rockville Pike Suite 505 


INK Inc. 

5600 General Washington Drive, 

Suite B214 


Irizarri &Kupersmith 

Advertising 

12322 Bennett Road 

Herndon, Virginia 22071 

Jaf Ford Advertising, Inc. 

5305 Dana Place N. W. 

Washington, D.C. 20016 

Jerry Pivec and Company 

302 Ritchie Highway 

Severna Park, Maryland 21146 

Jim Ricca & Associates 

1100 South Glebe Road 

Arlington, Virginia 22204 

John Marks & Associates 

1416 Clarkview Road 


Pivec Advertising Agency 

2219 York Road 

Timonium, Maryland 21093 

Rock It Media 

2032 Belmont Road NW # 306 

Washington, D.C. 20009 

Steve Czajka Advertising 

18209 Pinecroft Court 

Gaithersburg, Maryland 20877 

The Babcock Agency 

8229 Boone Blvd. Suite 380 

Vienna, Virginia 22182 

The Washington Post 

1150 15th Street NW 

Washington, D. C. 20071 

The Washington Times 

3600 New York Avenue 

Washington, D. C. 20002 

Trader Publishing 

Company 

P.O. Box 23600 

Alexandria, Virginia 22304-9360 

W. B. Doner & Company 

400 East Pratt Street 


Wheeler Advertising 

806 29th Street South, Suite 400 

Birmingham, Alabama 35205 

Williams Whipple 

711 Princess St. 


Zimmerman & Partners 

2200 West Commercial Blvd. 

Suite 300 

Fort Lauderdale, Florida 33309

WANADA'S AUTOMOTIVE ADVERTISING 

GUIDELINES 

As a franchised automobile dealer association interested in promoting fair automotive 

advertising in the Metropolitan Washington Area that is credible to the public, 

WANADA has devised and recommends the following guidelines for use by dealers: 

1. In the automotive sales advertisement that offers a purchase incentives on financing rate, trade-in, 

or special options, such advertisement should fully and fairly disclose all material terms. 

2. When an automotive advertisement contains an offer of a discount in relation to an advertiser's 

own former price, the former price should be genuine, that is, it should be the actual price at which 

the advertiser sold (or if not sold, offered in good faith an intention to sell) the product for a 

reasonable period of time. 

3. Where the words ''list'' or ''sticker'' or words of similar import are used in a new automotive 

advertisement, they should only refer to the manufacturer's suggested retail price. 

4. An automotive advertisement should not falsely imply that the dealer has a special sponsorship, 

approval status, affiliation or connection with the manufacturer that is greater or more direct than 

any other like dealer. Examples of such advertising include terms like ''factory outlets,'' ''factory 

authorized sale,'' and ''Manufacturer's Discount Center. 

5.Any automotive advertisement which makes underselling claims should be capable of being 

substantiated. 

6. In the automotive advertisement of a price which applies to a limited number of cars, the 

presentation should either state that a limited quantity is available or clearly and conspicuously 

disclose the number of vehicles available unless similar vehicles will be available in a reasonable 

period of time at the same price. 

7. The ''full delivered cash price'' for a new automobile in an advertisement should include the cost 

of any dealer installed options or services. If the ''full delivered cash price'' does not include the cost of 

tags, taxes and freight, such exclusion should be disclosed. 

8. Automotive advertising should not degrade or stereotype anyone on the basis of sex, race, color or 

national origin and it should not falsely disparage dealer competitors or the automobile business in 

general. 

9. In advertising new automobiles, the term ''invoice'' should be used only to mean the manufacturer's 

actual wholesale cost invoice to the dealer. Should the dealer advertise an automobile for sale '' 

invoice '' or at use the invoice price as a reference in advertising, such advertisement should fully 

disclose the additional charges. 

10. Any material qualifications or limitations regarding an offer used in automotive advertising 

should be clearly and conspicuously disclosed in a prominent place in the advertisement. 

11. Advertising of an automotive lease should not be done so that it would be interpreted by a 

reasonable person to be an advertisement of an automotive sale.

TABLE OF CONTENTS-MARYLAND REGULATIONS 

DEALER LICENSING AND REQUIREMENTS....................................................1 through 8 

SALESMEN’S LICENSE......................................................................................5,8,9,51 and 52 

DEALERSHIP ADVERTISING AND TRADE PRACTICES............................10 through 17 

FACTORY RELATIONSHIP................................11 

BAIT ADVERTISING...........................................12 

DEMONSTRATOR...............................................14 

DAMAGE DISCLOSURE.....................................15 

DISCLOSURE OF PRIOR USE..........................17 

DEFINITION OF “NEW”, “DEMONSTRATOR” AND “USED”........................................14 

REQUIRED DISCLOSURES.....................................................................................................15 

ODOMETER FRAUD.............................................................................................15 through 16 

DEALER REGISTRATION PLATES......................................................................................20 

BALANCE DUE ADVERTISING.............................................................................................24 

PRIZES ON PURCHASE OR SALES PROMOTION............................................................29 

MONTGOMERY COUNTY CODE......................................................................32 through 34 

MARYLAND ATTORNEY GENERAL’S LETTER...........................................35 through 37 

MARYLAND “LEMON LAW” STATUTE..........................................................38 through 45 

VEHICLE SALES CONTRACT AND PROCESSING FEE..............................46 through 47 

MECHANICAL REPAIR CONTRACTS.................................................................................47 

ADVERTISING PRACTICES...................................................................................................50 

WARRANTY REQUIREMENTS..............................................................................................55 

MARYLAND IMPLIED WARRANTY....................54

Title 11 

Subtitle 12 

CODE OF MARYLAND REGULATIONS 

MARYLAND DEPARTMENT OF TRANSPORTATION 

MOTOR VEHICLE ADMINISTRATION CONSUMER 

AFFAIRS AND BUSINESS LICENSING 

Chapter 01 Dealers and Salesmen 

.01 Dealer Licensing and Registration. 

A. The administration may refuse to grant a license to any person as a dealer or may suspend, 

revoke, or refuse to continue the license of a dealer already issued, unless meeting the 

requirements contained here. 

B. A person applying for a dealer license shall submit the application on forms approved by 

the administration, along with the fee as set forth in COMAR 11.11.05 

C. A dealer license shall be issued for a 2 year period.. 

.02 Location Requirements. 

A. Each location shall be subject to inspection by an authorized representative of the 

Administration before approval of application for dealer registration. 

B. Following approval of the application, the location shall be maintained in accordance with 

the applicable provisions of Transportation Article , Annotated Code of Maryland, and the 

regulations promulgated by the Administration. Licensees are subject to reinvestigation by 

authorized representatives of the Administration. 

C. Only one license for the type of vehicles being offered for sale will be permitted at any one 

location, and once the location has been licensed, it may not be subdivided for the purpose of 

establishing other businesses, under separate licenses for the same type of vehicles being offered 

for sale, without the prior approval of the Administration. This prohibition also applies to a 

licensee doing business under more that one corporate structure. 

D. A dealer may be business in a name or under any title or designation other than the 

corporation name, provided that the title or designation is not misleading. A trade or corporate 

name that falsely states or implies that a dealer has a special relationship or connection with a 

manufacturer that other dealers do not have is misleading, and an example of a title or designation 

that may not be adopted by a dealer. The dealer’s application for license shall state the full 

corporate name and all “trading as” or “doing business as” names. Example: ABC Pontiac– 

GMC–Datsun–Volvo–Inc.; T/A ABC Volvo, T/A ABC Datsun, T/A ABC Pontiac-GMC 

1

MVA CONSUMER AFFAIRS AND BUSINESS LICENSING 11.12-01.02 

E. A dealer may hold multiple licenses, for example, new or used vehicle, motorcycle, and 

trailer dealer’s licenses, provided that all licenses are issued in the same dealership name. 

F. The dealership shall face, adjoin, and be fully visible from an improved street or highway 

that is accessible to the public and that is identifiable by name or postal number. The street or 

highway shall be used by the public for vehicular travel. 

G. The location shall be of a size to adequately and safely permit the display of a minimum of 

ten vehicles and space for customer parking. 

H. The location shall meet all local zoning regulations. 

I. The Location shall be fully lighted. 

J. The display and customer parking areas shall be adequately surfaced with an appropriate 

covering, subject to approval by the Administration. 

K. The additional locations shall be inspected and approved by the Administration. 

L. Additional locations shall meet the minimum standards set forth in applicable provisions of 

the Transportation Article, Annotated Code of Maryland, and the regulations promulgated by the 

Administration. 

M. Additional locations may use registration plates issued to the primary location provided 

the trade name and ownership are identical to that of the primary location. 

N. Signs. 

(1) Appropriate dealership signs shall be permanently affixed. 

(2) The signs shall be of a size as to make them reasonably legible from the street or 

highway. 

(3) The signs shall clearly identify the business conducted at the dealership and shall 

adequately 

direct the customer to the dealership office. 

(4) As to wholesale dealers, a sign is not required. However, if a sign is displayed, it: 

(a) Shall be displayed at the dealership entrance; 

2


(b) May not be larger than 6 inches in height and 18 inches in length and may not 

contain any language which implies the dealership will sell to or exchange vehicles with a retail 

buyer. 

O. As to wholesale dealers, the location shall be in a permanent building and the space used 

shall be: 

(1) Owned or leased by the wholesale dealer; 

(2) Regularly occupied and exclusively used by the wholesale dealer for dealership 

purposes. 

.03 Office requirements. 

A. The dealership office shall be housed at the dealer’s fixed location and in a substantial 

building adequate and appropriate for the business so conducted. 

B. The dealership office shall be of sufficient size to accommodate the customers, and shall be 

equipped with office furniture, such as desks, chairs, and filing cabinets, and electricity, lighting, 

heat and telephone, in order to reasonably conduct the dealership business. 

C. A current trader’s license shall be issued by the political subdivision of each location. 

D. This license shall be displayed on the premises of the dealer in a conspicuous place. 

.04 Exemptions 

A. If a location is otherwise adequate and appropriate, the location requirements outlined in 

Regulation .02F, G, I, J, and N of this chapter may be waived for wholesale dealers, for new 

trailer, boat trailer, motorcycle dealers, and for any person licensed as a dealer to sell only fire, 

rescue, and emergency medical motor vehicles, who shall have the privilege of assigning 

manufacturer’s certificates of origin and to issue temporary tags upon filing with the 

Administration a written franchise agreement from the manufacturer of the vehicle for which the 

dealer claims a franchise. 

B. Once licensed as a dealer to sell fire, rescue, and emergency medical motor vehicles, the 

dealer shall be prohibited from selling any type of vehicles other than fire, rescue, and emergency 

medical motor vehicles until the location requirements in Regulations .02 and .03 have been met. 

C. Manufacturers and distributors are exempt from location requirements for the purpose of 

securing Class 1A registration plates. 

3


D. The registration of a dealer in the names of two or more persons as partners, or otherwise, 

may not require a reinspection on a change in ownership as long as one person named as a partner 

or co-owner remains as the owner, part-owner, or , in a corporation, as one of its legal officers. 

.05 Dealer’s Bond. 

A. The dealer’s bond shall be secured from a bonding company licensed to do business in 

Maryland. 

B. Each applicant shall file with the Administration acceptable evidence of a surety bond in 

such form as the administration shall approve in the sum of $15,000, for the use and benefit of the 

Administration and the public who may suffer or sustain any loss by reason of any violation of 

the applicable sections of Subtitles 12, 13, 15 , 17, and 23, Transportation Article, Annotated 

Code of Maryland, by a dealer. 

C. The bonding company shall give the Administration at least 45 days’ notice by registered 

or certified mail of the cancellation of the dealer’s bond. Otherwise, the bond is to be considered 

as being in full force and effect until the notice is received by the Administration. 

D. The bond shall run concurrently with the license period and continue, until canceled, 

regardless of the number of license renewal periods. 

E. The dealer shall notify the Administration and his bonding company of any change in the 

factual or material matters represented or set forth in the application for bond. 

.06 Display of License and Dealer’s Number 

A. The dealer license shall be displayed conspicuously in the dealer’s place of business. This 

particular license is issued in addition to regular registration stubs which shall accompany dealer 

registration plates. Additional licenses may be issued gratis for each additional approved 

location, and each license shall be conspicuously displayed in the respective office for which it is 

issued. 

B. The dealer shall use his dealer’s number on all departmental forms which are forwarded to 

the Administration in the space or area designated on the form for the number. 

.07 Voluntary Cancellation. 

Upon voluntary cancellation on the part of the dealer, all licenses and registration plates shall 

be immediately returned to the Administration. However, the Administration may grant an 

extension of not more than 30 days for the purpose of concluding any business of the dealership 

regarding the disposition of the existing inventory. 

4


.08 Duplicate License. 

If a dealer’s license becomes lost, mutilated , or illegible, the dealer shall make prompt 

application to the Administration for the issuance of a duplicate license. Application shall me 

made on forms to be supplied by the Administration, accompanied by required fees as set forth in 

COMAR 11.11.05 

.09 Dealership Records. 

A. Dealership records regarding purchases, sales, transfers of ownership, collection of excise 

tax, titling and registration fees, issuance of 45 day registration plates, and permits and listings of 

permanent dealer registration plates assigned to the dealership, shall be maintained on the 

premises and shall be open for inspection by authorized representatives of the Administration and 

law enforcement agencies during normal business hours. All records of the dealership shall be 

preserved in original form for a period of 3 years unless the Administration in writing consents to 

their destruction within that period, or, by order, requires that they be kept for a longer period. 

B. A dealer shall maintain records for each untitled vehicle in the dealer’s inventory while the 

vehicle is in the possession of prospective retail customers. These records shall document the 

following: 

(1) Each prospective retail customer of the vehicle; and: 

(2) The beginning and ending odometer reading of the vehicle for the period each 

prospective retail customer had possession of the vehicle. 

.10 Salesman’s License. 

A. A dealer shall retrieve and return salesmen’s licenses at the termination of their 

employment as salesman, as set forth in Subtitle 15, Transportation Article, Annotated Code of 


B. The dealer is to furnish to the Administration all applications for salesmen’s licenses, 

together with certificates of their appointment as salesmen for the dealer. The appointment shall 

be completed by the dealer and accompany the salesmen’s application for a license. 

.11 Issuance of Temporary 45-Day registration Permits. 

A. The Administration may deliver temporary 45-day registration permits in a form 

prescribed by the Administration to a dealer duly registered under the provisions of the 

Transportation Article, Annotated Code Of Maryland, in multiples of at least 25 sets. 

5


B. Each registered dealer shall make application for the temporary 45-day registration permits 

upon a form prescribed and furnished by the Administration. Dealers subject to the limitations 

and conditions set forth in these regulations may issue, on the date of sale, one temporary 45-day 

registration permit to purchasers of vehicles, provided the dealer has made a bona fide sale of a 

motor vehicle to a purchaser who possesses current registration plates issued to another vehicle 

under the laws of this State and the registration plates are transferable pursuant to the provisions 

of the Transportation Article, Annotated Code of Maryland. 

C: Maintaining Records. 

(1) Every dealer who has made application for temporary 45-day registration permits shall 

maintain: 

(a) A record , in permanent form, of all temporary 45-day registration permits delivered 

to him; 

(b) A record, in permanent form, of all temporary 45-day registration permits issued by 

him: and 

(c) A record, in permanent form, of any other information pertaining to the receipt or the 

issuance of temporary 45-day registration permits that the agency may require. 

(2) Each record shall be kept for a period of 3 years from the date of issue. Every dealer 

shall allow full and free access to these records during regular business hours to duly authorized 

representatives of the Administration and to law enforcement agencies. 

D. Every dealer who issues a temporary 45-day registration permit on the day that he issues 

the permit shall send to the Administration a copy of the temporary 45-day registration permit. 

The temporary 45-day registration permit shall be signed by the person entitled to receive the 

permit and by the dealer or his authorized agent having a power of attorney on file with the 

Administration. A dealer may not issue a temporary 45-day registration permit to anyone other 

than a bona fide purchaser possessing annual registration plates for a vehicle that has been sold, 

exchanged, or disposed of in a manner prescribed by law. 

E. A dealer may not issue a temporary 45-day registration permit to anyone who presents 

evidence of insurance in the form of a binder which is for a period of time less than 45 days. 


F. Every temporary 45-day registration permit shall be clearly and indelibly completed in its 

6

entirety. 

G. If the Administrator finds that the provisions of these regulations, or the directives of the 

Administration are not being complied with by the dealer, he may suspend, after a hearing, the 

rights of a dealership to issue temporary 45-day registration permits. 

H. Every person to whom a temporary 45-day registration permit has been issued shall 

permanently destroy the temporary 45-day registration permit immediately upon receiving the 

transfer registration card covering the annual registration plates, or on the 45 day from the date 

of issue of the temporary 45-day registration permit, whichever comes first. 

.12 Issuance of 45-Day Temporary Registration Plates. 

A. The Administration may deliver 45-day temporary registration plates to a dealer, licensed 

under the provisions of the Transportation Article, Annotated Code of Maryland, in multiples of 

not less than five plates, after proper application on forms prescribed by the Administration and 

payment of the required fees as set forth in COMAR 11.11.05 

B. Dealers subject to the limitations and conditions set forth in these regulations may issue one 

45-day temporary registration plate to a bona fide purchaser of a vehicle, if the purchaser does 

not possess current registration plates which are transferable under the provisions of the 

Transportation Article, Annotated Code of Maryland. Temporary registration plates may be 

issued on the date of delivery in those instances when delivery occurs on a date after the date of 

sale. The date of delivery as well as the date of sale shall be clearly reflected on the contract and 

on the temporary registration certificate. On the day a dealer issues a 45-day temporary 

registration certificate he shall forward to the Administration a copy of the 45-day temporary 

registration certificate. The 45-day temporary registration certificate shall be signed by the 

person entitled to receive the plate and by the dealer or his authorized agent having a power of 

attorney on file with the Administration. 

C. A dealer may not issue a 45-day temporary registration plate to anyone who presents 

evidence of insurance in the form of a binder which is for a period of time less than 45 days. 

D. Information as to the make and serial number of the vehicle shall be legibly inserted upon 

the temporary registration plate in the appropriate spaces in black indelible ink with figures not 

less than 3/8 inches in height. The date of expiration shall be punched through the cardboard 

plate in the appropriate spaces on the 45-day temporary registration plate. 

E. If a temporary registration plate is issued to commercial vehicles, the gross weight of the 

vehicles operating upon the temporary registration plate shall be: 


(1) That allowable gross weight designated on the application for permanent plates or; 

7

(2) If an application for permanent plates has not been submitted to the Administration, the 

maximum gross weight allowable for that vehicle 

F. If information is inadvertently or erroneously entered on a 45-day temporary registration 

plate, or on the corresponding temporary registration certificate, the dealer shall forward to the 

Administration the purchaser’s copy of the temporary registration certificate, 45-day temporary 

registration plate, and a letter of explanation. 

G. Whenever a dealer inadvertently completes a 45-day temporary registration plate and a 

temporary registration certificate that are not of the same numerical sequence, the dealer shall 

return to the Administration the 45-day temporary registration plate and the temporary 

registration certificate affected for appropriate cancellation. 

.13 Salesman’s Licensing. 

A. A vehicle salesman may not obtain a license under the provisions of the Transportation 

Article, Annotated Code of Maryland, unless the salesman complies with the requirements 

contained in these regulations, and pay the required fee as set forth in COMAR 11.11.05. 

B. A salesman shall buy and sell motor vehicles only for the dealer indicated upon the 

salesman’s license and may not be licensed by more than one licensed dealer at a given time 

except that a salesman licensed to act at a: 

(1) New or used car dealership may act as a vehicle salesman at any new or used dealership 

that is at least 60% owned by the licensed dealer indicated on the salesman’s license; or 

(2) Wholesale vehicle dealership may act as a vehicle salesman at any wholesale dealership 

that is at least 60 percent owned by the licensed wholesale dealer indicated on the salesman’s 

license. 

C. The Salesman’s license shall be in the possession of the salesman at all times when the 

salesman is buying or selling motor vehicles and shall be displayed, upon demand, to a 

prospective purchaser, peace officer, or authorized representative of the Administration. 

D. A salesman shall immediately contact the Administration if there is any factual or material 

change in the information stated in the salesman’s license. 


E. If a license becomes lost, mutilated, illegible, or if a motor vehicle or trailer salesman 

changes employment, the salesman shall promptly make application to the Administration for the 

8

issuance of a duplicate or corrected license, as the case may be. Application shall be made on 

forms to be supplied by the administration accompanied by required fees, as set forth in 

COMAR 11.11.05 

F. A salesman shall promptly surrender any applicable license to the appointing dealer for 

return to the Administration for cancellation. 

G. Upon the voluntary cancellation, cessation, or transfer of employment on the parts of the 

salesman, the salesman shall return any applicable license to the Administration immediately. 

H. If a salesman voluntarily surrenders the salesman’s license at any time during the license 

year, the license, upon request and if otherwise proper, shall be returned to the salesman without 

the payment of an additional license fee for that particular year, providing the appointing 

licensed dealer remains the same. 

I. If a salesman transfers employment to another dealership, a corrected license shall be 

issued upon receipt of a properly completed application, the fee as set forth in COMAR 11.11.05 

and the invalid license. 

J. The vehicle sales license shall be issued upon compliance with all statutory licensing 

requirements and the payment of the required fee as set forth in COMAR 11.11.05 


.14 Dealers’ Advertising and Trade Practices. 

A. Definitions. 

9

(1) “Advertising” means any oral, written, or graphic statement which offers vehicles for 

sale or which indicates the availability of vehicles, including any statements or representation 

made in a newspaper, pamphlet, circular, other publication, or on radio or television, contained 

in any notice, handbill, sign, billboard, poster, bill catalog, letter, or business card. 

(2) “Clear and conspicuous” means a statement, representation, or term differing from 

other statements, representations, or terms being made so as to be readily noticeable to the 

person to whom it is being disclosed either by its size, sound, length of time, color, placement in 

the advertisement, or the like. 

(3) “Consumer goods” means, as referred to in these regulations, a vehicle offered for retail 

sale for use by individuals primarily for personal, family, or household purposes. 

(4) “Dealer cost” means the total amount the dealer is invoiced by the manufacturer for a 

vehicle. 

(5) “Demonstrator” means a vehicle: 

(a) Of the current or preceding model year for which a title has not been issued 

(b) Which has been: 

(i) Used solely by the employees, officers, or principals of the dealer, 

manufacturer, or distributor, or: 

(ii) Driven for purposes of customer road testing; 

and 

(c) 

(d) 

Which has been driven more than 500 miles, excluding dealer exchange mileage; 

Subject to L of this regulation which has never been sold to a retail customer. 

(6) “Rebate, cash rebate, or other similar phrases” means a deduction granted by a dealer 

or manufacturer from an amount a purchaser pays to a dealer, or a return by a dealer or 

manufacturer of part an amount given in payment by a purchaser to a dealer after a sale of a 

vehicle has been consummated. 


B. Presentation Requirements. 

(1) A dealer may not advertise in any manner that is false, deceptive, or misleading or that 

misrepresents any vehicle offered for sale. 

10

(2) Advertisements for the sale of new and used vehicles shall clearly and conspicuously 

identify the dealership by the corporate name or trade name as it appears on the application for 

dealer’s license unless, in the context of the advertisement, the use of that name is misleading 

under Regulation .02D of this chapter, in which case the use is prohibited. 

(3) Advertising statements shall clearly identify the vehicle by manufacturer-designated 

year, make and model, type, equipment, price, trade-in allowance, terms or other claims. All 

terms or claims shall be factual and presented clearly and conspicuously. 

(4) The use of layout, headlines, illustrations, style, sound, length of time, lighting, color, 

or type of size of an advertisement, or all of the above, may not obscure or make misleading any 

material fact in advertisement or sales presentation. 

C. Price and Vehicle Identification. 

(1) When the price of a vehicle is quoted, the advertisement shall clearly identify the 

vehicle as to make, year, model, special equipment, etc. A price may not be quoted unless the 

vehicle or vehicles identified in the advertisement are currently available for sale to the public at 

the quoted price. 

(2) The advertised price shall be the full delivered cash price which the customer shall pay, 

except for taxes and title fees. In the case of new vehicles, the freight charge may be excluded. 

However, the advertisement shall fully and prominently disclose this fact. 

(3) In advertisements when vehicles are specifically priced, the space in the purchase price 

column shall indicate a purchase price for each vehicle listed. 

(4) Freight and dealer preparation charges may be excluded from manufacturers’s national 

advertising campaigns. However, the advertisement shall fully and prominently disclose this 

fact. 

D. Comparative Price and Savings Claims. 

(1) Unless the claims made are true, retail advertising may not state or imply that the dealer 

is selling vehicles in a manner other than through normal retail channels and may not imply that 

the dealer has a special relationship or connection to the manufacturer that others dealers do not 

have. Terms such as “wholesale”, “Factory sale”, “Factory discount”, “factory outlet”, “factory 

branch”, and similar terms used in connection with the manufacturer’s name (such as 

Manufacturers outlet”) are examples of terms that imply that a dealer has a special relationship 

or connection to a manufacturer that other dealers do not have. 


(2) Statements such as “as low as”, “from”, or “priced from “ may not be used in connection 

with the purchase price unless at least one vehicle is specifically identified and the requirements 

of C are complied with. 

(3) Advertised sales prices for vehicles may not claim or imply a savings or discount over 

11

other dealers. 

(4) Unsupported selling claims may not be used. Unless true, statements such as “Our 

prices are guaranteed lower than everywhere”, “Money refunded if you can duplicate our 

values”, “We guarantee to sell for less”, “Highest trade-in allowance”, “We give $300 more in 

trade than any other dealer”, are examples of unsupported selling claims which may not be used. 

(5) Statements that falsely imply that a buyer may determine the purchase price such as 

“Make your own deal”, “Name your own price”, “Name your monthly payments”, “ Appraise 

your own car” are examples of misleading phrases which may not be used in advertisements. 

(6) A statement or statements using or referring to “dealer cost” may not be used in 

advertising unless the claims made with respect to the dealer’s cost are true, and unless the 

advertising bears the following clear and conspicuous legend in a box: “Notice to Buyer: The 

invoice may be higher than the true, final cost to the dealer 

E. Bait advertising and Selling practices. 

(1) A vehicle advertised at a specific price shall be in the possession of the advertiser in the 

case of a used vehicle, or be available in the case of a new vehicle. The vehicle shall be 

willingly shown, demonstrated, and sold, or if a new vehicle, orders shall be taken for future 

delivery of the identical model at the advertised price and terms. If the vehicle is a used vehicle, 

and it has been sold, the advertiser shall substantiate, upon request, sales records of the 

previously advertised vehicle. 

(2) The practice of increasing the selling price of a vehicle above that originally quoted to a 

purchaser, after the purchaser has made an initial deposit or payment, either with money or with 

a trade-in, or signed contract is prohibited, unless the price is increased by the manufacturer. In 

this case, the dealer shall substantiate, upon request, evidence of the increase, and the customer 

shall have the right to cancel the contract. 

(3) Advertising a vehicle at a price which does not include equipment with which it is fitted 

or is ordinarily fitted or eliminating any equipment for the purpose of advertising a low price and 

baiting the customer into charges above the advertised price is prohibited. 


(4) Advertising the immediate availability of a new vehicle with the intent not to supply 

reasonable expectable public demand is prohibited unless the advertisement discloses a specific 

limitation of quantity. 

(5) Advertising a sale or promotion in connection with the sale of a vehicle shall clearly and 

conspicuously disclose the expiration date, if any, and any other conditions of the sale or 

12

promotion, including but not limited to whether the supply is limited and, if so, in what manner. 

(6) The advertising of a specific vehicle offered for sale when the advertised vehicle is not 

in stock on the date of the advertisement is prohibited unless the advertisement states “Not in 

Stock” or “Order Yours Now” or other phrases of similar import which clearly indicate that the 

vehicle is not available for immediate delivery and a reasonable estimate of the period of time in 

which delivery will be made. 

F. Down Payments, Credit Terms. 

(1) The amount of the down payment, or the balance after the down payment, may not be 

stated in such a manner as to permit the impression that it is the selling price of the vehicle. 

(2) The statement, “no money down”, or other similar phrases, means that the advertiser 

will deliver the vehicle, so described, to the purchaser without any initial payment or other initial 

obligation in any manner other than negotiating a lien contract for the advertised price. 

(3) The phrases, “ no finance charge”, “no carrying charge”, or expressions of similar 

phrases, may not be used when there is any type of a charge for financed transactions. 

(4) All advertising shall comply with Regulation Z of the Federal Truth in Lending Act and 

Federal Trade Commission Act. 

(5) Advertisements which offer special annual percentage rate financing shall disclose any 

special conditions or terms which shall be met before the annual percentage rate applies to 

preclude deception. 

G. Discounts, Savings, Rebates, Trade-in Allowances. 

(1) Advertisement statements which offer discounts, savings, rebates, and guaranteed trades 

shall include the original price as well as the full delivered cash price, which the customer shall 

pay, except for taxes and title fees and, in the case of new vehicles, the cost of freight. The 

dealer may give representative examples in ads when various savings, discounts, rebates, etc., 

are offered. 

(2) A specific price may not be stated in an advertisement as an offer for a trade-in, if the 

price so stated is contingent upon the condition, model, or age of the prospective buyer vehicles, 

without so stating in the advertisement. The use of phrases such as “up to” and “as much as” 

may not be considered as adequate explanation. 

MARYLAND MVA CONSUMER AFFAIRS AND BUSINESS LICENSING 11.12-01.14 

(3) When a purchase order or agreement includes the amount of trade-in allowance, subject 

to official acceptance and appraisal, that condition shall be clearly and conspicuously stated on 

the order or agreement. If the order, including the trade-in allowance has been officially 

accepted, the trade-in allowance may not be decreased upon appraisal unless the condition of the 

vehicle has been changed due to accident, failure of or damage to major components, or removal 

or substitution of equipment or accessories. 

13

H. Repossessions. The term “repossessed” shall be used only to describe those vehicles 

legally repossessed as a result of failure of an owner to fulfill the conditions of a lien contract. 

Advertisers offering repossessed vehicles for sale, upon request, shall offer proof of the 

repossessions. The amount quoted as an unpaid balance shall be the full selling price unless 

otherwise stated. 

I. Demonstrator Vehicle. 

(1) Demonstrator vehicles are considered used vehicles if they have been driven for more 

than 7,500 miles. 

(2) The term “new” may not be used as an adjective in the direct description of a 

demonstrator or used vehicle. 

(3) Except as otherwise provided in I(5) of this regulation, a dealer shall use the term 

“demonstrator” when advertising vehicles which meet the definition of that term as found in A 

(5) of this regulation. 

(4) Before the sale of a demonstrator vehicle, the dealer shall provide to the retail customer 

a written disclosure in 10 point type, and separate from the purchase contract document, which 

states: 

“THIS VEHICLE IS A DEMONSTRATOR VEHICLE. IT IS A VEHICLE WHICH HAS 

BEEN USED BY THE EMPLOYEES, OFFICERS OR PRINCIPALS OF THE DEALER, 

MANUFACTURER OR DISTRIBUTOR, OR FOR CUSTOMER ROAD TESTING. 

FEDERAL LAW REQUIRES A BUYERS GUIDE TO BE ATTACHED TO THE SIDE 

WINDOW OF THIS VEHICLE. YOU ARE WELCOME TO INQUIRE AS TO THE 

SPECIFIC USAGE OF THE VEHICLE FROM THE DATE OF ITS DELIVERY TO THE 

DEALER. YOU ARE WELCOME TO CONDUCT WHATEVER INSPECTION YOU 

DEEM APPROPRIATE PRIOR TO ENTERING INTO AN AGREEMENT TO 

PURCHASE THE VEHICLE.” 


(5) A vehicle which has been a demonstrator shall be advertised as a used vehicle once it 

has accumulated mileage in excess of 7,500 miles, and the term “demonstrator” may not be used 

as a adjective in the direct description of the vehicle. However, these vehicles are not required to 

be registered or titled before transfer to a retail customer. 

14

J. Disclosure of Vehicle Condition. 

(1) A dealer shall notify the manufacturer of the existence of a nonconformity, defect, or 

condition as required by Commercial Law Article, 14-1502(f)(1)(i), Annotated Code of 


(2) If a motor vehicle is returned to a manufacturer or factory branch under Commercial 

Law Article, Title 14, Subtitle 15, Automotive Warranty Enforcement Act, the manufacturer or 

factory branch shall, upon transfer to a dealer, disclose this information to the dealer. The 

disclosure shall: 

(a) Be in writing on a separate piece of paper in 10-point , all capital type; and: 

(b) State in a clear and conspicuous manner: 

(i) That the vehicle was returned to the manufacturer or factory branch, 

(ii) The nature of the defect, if any, and: 

(iii) The condition of the vehicle at the time it was transferred to the dealer. 

(3) If a vehicle which has been returned to a manufacturer or factory branch is made 

available for resale by a dealer, the dealer shall provide a copy of the disclosure described in J(2) 

of this regulation to the potential purchaser before the sale 

(4) After the vehicle is sold, the dealer shall send a copy of the disclosure described in J (2) 

of this regulation, signed by the vehicle’s purchaser, to the administration with the application of 

title. 

(5) Vehicles formerly wrecked or water-damaged shall be clearly and conspicuously 

identified as to their former condition. 

K. Vehicle Damage Disclosure. 

(1) If, before consummating the sale of vehicle which has never been titled, the vehicle has 

sustained either body damage or mechanical damage resulting in the replacement of a major part 

or parts, and the damage is not subject to disclosure under J of this regulation, the dealer shall 

fully disclose this information in writing to the prospective purchaser. The following apply: 

(a) In the case of body-related damage involving vehicle repainting, frame or suspension 

repairs, the dealer shall disclose the area repainted and any parts replaced (hood, fender, trunk 

lid, 


quarter panel, etc.). Minor paint touch up need not be disclosed (scratch, etc.). This disclosure 

shall specify who is providing warranty coverage on the replacement parts. 

(b) In the case of mechanically related damage involving a major component or 

components (engine, transmission, rear end, etc.), the dealer shall disclose any parts replaced. 

The disclosure shall specify who is providing warranty coverage on the replacement parts. 

15

(c) The dealer shall also disclose any damage which may affect the: 

(i) Manufacturer’s warranty; 

(ii) Life expectancy of the vehicle; or 

(iii) Safety of the vehicle. 

(2) Upon request of the prospective purchaser or purchasers, the dealer shall provide a copy 

of the repair order illustrating the extent of repairs conducted to repair the damage. 

(3) If a manufacturer or distributor transfers a vehicle which has never been titled to a 

dealership, the manufacturer or distributor shall disclose the information contained in K (1) of 

this regulation to the dealership, if applicable 

L. A vehicle which has never been titled, but which has been previously delivered to a 

customer, may be subsequently sold as a new vehicle if the: 

(1) Vehicle has not been used in a manner so as to destroy in newness; and: 

(2) Buyer is advised, in writing, of: 

(a) The number of persons to whom the vehicle was previously delivered, 

(b) The mileage accumulated on the vehicle while it was in the possession of each prior 

customer 

(c) The reason the prior customers returned the vehicle to the dealer, 

(d) Any other information required by K(1) of this regulation or any other state or 

federal law, and, 

(e) A written disclosure in 10 point type and separate from the purchase contract 

document which states: 

PART OR ALL OF THE MILEAGE ON THE ODOMETER OF THIS VEHICLE 

RESULTED FROM PREVIOUS DELIVERY TO A RETAIL PURCHASER WHO 

NEVER TOOK TITLE TO THE VEHICLE. FEDERAL LAW REQUIRES A BUYER’S 

GUIDE TO BE ATTACHED TO THE SIDE WINDOW OF THIS VEHICLE. YOU ARE 

WELCOME TO INQUIRE AS TO THE SPECIFIC USAGE OF THE VEHICLE FROM 

THE DATE OF ITS DELIVERY TO THE DEALER. YOU ARE ALSO WELCOME TO 

CONDUCT WHATEVER INSPECTION YOU DEEM APPROPRIATE PRIOR TO 

ENTERING INTO AN AGREEMENT TO PURCHASE THE VEHICLE.” 


M. Disclosure of Former vehicle use. 

(1) Vehicles formerly used for a purpose other than a consumer good shall be clearly and 

conspicuously identified as to their former use. This includes, but is not limited to, vehicles 

16

formerly used: 

(a) For public or governmental purposes and normally driver by multiple drivers; 

(b) As executive driver vehicles; 

(c) As Demonstrators; 

(d) For driver training; 

(e) As taxicabs; or 

(f) as short-term rental vehicles 

(2) The word “commercial”, or similar ambiguous terms, may not be used to describe these 

vehicles. 

.15 Vehicle Sales Contracts. 

A. Contracts. Every vehicle sales contract or agreement shall be evidenced by an 

instrument in writing containing all of the agreements of the parties. It shall be signed by all 

parties before the seller delivers to the buyer the vehicle covered by the agreement. 

B. Copy of Instrument. At the time the buyer signs the instrument, the seller shall deliver 

to him an exact copy of it. Until the buyer signs the instrument and receives a copy of it signed 

by the seller, the buyer or prospective buyer has an unconditional right to cancel the instrument 

or order and to receive immediate refund of all down payment or deposits made on account of, or 

in contemplation of, the agreement or order. 

C. Terms of Down Payment. 

(1) If, under any vehicle sales contract or agreement, the buyer is required to make one 

or more payments to the seller in addition to any down payments made at the time of the 

execution of the instrument before the seller is obligated to deliver the goods sold, then the buyer 

at any time before delivery or tender of the goods by the seller, may cancel the instrument. 

Thereupon, notwithstanding any provisions of the instrument, the seller shall be obligated to 

refund to the buyer, within 10 days after notice of the cancellation, an amount equal to at least 90 

percent of all payments made by the buyer under the instrument, including any down payment. 

If a seller has placed an order for special optional equipment, paint, or similar items, or if, at the 

request of the buyer, the dealer has modified a vehicle which he has in stock, and the vehicle 

sales contract has been properly signed by all parties attesting to this fact, if the buyer 

subsequently cancels the contract before delivery or tender of the vehicle, the seller shall refund 

the down payment within 10 days after notice of the cancellation, less reasonable expenses 

incurred in the ordering or the modification of the vehicle. The contract shall clearly disclose 

that the dealer may retain a portion of the deposit or down payment to cover any reasonable 

expenses incurred as a result of the cancellation of the contract. When a portion of the down 

payment or deposit is retained by the seller, the seller shall furnish the buyer with an itemized 

list 


reflecting all expenses incurred as a result of the cancellation of the contract. In disputed cases, 

the Administration shall decide whether the expenses claimed by the seller are reasonable. 

(2) If, under a vehicle sales contract or agreement, a down payment is made at the time of 

its execution and the buyer thereby becomes entitled to delivery of the goods before making 

further payments, then, if the buyer refuses to accept delivery of the goods in accordance with 

17

the instrument, all or part of the down payment may be forfeited to the extent provided in the 

instrument. 

D. Cost of Vehicle to be Set Forth. Every contract for the sale of any vehicle by a dealer or 

salesman shall set forth clearly the principal amount of the cost of the vehicle and all interest or 

other charges made in connection with the sale of the vehicle 

E. Brakes. Dealers shall inform the buyer of a trailer in writing that the trailer brakes shall 

conform to the requirements of Transportation Article, 22-301, Annotated Code of Maryland. 

.16 Sale of New Vehicles by Used Vehicle Dealers 

A. Used vehicle dealers who purchase new vehicles for the purpose of resale shall first 

have those vehicles titled in the State of Maryland, paying applicable excise tax based on the 

purchase price. 

B. Before resale, those vehicles shall be inspected at an authorized inspection facility. 

.17 Warranties. 

Except as provided in Commercial Law Article, 2-316.1(4), a warranty may not contain 

language which specifically disclaims any implied warranty of merchantability or fitness. 

Examples of prohibited disclaimers are as follows: 

A. “This warranty is expressly in lieu of any other warranty, express or implied, including 

any implied warranty of merchantability or fitness for a particular purpose, and any other 

obligations or liabilities on the seller’s part”, or similar language that could be construed by a 

consumer to limit his recourse to the terms of express warranties. 

B. “This vehicle is being sold as is, without any implied or express warranty of 

merchantability”, or similar language. 

C. “Sold used with 50-50 warranty. The dealer hereby guarantees this vehicle for 

____days after _____19_____ with the understanding that necessary repairs made within this 

period of time will be charged half to the buyer and half to the dealer, of total retail cost of parts 

and labor used, “ or similar language 


.18 Dismantling and Rebuilding. 

A. If a vehicle is sold for the purpose of dismantling or rebuilding, the term “rebuilding” 

18

means the restoring of a salvage vehicle as set forth in Transportation Article, 13-506(b), 

Annotated Code of Maryland, or any vehicle which is inoperable due to the need for major or 

extensive repairs to the body, frame, suspension, engine, or drive train. 

B. If a vehicle is sold for the purpose of dismantling or rebuilding, the dealer may not issue 

any form of temporary registration permit or temporary plate. 

.19 Uniform Manufacturer’s certificate of Origin. 

A. The Manufacturer’s Certificate of Origin for a new motor vehicle shall have the security 

features and be in the form recommended by the American Association of Motor Vehicle 

Administrators. 

B. A distributor of motor vehicles, licensed under Title 15 of the Transportation Article, 

may issue the uniform certificate of origin in behalf of the manufacturer of a new motor vehicle. 

.20 Odometer Fraud. 

A. A dealer may not transfer a vehicle which contains an odometer reading which does not 

reflect the actual mileage of the vehicle unless the dealer truthfully informs the transferee in 

writing: 

(1) That the odometer reading is not the actual mileage of the vehicle and should not be 

relied upon; 

(2) That the Odometer reading reflects the amount of mileage in excess of the designed 

mechanical odometer limit of 99,999 miles/kilometers of the vehicle; 

(3) That the odometer was repaired or replaced while in the dealer’s possession; 

(4) That the repaired or replacement odometer was incapable of registering the same 

mileage as the odometer before repair or replacement; 

(5) That the odometer was reset to zero; 

(6) of the last known accurate odometer reading. 


B. A dealer shall inform the transferee in writing if the dealer knows that the odometer in 

the vehicle has been altered, set back, disconnected, repaired, or replace. 

C. If the information concerning the odometer for a motor vehicle sold by a dealer is in 

error under A and B, the dealer may not be subject to administrative disciplinary action if the 

dealer did not know, or could not have discovered with reasonable diligence, that the odometer 

19

eading or the information provided was incorrect. 

D. In determining the degree of administrative disciplinary action for violating A or B , the 

Administration shall consider whether the dealer accepts return of the vehicle from the 

transferee and refunds to the transferee the full purchase price including all excise tax, license 

fees, registration fees, and any similar governmental charges and any costs incurred by the 

transferee for repairs resulting from the excess mileage, less: 

(1) An allowance of $0.22 per mile for the consumer’s use of the vehicle but not to 

exceed 15 % of the purchase price; and 

(2) A reasonable allowance for damages not attributable to normal wear. 

E. When transferring a motor vehicle, a dealer shall complete and sign any odometer 

statements and certifications required by the Federal odometer requirements and keep a copy for 

4 years. The Federal Odometer requirements, 49 CFR are incorporated by reference. 

.21 Use of Interchangeable Dealer Registration Plates. 

A. In this regulation, “dealer registration plate” means an interchangeable metal license 

plate used by licensed vehicle dealers, manufacturers, distributors, and factory branches. 

B. Display of Dealer Registration Plates by Licensed Dealers. 

(1) A dealer registration plate may be displayed on a vehicle owned by a licensed dealer 

and used mainly for business purposes. 

(2) A dealer registration plate may be displayed on a vehicle not owned by a licensed 

dealer, but in the possession of the dealer, if the dealer has the consent of the owner of the 

vehicle to this use. 

(3) An owner, partner, or officer of the corporation who is listed on the application for a 

vehicle dealer license or any employee of the dealership may operate a vehicle displaying a 

dealer registration plate, subject to the other conditions of this regulation. 


(4) A dealer registration plate may be displayed on a vehicle owned by the dealership and 

operated by a prospective buyer for demonstration purposes for a period of not more than 10 

days, provided the prospective buyer has written authorization from the dealership for any use of 

the vehicle exceeding 1 day. 

C. Issuance of Dealer Registration Plates by the Administration. 

20

(1) Dealers may apply to the Administration for the issuance of dealer registration plates. 

(2) The Administration may issue five dealer registration plates to each licensed dealer 

in addition to two additional registration plates for each licensed salesman, upon payment of the 

required fee as set forth in COMAR 11.11.05 

(3) For good cause shown, the Administration may issue additional dealer registration 

plates upon application of the dealer. 

.22 License Renewal- Staggered Basis. 

A. Each month during the calendar year, a proportionately uniform number of business 

licenses and salesmen licenses shall be renewed. 

B. The Administration shall evaluate from time to time the monthly volume of renewals for 

the purpose of maintaining relatively uniform workloads. The monthly volume of renewals may 

be rescheduled by applying different expiration months. 

C. Renewals shall be due on or before the last day of the month stated on the license. The 

license shall be considered suspended if the applicant has not met all requirements, or if the 

Administration is not in receipt of a properly completed renewal application at the close of 

business on the last day of the stated renewal month. 

.23 DEALER FEE- Electronic Transmission of Titling and Registration Information. 

A. Dealers electronically transmitting titling and registration information to the 

Administration as set forth by Transportation Article, 13-610, Annotated Code of Maryland, may 

charge the transferee of the vehicle a service fee in addition to any fees specified in 

Transportation Article 15-311.1, Annotated Code of Maryland and COMAR 11.11.05. This 

service fee may not exceed: 

(1) $20.00 for new registrations; or 

(2) $15.00 for transfer registrations. 

B. Service fees charged under A of this regulation are retained by the dealer and are not 

forwarded to the Administration. 


.24 Payment Bond. 

A. Definitions. 

(1) In this regulation, the following terms have the meanings indicated. 

(2) Terms Defined. 

21

(a) “most recent complete reporting period” means the year or part of a year the 

dealer was in business immediately preceding the application date for the dealer’s license. 

(b) “Payment bond” means a bond required to protect Administration funds and equal 

to 20 days receipts of taxes and fees, as calculated by a formula provided by the Administration. 

B. Payment Bond Required. 

(1) A dealer who elects not to submit Administration funds to the Administration within 

10 days is required to file a payment bond with the Administration in a form approved by the 


(2) The amount of the payment bond shall be the amount certified by the dealer or 

applicant as required by C of this regulation 

(3) The Payment bond shall: 

(a) Run concurrently with the annual license period; 

(b) Be reissued each year; and 

(c) Be submitted with payment of the annual license fee. 

(4) Upon renewal of the dealer license, the dealer shall obtain a larger payment bond 

only if the total taxes and fees collected exceed the amount used in the computation of the 

original bond by 10 percent or more. 

C. Certification. 

(1) Dealers and applicants shall certify at the time of renewal of application whether they 

will furnish a payment bond. 

(2) If the dealer elects to furnish a payment bond, the dealer shall submit Administration 

funds and documents required under Transportation Article, 13-113, Annotated Code of 

Maryland, within 20 days of the date of delivery of a vehicle. 

(3) If the dealer elects not to furnish a payment bond, the dealer shall submit 

Administration funds and documents required under Transportation Article, 13-113, Annotated 

Code of Maryland, within 10 days of the date of delivery of a vehicle. 


D. Computation of Payment Bond Amount. 

(1) A dealer in business for more than 1 year shall divide the total amount of taxes and 

fees collected during the preceding 12 months by 365 and multiply the results by 20 to determine 

the bond amount for the most recent complete reporting period 

(2) A dealer who has not been in business for a full year shall divide the total amount of 

22

taxes and fees collected during the period the dealer has been in business by the number of days 

the dealer has been in business and multiply the result by 20 to determine the bond amount for 

the most recent complete reporting period. 

.25 Refund of Licensing Fees. 

A. If a dealer license issued under Regulation .01 of this chapter is voluntarily canceled 

before the beginning of the second full year, the Administration shall refund the fee paid for the 

second license year. 

B. Requests for refunds shall be submitted in writing, on forms provided by the 

Administration, after the cancellation of the registration and before the first day of the second 

registration year. 

EXCERPT FROM MARYLAND MVA BULLETIN D- 2- 99- 01 

February 8, 1999 

3. Balance advertising 

The Administration has noted numerous advertisements that are showing a balance price which 

reflects the deduction of a trade-in allowance or cash down payment. 

COMAR 11.12.01.14F(1) states, “ the amount of the down payments, or the balance after the 

down payment may not be stated in such a manner as to permit the impression that it is the 

selling price of the vehicle:.” In addition, COMAR 11.12.01.14C (2) requires that “ The 

23

advertised price shall be the full delivered cash price which the customer shall pay, except for 

taxes and title fees. In the case of new vehicles, the freight charge may be excluded. However, 

the advertisement shall fully and prominently disclose this fact. It is important to remember that 

the selling price does not require the consumer to provide a down payment or trade to arrive at 

that figure. If the customer must put money down, or have a trade, then the down payment or 

trade, must be deducted from the selling price and reflected in the ad as the balance price. The 

selling price must also appear in large print compared to the balance figure. 

A disclosure must also appear in the ad when the trade-in is not a guaranteed trade. It is 

suggested that the disclosure conform to COMAR 11.12.01.14G(2) which states “ specific price 

may not be stated in an advertisement as an offer for a trade-in, if the price stated is contingent 

upon the conditions, model or age of the prospective buyer vehicles, without so stating in the 

advertisement”. 

CORRECT 

Original Price 15,000 

GM Rebate 1,000 

Dealer Discount 1,000 

SELLING PRICE 13,000 

EXAMPLES 

CORRECT 

Original Price 15,000 

GM Rebate 1,000 

Dealer Discount 1,000 

SELLING PRICE 13,000 

*Cash or Trade 1,000 

Balance 12,000 

* Trade contingent upon the condition, model or age of the vehicle. 

s/ 

Charles D. Schaub, Acting Manager 

Business Licensing & Consumer Services 

MARYLAND CODE ANNOTATED COMMERCIAL LAW 

Title 13. Consumer Protection Act 

Subtitle 3. Unfair or Deceptive Trade Practices 

§ 13-301. Unfair or deceptive trade practices defined. 

Unfair or deceptive trade practices include any: 

(1) False, falsely disparaging, or misleading oral or written statement, visual description, or other 

representation of any kind which has the capacity, tendency, or effect of deceiving or misleading 

consumers; 

24

(2) Representation that: 

(i) Consumer goods, consumer realty, or consumer services have a sponsorship, approval, 

accessory, characteristic, ingredient, use, benefit, or quantity which they do not have; 

(ii) A merchant has a sponsorship, approval, status, affiliation, or connection which he 

does not have; 

(iii) Deteriorated, altered, reconditioned, reclaimed, or secondhand consumer goods are 

original or new; or 

(iv) Consumer goods, consumer realty, or consumer services are of a particular standard, 

quality, grade, style, or model which they are not; 

(3) Failure to state a material fact if the failure deceives or tends to deceive; 

(4) Disparagement of the goods, realty, services, or business of another by a false or misleading 

representation of a material fact; 

(5) Advertisement or offer of consumer goods, consumer realty, or consumer services: 

(i) Without intent to sell, lease, or rent them as advertised or offered; or 

(ii) With intent not to supply reasonably expected public demand, unless the 

advertisement or offer discloses a limitation of quantity or other qualifying condition; 

(6) False or misleading representation of fact which concerns: 

(i) The reason for or the existence or amount of a price reduction; or 

MARYLAND CODE ANNOTATED COMMERCIAL LAW 13.301 

(ii) A price in comparison to a price of a competitor or to one's own price at a past or 

future time; 

(7) Knowingly false statement that a service, replacement, or repair is needed; 

(8) False statement which concerns the reason for offering or supplying consumer goods, 

consumer realty, or consumer services at sale or discount prices; 

(9) Deception, fraud, false pretense, false premise, misrepresentation, or knowing concealment, 

suppression, or omission of any material fact with the intent that a consumer rely on the same in 

25

connection with: 

or 

(i) The promotion or sale of any consumer goods, consumer realty, or consumer service; 

(ii) A contract or other agreement for the evaluation, perfection, marketing, brokering or 

promotion of an invention; or 

(iii) The subsequent performance of a merchant with respect to an agreement of sale, 

lease, or rental; 

(10) Solicitations of sales or services over the telephone without first clearly, affirmatively, and 

expressly stating: 

(i) The solicitor's name and the trade name of a person represented by the solicitor; 

(ii) The purpose of telephone conversation; and 

(iii) The kind of merchandise, real property, intangibles, or service solicited; 

(11) Use of any plan or scheme in soliciting sales or services over the telephone that 

misrepresents the solicitor's true status or mission; 

(12) Use of a contract related to a consumer transaction which contains a confessed judgment 

clause that waives the consumer's right to assert a legal defense to an action; 

(13) Use by a seller, who is in the business of selling consumer realty, of a contract related to the 

sale of single family residential consumer realty, including condominiums and town houses, that 

contains a clause limiting or precluding the buyer's right to obtain consequential damages as a 

result of the seller's breach or cancellation of the contract; 


(14) Violation of a provision of: 

(i) This title; 

(ii) An order of the Attorney General or agreement of a party relating to unit pricing 

under Title 14, Subtitle 1 of this article; 

(iii) Title 14, Subtitle 2 of this article, the Maryland Consumer Debt Collection Act; 

(iv) Title 14, Subtitle 3 of this article, the Maryland Door-to-Door Sales Act; 

(v) Title 14, Subtitle 9 of this article, Kosher Products; 

26

(vi) Title 14, Subtitle 10 of this article, Automotive Repair Facilities; 

(vii) Section 14-1302 of this article; 

(viii) Title 14, Subtitle 11 of this article, Maryland Layaway Sales Act; 

(ix) Section 22-415 of the Transportation Article; 

(x) Title 14, Subtitle 20 of this article; 

(xi) Title 14, Subtitle 15 of this article, the Automotive Warranty Enforcement Act; 

(xii) Title 14, Subtitle 21 of this article; 

(xiii) Section 18-107 of the Transportation Article; 

(xiv) Title 14, Subtitle 22 of this article, the Maryland Telephone Solicitations Act; 

(xv) Title 14, Subtitle 23 of this article, the Automotive Crash Parts Act; 

(xvi) Title 10, Subtitle 6 of the Real Property Article; 

(xvii) Title 10, Subtitle 8 of the Real Property Article; 

(xviii) Title 14, Subtitle 25 of this article, the Hearing Aid Sales Act; 

(xix) Title 14, Subtitle 26 of this article, the Maryland Door-to-Door Solicitations Act; 

(xx) Title 14, Subtitle 31 of this article, the Maryland Household Goods Movers Act; or 


(15) Act or omission that relates to a residential building and that is chargeable as a 

misdemeanor under or otherwise violates a provision of the Energy Conservation Building 

Standards Act, Title 7, Subtitle 4 of the Public Utility Companies Article. 

§ 13-302. Deception or damage unnecessary. 

Any practice prohibited by this title is a violation of this title, whether or not any consumer in 

fact has been misled, deceived, or damaged as a result of that practice. 

§ 13-303. Practices generally prohibited. 

27

A person may not engage in any unfair or deceptive trade practice, as defined in this subtitle or 

as further defined by the Division, in: 

(1) The sale, lease, rental, loan, or bailment of any consumer goods, consumer realty, or 

consumer services; 

(2) The offer for sale, lease, rental, loan, or bailment of consumer goods, consumer realty, or 

consumer services; 

(3) The extension of consumer credit; or 

(4) The collection of consumer debts. 

§ 13-304. Referral sales. 

A seller may not use any general referral sales technique, plan, arrangement, or agreement by 

which a buyer is induced to purchase merchandise, real property, or intangibles on the 

representation or promise of the seller that if the buyer furnishes to the seller the names of other 

prospective buyers of like or identical merchandise, real property, or intangibles, he will receive 

a reduction in purchase price by means of a cash rebate, commission, or credit toward balance 

due or any other consideration. 


§ 13-301. Unfair or deceptive trade practices defined. 

§ 13-304. Referral sales. 

§ 13-305. Prizes conditioned on purchase or sales promotion. 

(a) 

Exceptions. - This section does not apply to: 

(1) Trading stamps as defined by § 13-101 of the Business Regulation Article; 

(2) State lottery tickets issued under the authority of Title 9, Subtitle I of the 

State Government Article: 

(3) Retail promotions not involving the offer of gifts and prizes, which offer 

savings on consumer goods or services, including: "one-cent-sales", 

28

"two-for-the-price-of-one-sales", or manufacturer's "cents-off" coupons; or 

(4) Games of skill competition not involving sales promotion efforts 

(b) Prohibition. - A person may not notify any other person by any means, as part of 

an advertising scheme or plan, that the other person has won a prize, received an award or has 

been selected or is eligible to receive anything of value if the other person is required to 

purchase goods or services pay any money to participate in or submit to a sales promotion effort. 

(c) Additional exceptions – In general. – In addition to the exceptions provided in subsection 

(a) of this section, subsection (b) of this section does not prohibit the offer of prizes requiring the 

person to purchase other goods and services if the retail price of the prize offered does not 

exceed the greater of: 

(1) $40; or 

(2) The lesser of: 

(i) 20% of the purchase price of the goods or services that must be purchased; or 

(ii) $400. 

(d) Same – Not applicable to award of prizes by chance. – The exception provided in subsection 

(c) of this section does not apply to the offer of a prize requiring the person either to pay any 

money to participate in or to submit to a sales promotion effort, or to a prize promotion involving 

the award of prizes by chance. 

(e) Required disclosures relating to sale, lease or retail of real property. When a person offers 

prizes in a sales promotion effort relating to the sale. lease, or rental of real property not 

prohibited by this subsection, that person shall disclose to each offeree, in writing clearly and 

conspicuously. 

(1) That the purpose or the sales promotion effort is to solicit the purchase, 

lease, or rental of real property: 

(2) The exact number of each prize offered in each category to be made 

available during the sales promotion: 

(3) The manufacturer's suggested retail price or comparable retail price of 

Md. Code Ann. Commercial Law §13-305 

each prize offered; 

(4) (i) If calculable in advance, the odds against winning each prize; or 

(ii) 

If not calculable in advance, a statement to that effect, or that the 

odds of winning will be determined by the number of entries; 

29

(5) Whether all prizes offered will be awarded and when a determination of 

winners will be made; and 

offered, where and 

(6) If prizes with retail prices or monetary values in excess of $100 are 

when a list of winners of those prizes can be obtained. 

(f) Applicability of existing laws. - Where provisions of law or regulations relating to the awarding 

of prizes in the sale, lease, or rental of real property, including Section 11A-119 of the Real Property 

Article, the provisions of those laws or regulations shall apply if the provisions are more stringent than 

this section. 

(g) Required disclosures by entrants where prizes awarded. - If a person offers a contest, 

sweepstakes or other sales promotion effort not prohibited by this subsection, involving the award of 

prizes by chance, that person shall disclosure to each offeree in writing: 

(1) The exact number of each prize offered in each category to be made available 

during the contest. Sweepstakes, or sales promotion; 

(2) The manufacturer's suggested retail price, or comparable retail price, of each 

prize offered: 

(3) If calculable in advance, the odds against winning each prize and it not 

calculable in advance, a statement that the odds of winning will be determined by the 

number of entries; 

(4) Whether all prizes offered will be awarded and when a determination of winners 

will be made; 

(5) What, it any, conditions must be met in order to receive a prize; 

(6) If prizes with retail prices or monetary values in excess of $100 are offered where and 

when a list of winners of those prizes can be obtained; and 

(7) That in order to receive the prize offered in the sales promotion you may not be 

required to: 

(i) Purchase goods or services: 

Md. Code Ann. Commercial Law §13-305 

(ii) 

(iii) 

Pay any money; or 

Where applicable, submit to a sales promotion effort. 

(h) 

Required disclosures by entrants where no award of prizes made. - If a person offers a contest, 

30

sweepstakes or other sales promotion effort not prohibited by this subsection not involving the award 

of prizes by chance, that person shall disclose to each offeree in writing. 

(1) The manufacturer's suggested retail price or comparable retail price of each prize offered: 

(2) What, if any, conditions must be met in order to receive a prize; and: 

(3) That in order to receive the prize offered in the sales promotion you may not be required to: 

(i) Purchase goods or services, unless the retail price of the prize is within the limits 

set b subsection(c) of this section; 

(ii) Pay any money: or 

(iii) Where applicable, submit to a sales promotion effort. 

(g) Where disclosures are to appear the disclosures shall appear on the first page 

of the prize notification document. 

MONTGOMERY COUNTY MARYLAND CODE OF ORDINANCES 

CHAPTER 11.CONSUMER PROTECTION.[NOTE] 

Sec. 11-4. Deceptive trade practices. 

(1) It shall be unlawful for any merchant to engage in a deceptive trade practice whether or not any 

consumer has, in fact, been misled, deceived or damaged thereby. Deceptive trade practices are: 

(a) Representations that goods or services have sponsorship, approval, accessories, characteristics, 

ingredients, uses, benefits or quantities that they do not have. 

(b) Representations that the merchant has a sponsorship, approval, status, affiliation or connection 

that he does not have 

. 

(c) Representations that goods are original or new if they are deteriorated, altered, reconditioned, 

reclaimed or second hand. 

(d) Representations that goods or services are of particular standard, quality, grade, style or 

model, if they are of another. 

31

(e) The misrepresentation as to a material fact which has a tendency to mislead 

(f) The failure to state a material fact if such use or failure deceives or tends to deceive. 

(g) Disparaging the goods, services or business of another by false or misleading 

representations of material facts. 

(h) Advertising or offering goods or services without intent to sell them or sell them as 

advertised or offered. 

(i) Advertising or offering goods or services with intent not to supply reasonably expected 

public demand, unless the advertisement or offer discloses a limitation or quantity or other 

qualifying condition which has a tendency to mislead. 

(j) Making false or misleading representations of fact concerning: The reasons for, existence 

of or amounts of price reductions; or the price in comparison to price of competitors or one's own 

price at a past or future time. 

(k) Knowingly falsely stating that services, replacements or repairs are needed. 

(l) Falsely stating the reasons for offering or supplying goods or services at sale or discount 

prices. 

(m) The harassment of or threat to any person either by telephone, cards or letters with regard 

to any act other than legal process. 

MONTGOMERY COUNTY CODE OF ORDINANCE (CONTINUED) 

(n) Any deception, fraud, false pretense, false premise, misrepresentation or the knowing 

concealment, suppression or omission of any material fact with the intent that consumers rely upon 

such concealment, suppression or omission in connection with the sale or advertisement of any 

merchandise or with the subsequent performance of person aforesaid, whether or not any person has, 

in fact, been misled, deceived or damaged thereby. 

(o) Any false, falsely disparaging or misleading oral or written statement, visual description or 

other representation of any kind which has the capacity, tendency or effect of deceiving or 

misleading consumers and is made in connection with the sale, lease, rental, loan or bailment of 

consumer goods or services; the offering for sale, lease, rental, loan or bailment of consumer goods 

or services; the extension of consumer credit; or the collection of consumer debts. 

(2) It shall be unlawful for any merchant to engage in an unconscionable trade practice. 

Unconscionable trade practices are: 

(a) Failure to provide a written estimate of repairs, alterations, modifications or servicing 

when requested by a consumer and the subsequent repair, alteration, modification or servicing of any 

32

item without first tendering said estimate. 

(b) Making repairs, alterations, modifications or servicing exceeding by twenty-five (25) 

percent or more the price quoted in a written estimate without prior approval of a consumer. 

(c) Failure to reassemble or restore an electrical or mechanical apparatus, appliance, chattel 

or other goods or merchandise to its tendered condition unless a service or labor charge is paid 

without notification prior to receiving the tendered item of said service or labor charge. 

(d) Failing to supply to a consumer a copy of a sales or service contract, lease, promissory 

note, trust agreement or other evidence of indebtedness which that person may execute. 

(e) Making or enforcing unconscionable terms of provisions of sales or leases. In applying 

this subsection, consideration shall be given to any of the following factors: 

1 .Knowledge by the merchant at the time credit sales are consummated that there was no 

reasonable probability of payment in full of the obligation by the consumer. 

2. Knowledge by the merchant at the time of the sale or lease of the inability of the 

consumer to receive substantial benefits from the property or services sold or leased. 

3. Gross disparity between the price of the property or services sold or leased and the 

value of the property or services measured by the price at which similar property or services are 

readily obtainable in transactions by like buyers or lessees. 

MONTGOMERY COUNTY CODE OF ORDINANCE (CONTINUED) 

4. The fact that the merchant contracted for or received separate charges for insurance with 

respect to credit sales with the effect of making the sales, considered as a whole, unconscionable. 

5. The fact that the merchant has knowingly taken advantage of the inability of the 

consumer reasonably to protect his interests by reason of physical or mental infirmities, ignorance, 

illiteracy or inability to understand the language of the agreement, or similar factors. 

(f) Replacing parts or components in an electrical or mechanical apparatus, appliance, 

chattel or other goods or merchandise when such parts or components are not defective unless 

requested by the consumer. 

(g) Falsely stating or representing that repairs, alterations, modifications or servicing have 

been made and receiving remuneration therefore when they have not been. 

33

Reprinted Letter From: 

Office of 

J. Joseph Curran, Jr. 

Attorney General 

State of Maryland 

Dear Auto Dealer 

Since taking office in January, I have had the opportunity to review complaints that consumers 

have filed with this office and to hear the concerns of some members of the automobile sales industry 

about advertising. 

The purpose of this letter, which I am sending to every licensed new automobile dealer in Maryland, 

is to share with you my concerns and my intention to work with you to ensure compliance with the law. 

Together, I hope we can make Maryland a model of fair and informative dealer advertising and sales 

practices. 

Following is a clear and specific overview of the current Maryland law as it applies to dealer 

advertising; and sales practices. 

34

As you know, advertising utilized by motor vehicle dealers in Maryland is governed by regulations 

adopted and enforced by the Motor Vehicle Administration ("MVA"). COMAR 11.12.01 et. seq. The 

same advertising also must comply with the standards established by the Maryland General Assembly in 

the Consumer Protection Act. STET Code Ann. STET 13-301, et. seq. The Consumer Protection Act is 

enforced by the Consumer Protection Division of my office. 

In order to be in compliance with the Maryland Consumer Protection Act, your advertisements or 

other representations to customers may not: 

* contain false or misleading statements which have the capacity of misleading consumers (Section 

13-301(1.)); 

* represent that you do have a status, affiliation or connection which you do not (Section 13-301 

(2)(ii)); 

* fail to state a material fact if that failure tends to deceive (Section 13-301(3)); 

* list a vehicle that you do not intend to sell as advertised or offered (Section 13-301(5)(i)); 

* misleadingly represent a reason for, the existence of, or the amount of a price reduction (Section 

13-301(6)(i)); 

* misleadingly compare your prices to your own or a competitor's price at a past or future time 

(Section 13-301 (6)(ii)); 

* falsely state the reason your vehicles are being offered at sale or discount prices (Section 

13301(8)); 

* misrepresent, knowingly conceal, or omit any material fact with the intention that consumers will 

rely on those misrepresentations, concealments or omissions (Section 13-301(g)(i)). 

The following is a list of the most frequent violations of these standards and similar provisions of the 

MVA regulations that we observe in dealership advertising and sales practices: 

1. Advertising, by use of terms such as "direct factory outlet" or "factory sale," that a special 

relationship exists between an automobile manufacturer and a particular dealer, when, in fact, no special 

relationship exists; 

2. Advertising that vehicles in stock at a particular location are being liquidated or otherwise 

disposed of by the manufacturer when, in fact, the vehicles are simply being sold by a dealer, 

3. Advertising that savings are available because of the volume of vehicles purchased by the 

dealer when, in fact. the wholesale cost of the vehicle is the same to each dealer regardless of the 

volume of vehicles purchased; 

35

4. Advertising that vehicles are available for sale at prices under cost, at cost, or slightly above 

cost when, in fact, the vehicles are being offered at prices that still include significant profit to the 

dealer, or will result in significant profit when additional funds, held back from the dealer at the time of 

the transaction, are received; 

5. Advertising that a vehicle may be purchased for no money down' when, in fact, any initial 

costs such as taxes, tags or freight charges must be paid by the consumer at the time the contract is 

consummated; 

6. Advertising that below-market interest rates are available without prominently disclosing 

any conditions, other than credit worthiness, that must be satisfied in order to qualify for such rates; 

7. Advertising that a particular vehicle is available at a particular price when, in fact, the 

vehicle is not available; 

8. Advertising that fails to disclose precisely the options and special equipment that are 

included with a vehicle at the advertised price; 

9. Failing to disclose that only a limited number of vehicles are available at advertised price, 

when such is the case. Simply stating a vehicle stock number in the advertisement does not adequately 

disclose this fact; 

10. Advertising guaranteed minimum trade-ins when, in fact, the lowest price at which the 

dealer is prepared to sell a vehicle will be increased to compensate the dealer for the loss it will incur for 

accepting a trade-in worth less than the guaranteed minimum; 

11. Selling a vehicle for more than the current advertised price, even if the advertise price has 

not been communicated to the purchaser; 

12. Advertising financial incentives, such as rebates or below-market interest rates when. in 

fact, the lowest price at which the dealer is prepared to sell a vehicle is being increased to compensate 

the dealer for the cost of the incentive. A dealer may advertise such financial incentives if it prominently 

and clearly discloses the relationship between the financial incentive and the lowest price at which the 

vehicle will be sold; 

13. Advertising that fails to distinguish adequately between the offer of a vehicle for sale and 

the offer of a vehicle to lease; 

14. Advertising that fails to include all the disclosures required under the federal Truth in 

Lending Act or the federal Truth-in-Leasing Act; 

15. Advertising that lists in small print important disclosures that attempt to modify the 

message of more prominent portions of the advertisements; 

36

16. Allowing a consumer to accept delivery of a motor vehicle prior to all terms being finalized, 

including all financial terms, unless the consumer is clearly informed in a separate I prominent notice 

that a binding contract does not exist and that the motor vehicle can be returned if the consumer is in any 

way 

dissatisfied with the proposed deal. Once a contract binding both parties is created, the consumer's 

rights to return the motor vehicle, unless otherwise authorized is extinguished; and 

17. Disposing of a customer's trade-in vehicle before the motor vehicle transaction for which 

the trade-in was supplied has been consummated. 

Hopefully, this overview of the law and accompanying examples will assist your compliance with 

Maryland's advertising laws. Compliance with the law is consistent with running a successful business, 

as the vast majority of dealers know. If you have any questions, please contact the Consumer Protection 

Division. 

CUSTOMER NOTICE ON MARYLAND LEMON LAW 

In 1984 the General Assembly enacted the Maryland Automotive Warranty Enforcement Act more 

commonly known as "The Lemon Law." Md. Code. Ann. Commercial Law §§14-1501 et. This law 

provides consumers with a number of rights and remedies to aid in the enforcement of manufacturer's 

warranties on new cars. 

Every new automobile sold by a dealership in the United States comes with a manufacturer's 

warranty. The warranty may be of little comfort when the car dealer or manufacturer does not satisfy the 

guarantees made in the warranty or when the new car must be returned for repairs again and again. 

Applicability of the Lemon Law 

The Lemon Law applies to the sale of all new cars, small trucks, and multipurpose vehicles in 

Maryland. It does not apply to motor homes. 

The benefits of the Lemon Law are available not only if the vehicle that was purchased from a dealer 

was new, but also if it was transferred to another person during the vehicle's warranty period. That 

warranty period is 15 months after the car was originally delivered by the dealer or 15,000 miles, 

whichever comes first. 

Under the law, a car is considered a lemon if, during the 15-month/15,000 mile warranty period a 

37

defect or condition that substantially impairs the use and market value of the car cannot be repaired after 

a reasonable number of attempts. A "reasonable number of attempts" means once in the case of the 

braking or steering system and four times in the case of other defects. 

Alternatively, the "reasonable number of attempts" requirement is satisfied if the car is out of service 

for repair of defects for a total of 30 or more days during the warranty period. 

A car is not considered a lemon, however, if the defect is the result of abuse, neglect, or 

unauthorized modifications of the car. 

How the Process Works 

The Lemon Law imposes certain requirements on the consumer, the car dealer, and the 

manufacturer. If the dealer and manufacturer do not comply with these requirements, they may be 

subject to several different penalties under the law. If the consumer does not fulfill the consumer's 

obligations, the right to take advantage of the Lemon Law may be lost. If there is a problem with a new 

car during the warranty period, the dealer or the manufacturer must be given an opportunity to repair the 

defect. Also, the consumer must send a written notice of the defect to the manufacturer by certified mail, 

return receipt requested, during the warranty period. The manufacturer or dealer must correct the defect, 

at no charge to the consumer, within 30 days after receiving notice of the defect. If the car is returned to 

the dealer four times to repair the same defect or if it is out of service for more than a total of 20 days 

because of defects, the dealer must notify the manufacturer of the defect and send a copy of the notice to 

the Motor 

MARYLAND LEMON LAW (CONTINUED) 

Vehicle Administration. However, failure of the dealer to give the required notice does not affect the 

consumer's rights under The Lemon Law. If the consumer is not satisfied with the way the dealer or 

manufacturer is handling the new car's defect or if the consumer is unable to reach an agreement as to an 

appropriate remedy, the consumer may submit the dispute to the manufacturer's informal arbitration 

procedure, if one exists. The consumer is not required to submit to arbitration, however, and even if 

arbitration is chosen it is not binding on the consumer. Legal action in the courts before, during or after 

an arbitration proceeding is always an option. The only limitation is that a legal action under the Lemon 

Law must be filed in court within three years after the date of original delivery of the vehicle to the 

consumer. 

Remedies 

If the dealer or manufacturer is unable to repair the consumer's car after a reasonable number of 

attempts (as described above), the manufacturer is required to do one of two things. At the consumer's 

option, the manufacturer must either: 

(1) Replace the car with another that is acceptable to the consumer; or 

(2) Accept return of the car and refund the full purchase price, less a reasonable allowance for the use 

of the vehicle. There are other remedies available to a consumer under the Lemon Law. If the consumer 

38

cannot settle a dispute with the manufacturer out of court, the court may require the manufacturer to pay 

part or all of the consumer's attorney's fees if the consumer prevails in court. If the court finds that the 

manufacturer has acted in bad faith in failing to fulfill its obligations under the Lemon Law, the 

manufacturer may be ordered to pay the consumer up to $10,000 in addition to any other remedies 

ordered by the court. Furthermore, a violation of the Lemon Law by a car dealer or manufacturer is 

considered an "unfair and deceptive trade practice" and may subject the dealer or manufacturer to 

certain penalties under the Maryland Consumer Protection Act. 

In addition to the Lemon Law, other areas of the law may help the consumer in a dispute concerning 

a new car. For example, under the Maryland Uniform Commercial Code, the consumer may be entitled 

to the benefit of certain implied warranties which are not contained in a written warranty. 

§ 14-1501. Definitions 

MARYLAND “LEMON” LAW STATUTE 

Md. Code. Ann. Commercial Law §14-1501-14-1504 

(a) 

(b) 

In this subtitle the following words have the meanings indicated. 

"Consumer" means: 

(1) The purchaser, other than for purposes of resale, of a new motor vehicle; 

(2) Any person to whom a new motor vehicle is transferred during the duration of the 

warranty applicable to such motor vehicle; or 

(3) Any other person who is entitled to enforce the obligations of the warranty. 

(c) (1) "Motor vehicle" means a vehicle that is registered in this State as a: 

(i) 

(ii) 

(iii) 

Class A (passenger) vehicle; 

Class D (motorcycle) vehicle; 

Class E (truck) vehicle with a 3/4 ton or less manufacturer's rated capacity; or 

39

(iv) 

Class M (multipurpose) vehicle. 

(2) "Motor vehicle" does not include a motor home. For the purpose of administering this 

subtitle, the Motor Vehicle Administration shall promulgate a regulation defining a motor home. 

(d) 

"Dealer" has the meaning provided in § 15-101(b) of the Transportation Article. 

(e) "Manufacturer, factory branch, or distributor" means a person, partnership, association, 

corporation, or entity engaged in the business of manufacturing or assembling motor vehicles or of 

distributing motor vehicles to motor vehicle dealers as defined in § 15-201(b), (c), and (e) of the 

Transportation Article. 

(f) 

"Warranty" means warranties as defined in §§ 2-312, 2-313, 2-314, and 2-315 of this article. 

(g) (1) "Manufacturer's warranty period" means the earlier of: 

consumer. 

(i) 

(ii) 

The period of the motor vehicle's first 15,000 miles of operation; or 

15 months following the date of original delivery of the motor vehicle to the 

(2) This subsection does not extend any manufacturer's express warranty. 

MARYLAND LEMON LAW STATUTE 

§14-1502. Automobile warranty enforcement. 

(a) If the manufacturer's warranty period is to include those miles of operation when the new motor 

vehicle is in the possession of any person other than the consumer, the manufacturer shall state that fact 

in 12 point bold face type in the manufacturer's written warranty. 

(b)(1) If a new motor vehicle does not conform to all applicable warranties during the warranty period, 

the consumer shall, during such period, report the nonconformity, defect, or condition by giving written 

notice to the manufacturer or factory branch by certified mail, return receipt requested. Notice of this 

procedure shall be conspicuously disclosed to the consumer in writing at the time of sale or delivery of 

the motor vehicle. 

(2) The consumer shall provide an opportunity for the manufacturer or factory branch, or its agent 

to cure the nonconformity, defect, or condition. 

(3) The manufacturer or factory branch, its agent, or its authorized dealer shall correct the 

nonconformity, defect, or condition at no charge to the consumer, even if repairs are made after the 

expiration of the warranty period. The corrections shall be completed within 30 days of the 

manufacturer's receipt of the consumer's notification of the nonconformity, defect, or 

40

condition. 

(c) (1) If, during the warranty period, the manufacturer or factory branch, its agent, or its 

authorized dealer is unable to repair or correct any defect or condition that substantially impairs the use 

and market value of the motor vehicle to the consumer after a reasonable number of attempts, the 

manufacturer or factory branch, at the option of the consumer, shall: 

(i) 

consumer; or 

Replace the motor vehicle with a comparable motor vehicle acceptable to the 

(ii) Accept return of the motor vehicle from the consumer and refund to the consumer the 

full purchase price including all license fees, registration fees, and any similar governmental charges, 

less: 

1. A reasonable allowance for the consumer's use of the vehicle not to exceed 15 

percent of the purchase price; and 

2. A reasonable allowance for damage not attributable to normal wear but not to 

include damage resulting from a nonconformity, defect, or condition. 

(2) The manufacturer or factory branch shall make refunds under this section to the consumer 

and lienholder, if any, as their interests appear on the records of ownership maintained by the Motor 

Vehicle Administration. 


(3) It is an affirmative defense to any claim under this section that the nonconformity, defect, or 

condition: 

(i) Does not substantially impair the use and market value of the motor vehicle; or 

(ii) Is the result of abuse, neglect, or unauthorized modifications or alterations of the motor 

vehicle. 

(d) It shall be presumed that a reasonable number of attempts have been undertaken to conform a 

motor vehicle to the applicable warranties if: 

(1) The same nonconformity, defect, or condition has been subject to repair 4 or more times 

by the manufacturer or factory branch, or its agents or authorized dealers, within the warranty period but 

such nonconformity, defect, or condition continues to exist; 

(2) The vehicle is out of service by reason of repair of 1 or more nonconformities, defects, or 

conditions for a cumulative total of 30 or more days during the warranty period; or 

(3) A nonconformity, defect, or condition resulting in failure of the braking or steering 

41

system has been subject to the same repair at least once within the warranty period, and the 

manufacturer has been notified and given the opportunity to cure the defect, and the repair does not 

bring the vehicle into compliance with the motor vehicle safety inspection laws of the State. 

(e) The term of any warranty, the warranty period, and the 30 day out of service period shall be 

extended by any time during which repair services are not available to the consumer by reason of war, 

invasion, strike, or fire, flood, or other natural disaster. 

(f) (1) (i) It shall be the duty of a dealer to notify the manufacturer of the existence of a 

nonconformity, defect, or condition within 7 days when the motor vehicle is delivered to the same dealer 

for a fourth time for repair of the same nonconformity or when the vehicle is out of service by reason of 

repair of one or more non conformities, defects, or conditions for a cumulative total of 20 days. 

(ii) The notification shall be sent by certified mail and a copy of the notification shall be 

sent to the Motor Vehicle Administration; however, failure of the dealer to give the required notice 

required under this subsection shall not affect the consumer's right under this subtitle. 

(2) If a motor vehicle is returned to a manufacturer or factory branch either under this 

subtitle, or by judgment, decree, arbitration award, or by voluntary agreement, the manufacturer or 

factory branch shall notify the Motor Vehicle Administration in writing within 15 days of the fact that 

the vehicle was returned. 


(g) (1) (i) If a motor vehicle that is returned to the manufacturer under either this subtitle or 

by judgment, decree, arbitration award, settlement agreement, or by voluntary agreement in this or any 

other state and is then transferred to a dealer in Maryland, the manufacturer shall disclose this 

information to the dealer. 

(ii) The manufacturer's disclosure under this paragraph shall be in writing on a separate 

piece of paper in 10 point all capital type and shall state in a clear and conspicuous manner: 

1. That the motor vehicle was returned to the manufacturer or factory branch; 

2. The nature of the defect, if any, that resulted in the return; and 

3. The condition of the motor vehicle at the time that it is transferred to the dealer. 

(2) (i) If the returned vehicle is then made available for resale, the seller shall provide a 

copy of the manufacturer's disclosure form to the consumer prior to sale. 

(ii) If the returned vehicle is sold, the seller shall send a copy of the manufacturer's 

disclosure form, signed by the consumer, to the Administration. 

(h) 

This section does not limit the rights or remedies that are otherwise available to a consumer under 

42

any other law, including any implied warranties. 

(i) (1) If a manufacturer or factory branch has established an informal dispute settlement 

procedure which complies in all respects with the provisions of Title 16, Code of Federal Regulations, 

Part 703, as amended, a consumer may resort to that procedure before subsection (c) of this section 

applies. 

(2) A consumer who has resorted to an informal dispute settlement procedure may not be 

precluded from seeking the rights or remedies available by law. 

(j) (1) Any agreement entered into by a consumer for the purchase of a new motor vehicle that 

waives, limits, or disclaims the rights set forth in this section shall be void. 

(2) The rights available to a consumer under this section shall inure to a subsequent 

transferee of a new motor vehicle for the duration of the applicable warranties. 

(k) Any action brought under this section shall be commenced within 3 years of the date of original 

delivery of the motor vehicle to the consumer. 

(l) 

(1) A court may award reasonable attorney's fees to a prevailing plaintiff under this section. 


(2) If it appears to the satisfaction of the court that an action is brought in bad faith or is of a 

frivolous nature, the court may order the offending party to pay to the other party reasonable attorney's 

fees. 

(m) 

This subtitle does not apply to a fleet purchase of five or more motor vehicles. 

§ 14-1502.1. Notice. 

(a) The Motor Vehicle Administration shall: 

(1) Develop a notice that describes the rights provided to consumers under this subtitle; 

(2) Make the notice available to all dealers that sell new motor vehicles in the State; and 

(3) Adopt regulations as necessary to implement the provisions of this section. 

(b) 

The notice shall: 

(1) Be written in simple and readable plain language; and 

(2) Contain sufficient detail to fully inform consumers about the rights and remedies available 

under this subtitle and the procedures to follow to enforce those rights and remedies. 

43

(c) Each dealer that sells a new motor vehicle in the State shall provide to the purchaser, at the time 

of the sale or delivery of the motor vehicle, a copy of the notice developed by the Motor Vehicle 

Administration under this section. 

§ 14-1503. Recovery of excise taxes. 

(a) (1) If a dealer, manufacturer, factory branch, or distributor is required under a judgment, 

decree, arbitration award, or settlement agreement to accept, or by voluntary agreement accepts, return 

of a motor vehicle from a consumer, the consumer shall be entitled to recover from the Motor Vehicle 

Administration the excise taxes originally paid by the consumer, subject to subsection (b) of this section. 

(2) (i) If a dealer, manufacturer, factory branch, or distributor replaces a motor vehicle 

with a comparable motor vehicle under § 14-1502(c)(1)(i) of this subtitle, the Motor Vehicle 

Administration shall allow a credit against the excise tax imposed for the replacement vehicle in the 

amount of the excise taxes originally paid by the consumer for the returned vehicle, subject to 

subsection (b) of this section. 

(ii) 1. If the excise tax on the replacement vehicle exceeds the credit allowed under 

subparagraph (i) of this paragraph, the dealer shall collect only that portion of excise tax due; or; 


2. If the excise tax on the vehicle being replaced exceeds the excise tax on the replacement 

vehicle, the consumer shall be entitled to recover from the Motor Vehicle Administration the excess 

of the excise tax paid. 

(b) The excise taxes that a consumer is entitled to recover under this section shall be calculated based 

on the amount of the purchase price or any portion of the purchase price of the motor vehicle that 

the dealer, manufacturer, factory branch, or distributor refunds to the consumer. 

(c) A dealer, manufacturer, factory branch, or distributor who is required under a judgment, decree, 

arbitration award, or settlement agreement to accept, or who accepts, by voluntary agreement, return of 

a motor vehicle shall notify the consumer in writing that the consumer is entitled to recover the excise 

taxes from the Motor Vehicle Administration. 

§ 14-1504. Violation of subtitle is unfair and deceptive trade practice; damages. 

(a) A violation of this subtitle shall be an unfair and deceptive trade practice under Title 13 of the 

Commercial Law Article. 

(b) In addition to any other remedies that may be available under this subtitle, if a manufacturer, 

factory branch, or distributor is found to have acted in bad faith, the court may award the consumer 

44

damages of up to $10,000. 


Subtitle 3. Dealers 

§ 15-311. Contents of vehicle sales contracts. 

(a) 

A contract for the sale of a vehicle by a dealer shall contain a clear statement of: 

(1) The principal amount charged for the vehicle; 

(2) Any interest charged on the principal amount; 

(3) Any fee charged under § 13-610 of this article; 

(4) Any dealer processing charge, as defined in § 15-311.1 of this subtitle; and 

(5) Any other charge made in connection with the sale of the vehicle. 

(b) In addition to the information required by subsection (a) of this section, a contract for the 

sale of a new vehicle shall include: 

(1) The base price of the vehicle; 

(2) The manufacturer's code or stock number for the vehicle; and 

(3) A clear and specific description of each extra item and each extra charge not 

45

included in the base price of the vehicle ordered by the buyer. 

(c) When a vehicle arrives for delivery, the dealer shall advise the buyer of any extra items 

ordered by the buyer that are not on the vehicle. 

(d) When a vehicle arrives for delivery, the dealer shall advise the buyer of any extra items on 

the vehicle that the buyer did not order. 

(e) When a vehicle arrives for delivery, the dealer shall advise the buyer of the cost of extra 

items described under subsections (c) and (d) of this section. 

§ 15-311.1. Dealer processing charge. 

(a) 

for: 

(1) In this section, "dealer processing charge" includes an amount charged by a dealer 

(i) 

(ii) 

The preparation of written documentation of the transaction; 

Obtaining the title and license plates for the vehicle; 

Md Code Ann. Commercial Law 15.311.1 

( iii) Obtaining a release of lien; 

(iv) 

(v) 

Filing title documents with the Administration; or 

Other administrative services concerning the sale of the vehicle. 

(2) "Dealer processing charge" does not include a charge to purchase or install tangible 

personal property on or in the vehicle, or to perform mechanical service on the vehicle. 

(b) If a dealer charges a dealer processing charge, the charge may not exceed $100. 

(c) 

Any dealer processing charge shall be disclosed to a purchaser as provided in this section. 

(d) A contract for the sale of a vehicle shall contain a statement, in 10 point type or larger, 

preprinted on the contract form as follows: 

"Dealer processing charge (not required by law): $....". 

(e) If a dealer advertises the price of a vehicle, the amount of the dealer processing charge 

shall be included in the advertised price. 

(f) The dealer shall attach its price statement to a window of the vehicle, next to any other 

price disclosure required by law. The dealer's price statement shall state the total price for which 

46

the dealer is offering to sell the vehicle. The total price stated shall include any dealer processing 

charge, which shall be disclosed above the total price in at least 10 point type as "dealer 

processing charge (Not Required by Law): $.....". The total price may exclude only the taxes and 

title fees payable to the State. 

§ 15-311.2. Mechanical repair contracts. 

(a) (1) For the purposes of this section, the term "mechanical repair contract" means any 

agreement or contract sold by a licensed vehicle dealer under which a specified provider agrees 

to perform over a fixed period of time, for a specific duration and for a specific identifiable 

price, services relating to the maintenance or repair of a motor vehicle; provided that the 

purchase of the contract is optional to the purchaser. 

(2) The term "mechanical repair contract" includes, but is not limited to, extended 

warranties and extended service contracts. 

Md. Code Ann. Commercial Law 15.311.2 

(b) (1) A provider of services under a mechanical repair contract shall maintain adequate 

insurance reserves, as defined by the Insurance Commissioner, for each such contract for the 

protection of the purchasing consumer. A policy of insurance providing coverage for all 

obligations and liabilities incurred by a provider under the terms of a mechanical repair contract 

shall constitute adequate insurance reserves. 

(2) The reserves shall be maintained with an insurer authorized to do business in 

Maryland on an admitted or surplus lines basis. 

(3) A purchaser of a mechanical repair contract shall be entitled to make a direct claim 

against the insurer issuing a policy of insurance under this subsection upon failure of the 

specified provider to pay any claim or make any refund or consideration due within 60 days after 

the proof is filed with the provider. 

(c) A mechanical repair contract shall be offered in addition to any express warranty 

originally included as part of the contract for sale of a new motor vehicle. 

(d) A mechanical repair contract shall clearly and conspicuously set forth the date when the 

warranty begins. 

(e) A mechanical repair contract shall clearly and conspicuously set forth the date or the 

odometer reading at which the warranty expires and the name and address of the insurer issuing 

the policy of insurance as described in subsection (b) of this section. 

(f) 

The repair of a malfunction or defect covered under a mechanical repair contract shall 

47

include the cost of the tear down and diagnosing the malfunction or defect. 

(g) The provisions of the Maryland Consumer Products Guaranty Act, Title 14, Subtitle 4 of 

the Commercial Law Article, apply to a mechanical repair contract sold by a licensed vehicle 

dealer. 

(h) The provisions of this section do not apply to mechanical repair contracts issued by the 

motor vehicle manufacturer or the distributor or a wholly owned subsidiary of the manufacturer 

or the distributor as defined in § 15-201 of this title. 

(i) Notwithstanding subsection (h) of this section, licensed vehicle dealers who sell 

mechanical repair contracts shall have the same obligations as a seller under § 2-314 of the 

Commercial Law Article. 

Md. Code Ann. Commercial Law 15.311.2 

(a) A dealer or an agent or employee of a dealer may not permit any individual to road test a 

motor vehicle if he knows that the other individual does not have a license to drive of the 

appropriate class. 

(b) A dealer or an agent or employee of a dealer may not make any material 

misrepresentation in obtaining a vehicle sales contract. 

(c) A dealer or an agent or employee of a dealer may not commit any fraud in the 

execution of or any material alteration of a contract, power of attorney, or other document 

incident to a sales transaction. 

(d) A dealer or an agent or employee of a dealer may not prepare or accept any promissory 

note or other evidence of indebtedness on a vehicle sales contract knowing that it requires the 

debtor to pay an amount greater than that agreed on in the written contract for the sale of the 

vehicle. 

(e) A dealer or an agent or employee of a dealer may not willfully fail to perform, without 

justification, any vehicle sales contract. 

(f) A dealer or an agent or employee of a dealer may not materially deviate from or disregard, 

without the consent of the buyer, any of the original terms of the contract. 

(g) A dealer or an agent or employee of a dealer may not willfully fail to comply with the 

terms of a warranty or guarantee. 

(h) A dealer or an agent or employee of a dealer may not rent a dealer registration plate 

issued by the Administration. 

48

§ 15-312. Prohibited acts - Vehicle sales transactions. 

(a) A dealer or an agent or employee of a dealer may not permit any individual to road test a 

motor vehicle if he knows that the other individual does not have a license to drive of the 

appropriate class. 

(b) A dealer or an agent or employee of a dealer may not make any material misrepresentation 

in obtaining a vehicle sales contract. 

(c) A dealer or an agent or employee of a dealer may not commit any fraud in the execution of 

or any material alteration of a contract, power of attorney, or other document incident to a sales 

transaction. 

Md. Code Ann. Commercial Law 15.312 

(d) A dealer or an agent or employee of a dealer may not prepare or accept any promissory note 

or other evidence of indebtedness on a vehicle sales contract knowing that it requires the debtor 

to pay an amount greater than that agreed on in the written contract for the sale of the vehicle. 

(e) A dealer or an agent or employee of a dealer may not willfully fail to perform, without 

justification, any vehicle sales contract. 

(f) A dealer or an agent or employee of a dealer may not materially deviate from or disregard, 

without the consent of the buyer, any of the original terms of the contract. 

(g) A dealer or an agent or employee of a dealer may not willfully fail to comply with the terms 

of a warranty or guarantee. 

(h) A dealer or an agent or employee of a dealer may not rent a dealer registration plate issued 

by the Administration. 

§ 15-313. Same – Advertising practices. 

(a) A dealer or an agent or employee of a dealer may not use any advertisement that is in any 

way false, deceptive, or misleading. 

(b) A dealer or an agent or employee of a dealer may not by any means advertise or offer to 

the public any vehicle without intent to sell it as advertised or offered. 

(c) Any advertisement that is subject to and complies with the rules and regulations of and 

statutes administered by the Federal Trade Commission is not false, deceptive, or misleading 

under this section. 

49

(d) (1) A dealer or an agent or employee of a dealer may not place on a vehicle an 

insignia, logo, or other plate that advertises the name of the dealer, unless: 

(i) The contract of sale for the vehicle contains a notice of the rights of the buyer 

described in this subsection; and 

(ii) The buyer of the vehicle consents to the placement of the insignia, logo, or 

other plate on the vehicle. 

(2) A dealer or an agent or employee of a dealer may enter into an agreement with a 

buyer of a vehicle to compensate the buyer in exchange for the buyer's consent to the placement 

Md Code Ann. Commercial Law, 15.313 

on the vehicle of an insignia, logo, or other plate that advertises the name of the dealer. 

(3) If a dealer or an agent or employee of a dealer places an insignia, logo, or other 

plate that advertises the name of the dealer without obtaining a buyer's consent, the dealer shall, 

at the request of the buyer, remove the advertising and make all repairs necessary to restore the 

vehicle to its original appearance at no charge to the buyer. 

§ 15-314. Same – Violation of licensing laws. 

(a) A dealer or an agent or employee of a dealer may not misrepresent any material fact in 

obtaining a license. 

(b) A dealer or an agent or employee of a dealer may not conduct a dealership in any name 

other than the one in which the dealer is licensed. 

(c) A dealer or an agent or employee of a dealer may not willfully fail to notify the 

Administration of any change of ownership, management, business name, or location or of the 

employment of vehicle salesmen, as required by this title. 

(d) A dealer or an agent or employee of a dealer may not do any vehicle sales business with 

or through any person required to be licensed under this title if he knows that the person is not 

licensed. 

(e) A dealer or an agent or employee of a dealer may not sell any new motor vehicle, or new 

two-stage motor vehicle unless the manufacturer or distributor of the vehicle is licensed as 

required by this title. 

(f) A dealer or an agent or employee of a dealer may not willfully fail to comply with any 

rule, regulation, or lawful order adopted by the Administration under this title. 

(g) 

A dealer or an agent or employee of a dealer may not willfully violate any of the dealer 

50

licensing laws of this State. 

§ 15-315. Refusal, suspension, or revocation of license; fine. 

(a) In addition to the other grounds specified in Subtitle 1 of this title for refusal, suspension, 

or revocation of a license, the Administration may refuse to grant a license under this subtitle to 

any person and may suspend, revoke, or refuse to renew the license of any person if it finds that: 

(1) The person, his management personnel, or any other person who has a direct or 

indirect financial interest in the dealership is untrustworthy, lacks competence, or has been 

convicted by final judgment in any court of a crime of moral turpitude; 


(2) The vehicle sales transactions of the person have been marked by a practice of 

failure to perform contracts or by fraud or bad faith; 

(3) The person or the manufacturer or distributor of the vehicles in which the person 

deals is not in compliance with the surety bond requirements of § 15-205 of this title; or: 

(4) The person has failed to comply with any of the provisions of the Maryland Vehicle 

Law relating to the registration of vehicles, certificates of title, and the sale of vehicles. 

(b) As to any person licensed under this subtitle, instead of or in addition to revocation, 

suspension, or refusal to renew a license under this section, the Administrator may order the 

licensee to pay a fine not exceeding $1,000 for each violation of this subtitle. 

§ 15-402. License required; refused, revoked, or suspended licenses. 

(a) A person may not act as a vehicle salesman unless the person is licensed by the 

Administration under this subtitle. 

(b) Any person who has been refused a vehicle salesman's license in this State or whose 

vehicle salesman's license is revoked or suspended may not conduct the business of a vehicle 

salesman under any license, permit, or registration certificate issued by any other jurisdiction. 

§ 15-404. Employment by licensed dealer required. 

(a) 

A person may not be licensed under this subtitle unless the person: 

(1) Is a licensed dealer; or 

(2) Is employed as a vehicle salesman by a licensed dealer. 

(b) Unless the applicant is himself a licensed dealer, each application for a license shall 

contain or be accompanied by the written statement of the licensed dealer by whom the applicant 

is or will be employed, certifying that the applicant has been accepted by the licensed dealer for 

51

employment as a vehicle salesman. The written statement shall be signed on behalf of the 

licensed dealer by a person authorized under this title to sign an application for a dealer's license. 

(c) If a dealer makes a certified statement under this section, the dealer immediately shall 

notify the Administration of any termination of employment of the salesman. 

(d) The notification required under subsection (c) of this section shall be made on the form 

that the Administration requires. 

§ 15-409. Salesman must act on behalf of specified licensed dealer. 

(a) Each license shall state the name of the licensed dealer by whom the licensee is employed, 

as specified in the application for the license. 


(b) A licensed vehicle salesman may not act as a vehicle salesman for any person other than 

the licensed dealer named in the salesman's license. 

(c) A licensed vehicle salesman may act as a vehicle salesman for any dealership that is at 

least 60 percent owned by the licensed dealer named in the salesman's license. 

52

MARYLAND WARRANTY LAWS 

Implied Warranty: 

Vehicles sold in Maryland by dealers are covered by the implied warranty of merchantability, Md. 

Code Ann. Commercial Law §2-314. The implied warranty requires the dealer to provide warranty 

service for any defect that would affect the vehicle’s ability to provide safe transportation for a 

reasonable time period after purchase. Repair costs cannot be shared with the consumers. 

The implied warranty covers inspection items, power train and any defect affecting the vehicle’s 

merchantability. Accessories, minor water leaks, paint defects, minor oil leaks, maintenance items, 

etc., are not covered. Major items, i.e., carburetor, alternator, water pump, fuel pump, electrical 

components, etc., are covered. 

The implied warranty can be waived if the vehicle is six model years old AND has 60,000 miles. 

The consumer must also sign the notice of exclusion or modification of implied warranty form which 

is provided by the Administration Md. Code Ann. Commercial Law §2-316.1. The vehicle must still 

be inspected and inspection items cannot be waived under, the implied, warranty exclusion. 

Warranty Service: 

Dealers providing warranty service must complete a repair invoice every time a vehicle is returned 

for warranty service. The invoice must reflect the alleged defect, date and mileage vehicle returned 

and work completed. 

A copy of the invoice shall be given to the consumer and a copy filed for inspection by the 


Vehicles sold for Rebuilding: 

A vehicle can be sold as is without inspection if the vehicle is inoperable due to the need for 

Major repairs and the sales order reflects that the vehicle is being sold for dismantling or rebuilding. 

53

WARRANTIES Md. Code Ann. Commercial Law 

§ 2-314. Implied warranty; merchantability; usage of trade. 

(1) Unless excluded or modified (§ 2-316), a warranty that the goods shall be merchantable is 

implied in a contract for their sale if the seller is a merchant with respect to goods of that kind. Under 

this section the serving for value of food or drink to be consumed either on the premises or elsewhere 

is a sale. Notwithstanding any other provisions of this title 

(a) In §§ 2-314 through 2-318 of this title, "seller" includes the manufacturer, distributor, 

dealer, wholesaler or other middleman or the retailer; and: 

(b) Any previous requirement of privity is abolished as between the buyer and the seller in 

any action brought by the buyer. 

(2) Goods to be merchantable must be at least such as: 

(a) 

(b) 

(c) 

Pass without objection in the trade under the contract description; and 

In the case of fungible goods, are of fair average quality within the description; and 

Are fit for the ordinary purposes for which such goods are used; and 

(d) Run, within the variations permitted by the agreement, of even kind, quality and 

quantity within each unit and among all units involved; and 

(e) 

(f) 

Are adequately contained, packaged, and labeled as the agreement may require; and 

Conform to the promises or affirmations of fact made on the container or label if any. 

(3) Unless excluded or modified (§ 2-316) other implied warranties may arise from course of 

dealing or usage of trade. 

(4) Subsections (1) and (2) of this section apply to a lease of goods and a bailment for hire of 

goods that pass through the physical possession of and are maintained by the lessor, sublessor, or 

54

ailor. 

§ 2-315. Implied warranty; fitness for particular use; applicability to lease and bailment of 

goods. 

(1) Where the seller at the time of contracting has reason to know any particular purpose for 

which the goods are required and that the buyer is relying on the seller's skill or judgment to select or 

furnish suitable goods, there is unless excluded or modified under the next section an implied 

warranty that the goods shall be fit for such purpose. 

(2) The provisions of subsection (1) apply to a lease of goods and a bailment for hire of goods 

which pass through the physical possession of and are maintained by the lessor, sublessor, or bailor. 

§ 2-316. Exclusion or modification of warranties. 

(1) Words or conduct relevant to the creation of an express warranty and words or conduct 

tending to negate or limit warranty shall be construed wherever reasonable as consistent with each 

other; but subject to the provisions of this title on parol or extrinsic evidence (§ 2-202) negation or 

limitation is inoperative to the extent that such construction is unreasonable. 

(2) Subject to subsection (3), to exclude or modify the implied warranty of merchantability or 

any part of it the language must mention merchantability and in case of a writing must be 

conspicuous, and to exclude or modify any implied warranty of fitness the exclusion must be by a 

writing and conspicuous. Language to exclude all implied warranties of fitness is sufficient if it 

states, for example, that "There are no warranties which extend beyond the description on the face 

hereof." 

(3) Notwithstanding subsection (2) 

(a) Unless the circumstances indicate otherwise, all implied warranties are excluded by 

expressions like "as is," "with all faults" or other language which in common understanding calls the 

buyer's attention to the exclusion of warranties and makes plain that there is no implied warranty; and 

(b) When the buyer before entering into the contract has examined the goods or the sample 

or model as fully as he desired or has refused to examine the goods there is no implied warranty with 

regard to defects which an examination ought in the circumstances to have revealed to him; and 

(c) An implied warranty can also be excluded or modified by course of dealing or course 

of performance or usage of trade. 

(4) Remedies for breach of warranty can be limited in accordance with the provisions of this 

title on liquidation or limitation of damages and on contractual modification of remedy (§§ 2-718 and 

2-719). 

§ 2-316.1. Limitation of exclusion or modification of warranties to consumers. 

55

(1) The provisions of § 2-316 do not apply to sales of consumer goods, as defined by § 9-109, 

services, or both. 

(2) Any oral or written language used by a seller of consumer goods and services, which 

attempts to exclude or modify any implied warranties of merchantability and fitness for a particular 

purpose or to exclude or modify the consumer's remedies for breach of those warranties, is 

unenforceable. However, the seller may recover from the manufacturer any damages resulting from 

breach of the implied warranty of merchantability or fitness for a particular purpose. 

(3) Any oral or written language used by a manufacturer of consumer goods, which attempts to 

limit or modify a consumer's remedies for breach of the manufacturer's express warranties, is 

unenforceable, unless the manufacturer provides reasonable and expeditious means of performing the 

warranty obligations. 

(4) (a) The provisions of this section do not apply to a motor vehicle: 

and : 

(i) 

(ii) 

Required to be titled under the Transportation Article; 

That is over 6 model years old and that has been driven more than 60,000 miles; 

(iii) If, at the time of the sale of the motor vehicle, the seller gives the purchaser 

notice of the inapplicability of this section on the form prescribed under § 13-119 of the 

Transportation Article. 

(b) (i) An exclusion or modification of an implied warranty of merchantability, or any 

part of a warranty under this subsection shall be in writing, mention merchantability, and be 

conspicuous. 

(ii) An exclusion or modification of the implied warranty of fitness shall be in 

writing and conspicuous. 

(iii) Any exclusion or modification of either warranty shall be separately 

acknowledged by the signature of the buyer. 

§ 2-317. Cumulation and conflict of warranties express or implied. 

Warranties whether express or implied shall be construed as consistent with each other and as 

cumulative, but if such construction is unreasonable the intention of the parties shall determine which 

warranty is dominant. In ascertaining that intention the following rules apply: 

(a) Exact or technical specifications displace an inconsistent sample or model or general 

language of description. 

56

(b) 

A sample from an existing bulk displaces inconsistent general language of description. 

(c) Express warranties displace inconsistent implied warranties other than an implied warranty 

of fitness for a particular purpose. 

57

TABLE OF CONTENTS-VIRGINIA REGULATIONS 

FRANCHISE LAW.....................................................................................................................58 

MOTOR VEHICLE DEALER BOARD...................................................................................63 

SALESMAN LICENSING...........................................................................................65 AND 70 

USED VEHICLES.......................................................................................................................67 

BUYERS ORDER...................................................................................................68 Through 70 

DEALER PLATES.................................................................................................72 Through 74 

FACTORY/DEALER RELATION............................................................................................75 

COERCION.......................................................................................75 

RIGHT OF FIRST REFUSAL............................................................79 

WARRANTY OBLIGATIONS.............................................................80 

THREE PERCENT RULE.................................................................83 

OPERATION OF DEALERSHIP BY MANUFACTURER..................84 

OWNERSHIP OF SERVICE FACILITIES.........................................85 

GROUNDS FOR SUSPENSION........................................................87 

AUTOMOBILE REPAIR FACILITIES ACT....................................................93 Through 95 

DEFINITION OF “NEW”...............................................................105 

DEFINITION OF “USED”.............................................................106 

PROCESSING FEE AND FREIGHT, BOLD TYPE.........................107 

SALE...............................................................................................107 

LIST PRICE, INVOICE, COST,......................................................108 

BETTERING COMPETITOR’S PRICE..........................................108 

BAIT ADVERTISING......................................................................109 

FREE..............................................................................................109 

FACTORY RELATIONSHIP...........................................................110 

VIRGINIA LEMON LAW..................................................................................96 Through 101 

REGULATED ADVERTISING PRACTICES.......................................................................104

CODE OF VIRGINIA 

Chapter 15. Motor Vehicle Dealers 

Article 1. Motor Vehicle Dealers, Generally 

§ 46.2-1500 Definitions 

Unless the context otherwise requires, the following words and terms for the purpose of this 

chapter shall have the following meanings: 

"Board" means the Motor Vehicle Dealer Board. 

"Certificate of origin" means the document provided by the manufacturer of a new motor 

vehicle, or its distributor, which is the only valid indication of ownership between the 

manufacturer, its distributor, its franchised motor vehicle dealers, and the original purchaser not 

for resale. 

"Dealer-operator" means the individual who works at the established place of business of a 

dealer and who is responsible for and in charge of day-to-day operations of that place of 

business. 

"Distributor" means a person who is licensed by the Department of Motor Vehicles under 

Chapter 19 (§46.2-1900 et seq.) of this title and who sells or distributes new motor vehicles 

pursuant to a written agreement with the manufacturer, to franchised motor vehicle dealers in the 

Commonwealth. 

"Distributor branch" means a branch office licensed by the Department of Motor Vehicles 

under Chapter 19 (§46.2-1900 et seq.) of this title and maintained by a distributor for the sale of 

motor vehicles to motor vehicle dealers or for directing or supervising, in whole or in part, its 

representatives in the Commonwealth. 

"Distributor representative" means a person who is licensed by the Department of Motor 

Vehicles under Chapter 19 (§46.2-1900 et seq.) of this title and employed by a distributor or by a 

distributor branch, for the purpose of making or promoting the sale of motor vehicles or for 

supervising or contacting its dealers, prospective dealers, or representatives in the 

Commonwealth. 

"Factory branch" means a branch office maintained by a person for the sale of motor vehicles 

to distributors or for the sale of motor vehicles to motor vehicle dealers, or for directing or 

supervising, in whole or in part, its representatives in the Commonwealth. 

"Factory representative" means a person who is licensed by the Department of Motor Vehicles 

under Chapter 19 (§46.2-1900 et seq.) of this title and employed by a person who manufactures 

or assembles motor vehicles or by a factory branch for the purpose of making or promoting the 

sale of its motor vehicles or for supervising or contacting its dealers, prospective dealers, or 

representatives in the Commonwealth. 

58

Motor Vehicle Dealers, Generally, Va. Code, §46.2.1500 

"Factory repurchase motor vehicle" means a motor vehicle sold, leased, rented, consigned, or 

otherwise transferred to a person under an agreement that the motor vehicle will be resold or 

otherwise retransferred only to the manufacturer or distributor of the motor vehicle, and which is 

reacquired by the manufacturer or distributor, or its agents. 

"Family member" means a person who either (i) is the spouse, child, grandchild, spouse of a 

child, spouse of a grandchild, brother, sister, or parent of the dealer or owner or (ii) has been 

employed continuously by the dealer for at least five years. 

"Franchise" means a written contract or agreement between two or more persons whereby one 

person, the franchisee, is granted the right to engage in the business of offering and selling, 

servicing, or offering, selling, and servicing new motor vehicles of a particular line-make or late 

model or factory repurchase motor vehicles of a particular line-make manufactured or distributed 

by the grantor of the right, the franchisor, and where the operation of the franchisee's business is 

substantially associated with the franchisor's trademark, trade name, advertising, or other 

commercial symbol designating the franchisor, the motor vehicle or its manufacturer or 

distributor. The term shall include any severable part or parts of a franchise agreement which 

separately provides for selling and servicing different line-makes of the franchisor. 

"Franchised late model or factory repurchase motor vehicle dealer" means a dealer in late 

model or factory repurchase motor vehicles, including a franchised new motor vehicle dealer, 

that has a franchise agreement with a manufacturer or distributor of the line-make of the late 

model or factory repurchase motor vehicles. 

"Franchised motor vehicle dealer" means a dealer in new motor vehicles that has a franchise 

agreement with a manufacturer or distributor of new motor vehicles, trailers, or semitrailers. 

"Fund" means the Motor Vehicle Dealer Board Fund. 

"Independent motor vehicle dealer" means a dealer in used motor vehicles. 

"Late model motor vehicle" means a motor vehicle of the current model year and the 

immediately preceding model year. 

"Line-make" means the name of the motor vehicle manufacturer or distributor and a brand or 

name plate marketed by the manufacturer or distributor. 

"Manufacturer" means a person who is licensed by the Department of Motor Vehicles under 

Chapter 19 (§46.2-1900 et seq.) of this title and engaged in the business of constructing or 

assembling new motor vehicles and, in the case of trucks, also means a person engaged in the 

59

Motor Vehicle Dealers, Generally, Va. Code §46.2.1500 

business of manufacturing engines, power trains, or rear axles, when such engines, power trains, 

or rear axles are not warranted by the final manufacturer or assembler of the truck. 

"Motor vehicle" means the same as provided in §46.2-100, except, for the purposes of this 

chapter, it shall not include (i) trailers and semitrailers; (ii) manufactured homes, sales of which 

are regulated under Chapter 4.2 (§36-85.16 et seq.) of Title 36; (iii) motor homes; (iv) 

motorcycles; (v) nonrepairable vehicles, as defined in § 46.2-1600; and (vi) salvage vehicles, as 

defined in §46.2-1600. 

"Motor vehicle dealer" or "dealer" means any person who: 

1. For commission, money, or other thing of value, buys, sells, exchanges, either outright or on 

conditional sale, bailment lease, chattel mortgage, or otherwise or arranges or offers or attempts 

to solicit or negotiate on behalf of others a sale, purchase, or exchange of an interest in new 

motor vehicles, new and used motor vehicles, or used motor vehicles alone, whether or not the 

motor vehicles are owned by him; or 

2. Is wholly or partly engaged in the business of selling new motor vehicles, new and used motor 

vehicles, or used motor vehicles only, whether or not the motor vehicles are owned by him; or 

3. Offers to sell, sells, displays, or permits the display for sale, of five or more motor vehicles 

within any twelve consecutive months. 

The term "motor vehicle dealer" does not include: 

1. Receivers, trustees, administrators, executors, guardians, conservators or other persons 

appointed by or acting under judgment or order of any court or their employees when engaged in 

the specific performance of their duties as employees. 

2. Public officers, their deputies, assistants, or employees, while performing their official duties. 

3. Persons other than business entities primarily engaged in the leasing or renting of motor 

vehicles to others when selling or offering such vehicles for sale at retail, disposing of motor 

vehicles acquired for their own use and actually so used, when the vehicles have been so 

acquired and used in good faith and not for the purpose of avoiding the provisions of this 

chapter. 

4. Persons dealing solely in the sale and distribution of fire-fighting equipment, ambulances, and 

funeral vehicles, including motor vehicles adapted therefor; however, this exemption shall not 

exempt any person from the provisions of §§46.2-1519, 46.2-1520 and 46.2-1548. 

60


5. Any financial institution chartered or authorized to do business under the laws of the 

Commonwealth or the United States which may have received title to a motor vehicle in the 

normal course of its business by reason of a foreclosure, other taking, repossession, or voluntary 

reconveyance to that institution occurring as a result of any loan secured by a lien on the vehicle. 

6. An employee of an organization arranging for the purchase or lease by the organization of 

vehicles for use in the organization's business. 

7. Any person licensed to sell real estate who sells a manufactured home or similar vehicle in 

conjunction with the sale of the parcel of land on which the manufactured home or similar 

vehicle is located. 

8. Any person who permits the operation of a motor vehicle show or permits the display of motor 

vehicles for sale by any motor vehicle dealer licensed under this chapter 

. 

9. An insurance company authorized to do business in the Commonwealth that sells or disposes 

of vehicles under a contract with its insured in the regular course of business. 

10. Any publication, broadcast, or other communications media when engaged in the business of 

advertising, but not otherwise arranging for the sale of vehicles owned by others. 

11. Any person dealing solely in the sale or lease of vehicles designed exclusively for off-road 

use. 

12. Any credit union authorized to do business in Virginia, provided the credit union does not 

receive a commission, money, or other thing of value directly from a motor vehicle dealer. 

13. Any person licensed as a manufactured home dealer, broker, manufacturer, or salesperson 

under Chapter 4.2 (§36-85.16 et seq.) of Title 36. 

14. The State Department of Social Services or local departments of social services. 

"Motor vehicle salesperson" or "salesperson" means any person who is licensed as and 

employed as a salesperson by a motor vehicle dealer to sell or exchange motor vehicles. It also 

means any person who is licensed as a motor vehicle dealer and who sells or exchanges motor 

vehicles. 

"Motor vehicle show" means a display of motor vehicles to the general public at a location 

other than a dealer's location licensed under this chapter where the vehicles are not being offered 

for sale or exchange during or as part of the display. 

"New motor vehicle" means any vehicle which (i) has not been previously sold except in good 

faith for the purpose of resale, (ii) has not been used as a rental, driver education, or 

demonstration motor vehicle, or for the personal and business transportation of the manufacturer, 

distributor, dealer, or any of his employees, (iii) has not been used except for limited use 

61


necessary in moving or road testing the vehicle prior to delivery to a customer, (iv) is transferred 

by a certificate of origin, and (v) has the manufacturer's certification that it conforms to all 

applicable federal motor vehicle safety and emission standards. Notwithstanding provisions (i) 

and (iii), a motor vehicle that has been previously sold but not titled shall be deemed a new 

motor vehicle if it meets the requirements of provisions (ii), (iv), and (v). 

"Original license" means a motor vehicle dealer license issued to an applicant who has never 

been licensed as a motor vehicle dealer in Virginia or whose Virginia motor vehicle dealer 

license has been expired for more than thirty days. 

"Relevant market area" means as follows: 

1. In metropolitan localities, the relevant market area shall be a circular area around an existing 

franchised dealer with a population of 250,000, not to exceed a radius of ten miles, but in no case 

less than seven miles. 

2. If the population in an area within a radius of ten miles around an existing franchised dealer is 

less than 250,000, but the population in an area within a radius of fifteen miles around an 

existing franchised dealer is 150,000 or more, the relevant market area shall be that area within 

the fifteen-mile radius. 

3. In all other cases the relevant market area shall be an area within a radius of twenty miles 

around an existing franchised dealer or the area of responsibility defined in the franchise, 

whichever is greater. In any case where the franchise agreement is silent as to area of 

responsibility, the relevant market area shall be the greater of an area within a radius of twenty 

miles around an existing franchised dealer or that area in which the franchisor otherwise requires 

the franchisee to make significant retail sales or sales efforts. 

In determining population for this definition, the most recent census by the U.S. Bureau of the 

Census or the most recent population update, either from the National Planning Data Corporation 

or other similar recognized source, shall be accumulated for all census tracts either wholly or 

partially within the relevant market area. 

"Retail installment sale" means every sale of one or more motor vehicles to a buyer for his use 

and not for resale, in which the price of the vehicle is payable in one or more installments and in 

which the seller has either retained title to the goods or has taken or retained a security interest in 

the goods under form of contract designated either as a security agreement, conditional sale, 

bailment lease, chattel mortgage, or otherwise. 

62


"Sale at retail" or "retail sale" means the act or attempted act of selling, bartering, exchanging, 

or otherwise disposing of a motor vehicle to a buyer for his personal use and not for resale. 

"Sale at wholesale" or "wholesale" means a sale to motor vehicle dealers or wholesalers other 

than to consumers; a sale to one who intends to resell. 

"Used motor vehicle" means any vehicle other than a new motor vehicle as defined in this 

section. 

"Wholesale auction" means an auction of motor vehicles restricted to sales at wholesale. 

§ 46.2-1503 Motor Vehicle Dealer Board 

A. The Motor Vehicle Dealer Board is hereby created. The Board shall consist of nineteen 

members appointed by the Governor, subject to confirmation by the General Assembly. Every 

member appointed by the Governor must be a citizen of the United States and must be a resident 

of Virginia. The Governor may remove any member as provided in subsection B of §2.1-43. The 

initial terms of eight of the members appointed in July of 1995 shall commence when appointed 

and shall be for terms ending on June 30, 1997. Nine members shall be appointed for four-year 

terms. The members shall be at-large members and, insofar as practical, should reflect fair and 

equitable statewide representation. 

B. Nine members shall be licensed franchised motor vehicle dealers who have been licensed as 

such for at least two years prior to being appointed by the Governor and seven members shall be 

licensed independent motor vehicle dealers who (i) have been licensed as such for at least two 

years prior to being appointed by the Governor and (ii) are not also franchised motor vehicle 

dealers. One of the independent dealers appointed to the Board shall be a licensed motor vehicle 

dealer primarily engaged in the business of renting vehicles, and one shall be a licensed 

independent dealer primarily engaged in the motor vehicle salvage business. One member shall 

be an individual who has no direct or indirect interest, other than as a consumer, in or relating to 

the motor vehicle industry. 

C. Appointments shall be for terms of four years, and no person other than the Commissioner of 

the Department of Motor Vehicles and the Commissioner of Agriculture and Consumer Services 

shall be eligible to serve more than two successive four-year terms. The Commissioner of the 

Department of Motor Vehicles shall serve as chairman of the Board. Vacancies shall be filled by 

appointment by the Governor for the unexpired term and shall be effective until thirty days after 

the next meeting of the ensuing General Assembly and, if confirmed, thereafter for the remainder 

of the term. Any person appointed to fill a vacancy may serve two additional successive terms. 

63


D. The Commissioner of the Department of Motor Vehicles and the Commissioner of 

Agriculture and Consumer Services shall be ex officio voting members of the Board. 

E. Members of the Board shall be reimbursed their actual and necessary expenses incurred in 

carrying out their duties, such reimbursement to be paid from the special fund referred to in 

§46.2-1520. 

§ 46.2-1503.4 General powers and duties of Board 

The powers and duties of the Board shall include, but not be limited to the following: 

1. To establish the qualifications of applicants for certification or licensure, provided that all 

qualifications shall be necessary to ensure competence and integrity. 

2. To examine, or cause to be examined, the qualifications of each applicant for certification or 

licensure, including the preparation, administration and grading of examinations. 

3. To certify or license qualified applicants as motor vehicle dealers and motor vehicle 

salesperson. 

4. To levy and collect fees for certification or licensure and renewal that are sufficient to cover 

all expenses for the administration and operation of the Board. 

5. To levy on licensees special assessments necessary to cover expenses of the Board. 

6. To revoke, suspend, or fail to renew a certificate or license for just cause as set out in Articles 

2 (§46.2-1508 et seq.), 3.1 (§46.2-1527.1 et seq.), 4 (§46.2-1528 et seq.), 8 (§46.2-1574 et seq.), 

and 9 (§46.2-1580 et seq.) of this chapter or enumerated in regulations promulgated by the 

Board. 

7. To ensure that inspections are conducted relating to the motor vehicle sales industry and to 

ensure that all licensed dealers and salespersons are conducting business in a professional 

manner, not in violation of any provision of Articles 2 (§46.2-1508 et seq.), 3.1 (§46.2-1527.1 et 

seq.), 4 (§46.2-1528 et seq.), 7 (§46.2-1566 et seq.), 8 (§46.2-1574 et seq.), and 9 (§46.2-1580 et 

seq.) of this chapter and within the lawful regulations promulgated by the Board. 

8. To receive complaints concerning the conduct of persons and businesses licensed by the 

Board and to take appropriate disciplinary action if warranted. 

Motor Vehicle Dealers, Generally, Va. Code §46.2.1503.4 

64

9. To enter into contracts necessary or convenient for carrying out the provisions of this chapter 

or the functions of the Board. 

10. To establish committees of the Board, appoint persons to such committees, and to 

promulgate regulations establishing the responsibilities of these committees. Each of these 

committees shall include at least one Board member and the Advertising, Dealer Practices and 

Transaction Recovery Fund committees shall include at least one citizen member who is not 

licensed or certified by the Board. The Board may establish one of each committee in each DMV 

District. Committees to be established shall include, but not be limited to the following: 

a. Advertising; 

b. Licensing; 

c. Dealer Practices; 

d. Franchise Review and Advisory Committee; and 

e. Transaction Recovery Fund. 

11. To do all things necessary and convenient for carrying into effect Articles 2, 3.1, 4, 8 and 9 

of this chapter or as enumerated in regulations promulgated by the Board. 

§ 46.2-1504 Board's powers with respect to hearings under this chapter 

The Board may, in hearings arising under this chapter, except as provided for in Article 7 

(§46.2-1566 et seq.), determine the place in the Commonwealth where they shall be held; 

subpoena witnesses; take depositions of witnesses residing outside the Commonwealth in the 

manner provided for in civil actions in courts of record; pay these witnesses the fees and mileage 

for their attendance as is provided for witnesses in civil actions in courts of record; and 

administer oaths. 

§ 46.2-1505 Suit to enjoin violations 

The Board, whenever it believes from evidence submitted to the Board that any person has been 

violating, is violating or is about to violate any provision of this chapter, in addition to any other 

remedy, may bring an action in the name of the Commonwealth to enjoin any violation of this 

chapter. 

Article 2. Motor Vehicle Dealer Licenses 

§ 46.2-1512 Salesperson to have certificate of qualification 

No license shall be issued to any motor vehicle salesperson unless he holds a valid certificate of qualification issued 

by the Board. A certificate shall be issued only on application to the Board, payment of the required application fee 

of no more than fifty dollars as determined by the Board, the successful completion of an examination prepared and 

administered by the Board, and other prerequisites as set forth in this section. Any individual who is licensed as a 

salesperson on July 1, 1995, shall be entitled to such a certificate without examination on application to the Board 

Motor Vehicle Dealers Licenses, Va. Code §46.2.1518 

made on or before January 1, 1996. 

The Board may establish minimum qualifications for applicants and require applicants to 

65

satisfactorily complete courses of study or other prerequisites prior to taking the examination 

§ 46.2-1518 Display of salesperson's license; notice on termination 

No salesperson shall be employed by more than one dealer, unless the dealerships are owned by 

the same person. 

Each dealer shall post and maintain in a place conspicuous to the public a list of salespersons 

employed. 

Each salesperson shall carry his license when engaged in his business and shall display it on 

request. 

Each dealer shall notify the Board in writing not later than the tenth day following the month of 

the termination of any licensed salesperson's employment. In lieu of written notification, the 

license of the terminated salesperson may be returned to the Board annotated "terminated" on the 

face of the license and signed and dated by the dealer-operator, owner, or officer. 

Article 3.1 Motor vehicle Transaction Recovery Fund 

46.2-1527.1 Motor Vehicle Transaction Recovery Fund established 

All fees in this article shall be deposited in the Motor Vehicle Transaction Recovery Fund, 

hereinafter referred to in this article as "the Fund." The Fund shall be a special fund in the state 

treasury to pay claims against the Fund and for no other purpose, except the Board may expend 

moneys from the interest earned on the Fund for the administration of this article, in accordance 

with the general appropriation act. The Fund shall be used to satisfy unpaid judgments, as 

provided for in §46.2-1527.3. Any interest income shall accrue to the Fund. The Board shall 

maintain an accurate record of all transactions involving the Fund. The minimum balance of the 

Fund shall be $250,000. 

Every applicant renewing a motor vehicle dealer's license shall pay, in addition to other license 

fees, an annual Fund fee of $100, and every applicant for a motor vehicle salesperson's license 

shall pay, in addition to other license fees, an annual Fund fee of ten dollars, prior to license 

issue. However, annual Fund renewal fees from salespersons shall not exceed $100 per year 

from an individual dealer. 

These fees shall be deposited in the Motor Vehicle Transaction Recovery Fund. 

Motor Vehicle Transaction Recovery Fund, Va. Code §46.2.1527.1 

Applicants for an original motor vehicle dealer's license shall pay an annual Fund fee of $250 

each year for three consecutive years. During this period, the $250 Fund fee will take the place 

of the annual $100 Fund fee. 

66

In addition to the $250 annual fee, applicants for an original dealer's license shall have a $25,000 

bond pursuant to §46.2-1527.2 for three consecutive years. Only those renewing licensees who 

have not been the subject of a claim against their bond or against the Fund for three consecutive 

years shall pay the annual $100 fee and will no longer be required to pay the $250 annual fee or 

hold the $25,000 bond. 

In addition to other license fees, applicants for an original Certificate of Dealer Registration or 

its renewal shall pay a Fund fee of $60. 

The Board may suspend or reinstate collection of Fund fees. 

§ 46.2-1529 Dealer records 

Article 4. Conduct of Business 

All dealer records regarding employees; lists of vehicles in inventory for sale, resale, or on 

consignment; vehicle purchases, sales, trades, and transfers of ownership; collections of taxes; 

titling, uninsured motor vehicle, and registration fees; odometer disclosure statements; records of 

permanent dealer registration plates assigned to the dealer and temporary transport plates and 

temporary certificates of ownership; and other records required by the Department or the Board 

shall be maintained on the premises of the licensed location. The Board may, on written request 

by a dealer, permit his records to be maintained at a location other than the premises of the 

licensed location for good cause shown. All dealer records shall be preserved in original form or 

in film, magnetic, or optical media (including but not limited to microfilm, microfiche, or other 

electronic media) for a period of five years in a manner that permits systematic retrieval. Certain 

records may be maintained on a computerized record-keeping system with the prior approval of 

the Board. 

§ 46.2-1529.1 Sales of used motor vehicles by dealers; disclosures; penalty 

A. If, in any retail sale by a dealer of a used motor vehicle of under 6,000 pounds gross vehicle 

weight for use on the public highways, and normally used for personal, family or household use, 

the dealer offers an express warranty, the dealer shall provide the buyer a written disclosure of 

this warranty. The written disclosure shall be the Buyer's Guide required by federal law, shall be 

completely filled out and, in addition, signed and dated by the buyer and incorporated as part of 

the buyer's order. 

B. A dealer may sell a used motor vehicle at retail "AS IS" and exclude all warranties only if the 

Conduct of Business, Va. Code §46.2.1529.1 

dealer provides the buyer, prior to sale, a separate written disclosure as to the effect of an "AS 

IS" sale. The written disclosure shall be conspicuous and contained on the front of the buyer's 

order and printed in not less than bold, ten-point type and signed by the buyer: "I understand 

that this vehicle is being sold "AS IS' with all faults and is not covered by any dealer 

67

warranty. I understand that the dealer is not required to make any repairs after I buy this 

vehicle. I will have to pay for any repairs this vehicle will need." A fully completed Buyer's 

Guide, as required by federal law, shall be signed and dated by the buyer and incorporated as 

part of the buyer's order. 

C. Failure to provide the applicable disclosure required by subsection A or B of this section shall 

be punishable by a civil penalty of no more than $1,000. Any such civil penalty shall be paid into 

the general fund of the state treasury. Furthermore, if the applicable disclosure required by 

subsection A or B of this section is not provided as required in this section, the buyer may cancel 

the sale within thirty days. In this case, the buyer shall have the right to return the vehicle to the 

dealer and obtain a full refund of all payments made toward the purchase of the vehicle, less any 

damage to the vehicle incurred while ownership was vested in the purchaser, and less a 

reasonable amount for the use not to exceed one-half the amount allowed per mile by the Internal 

Revenue Service, as provided by regulation, revenue procedure, or revenue ruling promulgated 

pursuant to § 162 of the Internal Revenue Code, for use of a personal vehicle for business 

purposes. Notice of the provisions of this subsection shall be included as part of every disclosure 

made under subsection A or B of this section. 

§ 46.2-1530 Buyer's order 

A. Every motor vehicle dealer shall complete, in duplicate, a buyer's order for each sale or 

exchange of a motor vehicle. A copy of the buyer's order form shall be made available to a 

prospective buyer during the negotiating phase of a sale and prior to any sales agreement. The 

completed original shall be retained for a period of four years in accordance with §46.2-1529, 

and a duplicate copy shall be delivered to the purchaser at the time of sale or exchange. A 

buyer's order shall include: 

1. The name and address of the person to whom the vehicle was sold or traded. 

2. The date of the sale or trade. 

3. The name and address of the motor vehicle dealer selling or trading the vehicle 

. 

4. The make, model year, vehicle identification number and body style of the vehicle. 

5. The sale price of the vehicle. 

6. The amount of any cash deposit made by the buyer. 

Conduct of Business, Va. Code, §46.2.1530 

7. A description of any vehicle used as a trade-in and the amount credited the buyer for the 

trade-in. The description of the trade-in shall be the same as outlined in subdivision 4 of this 

subsection. 

68

8. The amount of any sales and use tax, title fee, uninsured motor vehicle fee, registration fee, or 

other fee required by law for which the buyer is responsible and the dealer has collected. Each 

tax and fee shall be individually listed and identified. 

9. The net balance due at settlement. 

10. Any item designated as "processing fee," and the amount charged by the dealer, if any, for 

processing the transaction. As used in this section processing includes obtaining title and license 

plates for the purchaser. 

11. Any item designated as "dealer's business license tax," and the amount charged by the dealer, 

if any. 

12. For sales involving dealer-arranged financing, the following notice, printed in bold type no 

less than ten-point: 

"THIS SALE IS CONDITIONED UPON APPROVAL OF YOUR PROPOSED RETAIL 

INSTALLMENT SALE CONTRACT AS SUBMITTED TO OR THROUGH THE DEALER. IF 

THAT PROPOSED RETAIL INSTALLMENT SALE CONTRACT IS NOT APPROVED 

UNDER THE TERMS AGREED TO WITH THE DEALER, YOU MAY CANCEL THIS SALE 

AND ANY DOWN PAYMENT AND/OR TRADE-IN YOU SUBMITTED WILL BE 

RETURNED TO YOU, PROVIDED THAT ANY VEHICLE DELIVERED TO YOU BY THE 

DEALER PURSUANT TO THIS AGREEMENT IS RETURNED TO THE DEALER IN THE 

SAME CONDITION AS DELIVERED TO YOU, NORMAL WEAR AND TEAR EXCEPTED, 

WITHIN TWENTY-FOUR HOURS OF WRITTEN OR ORAL NOTICE TO YOU OF THE 

CREDIT DENIAL." 

13. For sales of used motor vehicles, the disclosure required by § 46.2-1529.1. 

If the transaction does not include a policy of motor vehicle liability insurance, the seller shall 

stamp or mark on the face of the bill of sale in boldface letters no smaller than eighteen point 

type the following words: "No Liability Insurance Included." 

A completed buyer's order when signed by both buyer and seller may constitute a bill of sale. 

B. The Board shall approve a buyer's order form and each dealer shall file with each original 

license application, its buyer's order form, on which the processing fee amount is stated. 

C. If a processing fee is charged, that fact and the amount of the processing fee shall be disclosed 

Conduct of Business, Va. Code §46.2.1538 

by the dealer. Disclosure shall be by placing a clear and conspicuous sign in the public sales area 

of the dealership. The sign shall be no smaller than eight and one-half inches by eleven inches 

and the print shall be no smaller than one-half inch, and in a form as approved by the Board. 

69

§ 46.2-1538 Salesman selling for other than his employer prohibited 

It shall be unlawful for any motor vehicle salesman licensed under this chapter to sell or 

exchange or offer or attempt to sell or exchange any motor vehicle except for the licensed motor 

vehicle dealer by whom he is employed, or to offer, transfer, or assign any sale or exchange that 

he may have negotiated to any other dealer or salesman. 

§ 46.2-1542 Temporary certificates of ownership 

A. Notwithstanding §§46.2-617 and 46.2-628, whenever a dealer licensed by the Board sells and 

delivers to a purchaser a motor vehicle and is unable at the time of the sale to deliver to the 

purchaser the certificate of title or certificate of origin for the vehicle because the certificate of 

title or certificate of origin is lost or is being detained by another in possession or for any other 

reason beyond the dealer's control, the dealer shall execute, on forms provided by the 

Commissioner, a temporary certificate of ownership. The certificate shall bear its date of 

issuance, the name and address of the purchaser, the identification number of the vehicle, the 

registration number to be used temporarily on the vehicle, the name of the state in which the 

vehicle is to be registered, the name and address of the person from whom the dealer acquired 

the vehicle, and whatever other information may be required by the Commissioner. A copy of 

the temporary certificate and a bona fide bill of sale shall be delivered to the purchaser and shall 

be in the possession of the purchaser at all times when operating the vehicle. One copy of the 

certificate shall be retained by the dealer and shall be subject to inspection at any time by the 

Department's agents. The original of the certificate shall be forwarded by the dealer to the 

Department directly on issuance to the purchaser if the vehicle is to be titled outside the 

Commonwealth, along with application for title. The issuance of a temporary certificate of 

ownership to a purchaser pursuant to this section shall have the effect of vesting ownership to the 

vehicle in the purchaser for the period that the certificate remains effective. 

B. A temporary certificate of ownership issued by a dealer to a purchaser pursuant to this section 

shall expire on receipt by the purchaser of a certificate of title to the vehicle issued by the 

Department in the name of the purchaser, but in no event shall any temporary certificate of 

ownership issued under this section be effective for more than thirty days from the date of its 

issuance. In the event that the dealer fails to produce the old certificate of title or certificate of 

origin to the vehicle or fails to apply for a replacement certificate of title pursuant to §46.2-632, 

thereby preventing delivery to the Department or purchaser before the expiration of the 

temporary certificate of ownership, the purchaser's ownership of the vehicle may terminate and 

the purchaser shall have the right to return the vehicle to the dealer and obtain a full refund of all 

Conduct of Business Va. Code, §46.2.1542 

payments made toward the purchase of the vehicle, less any damage to the vehicle incurred 

while ownership was vested in the purchaser, and less a reasonable amount for use not to exceed 

one-half the amount allowed per mile by the Internal Revenue Service, as provided by 

regulation, revenue procedure, or revenue ruling promulgated pursuant to § 162 of the Internal 

Revenue Code, for use of a personal vehicle for business purpose 

70

C. Notwithstanding subsection B of this section, if the dealer fails to deliver the certificate of 

title or certificate of origin to the purchaser within thirty days, a second temporary certificate of 

ownership may be issued. However, the dealer shall, not later than the expiration of the first 

temporary certificate, deliver to the Department an application for title, copy of the bill of sale, 

all required fees and a written statement of facts describing the dealer's efforts to secure the 

certificate of title or certificate of origin to the vehicle. On receipt of the title application with 

attachments as described herein, the Department shall record the purchaser's ownership of the 

vehicle and may authorize the dealer to issue a second thirty-day temporary certificate of 

ownership. If the dealer does not produce the certificate of title or certificate of origin to the 

vehicle before the expiration of the second temporary certificate, the purchaser's ownership of 

the vehicle may terminate and he shall have the right to return the vehicle as provided in 

subsection B of this section. 

D. If the dealer is unable to produce the certificate of title or certificate of origin to the vehicle 

within the sixty-day period from the date of issuance of the first temporary certificate, the 

Department may extend temporary ownership for an additional period of up to ninety days, 

provided the dealer makes application in the format required by the Department. If the dealer 

does not produce the certificate of title or certificate of origin to the vehicle before the expiration 

of the additional ninety-day period, the purchaser's ownership of the vehicle may terminate and 

he shall have the right to return the vehicle as provided in subsection B of this section. 

E. The Commissioner, on determining that the provisions of this section or the directions of the 

Department are not being complied with by a dealer, may suspend, after a hearing, the right of 

the dealer to issue temporary certificates of ownership. 

§ 46.2-1546 Registration of dealers; fees 

Article 5. Dealer’s License Plates 

Every manufacturer, distributor, or dealer, before he commences to operate vehicles in his 

inventory for sale or resale, shall apply to the Commissioner for a dealer's certificate of vehicle 

registration and license plates. For the purposes of this article, a vehicle is in inventory when it is 

owned by or assigned to a dealer and is offered and available for sale or resale. All dealer's 

certificates of vehicle registration and license plates issued under this section may, at the 

discretion of the Commissioner, be placed in a system of staggered issue to distribute the work of 

issuing vehicle registration certificates and license plates as uniformly as practicable throughout 

the year. 

Dealers License Plates Va. Code §46.2.1546 

Dealerships which sold fewer than twenty-five vehicles during the last twelve months of the 

preceding license year shall be eligible to receive no more than two dealer's license plates; 

dealerships which sold at least twenty-five but fewer than fifty vehicles during the last twelve 

months of the preceding license year shall be eligible to receive no more than four dealer's 

license plates. However, dealerships which sold fifty or more vehicles during their current 

71

license year 

may apply for additional license plates not to exceed four times the number of licensed 

salespersons employed by that dealership. Dealerships which sold fifty or more vehicles during 

the last twelve months of the preceding license year shall be eligible to receive a number of 

dealer's license plates not to exceed four times the number of licensed salespersons employed by 

that dealership. A new applicant for a dealership shall be eligible to receive a number of dealer's 

license plates not to exceed four times the number of licensed salespersons employed by that 

dealership. For the purposes of this article, a salesperson or employee shall be considered to be 

employed only if he (i) works for the dealership at least twenty-five hours each week on a 

regular basis and (ii) is compensated for this work. All salespersons' or employees' employment 

records shall be retained in accordance with the provisions of §46.2-1529. A salesperson shall 

not be considered employed, within the meaning of this section, if he is an independent 

contractor as defined by the United States Internal Revenue Code. The fee for the issuance of 

dealer's license plates shall be determined by the Board, but not more than $30 per license plate; 

however, the fee for the first two dealer's plates shall not be less than twenty-four dollars and the 

fee for additional dealer's license plates shall not be less than ten dollars and forty cents each. 

For the first two dealer's license plates issued by the Department to a dealer, twenty-four dollars 

shall be deposited into the Transportation Trust Fund and the remainder shall be deposited into 

the Motor Vehicle Dealer Fund. For each additional dealer's license plate issued to a dealer, ten 

dollars and forty cents shall be deposited into the Transportation Trust Fund and the remainder 

shall be deposited into the Motor Vehicle Dealer Fund. 

§ 46.2-1550 Use of dealer's license plates, generally 

A. Dealer's license plates may be used on vehicles in the inventory of licensed motor vehicle 

manufacturers, distributors, and dealers in the Commonwealth when operated on the highways of 

Virginia by dealers or dealer-operators, their spouses, or employees of manufacturers, 

distributors, and dealers as permitted in this article. Except as otherwise explicitly permitted in 

this article, it shall be unlawful for any dealer to cause or permit: (i) use of dealer's license plates 

on vehicles other than those held in inventory for sale or resale; (ii) dealer's license plates to be 

lent, leased, rented, or placed at the disposal of any persons other than those permitted by this 

article to use dealer's license plates; and (iii) use of dealer's license plates on any vehicle of a 

type for which their use is not authorized by this article. It shall be unlawful for any dealer to 

cause or permit dealer's license plates to be used on: 

1. Motor vehicles such as tow trucks, wrecking cranes, or other service motor vehicles; 

Dealer’s License Plates, Va. Code §46.2.1550 

2. Vehicles used to deliver or transport (i) other vehicles; (ii) portions of vehicles; (iii) vehicle 

components, parts, or accessories; or (iv) fuel; 

3. Courtesy vehicles; or 

4. Vehicles used in conjunction with any other business. 

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B. A dealer may permit his license plates to be used in the operation of a motor vehicle: 

1. By any person whom the dealer reasonably believes to be a bona fide prospective purchaser 

who is either accompanied by a licensed salesperson or has the written permission of the dealer; 

2. When the plates are being used by a customer on a vehicle owned by the dealer in whose 

repair shop the customer's vehicle is being repaired; or 

3. By a person authorized by the dealer on a vehicle that is being driven to or from (i) a point of 

sale, (ii) an auction, (iii) a repair facility for the purpose of mechanical repairs, painting, or 

installation of parts or accessories, or (iv) a dealer exchange. 

The dealer shall issue to the prospective purchaser, customer whose vehicle is being repaired, or 

other person authorized under subdivision 3 of this subsection, a certificate on forms provided by 

the Department, a copy of which shall be retained by the dealer and open at all times to the 

inspection of the Commissioner or any of the officers or agents of the Department. The 

certificate shall be in the immediate possession of the person operating or authorized to operate 

the vehicle. The certificate shall entitle a person to operate with dealer's license plates under (i) 

subdivision 1 or 2 of this subsection for a specific period of no more than five days or (ii) 

subdivision 3 of this subsection for no more than twenty-four hours. No more than two 

certificates may be issued by a dealer to the same person under subdivision 1 or 2 of this 

subsection for successive periods. 

§ 46.2-1550.2 

§46.2-1550.2 Issuance and use of temporary transport plates, generally 

The Department, subject to the limitations and conditions set forth in this section and the 

insurance requirements contained in §46.2-1547, may provide for the issuance of temporary 

transport plates designed by the Department to any dealer licensed under this chapter who 

applies for at least ten plates and who encloses with his application a fee of one dollar for each 

plate. The application shall be made on a form prescribed and furnished by the Department. 

Temporary transport plates may be used for those purposes outlined in §46.2-1550.1. Every 

dealer who has applied for temporary transport plates shall maintain a permanent record of (i) all 

temporary transport plates delivered to him, (ii) all temporary transport plates issued by him, and 

(iii) any other information pertaining to the receipt or the issuance of temporary transport plates 

which 

Dealer’s License Plates Va. Code §46.2.1550 

may be required by the Department. 

Every dealer who issues temporary transport plates shall insert clearly and indelibly on the face 

of the temporary transport plates the name of the issuing dealer, the date of issuance and 

expiration, and the make and identification number of the vehicle for which issued. 

The dealer shall issue to the operator of the specified vehicle a certificate on forms provided by 

73

the Department, a copy of which shall be retained by the dealer and open at all times to the 

inspection of the Commissioner or any of the officers or agents of the Department. The 

certificate shall be in the immediate possession of the person operating or authorized to operate 

the vehicle. The certificate shall entitle the person to operate with the dealer's temporary 

transport plate for a period of no more than five days. Temporary transport plates may also be 

used by the dealer to demonstrate types of vehicles taken in trade but for which he has not been 

issued dealer's license plates. 

§ 46.2-1552 Use of dealer's license plates on newly purchased vehicles 

Notwithstanding the provisions of §46.2-1550, any dealer who sells and delivers to a purchaser a 

motor vehicle at a time when the main offices of the Department, its branch offices, or offices of 

its local agents, are not open for business and the purchaser is therefore unable to register the 

vehicle, may permit the purchaser to use, for a period not exceeding five days, on the newly 

purchased vehicle, license plates which have been issued to the dealer, provided that, at the time 

of the purchase, the dealer executes in duplicate, on forms provided by the Commissioner, a 

certificate bearing the date of issuance, the name and address of the purchaser, the identification 

number of the vehicle, the registration number to be used temporarily on the vehicle, the name of 

the state in which the vehicle is to be registered, and whatever other information may be required 

by the Commissioner. The original of the certificate and a bona fide bill of sale shall be delivered 

to the purchaser and shall be in the possession of the purchaser at all times when operating the 

vehicle under dealer plates. One copy of the certificate shall be retained by the dealer, filed by 

him, and shall be subject to inspection at any time by the Department's agents. If the vehicle is to 

be titled and registered in the Commonwealth, application for title and registration shall be made 

by the purchaser on the first business day following issuance of the certificate and a copy of the 

certificate shall accompany the applications. 

License plates temporarily used by the purchaser shall be returned to the dealer by the purchaser 

not later than five days after the issuance of the certificate. 

46.2-1566 Filing of franchises 

Article 7. Franchises 

A. It shall be the responsibility of each motor vehicle manufacturer, factory branch, distributor, 

distributor branch, or subsidiary thereof to file with the Commissioner by certified mail a true 

copy of each new, amended, modified, or different form or addendum offered to more than one 

Franchises Va. Code §46.2.1566 

dealer which affects the rights, responsibilities, or obligations of the parties of a franchise or 

sales, service, or sales and service agreement to be offered to a motor vehicle dealer or 

prospective motor vehicle dealer in the Commonwealth no later than sixty days prior to the date 

the franchise or sales agreement is offered. In no event shall a new, amended, modified, or 

different form of franchise or sales, service, or sales and service agreement be offered a motor 

vehicle dealer in the Commonwealth until the form has been determined by the Commissioner as 

not containing terms inconsistent with the provisions of this chapter. At the time a filing is made 

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with the Commissioner pursuant to this section, the manufacturer, factory branch, distributor, 

distributor branch, or subsidiary shall also give written notice together with a copy of the papers 

so filed to the affected dealer or dealers. 

B. The Department shall inform the manufacturer, factory branch, distributor, distributor branch, 

or subsidiary and the dealer or dealers or other parties named in the agreement of a preliminary 

recommendation as to the consistency of the agreement with the provisions of this chapter. If any 

of the parties involved have comments on the preliminary recommendation, they must be 

submitted to the Commissioner within thirty days of receiving the preliminary recommendation. 

The Commissioner shall render his decision within fifteen days of receiving comments from the 

parties involved. If the Commissioner does not receive comments within the thirty-day time 

period, he shall make the final determination as to the consistency of the agreement with the 

provisions of this chapter. 

§ 46.2-1568 Coercion of retail dealer by manufacturer or distributor with respect to retail 

installment sales contracts prohibited; penalty 

A. It shall be unlawful for any manufacturer or distributor, or any officer, agent, or 

representative of either, to coerce or attempt to coerce any retail motor vehicle dealer or 

prospective retail motor vehicle dealer in the Commonwealth to sell, assign, or transfer any retail 

installment sales contract obtained by the dealer in connection with the sale by him in the 

Commonwealth of motor vehicles manufactured or sold by the manufacturer or distributor, to a 

specified finance company or class of finance companies or to any other specified persons by 

any of the following: 

1. By any statement, suggestion, promise, or threat that the manufacturer or distributor will in 

any manner benefit or injure the dealer, whether the statement, suggestion, threat, or promise is 

express or implied or made directly or indirectly. 

2. By any act that will benefit or injure the dealer. 

3. By any contract, or any express or implied offer of contract, made directly or indirectly to the 

dealer, for handling the motor vehicle on the condition that the dealer sell, assign, or transfer his 

retail installment sales contract on the vehicle, in the Commonwealth, to a specified finance 

company or class of finance companies or to any other specified person. 

4. By any express or implied statement or representation made directly or indirectly that the 

dealer is under any obligation whatsoever to sell, assign, or transfer any of his retail sales 


contracts in the Commonwealth on motor vehicles manufactured or sold by the manufacturer or 

distributor to a finance company, or class of finance companies, or other specified person, 

because of any relationship or affiliation between the manufacturer or distributor and the finance 

company or companies or the specified person or persons. 

B. Any such statements, threats, promises, acts, contracts, or offers of contracts, when their 

75

effect may be to lessen or eliminate competition or tend to create a monopoly, are declared unfair 

trade practices and unfair methods of competition and are prohibited. 

C. Any person found guilty of violating any of the provisions of this section shall be guilty of a 

Class 1 misdemeanor. 

§ 46.2-1569 Other coercion of dealers; transfer, grant, succession to and cancellation of 

dealer franchises; delivery of vehicles, parts, and accessories 

Notwithstanding the terms of any franchise agreement, it shall be unlawful for any manufacturer, 

factory branch, distributor, or distributor branch, or any field representative, officer, agent, or 

their representatives: 

1. To coerce or attempt to coerce any dealer to accept delivery of any motor vehicle or vehicles, 

parts or accessories therefor, or any other commodities, which have not been ordered by the 

dealer. 

2. To coerce or attempt to coerce any dealer to enter into an agreement with the manufacturer, 

factory branch, distributor, or distributor branch, or representative thereof, or do any other act 

unfair to the dealer, by threatening to cancel any franchise existing between the manufacturer, 

factory branch, distributor, distributor branch, or representative thereof and the dealer. 

2a. To coerce or attempt to coerce any dealer to join, contribute to, or affiliate with any 

advertising association. 

3. To prevent or refuse to approve the sale or transfer of the ownership of a dealership by the sale 

of the business, stock transfer, or otherwise, or the transfer, sale, or assignment of a dealer 

franchise, or a change in the executive management or principal operator of the dealership, 

unless the franchisor provides written notice to the dealer of its objection and the reasons 

therefor at least thirty days prior to the proposed effective date of the transfer, sale, assignment, 

or change. No such objection shall be effective to prevent the sale, transfer, assignment, or 

change if the 

Commissioner has determined, if requested in writing by the dealer within thirty days after 

receipt of an objection to the proposed sale, transfer, or change, and after a hearing on the matter, 

that the failure to permit or honor the sale, transfer, assignment, or change is unreasonable under 

the circumstances. No franchise may be sold, assigned, or transferred unless (i) the franchisor 

has been given at least ninety days' prior written notice by the dealer as to the identity, financial 

ability, and qualifications of the proposed transferee, and (ii) the sale or transfer of the franchise 

and business will not involve, without the franchisor's consent, a relocation of the business. 


4. To grant an additional franchise for a particular line-make of motor vehicle in a relevant 

market area in which a dealer or dealers in that line-make are already located unless the 

franchisor has first advised in writing all other dealers in the line-make in the relevant market 

area. No such additional franchise may be established at the proposed site unless the 

Commissioner has determined, if requested by a dealer of the same line-make in the relevant 

76

market area within thirty 

days after receipt of the franchisor's notice of intention to establish the additional franchise, and 

after a hearing on the matter, that there is reasonable evidence that after the grant of the new 

franchise, the market will support all of the dealers in that line-make in the relevant market area. 

Establishing a franchised dealer in a relevant market area to replace a franchised dealer that has 

not been in operation for more than two years shall constitute the establishment of a new 

franchise subject to the terms of this subdivision. The two-year period for replacing a franchised 

dealer shall begin on the day the franchise was terminated, or, if a termination hearing was held, 

on the day the franchisor was legally permitted finally to terminate the franchise. This 

subdivision shall not apply to (i) the relocation of an existing dealer within that dealer's relevant 

market area if the relocation site is to be more than ten miles distant from any other dealer for the 

same line-make; (ii) the relocation of an existing dealer within that dealer's relevant market area 

if the relocation site is to be more distant than the existing site from all other dealers of the same 

line-make in that relevant market area; or (iii) the relocation of an existing new motor vehicle 

dealer within two miles of the existing site of the relocating dealer. 

5. Except as otherwise provided in this subdivision and notwithstanding the terms of any 

franchise, to terminate, cancel, or refuse to renew the franchise of any dealer without good cause 

and unless (i) the dealer and the Commissioner have received written notice of the franchisor's 

intentions at least sixty days prior to the effective date of such termination, cancellation, or the 

expiration date of the franchise, setting forth the specific grounds for the action, and (ii) the 

Commissioner has determined, if requested in writing by the dealer within the sixty-day period 

and, after a hearing on the matter, that there is good cause for the termination, cancellation, or 

nonrenewal of the franchise. In any case where a petition is made to the Commissioner for a 

determination as to good cause for the termination, cancellation, or nonrenewal of a franchise, 

the franchise in question shall continue in effect pending the Commissioner's decision or, if that 

decision is appealed to the circuit court, pending the decision of the circuit court. In any case in 

which a franchisor neither advises a dealer that it does not intend to renew a franchise nor takes 

any action to renew a franchise beyond its expiration date, the franchise in question shall 

continue in effect on the terms last agreed to by the parties. Notwithstanding the other provisions 

of this subdivision notice of termination, cancellation, or nonrenewal may be provided to a 

dealer by a franchisor not less than fifteen days prior to the effective date of such termination, 

cancellation, or nonrenewal when the grounds for such action are any of the following: 

a. Insolvency of the franchised motor vehicle dealer or filing of any petition by or against the 

franchised motor vehicle dealer, under any bankruptcy or receivership law, leading to liquidation 

or which is intended to lead to liquidation of the franchisee's business. 


b. Failure of the franchised motor vehicle dealer to conduct its customary sales and service 

operations during its posted business hours for seven consecutive business days, except where 

the failure results from acts of God or circumstances beyond the direct control of the franchised 

motor vehicle dealer. 

c. Revocation of any license which the franchised motor vehicle dealer is required to have to 

77

operate a dealership. 

d. Conviction of the dealer or any principal of the dealer of a felony. 

The change or discontinuance of a marketing or distribution system of a particular line-make 

product by a manufacturer or distributor, while the name identification of the product is 

continued in substantial form by the same or a different manufacturer or distributor, may be 

considered to be a franchise termination, cancellation, or nonrenewal. The provisions of this 

paragraph shall apply to changes and discontinuances made after January 1, 1989, but they shall 

not be considered by any court in any case in which such a change or discontinuance occurring 

prior to that date has been challenged as constituting a termination, cancellation or nonrenewal. 

5a. To fail to provide continued parts and service support to a dealer which holds a franchise 

in a discontinued line-make for at least five years from the date of such discontinuance. This 

requirement shall not apply to a line-make which was discontinued prior to January 1, 1989. 

6. To fail to allow a dealer the right at any time to designate a member of his family as a 

successor to the dealership in the event of the death or incapacity of the dealer. It shall be 

unlawful to prevent or refuse to honor the succession to a dealership by a member of the family 

of a deceased or incapacitated dealer if the franchisor has not provided to the member of the 

family previously designated by the dealer as his successor written notice of its objections to the 

succession and of such person's right to seek a hearing on the matter before the Commissioner 

pursuant to this article, and the Commissioner determines, if requested in writing by such 

member of the family within thirty days of receipt of such notice from the franchisor, and after a 

hearing on the matter before the Commissioner pursuant to this article, that the failure to permit 

or honor the succession is unreasonable under the circumstances. No member of the family may 

succeed to a franchise unless (i) the franchisor has been given written notice as to the identity, 

financial ability, and qualifications of the member of the family in question, and (ii) the 

succession to the franchise will not involve, without the franchisor's consent, a relocation of the 

business. 

7. To fail to ship monthly to any dealer, if ordered by the dealer, the number of new vehicles of 

each make, series, and model needed by the dealer to receive a percentage of total new vehicle 

sales of each make, series, and model equitably related to the total new vehicle production or 

importation currently being achieved nationally by each make, series, and model covered under 


the franchise. Upon the written request of any dealer holding its sales or sales and service 

franchise, the manufacturer or distributor shall disclose to the dealer in writing the basis upon 

which new motor vehicles are allocated, scheduled, and delivered to the dealers of the same 

line-make. In the event that allocation is at issue in a request for a hearing, the dealer may 

demand the Commissioner to direct that the manufacturer or distributor provide to the dealer, 

within thirty days of such demand, all records of sales and all records of distribution of all motor 

78

vehicles to the same line-make dealers who compete with the dealer requesting the hearing. 

7a. To fail or refuse to offer to its same line-make franchised dealers all models manufactured 

for the line-make, or require a dealer to pay any extra fee, or remodel, renovate, or recondition 

the dealer's existing facilities, or purchase unreasonable advertising displays or other materials as 

a prerequisite to receiving a model or a series of vehicles. 

7b. To require or otherwise coerce a dealer to underutilize the dealer's facilities. 

8. To include in any franchise with a motor vehicle dealer terms that are contrary to, prohibited 

by, or otherwise inconsistent with the requirements of this chapter. 

8a. For any franchise agreement, to require a motor vehicle dealer to pay the attorney's fees of 

the manufacturer or distributor related to hearings and appeals brought under this article. 

9. To fail to include in any franchise with a motor vehicle dealer the following language: "If any 

provision herein contravenes the laws or regulations of any state or other jurisdiction wherein 

this agreement is to be performed, or denies access to the procedures, forums, or remedies 

provided for by such laws or regulations, such provision shall be deemed to be modified to 

conform to such laws or regulations, and all other terms and provisions shall remain in full 

force," or words to that effect 

§ 46.2-1569.1 Manufacturer or distributor right of first refusal 

Notwithstanding the terms of any franchise agreement, in the event of a proposed sale or transfer 

of a dealership, the manufacturer or distributor shall be permitted to exercise a right of first 

refusal to acquire the new vehicle dealer's assets or ownership, if such sale or transfer is 

conditioned upon the manufacturer's or dealer's entering into a dealer agreement with the 

proposed new owner or transferee, only if all the following requirements are met: 

1. To exercise its right of first refusal, the manufacturer or distributor must notify the dealer in 

writing within forty-five days of its receipt of the completed proposal for the proposed sale 

transfer; 

Franchises Va. Code §46.2.1569.1 

2. The exercise of the right of first refusal will result in the dealer's and dealer's owner's 

receiving 

the same or greater consideration as they have contracted to receive in connection with the 

proposed change of ownership or transfer; 

3. The proposed sale or transfer of the dealership's assets does not involve the transfer or sale to 

a member or members of the family of one or more dealer owners, or to a qualified manager or a 

79

partnership or corporation controlled by such persons; and 

4. The manufacturer or distributor agrees to pay the reasonable expenses, including attorney's 

fees which do not exceed the usual, customary, and reasonable fees charged for similar work 

done for other clients, incurred by the proposed new owner and transferee prior to the 

manufacturer's or distributor's exercise of its right of first refusal in negotiating and 

implementing the contract for the proposed sale or transfer of the dealership or dealership assets. 

Notwithstanding the foregoing, no payment of such expenses and attorney's fees shall be 

required if the dealer has not submitted or caused to be submitted an accounting of those 

expenses within thirty days of the dealer's receipt of the manufacturer's or distributor's written 

request for such an accounting. Such accounting may be requested by a manufacturer or 

distributor before exercising its right of first refusal. 

§ 46.2-1571 Warranty obligations 

A. Each motor vehicle manufacturer, factory branch, distributor, or distributor branch shall (i) 

specify in writing to each of its motor vehicle dealers licensed in the Commonwealth the dealer's 

obligations for preparation, delivery, and warranty service on its products and (ii) compensate 

the dealer for warranty parts, service and diagnostic work required of the dealer by the 

manufacturer or distributor as follows: 

1. Compensation of a dealer for warranty parts, service and diagnostic work shall not be less than 

the amounts charged by the dealer for the manufacturer's or distributor's original parts, service 

and diagnostic work to retail customers for nonwarranty service, parts and diagnostic work 

installed or performed in the dealer's service department unless the amounts are not reasonable. 

Warranty parts compensation shall be stated as a percentage of markup, which shall be an agreed 

reasonable approximation of retail markup and which shall be uniformly applied to all of the 

manufacturer's or distributor's parts unless otherwise provided for in this section. If the dealer 

and manufacturer or distributor cannot agree on the warranty parts compensation markup to be 

paid to the dealer, the markup shall be determined by an average of the dealer's retail markup on 

all of the manufacturer's or distributor's parts as described in subdivisions 2 and 3 of this 

subsection. 

2. For purposes of determining warranty parts and service compensation paid to a dealer by the 

manufacturer or distributor, menu-priced parts or services, group discounts, special event 

discounts, and special event promotions shall not be considered in determining amounts charged 

by the dealer to retail customers. For purposes of determining labor compensation for warranty 


body shop repairs paid to a dealer by the manufacturer or distributor, internal and insurance-paid 

repairs shall not be considered in determining amounts charged by the dealer to retail customers. 

3. Increases in dealer warranty parts and service compensation and diagnostic work. 

Compensation, pursuant to this section, shall be requested by the dealer in writing, shall be based 

80

on 100 consecutive repair orders or all repair orders over a ninety-day period, whichever occurs 

first and, in the case of parts, shall be stated as a percentage of markup which shall be uniformly 

applied to all the manufacturer's or distributor's parts. 

4. In the case of warranty parts compensation, the provisions of this subsection shall be effective 

only for model year 1992 and succeeding model years. 

5. If a manufacturer or distributor furnishes a part to a dealer at no cost for use by the dealer in 

performing work for which the manufacturer or distributor is required to compensate the dealer 

under this section, the manufacturer or distributor shall compensate the dealer for the part in the 

same manner as warranty parts compensation, less the wholesale costs, for such part as listed in 

the manufacturer's current price schedules. A manufacturer or distributor may pay the dealer a 

reasonable handling fee instead of the compensation otherwise required by this subsection for 

special high-performance complete engine assemblies in limited production motor vehicles 

which constitute less than five percent of model production furnished to the dealer at no cost, if 

the manufacturer or distributor excludes such special high-performance complete engine 

assemblies in determining whether the amounts requested by the dealer for warranty 

compensation are consistent with the amounts that the dealer charges its other retail service 

customers for parts used by the dealer to perform similar work. 

6. In the case of service work, manufacturer original parts or parts otherwise specified by the 

manufacturer or distributor, and parts provided by a dealer either pursuant to an adjustment 

program as defined in §59.1-207.34 or as otherwise requested by the manufacturer or distributor, 

the dealer shall be compensated in the same manner as for warranty service or parts. 

This section does not apply to compensation for parts such as components, systems, fixtures, 

appliances, furnishings, accessories, and features that are designed, used, and maintained 

primarily for nonvehicular, residential purposes. Warranty and sales incentive audits of dealer 

records may be conducted by the manufacturer, factory branch, distributor, or distributor branch 

on a reasonable basis, and dealer claims for warranty or sales incentive compensation shall not 

be denied except for good cause, such as performance of nonwarranty repairs, lack of material 

documentation, fraud, or misrepresentation. A dealer's failure to comply with the specific 

requirements of the manufacturer or distributor for processing the claim shall not constitute 

grounds for the denial of the claim or reduction of the amount of compensation to the dealer as 

long as reasonable documentation or other evidence has been presented to substantiate the claim. 

Claims for dealer compensation shall be paid within thirty days of dealer submission or within 

thirty days of the end of an incentive program or rejected in writing for stated reasons. The 


manufacturer, factory branch, distributor, or distributor branch shall reserve the right to 

reasonable periodic audits to determine the validity of all such paid claims for dealer 

compensation. Any chargebacks for warranty parts or service compensation and service 

incentives shall only be for the twelve-month period immediately following the date of the claim 

and, in the case of chargebacks for sales compensation only, for the eighteen-month period 

81

immediately following the date of claim. However, such limitations shall not be effective in the 

case of intentionally false or fraudulent claims. A dealer shall not be charged back or otherwise 

liable for sales incentives or charges related to a motor vehicle sold by the dealer and 

subsequently exported, provided the dealer can demonstrate that he exercised due diligence and 

that the sale was made in good faith and without knowledge of the purchaser's intention to export 

the motor vehicle. 

B. It shall be unlawful for any motor vehicle manufacturer, factory branch, distributor, or 

distributor branch to: 

1. Fail to perform any of its warranty obligations, including tires, with respect to a motor vehicle; 

2. Fail to assume all responsibility for any liability resulting from structural or production 

defects; 

3. Fail to include in written notices of factory recalls to vehicle owners and dealers the expected 

date by which necessary parts and equipment will be available to dealers for the correction of 

defects; 

4. Fail to compensate any of the motor vehicle dealers licensed in the Commonwealth for repairs 

effected by the dealer of merchandise damaged in manufacture or transit to the dealer where the 

carrier is designated by the manufacturer, factory branch, distributor, or distributor branch; 

5. Fail to compensate its motor vehicle dealers licensed in the Commonwealth for warranty parts, 

work, and service pursuant to subsection A of this section, or for legal costs and expenses 

incurred by such dealers in connection with warranty obligations for which the manufacturer, 

factory branch, distributor, or distributor branch is legally responsible or which the 

manufacturer, factory branch, distributor, or distributor branch imposes upon the dealer; 

6. Misrepresent in any way to purchasers of motor vehicles that warranties with respect to the 

manufacture, performance, or design of the vehicle are made by the dealer, either as warrantor or 

co-warrantor; 

7. Require the dealer to make warranties to customers in any manner related to the manufacture, 

performance, or design of the vehicle; or 


8. Shift or attempt to shift to the motor vehicle dealer, directly or indirectly, any liabilities of the 

manufacturer, factory branch, distributor or distributor branch under the Virginia Motor Vehicle 

Warranty Enforcement Act (§59.1-207.9 et seq.), unless such liability results from the act or 

omission by the dealer. 

C. Notwithstanding the terms of any franchise, it shall be unlawful for any motor vehicle 

82

manufacturer, factory branch, distributor, or distributor branch to fail to indemnify and hold 

harmless its motor vehicle dealers against any losses or damages arising out of complaints, 

claims, or suits relating to the manufacture, assembly, or design of motor vehicles, parts, or 

accessories, or other functions by the manufacturer, factory branch, distributor, or distributor 

branch beyond the control of the dealer, including, without limitation, the selection by the 

manufacturer, factory branch, distributor, or distributor branch of parts or components for the 

vehicle or any damages to merchandise occurring in transit to the dealer where the carrier is 

designated by the manufacturer, factory branch, distributor, or distributor branch. The dealer 

shall notify the manufacturer of pending suits in which allegations are made which come within 

this subsection whenever reasonably practicable to do so. Every motor vehicle dealer franchise 

issued to, amended, or renewed for motor vehicle dealers in Virginia shall be construed to 

incorporate provisions consistent with the requirements of this subsection. 

D. On any new motor vehicle, any uncorrected damage or any corrected damage exceeding three 

percent of the manufacturer's or distributor's suggested retail price as defined in 15 U.S.C. 

§§1231-1233, as measured by retail repair costs, must be disclosed to the dealer in writing prior 

to delivery. Factory mechanical repair and damage to glass, tires, and bumpers are excluded from 

the three percent rule when properly replaced by identical manufacturer's or distributor's original 

equipment or parts. Whenever a new motor vehicle is damaged in transit, when the carrier or 

means of transportation is determined by the manufacturer or distributor, or whenever a motor 

vehicle is otherwise damaged prior to delivery to the new motor vehicle dealer, the new motor 

vehicle dealer shall: 

1. Notify the manufacturer or distributor of the damage within three business days from the date 

of delivery of the new motor vehicle to the new motor vehicle dealership or within the additional 

time specified in the franchise; and: 

2. Request from the manufacturer or distributor authorization to replace the components, parts, 

and accessories damaged or otherwise correct the damage, unless the damage to the vehicle 

exceeds the three percent rule, in which case the dealer may reject the vehicle within three 

business days. 

E. If the manufacturer or distributor refuses or fails to authorize correction of such damage 

within ten days after receipt of notification, or if the dealer rejects the vehicle because damage 

exceeds the three percent rule, ownership of the new motor vehicle shall revert to the 

manufacturer or 


distributor, and the new motor vehicle dealer shall have no obligation, financial or otherwise, 

with respect to such motor vehicle. Should either the manufacturer, distributor, or the dealer 

elect 

to correct the damage or any other damage exceeding the three percent rule, full disclosure shall 

be made by the dealer in writing to the buyer and an acknowledgment by the buyer is required. If 

there is less than three percent damage, no disclosure is required, provided the damage has been 

corrected. Predelivery mechanical work shall not require a disclosure. Failure to disclose any 

corrected damage within the knowledge of the selling dealer to a new motor vehicle in excess of 

83

the three percent rule shall constitute grounds for revocation of the buyer order, provided that, 

within thirty days of purchase, the motor vehicle is returned to the dealer with an accompanying 

written notice of the grounds for revocation. In case of revocation pursuant to this section, the 

dealer shall accept the vehicle and refund any payments made to the dealer in connection with 

the transaction, less a reasonable allowance for the consumer's use of the vehicle. 

F. If there is a dispute between the manufacturer, factory branch, distributor, or distributor 

branch and the dealer with respect to any matter referred to in subsection A, B, or C of this 

section, either party may petition the Commissioner in writing, within thirty days after either 

party has given written notice of the dispute to the other, for a hearing. The decision of the 

Commissioner shall be binding on the parties, subject to rights of judicial review and appeal as 

provided in Chapter 1.1:1 (§9-6.14:1 et seq.) of Title 9. However, nothing contained in this 

section shall give the Commissioner any authority as to the content or interpretation of any 

manufacturer's or distributor's warranty. 

§ 46.2-1572 Operation of dealership by manufacturer 

It shall be unlawful for any motor vehicle manufacturer, factory branch, distributor, distributor 

branch, or subsidiary thereof, to own, operate, or control any motor vehicle dealership in the 

Commonwealth. However, this section shall not prohibit: 

1. The operation by a manufacturer, factory branch, distributor, distributor branch, or subsidiary 

thereof, of a dealership for a temporary period, not to exceed one year, during the transition from 

one owner or operator to another; 

2. The ownership or control of a dealership by a manufacturer, factory branch, distributor, 

distributor branch, or subsidiary thereof, while the dealership is being sold under a bona fide 

contract or purchase option to the operator of the dealership; 

3. The ownership, operation, or control of a dealership by a manufacturer, factory branch, 

distributor, distributor branch, or subsidiary has been engaged in the retail sale of motor vehicles 

through the dealership for a continuous period of three years prior to July 1, 1972, and if the 

Commissioner determines, after a hearing on the matter at the request of any party, that there is 

no dealer independent of the manufacturer or distributor, factory branch or distributor branch, or 

subsidiary thereof available in the community to own and operate the franchise in a manner 

consistent with the public interest; 


4. The ownership, operation, or control of a dealership by a manufacturer, factory branch, 

distributor, distributor branch, or subsidiary thereof if the Commissioner determines, after a 

hearing at the request of any party, that there is no dealer independent of the manufacturer or 

distributor, factory branch or distributor branch, or subsidiary thereof available in the community 

or trade area to own and operate the franchise in a manner consistent with the public interest; 

5. The ownership, operation, or control of a dealership dealing exclusively with school buses by 

a school bus manufacturer or school bus parts manufacturer or a person who assembles school 

84

uses; or 

6. The ownership, operation, or control of a dealership dealing exclusively with refined fuels 

truck tanks by a manufacturer of refined fuels truck tanks or by a person who assembles refined 

fuels truck tanks. 

§ 46.2-1572.1 Ownership of service facilities 

It shall be unlawful for any motor vehicle manufacturer, factory branch, distributor, distributor 

branch, or subsidiary thereof, to own, operate, or control, either directly or indirectly, any motor 

vehicle warranty or service facility located in the Commonwealth. Nothing in this section shall 

prohibit any motor vehicle manufacturer, factory branch, distributor, distributor branch, or 

subsidiary thereof, from owning, operating, or controlling any warranty or service facility for 

warranty or service of motor vehicles owned or operated by the manufacturer, factory branch, 

distributor, distributor branch, or subsidiary thereof. Nothing contained in this section shall 

prohibit a motor vehicle manufacturer, factory branch, distributor, or distributor branch from 

performing service for reasons of compliance with an order of a court of competent jurisdiction 

or of warranty under Chapter 17.3 (§59.1-207.9 et seq.) of Title 59.1. 

§ 46.2-1572.2 Mediation of disputes 

At any time before a hearing under this article is commenced before the Commissioner, either 

party to a franchise agreement for the sale or service of passenger cars, pickup trucks or trucks 

may demand that a dispute be submitted to nonbinding mediation as a condition precedent to the 

right to a hearing before the Commissioner. A demand for mediation may be served on the other 

party and shall be filed with the Commissioner at any time before a hearing is commenced by the 

Commissioner. The service of the demand for mediation shall, of itself, toll the time required to 

file requests for hearings and for the time for commencing and completing hearings under this 

article until mediation is concluded. 

Franchises Va. Code §46.2.1572.2 

A demand for mediation shall be in writing and shall be served upon the other party by certified 

mail at an address designated in the franchise agreement or in the records of the Department. The 

demand for mediation shall contain a brief statement of the dispute and the relief sought by the 

party filing the demand. 

Within ten days after the date on which the demand for mediation is served, the Commissioner 

shall select one mediator from his approved list of mediators or from the lists of hearing officers 

as set forth in § 9-6.14:14.1. Within twenty-five days of the date of demand, the parties shall 

85

meet with the mediator for the purpose of attempting to resolve the dispute. The meeting place 

shall be within the Commonwealth at a location selected by the mediator. The mediator may 

extend the date of the meeting for good cause shown by either party or upon the stipulation of 

both parties. 

§ 46.2-1573 Hearings and other remedies 

A. In every case of a hearing before the Commissioner authorized under this article, the 

Commissioner shall give reasonable notice of each hearing to all interested parties, and the 

Commissioner's decision shall be binding on the parties, subject to the rights of judicial review 

and appeal as provided in Chapter 1.1:1 (§9-6.14:1 et seq.) of Title 9. 

B. Hearings before the Commissioner under this article shall commence within ninety days of 

the request for a hearing and the Commissioner's decision shall be rendered within sixty days 

from the receipt of the hearing officer's recommendation. Hearings authorized under this article 

shall be presided over by a hearing officer selected from a list prepared by the Executive 

Secretary of the Supreme Court of Virginia. On request of the Commissioner, the Executive 

Secretary will name a hearing officer from the list, selected on a rotation system administered by 

the Executive Secretary. 

The hearing officer shall provide recommendations to the Commissioner within ninety days of 

the conclusion of the hearing. 

C. Notwithstanding any contrary provision of this article, the Commissioner shall initiate 

investigations, conduct hearings, and determine the rights of parties under this article whenever 

he is provided information by the Motor Vehicle Dealer Board or any other person indicating a 

possible violation of any provision of this article. 

D. For purposes of any matter brought to the Commissioner under subdivisions 3, 4, 5, 6 and 7b 

of §46.2-1569 with respect to which the Commissioner is to determine whether there is good 

cause for a proposed action or whether it would be unreasonable under the circumstances, the 

Commissioner shall consider: 

Franchises Va. Codes §46.2.1573 

1. The volume of the affected dealer's business in the relevant market area; 

2. The nature and extent of the dealer's investment in its business; 

3. The adequacy of the dealer's service facilities, equipment, parts, supplies, and personnel; 

4. The effect of the proposed action on the community; 

5. The extent and quality of the dealer's service under motor vehicle warranties 

6. The dealer's performance under the terms of its franchise; 

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7. Other economic and geographical factors reasonably associated with the proposed action; and 

8. The recommendations, if any, from a three-member panel composed of members of the Board 

who are franchised dealers not of the same line-make involved in the hearing and who are 

appointed to the panel by the Commissioner. 

With respect to subdivision 6 of this subsection, any performance standard or program for 

measuring dealership performance that may have a material effect on a dealer, and the 

application of any such standard or program by a manufacturer or distributor, shall be fair, 

reasonable, and equitable and, if based upon a survey, shall be based upon a statistically valid 

sample. Upon the request of any dealer, a manufacturer or distributor shall disclose in writing to 

the dealer a description of how a performance standard or program is designed and all relevant 

information used in the application of the performance standard or program to that dealer. 

E. An interested party in a hearing held pursuant to subsection A of this section shall comply 

with the effective date of compliance established by the Commissioner in his decision in such 

hearing, unless a stay or extension of such date is granted by the Commissioner or the 

Commissioner's decision is under judicial review and appeal as provided in subsection A of this 

section. If, after notice to such interested party and an opportunity to comment, the 

Commissioner finds an interested party has not complied with his decision by the designated 

date of compliance, unless a stay or extension of such date has been granted by the 

Commissioner or the Commissioner's decision is under judicial review and appeal, the 

Commissioner may assess such interested party a civil penalty not to exceed $1,000 per day of 

noncompliance. Civil penalties collected under this subsection shall be deposited into the 

Transportation Trust Fund. 

§ 46.2-1575 Grounds for denying, suspending, or revoking licenses or certificates of dealer 

registration or qualification 

A license or certificate of dealer registration or qualification issued under this subtitle may be 

denied, suspended, or revoked on any one or more of the following grounds: 

Denial, Suspension, and revocation of Dealer Licenses Va. Code §46.2.1575 

1. Material misstatement or omission in application for license, dealer's license plates, certificate 

of dealer registration, certificate of qualification, or certificate of title; 

2. Failure to comply subsequent to receipt of a written warning from the Department or the 

Board or any willful failure to comply with any provision of this chapter or any regulation 

promulgated by the Commissioner or the Board under this chapter; 

3. Failure to have an established place of business as defined in §46.2-1510 or failure to have as 

the dealer-operator an individual who holds a valid certificate of qualification; 

4. Defrauding any retail buyer, to the buyer's damage, or any other person in the conduct of the 

87

licensee's or registrant's business; 

5. Employment of fraudulent devices, methods or practices in connection with compliance with 

the requirements under the statutes of the Commonwealth with respect to the retaking of vehicles 

under retail installment contracts and the redemption and resale of those vehicles; 

6. Having used deceptive acts or practices; 

7. Knowingly advertising by any means any assertion, representation, or statement of fact which 

is untrue, misleading, or deceptive in any particular relating to the conduct of the business 

licensed or registered or for which a license or registration is sought; 

8. Having been convicted of any fraudulent act in connection with the business of selling 

vehicles or any consumer-related fraud; 

9. Having been convicted of any criminal act involving the business of selling vehicles; 

10. Willfully retaining in his possession title to a motor vehicle that has not been completely and 

legally assigned to him; 

11. Failure to comply with any provision of Chapter 4.1 (§36-85.2 et seq.) of Title 36 or any 

regulation promulgated pursuant to that chapter; 

12. Leasing, renting, lending, or otherwise allowing the use of a dealer's license plate by persons 

not specifically authorized under this title; 

13. Having been convicted of a felony; 

14. Failure to submit to the Department, within thirty days from the date of sale, any application, 

tax, or fee collected for the Department on behalf of a buyer; 

15. Having been convicted of larceny of a vehicle or receipt or sale of a stolen vehicle; 

Denial, Suspension, and revocation of Licenses Va. Code §46.2.1576 

16. Having been convicted of odometer tampering or any related violation; 

17. If a salvage dealer, salvage pool, or rebuilder, failing to comply with any provision of 

Chapter 16 (§46.2-1600 et seq.) of this title or any regulation promulgated by the Commissioner 

under that chapter; 

18. Failing to maintain automobile liability insurance, issued by a company licensed to do 

business in the Commonwealth, or a certificate of self-insurance as defined in §46.2-368, with 

respect to each dealer's license plate issued to the dealer by the Department; or 

19. Failing or refusing to pay civil penalties imposed by the Board pursuant to §46.2-1507. 

88

§ 46.2-1576 Suspension, revocation, and refusal to renew licenses or certificates of dealer 

registration or qualification; notice and hearing 

A. Except as provided in §46.2-1527.7 and subsections B and C of this section, no license or 

certificate of dealer registration or qualification issued under this subtitle shall be suspended or 

revoked, or renewal thereof refused, until a written copy of the complaint made has been 

furnished to the licensee, registrant, or qualifier against whom the same is directed and a public 

hearing thereon has been had before a hearing officer designated by the Board. At least ten days' 

written notice of the time and place of the hearing shall be given to the licensee, registrant, or 

qualifier by registered mail addressed to his last known post office address or as shown on his 

license or certificate or other record of information in possession of the Board. At the hearing the 

licensee, registrant, or qualifier shall have the right to be heard personally or by counsel. The 

hearing officer shall provide recommendations to the Board within ninety days of the conclusion 

of the hearing. After receiving the recommendations from the hearing officer, the Board may 

suspend, revoke, or refuse to renew the license or certificate in question. A Board member shall 

disqualify himself and withdraw from any case in which he cannot accord fair and impartial 

consideration. Any party may request the disqualification of any Board member by stating with 

particularity the grounds upon which it is claimed that fair and impartial consideration cannot be 

accorded. The remaining members of the Board shall determine whether the individual should be 

disqualified. Immediate notice of any suspension, revocation, or refusal shall be given to the 

licensee, registrant, or qualifier in the manner provided in this section in the case of notices of 

hearing. 

B. Should a dealer fail to maintain an established place of business, the Board may cancel the 

license of the dealer without a hearing after notification of the intent to cancel has been sent, by 

return receipt mail, to the dealer at the dealer's residence and business addresses, and the notices 

are returned undelivered or the dealer does not respond within twenty days from the date the 

notices were sent. Any subsequent application for a dealer's license shall be treated as an original 

application. 

C. Should a dealer fail or refuse to pay civil penalties imposed by the Board pursuant to 

§46.2-1507, the Board may deny, revoke, or suspend the dealer's license without a hearing after 

Denial, Suspension, and revocation of Licenses Va. Code §46.2.1581 

notice of imposition of civil penalties has been sent, by certified mail, return receipt requested, to 

the dealer at the dealer's business address and such civil penalty is not paid in full within thirty 

days after receipt of the notice. 

§ 46.2-1581 Regulated advertising practices 

Article 9. Motor Vehicle Advertising 

For purposes of this chapter, a violation of the following regulated advertising practices shall be 

an unfair, deceptive, or misleading act or practice. 

1. A vehicle shall not be advertised as new, either by word or implication, unless it is one which 

89

conforms to the requirements of §46.2-1500. 

2. When advertising any vehicle which does not conform to the definition of "new" as provided 

in §46.2-1500, the fact that it is used shall be clearly and unequivocally expressed by the term 

"used" or by such other term as is commonly understood to mean that the vehicle is used. By 

way of example but not by limitation, "special purchase" by itself is not a satisfactory disclosure; 

however, such terms as "demonstrator" or "former leased vehicles" used alone clearly express 

that the vehicles are used for advertising purposes. 

3. Advertisement of finance charges or other interest rates shall not be used when there is a cost 

to buy-down said charge or rate which is passed on, in whole or in part, to the purchaser. 

4. Terms, conditions, and disclaimers shall be stated clearly and conspicuously. An asterisk or 

other reference symbol may be used to point to a disclaimer or other information, but shall not be 

used as a means of contradicting or changing the meaning of an advertised statement. 

5. The expiration date of an advertised sale shall be clearly and conspicuously disclosed. 

6. The term "list price," "sticker price," or "suggested retail price" and similar terms, shall be 

used only in reference to the manufacturer's suggested retail price for new vehicles or the dealer's 

own usual and customary price for used vehicles. 

7. Terms such as "at cost," "below cost," "$ off cost" shall not be used in advertisements because 

of the difficulty in determining a dealer's actual net cost at the time of the sale. Terms such as 

"invoice price," "$ over invoice," may be used, provided that the invoice referred to is the 

manufacturer's factory invoice or a bona fide bill of sale and the invoice or bill of sale is 

available for customer inspection.. "Manufacturer's factory invoice" means that document 

supplied by the manufacturer to the dealer listing the manufacturer's charge to the dealer before 

any deduction for holdback, group advertising, factory incentives or rebates, or any 

governmental charges. 

8. When the price or credit terms of a vehicle are advertised, the vehicle shall be fully identified 

as to year, make, and model. In addition, in advertisements placed by individual dealers and not 

Motor Vehicle Dealer Advertising Va. Code §46.2.1581 

line-make marketing groups, the advertised price or credit terms shall include all charges which 

the buyer must pay to the seller, except buyer-selected options, state and local fees and taxes, 

and manufacturer's or distributor's freight or destination charges, and a processing fee, if any. If a 

processing fee or freight or destination charges are not included in the advertised price, the 

amount of any such processing fee and freight or destination charge must be (i) clearly and 

conspicuously disclosed in not less than eight-point boldface type or (ii) not smaller than the 

largest typeface within the advertisement. If the processing fee is not included in the advertised 

price, the amount of the processing fee may be omitted from any advertisement in which the 

largest type size is less than eight-point typeface, so long as the dealer participates in a 

media-provided listing of processing fees and the dealer's advertisement includes an asterisk or 

other such notation to refer the reader to the listing of the fees. 

90

9. Advertisements which set out a policy of matching or bettering competitors' prices shall not be 

used unless the terms of the offer are specific, verifiable and reasonable. 

10. Advertisements of "dealer rebates" shall not be used. This does not affect advertisement of 

manufacturer rebates. 

11. "Free," "at no cost," or other words to that effect shall not be used unless the "free" item, 

merchandise, or service is available without a purchase. This provision shall not apply to 

advertising placed by manufacturers, distributors, or line-make marketing groups. 

12. "Bait" advertising, in which an advertiser may have no intention to sell at the price or terms 

advertised, shall not be used. By way of example, but not by limitation: 

a. If a specific vehicle is advertised, the seller shall be in possession of a reasonable supply of 

said vehicles, and they shall be available at the advertised price. If the advertised vehicle is 

available only in limited numbers or only by order, that shall be stated in the advertisement. For 

purposes of this subdivision, the listing of a vehicle by stock number or vehicle identification 

number in the advertisement for a used vehicle is one means of satisfactorily disclosing a 

limitation of availability. Stock numbers or vehicle identification numbers shall not be used in 

advertising a new vehicle unless the advertisement clearly and conspicuously discloses that it 

relates to only one vehicle. 

b. Advertising a vehicle at a certain price, including "as low as" statements, but having available 

for sale only vehicles equipped with dealer added cost "options" which increase the selling price, 

above the advertised price, shall also be considered "bait" advertising. 

c. If a lease payment is advertised, the fact that it is a lease arrangement shall be disclosed. 

13. The term "repossessed" shall be used only to describe vehicles that have been sold, 

registered, titled and then taken back from a purchaser and not yet resold to an ultimate user. 

Advertisers offering repossessed vehicles for sale shall provide proof of repossession upon 

request. 

Motor Vehicle Dealer Advertising Va. Code §46.2.1600 

14. Words such as "finance" or "loan" shall not be used in a motor vehicle advertiser's firm name 

or trade name, unless that person is actually engaged in the financing of motor vehicles. 

15. Any advertisement which gives the impression a dealer has a special arrangement or 

relationship with the distributor or manufacturer, as compared to similarly situated dealers, shall 

not be used. 

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CHAPTER 17.1 AUTOMOBILE REPAIR FACILITIES ACT 

§ 59.1-207.1 Title of chapter 

This chapter may be cited as the Automobile Repair Facilities Act. 

§ 59.1-207.2 Definitions 

As used in this chapter: 

1. "Motor vehicle" shall mean every vehicle which is self-propelled or designed for 

self-propulsion and every vehicle drawn by or designed to be drawn by a motor vehicle and 

includes every device in, upon or by which any property is or can be transported or drawn upon a 

highway, whether or not required to be licensed by the Commonwealth, but shall not include 

92

devices moved by human or animal power or devices used exclusively upon stationary rails or 

tracks. Nor shall it include those parts of a manufactured home which do not affect the ability of 

the manufactured home to be safely upon a highway. 

2. "Person" shall include any natural person, firm, partnership, association or corporation. 

3. "Automobile repair facility" shall mean any person who for profit diagnoses or corrects 

malfunctions of, or damage to, a motor vehicle. 

§ 59.1-207.3 Written estimate for repair work required upon request; charge in excess of 

estimate; conditions; display of sign required; limitations on liability for delay; exception 

A. Upon request by a customer, prior to the commencement of any repair work on a motor 

vehicle for which a customer may be charged more than twenty-five dollars, every automobile 

repair facility doing business in the Commonwealth shall provide the customer a written 

statement of (i) the estimated cost of labor necessary to complete the work, (ii) the estimated cost 

of parts necessary to complete work, (iii) a description of the problem or work as described or 

authorized by the customer, and (iv) the estimated completion time. An automobile repair facility 

shall have no obligation to provide such written statements prior to 10:00 a.m. or after 4:00 p.m. 

during a working day. 

B. Where a written estimate is requested, no repair work on the motor vehicle may be 

undertaken, other than such diagnostic work as may be necessary for the preparation of an 

estimate, until the written estimate has been provided the customer and the customer has 

authorized the work, either in writing or orally, and no charge for repair work in excess of the 

written estimate by more than ten percent or, in the case of any motor vehicle which is at least 

twenty-five model years old, twenty percent or extension of the time for the work may be made 

unless the additional work represented by such excess charge or the time extension has been 

authorized, in writing or orally, by the customer. 

AUTOMOBILE REPAIR FACILITIES ACT, Va. Code §59.1-207.3 

C. An automobile repair facility may impose reasonable conditions for its obligations to provide 

written estimates to a customer, including the imposition of a reasonable fee for the preparation 

of a written estimate and related diagnostic work; provided that any such conditions shall be 

disclosed to the customer at the time of his request by writing or by sign conspicuously posted at 

the entrance of the automobile repair facility. Each automobile repair facility shall display in a 

conspicuous place at any point where vehicles are normally received for repairs, a sign which 

states that: 

1. The customer may receive a written estimate on request; 

2. No repair work charge may exceed the written estimate by more than ten percent unless the 

additional work represented by the excess charge has been authorized by the customer; 

3. Any conditions imposed by the automobile repair facility in providing written estimates, such 

93

as the limited hours when written estimates will be prepared or the amount of the reasonable fee 

charged for preparing a written estimate and for related diagnostic work; 

4. The facility shall offer to return all replaced parts except warranty, core charge or trade-in 

parts required to be returned to a manufacturer or distributor; and 

5. Any complaints can be made to the Virginia Office of Consumer Affairs. 

The sign heading "Customer Rights" shall be in letters at least one and one-half inches high and 

the remaining print shall be in letters at least one-fourth inch high with spacing between letters, 

words and lines so as to be clearly legible. 

D. An automobile repair facility shall not be liable for breach of the written estimated 

completion date for a repair if the delay is occasioned by (i) an act of God or (ii) an unexpected 

shortage of labor or parts or (iii) other causes beyond the control of the automobile repair 

facility. 

E. Nothing in this section shall require an automobile repair facility to give a written estimate if 

the facility is unwilling to perform the requested repair work. 

F. The provisions of this section shall not apply to the repair of any motor vehicle which is any 

car listed in the Official Judging Manual of the Antique Automobile Club of America. 

§ 59.1-207.4 Offer to return replaced parts required; customer’s right to inspect parts 

An automobile repair facility shall offer at the time the repair work is authorized to return to the 

customer any parts which are removed from the motor vehicle and replaced during the process of 

repair; provided that any part which is required to be returned to a manufacturer or distributor 

under a warranty agreement, trade-in agreement or core charge agreement for a reconditioned 

part need not be returned to the customer. If the customer wishes the return of replaced parts 

subject to core charge or other trade-in agreements, customer agrees to pay the facility the 

additional core charge or other trade-in fee. The customer retains the right to inspect requested 

AUTOMOBILE REPAIR FACILITY ACT, Va. Code §59.1-207.5 

returned parts even if custody is refused. 

§ 59.1-207.5 Written invoice required upon completion of repair work 

Upon completion of any repair work on a motor vehicle, including work performed pursuant to 

any warranty, an automobile repair facility shall provide the customer a written invoice which 

clearly indicates the work performed and the charges for parts and labor, separately stated, and 

which separately identifies those parts provided under warranty and not under warranty, and 

identifies those parts, if any, which are used, rebuilt or reconditioned. The provisions of this 

section shall not apply to work performed which was done on an advertised single price basis. 

§ 59.1-207.6 Enforcement; penalties 

Any violation of the provisions of this chapter shall constitute a prohibited practice pursuant to 

the provisions of §59.1-200 and shall be subject to any and all of the enforcement provisions of 

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Chapter 17 (§59.1-196 et seq.) of this title 


CHAPTER 17.3. MOTOR VEHICLE WARRANTY 

ENFORCEMENT ACT 

‘VIRGINIA’S LEMON LAW’ 

§ 59.1-207.9 Short title 

This chapter may be cited as the Virginia Motor Vehicle Warranty Enforcement Act. 

§ 59.1-207.10 Intent 

The General Assembly recognizes that a motor vehicle is a major consumer purchase, and there 

is no doubt that a defective motor vehicle creates a hardship for the consumer. It is the intent of 

the General Assembly that a good faith motor vehicle warranty complaint by a consumer should 

be resolved by the manufacturer, or its agent, within a specified period of time. It is further the 

95

intent of the General Assembly to provide the statutory procedures whereby a consumer may 

receive a replacement motor vehicle, or a full refund, for a motor vehicle which cannot be 

brought into conformity with the express warranty issued by the manufacturer. However, nothing 

in this chapter shall in any way limit the rights or remedies which are otherwise available to a 

consumer under any other law. 


As used in this chapter, the following terms shall have the following meanings: 

"Collateral charges" means any sales-related or lease-related charges including but not limited to 

sales tax, license fees, registration fees, title fees, finance charges and interest, transportation 

charges, dealer preparation charges or any other charges for service contracts, undercoating, rust 

proofing or installed options, not recoverable from a third party. If a refund involves a lease, 

"collateral charges" means, in addition to any of the above, capitalized cost reductions, credits 

and allowances for any trade-in vehicles, fees to another to obtain the lease, and insurance or 

other costs expended by the lessor for the benefit of the lessee. 

"Comparable motor vehicle" means a motor vehicle that is identical or reasonably equivalent to 

the motor vehicle to be replaced, as the motor vehicle to be replaced existed at the time of 

purchase or lease with an offset from this value for a reasonable allowance for its use. 

"Consumer" means the purchaser, other than for purposes of resale, or the lessee, of a motor 

vehicle used in substantial part for personal, family, or household purposes, and any person to 

whom such motor vehicle is transferred for the same purposes during the duration of any 

warranty applicable to such motor vehicle, and any other person entitled by the terms of such 

VIRGINIA LEMON LAW, Va. Code §59.1-207.11 

warranty to enforce the obligations of the warranty. 

"Incidental damages" shall have the same meaning as provided in §8.2-715. 

"Lemon law rights period" means the period ending eighteen months after the date of the 

original delivery to the consumer of a new motor vehicle. This shall be the period during which 

the consumer can report any nonconformity to the manufacturer and pursue any rights provided 

for under this chapter. 

"Lien" means a security interest in a motor vehicle. 

"Lienholder" means a person, partnership, association, corporation or entity with a security 

interest in a motor vehicle pursuant to a lien. 

"Manufacturer" means a person, partnership, association, corporation or entity engaged in the 

business of manufacturing or assembling motor vehicles, or of distributing motor vehicles to 

motor vehicle dealers. 

96

"Manufacturer's express warranty" means the written warranty, so labeled, of the 

manufacturer of a new automobile, including any terms or conditions precedent to the 

enforcement of obligations under that warranty. 

"Motor vehicle" means only passenger cars, pickup or panel trucks, motorcycles, self-propelled 

motorized chassis of motor homes and mopeds as those terms are defined in §46.2-100 and 

demonstrators or leased vehicles with which a warranty was issued. 

"Motor vehicle dealer" shall have the same meaning as provided in §46.2-1500. 

"Nonconformity" means a failure to conform with a warranty, a defect or a condition, including 

those that do not affect the driveability of the vehicle, which significantly impairs the use, 

market value, or safety of a motor vehicle. 

"Notify" or "notification" means that the manufacturer shall be deemed to have been notified 

under this chapter if a written complaint of the defect or defects has been mailed to it or it has 

responded to the consumer in writing regarding a complaint, or a factory representative has 

either inspected the vehicle or met with the consumer or an authorized dealer regarding the 

nonconformity. 

"Reasonable allowance for use" shall not exceed one-half of the amount allowed per mile by 

the Internal Revenue Service, as provided by regulation, revenue procedure, or revenue ruling 

promulgated pursuant to § 162 of the Internal Revenue Code, for use of a personal vehicle for 

business purposes, plus an amount to account for any loss to the fair market value of the vehicle 


resulting from damage beyond normal wear and tear, unless the damage resulted from 

nonconformity to any warranty. 

"Serious safety defect" means a life-threatening malfunction or nonconformity that impedes the 

consumer's ability to control or operate the new motor vehicle for ordinary use or reasonable 

intended purposes or creates a risk of fire or explosion. 

"Significant impairment" means to render the new motor vehicle unfit, unreliable or unsafe for 

ordinary use or reasonable intended purposes. 

"Warranty" means any implied warranty or any written warranty of the manufacturer, or any 

affirmations of fact or promise made by the manufacturer in connection with the sale or lease of 

a motor vehicle that become part of the basis of the bargain. The term "warranty" pertains to the 

obligations of the manufacturer in relation to materials, workmanship, and fitness of a motor 

vehicle for ordinary use or reasonable intended purposes throughout the duration of the lemon 

law rights period as defined under this section. 

§ 59.1-207.12 Conformity to all warranties 

If a new motor vehicle does not conform to all warranties, and the consumer reports the 

97

nonconformity to the manufacturer, its agents, or its authorized dealer during the manufacturer's 

warranty period, the manufacturer, its agent or its authorized dealer shall make such repairs as 

are necessary to conform the vehicle to such warranties, notwithstanding the fact that such 

repairs are made after the expiration of such manufacturer's warranty period. 

§ 59.1-207.13 Nonconformity of motor vehicles 

A. If the manufacturer, its agents or authorized dealers do not conform the motor vehicle to any 

applicable warranty by repairing or correcting any defect or condition, including those that do 

not affect the driveability of the vehicle, which significantly impairs the use, market value, or 

safety of the motor vehicle to the consumer after a reasonable number of attempts during the 

lemon law rights period, the manufacturer shall: 

1. Replace the motor vehicle with a comparable motor vehicle acceptable to the consumer, or 

2. Accept return of the motor vehicle and refund to the consumer, lessor, and any lienholder as 

their interest may appear the full contract price, including all collateral charges, incidental 

damages, less a reasonable allowance for the consumer's use of the vehicle up to the date of the 

first notice of nonconformity that is given to the manufacturer, its agents or authorized dealer. 

Refunds or replacements shall be made to the consumer, lessor or Lienholder, if any, as their 

interests may appear. The consumer shall have the unconditional right to choose a refund rather 

than a replacement vehicle and to drive the motor vehicle until he receives either the replacement 

vehicle or the refund. The subtraction of a reasonable allowance for use shall apply to either a 

replacement or refund of the motor vehicle. Mileage, expenses, and reasonable loss of use 

necessitated by attempts to conform such motor vehicle to the express warranty may be 

recovered 


by the consumer 

A. In the case of a replacement of or refund for a leased vehicle, in addition to any other 

damages provided in this chapter, the motor vehicle shall be returned to the manufacturer and the 

consumer's written lease shall be terminated by the lessor without penalty to the consumer. The 

lessor shall transfer title to the manufacturer as necessary to effectuate the consumer's rights 

pursuant to this chapter, whether the consumer chooses vehicle replacement or a refund. 

B. It shall be presumed that a reasonable number of attempts have been undertaken to conform a 

motor vehicle to any warranty and that the motor vehicle is significantly impaired if during the 

period of eighteen months following the date of original delivery of the motor vehicle to the 

consumer either: 

1. The same nonconformity has been subject to repair three or more times by the manufacturer, 

its agents or its authorized dealers and the same nonconformity continues to exist; 

2. The nonconformity is a serious safety defect and has been subject to repair one or more times 

by the manufacturer, its agent or its authorized dealer and the same nonconformity continues to 

exist; or 

3. The motor vehicle is out of service due to repair for a cumulative total of thirty calendar days, 

98

unless such repairs could not be performed because of conditions beyond the control of the 

manufacturer, its agents or authorized dealers, including war, invasion, strike, fire, flood or other 

natural disasters. 

C. The lemon law rights period shall be extended if the manufacturer has been notified but the 

nonconformity has not been effectively repaired by the manufacturer, or its agent, by the 

expiration of the lemon law rights period. 

D. The manufacturer shall clearly and conspicuously disclose to the consumer, in the warranty or 

owner's manual, that written notification of the nonconformity to the manufacturer is required 

before the consumer may be eligible for a refund or replacement of the vehicle under this 

chapter. The manufacturer shall include with the warranty or owner's manual the name and 

address to which the consumer shall send such written notification. 

E. It shall be the responsibility of the consumer, or his representative, prior to availing himself of 

the provisions of this section, to notify the manufacturer of the need for the correction or repair 

of the nonconformity, unless the manufacturer has been notified as defined in § 59.1-207.11. If 

the manufacturer or factory representative has not been notified of the conditions set forth in 

subsection B of this section and any of the conditions set forth in subsection B of this section 

already exists, the manufacturer shall be given an additional opportunity, not to exceed fifteen 

days, to correct or repair the nonconformity. If notification shall be mailed to an authorized 

dealer, the authorized dealer shall upon receipt forward such notification to the manufacturer. 

F. Nothing in this chapter shall be construed to limit or impair the rights and remedies of a 

consumer under any other law. 


G. It is an affirmative defense to any claim under this chapter that: 

1. An alleged nonconformity does not significantly impair the use, market value, or safety of the 

motor vehicle; or 

2. A nonconformity is the result of abuse, neglect or unauthorized modification or alteration of a 

motor vehicle by a consumer. 

§ 59.1-207.14 Action to enforce provisions of chapter 

Any consumer who suffers loss by reason of a violation of any provision of this chapter may 

bring a civil action to enforce such provision. Any consumer who is successful in such an action 

or any defendant in any frivolous action brought by a consumer shall recover reasonable 

attorney's fees, expert witness fees and court costs incurred by bringing such actions. 

§ 59.1-207.15 Informal dispute settlement procedure 

A. If a manufacturer provides an informal dispute settlement procedure, it shall be the 

consumer's choice whether or not to use it prior to availing himself of his rights under this 

chapter. 

99

B. If a dispute settlement procedure is resorted to by the consumer and the decision is for a 

refund or a comparable motor vehicle, the manufacturer shall have forty days from its receipt of 

the consumer's acceptance of the decision or from the date of a court order to comply with the 

terms of the decision. 

C. In any action brought because of the manufacturer's failure to comply with the decision, 

within the scope of the procedure's authority, rendered as a result of a dispute resolution 

proceeding or a court order, the court may triple the value of the award stipulated in the decision 

as provided for in this chapter, plus award other equitable relief the court deems appropriate, 

including additional attorney's fees. 

§ 59.1-207.16 Action to be brought within certain time 

Any action brought under this chapter shall be commenced within eighteen months following the 

date of original delivery of the motor vehicle to the consumer. However, any consumer whose 

good faith attempts to settle the dispute pursuant to the informal dispute settlement provisions of 

§59.1-207.15 have not resulted in the satisfactory resolution of the matter shall have (i) twelve 

months from the date of the final action taken by the manufacturer in its dispute settlement 

procedure, if such procedure was resorted to within eighteen months of delivery, or (ii) the 

original eighteen-month period, whichever is longer, to file an action in the proper court. 

VIRGINIA LEMON LAW, VA. CODE §59.1-207.16:1 

§ 59.1-207.16:1 Disclosure of returned vehicles; penalty 

A. If a motor vehicle that is returned to the manufacturer or distributor either under this chapter 

or by judgment, decree, or arbitration award in this or any other state and is then transferred by a 

manufacturer or distributor to a dealer, licensed under Chapter 15 (§46.2-1500 et seq.) of Title 

46.2, in Virginia, the manufacturer or distributor shall disclose this information to the Virginia 

dealer. 

B. If the returned vehicle is then made available for resale or for another lease, the manufacturer 

shall, prior to sale or lease, disclose in writing in a clear and conspicuous manner, on a separate 

piece of paper in ten-point capital type, to the Virginia dealer that this motor vehicle was 

returned to the manufacturer, distributor or factory branch, the nature of the defect which 

resulted in the return, and the condition of the motor vehicle at the time of transfer to the 

Virginia dealer. It shall be the responsibility of the dealer that receives this disclosure to give 

notice of its contents to any prospective purchaser or lessee prior to sale or lease, and to transfer 

the disclosure, or a copy thereof, to the next purchaser or lessee. A dealer's responsibility under 

this section shall cease upon the sale or lease of the affected motor vehicle to the first purchaser 

or lessee not for resale or lease. 

C. Any manufacturer or distributor who violates this section of the Motor Vehicle Warranty 

Enforcement Act shall be guilty of a Class 3 misdemeanor. 

100



Chapter 17.7. Comparison Price Advertisement Act 

In addition to the definitions listed in § 15.1-198, as used in this chapter, the following terms 

shall have the following meanings: 

"Former price" or "comparison price" means the direct or indirect comparison in any 

advertisement whether or not expressed wholly or in part in dollars, cents, fractions, or 

percentages, and whether or not such price is actually stated in the advertisement. 

"Substantial sales" means a substantial aggregate volume of sales of identical or comparable 

goods or services at or above the advertised comparison price in the supplier's trade area. 

§ 59.1-207.41. Advertising former price of goods or services. 

No supplier shall in any manner knowingly advertise a former price of any goods or services 

unless: 

1. Such former price is the price at or above which substantial sales were made in the recent 

regular course of business; or 

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2. Such former price was the price at which such goods or services or goods or services of 

substantially the same kind, quality, or quantity and with substantially the same service were 

openly and actively offered for sale for a reasonably substantial period of time in the recent 

regular course of business honestly, in good faith and not for the purpose of establishing a 

fictitious higher price on which a deceptive comparison might be based; or 

3. Such former price is based on a markup that does not exceed the supplier's cost plus the usual 

and customary markup used by the supplier in the actual sale of such goods or services or goods 

or services of substantially the same kind, quality, or quantity and with substantially the same 

service, in the recent regular course of business; or 

4. The date on which substantial sales were made, or the goods or services were openly and 

actively offered for sale for a reasonably substantial period of time at the former price is 

advertised in a clear and conspicuous manner. 

§ 59.1-207.42. Advertising comparison price of goods or services. 

No supplier shall in any manner knowingly advertise a comparison price which is based on 

another supplier's price unless: 

1. The supplier can substantiate that the comparison price is the price offered for sale by another 

supplier in the regular course of business for goods or services of substantially the same kind and 

quality, and with substantially the same service in the defined trade area; 

2. The trade area to which the advertisement refers is clearly defined and disclosed; and 

3. A clear and conspicuous disclosure is made in the advertisement that the price used as a basis 

of comparison is another supplier's price, and not the supplier's own price. 

§ 59.1-207.43. Use of certain terms in advertising former or comparison prices. 

A. No supplier shall advertise a former or comparison price in terms of "market value," "valued 

at" or words of similar import unless such price is the price at which the goods or services, or 

goods or services of substantially the same kind, quality or quantity, are offered for sale by a 

reasonable number of suppliers in the supplier's trade area. 

B. A supplier may advertise a former or comparison price in terms of "manufacturer's suggested 

price," "suggested retail price," "list price," or words of similar import provided that, with regard 

to such advertising, the use of the former or comparison price complies with 15 U.S.C. § 45 (a) 

(1) and the regulations of the Federal Trade Commission adopted thereunder. 

§ 59.1-207.44. Enforcement; penalties. 

Any violation of this chapter shall constitute a prohibited practice under the provisions of § 59.1- 

200 and shall be subject to the enforcement provisions of Chapter 17 (§ 59.1-196 et seq.) of this 

title. It shall be the responsibility of any supplier who uses a comparison price to be able to 

substantiate the basis for any price comparisons made by the supplier. Upon the request of the 

Attorney General, any attorney for the Commonwealth, the attorney of any county, city, or town, 

or the Commissioner of the Virginia Department of Agriculture and Consumer Services, a 

supplier shall provide documentation to substantiate the basis for any comparison price utilized 

102

y the supplier in any advertisement governed by this chapter. No provision of this chapter shall 

be construed to apply to any supplier whose advertising practices are governed by § 46.2-1581. 

VIRGINIA ADMINISTRATIVE CODE 

CHAPTER 30 

MOTOR VEHICLE DEALER ADVERTISING PRACTICES AND ENFORCEMENT 

REGULATIONS 

24VAC22-30-10. Intent. 

PART 1 

GENERAL PROVISIONS 

In the 1989 Acts of the Virginia General Assembly it was found that it is in the interest of the 

consuming public and legitimate motor vehicle dealers to ensure that the advertising of motor 

vehicles is honest, fair, and clear and that deceptive or misleading advertising of the retail sales 

of motor vehicles as described in Motor Vehicle Dealer Advertising, Article 9 (§46.2-1580 et 

seq.) of Chapter 15 of Title 46.2 of the Code of Virginia should be prohibited. In the 1995 Acts 

of the Virginia General Assembly it was found that it is in the interest of the consuming public 

and legitimate motor vehicle dealers for dealers to be regulated by a board of their peers, 

resulting in the formation of the Virginia Motor Vehicle Dealer Board. Therefore, the following 

regulations are promulgated by the board to administer the administrative and civil penalties 

necessary for enforcement of prohibited advertising practices. 

24VAC22-30-20. Definitions. 

103

The following words and terms, when used in this chapter, shall have the following meanings 

unless the context clearly indicates otherwise: 

"Act" means Chapter 15 (§46.2-1500 et seq.) of Title 46.2 of the Code of Virginia. 

Motor Vehicle Dealer Advertising Practices and Enforcement Regulations, 24VAC22-30-20 

"Administrative penalties" means the denial, suspension or revocation of a license as allowed in 

46.2-1576 of the Act and based on one or more of the grounds specified in §46.2-1575 of the 

Act. 

"Advertiser" means same as licensee. 

“Advertisement” means all representations disseminated in any manner or by any means for the 

purpose of inducing, or which are likely to induce, directly or indirectly, the purchase or lease of 

a new or used motor vehicle. 

"Board" means the Motor Vehicle Dealer Board of this Commonwealth. 

"Civil penalty" means the monetary assessment imposed by the board or the executive director 

against a licensee not to exceed $1,000 for any single violation of §46.2-1581 of the Code of 

Virginia. 

"Disclaimer" means those words or phrases used to provide a clear understanding or limitation to 

an advertised statement but not used to contradict or change the meaning of the statement. 

"Disclosure" means a statement in clear terms of the dollar amounts, time frames, down 

payments and other terms which may be needed to provide a full understanding of credit terms, 

periodic payment, interest rates, time payment plans, etc. 

104

"Executive director" means the Executive Director of the Motor Vehicle Dealer Board of this 

Commonwealth. 

"License" means the document issued to a Virginia motor vehicle dealer and which permits such 

dealer to engage in the business of buying and selling new and used motor vehicles or used 

motor vehicles only. 

"Licensee" means any person, partnership, association, corporation or entity which is required to 

be licensed as a motor vehicle dealer in this Commonwealth. 

"Line-make marketing group" means an association of motor vehicle dealers franchised to sell 

and advertise the same line-make of new motor vehicles. 

"New motor vehicle" means a vehicle which meets all of the following criteria. The new motor 

vehicle has: 

1. Had limited use necessary in moving or road testing the vehicle prior to delivery to a 

customer; 

2. Been transferred by a manufacturer's or distributor's certificate of origin which is the 

document provided by the manufacturer of a new motor vehicle, or its distributor to its 

franchised motor vehicle dealer; 


3. The manufacturer's or distributor's certification that it conforms to all applicable federal 

motor vehicle safety and emission standards; 

4. Not been previously sold by a dealer except for the purpose of resale and when the 

exchange is between franchised dealers of the same line-make; 

5. Not been used as a rental, driver education, or demonstration motor vehicle; and 

6. Not been used for the personal and business transportation of the manufacturer, distributor 

or dealer or any of their employees. 

"Repossessed vehicle" means a vehicle which meets all of the following criteria. It has: 

1. Been sold, titled, registered, and taken back from a purchaser; and 

2. Not yet been resold to an ultimate user. 

"Sale" means there is a significant reduction from the advertiser's usual and customary price of a 

motor vehicle and the offer is for a limited period of time. 

"Used motor vehicle" means any vehicle other than a new motor vehicle as defined in this 

chapter. 

105

Part II. 

Regulated Advertising Practices 

24VAC22-30-30. Practices. 

For purposes of this chapter, a violation of the following regulated advertising practices shall be 

an unfair, deceptive, or misleading act or practice. 

A. New Motor Vehicle 

A motor vehicle shall not be advertised as new, either by word or implication, unless it is one 

which conforms to the definition of a "new motor vehicle" as defined in 24VAC22-30-20. 

B. Used motor vehicle. 

1. The fact that a motor vehicle is used should be clearly and unequivocally expressed by the 

term "used" or by such other term as is commonly understood to mean that the vehicle is 

used. For example, "special purchase" or “program cars” by itself is not a satisfactory 

disclosure; however, such terms as "demonstrator" or "former leased and/or rental vehicles" 

used alone clearly express that they meet the definition of a used vehicle for advertising 

purposes. When in doubt, the dealer should provide more information or simply say "used." 


2. Once a certificate of origin as defined in §46.2-1500 has been assigned to a purchaser, the 

motor vehicle becomes a used vehicle and must be advertised as such. 

C. Finance charges or interest rates advertisements. 

1. Advertisements of finance charges or other interest rates "below market" (or words to that 

effect) shall not be used unless it is manufacturer or distributor sponsored or substantiated 

by a written agreement with the finance source. 

2. Advertisement of finance charges or other interest rates shall not be used when there is a 

cost to buy-down said charge or rate which is passed on, in whole or in part, to the purchaser. 

D. Terms, conditions, and disclaimers. 

1. When terms, conditions or disclaimers are used, they shall always be stated clearly and 

conspicuously. An asterisk or other reference symbol may be used to point to a disclaimer or 

other information; but, the disclaimer shall not be used as a means of contradicting or changing 

the meaning of an advertised statement. In addition, they must meet the Federal Trade 

commission Truth in Lending Act Requirements 15 USC §§1601 et seq., 12 CFR 226 

(Regulation Z) or the Federal Trade Commission Truth in Leasing Act Requirements, as 

applicable. 

106

2. In all printed media, where terms, conditions or disclaimers are used, they shall be clearly 

and conspicuously visible and printed in not less than 8 point type print or printed in 6-point 

upper case type print. If a processing fee or freight or destination charges are not included in the 

advertised price, the amount of any such processing fee and freight or destination charge must be 

clearly and conspicuously disclosed in not less than eight-point boldface type. When billboards, 

portable signs, posters, etc., are used, all terms, conditions or disclaimers need to be displayed and 

phrased in a manner which is clear and conspicuous. 

3. In radio advertisements where terms, conditions or disclaimers are used, they shall be clearly 

announced during the advertisement. They must be explained clearly and at an understandable 

speed and volume level. 

4. In television advertisements, where terms, conditions or disclaimers are used, they shall be 

clearly and conspicuously displayed or announced, or both, during the advertisement. They 

shall be at an understandable speed or understandable volume level, or both. 

E. Sale or sales. 

The expiration date of an advertised "sale" shall be clearly and conspicuously disclosed. If 

the sale exceeds 30 days, the advertiser should be prepared to substantiate that the offering is 

indeed a valid reduction and has not become his regular price. 


F. "List price," "sticker price," "suggested retail price." 

These terms and similar terms shall be used only as follows: 

1. In reference to the manufacturer's or distributor's suggested retail price for new vehicles; or 

2. The dealer's own usual and customary price for used vehicles. 

G. "Cost" and "invoice price" terms. 

1. "At cost," "below cost," "$ off cost" shall not be used in advertisements because of the 

difficulty in determining a dealer's actual net cost at the time of sale. 

2. "Invoice price," "$ over invoice," may be used, provided that the invoice referred to is the 

manufacturer's factory invoice, distributor's invoice, or a bona fide bill of sale, as applicable, and 

that it is available for customer inspection. 

3. "Manufacturer's factory invoice" or "distributor's invoice" means that document supplied by 

the manufacturer or the distributor listing the manufacturer's or distributor's charge to the dealer 

before any deduction for items such as holdback, group advertising, factory incentives or rebates, 

or any governmental charges. 

H. Price or credit terms of advertised vehicles 

. When the price or credit terms of a vehicle are advertised in print, radio, or television, the 

vehicle should be fully identified as to year, make, and model. In addition, in all 

107

advertisements placed by individual dealers and not marketing groups, the stated price or 

credit terms shall include all charges which the buyer must pay to the seller including 

"freight" or "destination charges." If there are deferred payments on credit sales where 

accrued finance charges are ultimately charged to the consumer for any part of the deferred 

period, then these charges must be clearly stated. State and local fees and taxes need not be 

included in the stated price. If the buyer will be required to pay to the seller charges which 

increase the advertised price, the charges must be disclosed and priced in the advertisement. 

I. Matching or bettering competitor's price ads. 

Advertisements which set out a policy matching or bettering a competitor's price shall not be 

used unless the terms of the offer are specific, verifiable, and reasonable. All terms of the 

offer shall be included in the disclosure and disclaimer area and may not say such things as 

"rules or terms available in showroom" or "available before delivery." You must fully 

disclose as a part of the ad any material or significant conditions which must be met or the 

evidence the consumer must present to take advantage of the offer. 

J. Advertisements of dealer rebates shall not be used. Offers to match down payments or 

guarantee minimum trade-in allowances are forms of dealer rebates. 

Motor Vehicle Dealer Advertising Practices and Enforcement Regulations, 24VAC 22-30-30 

K. "Free," "at no extra cost" terms. 

No equipment, accessory, other merchandise or service shall be described using any of the terms 

listed below or if a purchase is required in order to receive the “free” offer. Prohibited terms are: 

1. Free 

2. Complimentary 

3. At no extra cost 

4. At no extra charge 

5. At no extra fee 

6. At no extra price 

7. At no additional cost 

8. At no additional charge 

9. At no additional fee 

10. At no additional price 

11. Present 

12. Gift 

13. On the house 

L. "Bait advertising" shall not be used. 

1. The purpose of this section is to ensure that customers will be informed the vehicle is in 

limited quantity or availability. If a specific vehicle is advertised, the seller shall be in possession 

of a reasonable supply of said vehicles and they shall be available at the advertised price. If the 

advertised vehicle is available only in limited numbers or only by order, that shall be stated in 

the ad. The listing of vehicles by stock numbers or vehicle identification numbers is permissible 

108

and is one means of satisfactorily disclosing a limitation of availability, provided a separate 

number is used for each vehicle. For new vehicles, if the offer is limited, you will be able to say 

such things as "in stock" or "will order" provided you can order the vehicle just as advertised and 

delivery can be assured as soon as the manufacturer or distributor can confirm the order and 

deliver it to your dealership. If you cannot get an order confirmation within 30 days, you must 

refund all moneys collected from the buyer at his request. If the vehicle is available only by 

order then it must be clearly and conspicuously disclosed in the advertisement. 

2. Advertising a vehicle at a certain price (including "as low as" statements), but having 

available for sale only vehicles equipped with dealer added cost "options" which increase 

the selling price above the advertised price, may also be considered "bait advertising." 

3. If a lease payment is advertised, the fact that it is a lease arrangement shall be disclosed. 

M. The term "repossessed vehicle" shall not be used unless the full criteria of the definition 

in 24VAC22-30-30 is met. Advertisers offering such vehicles for sale shall provide proof of 

repossession upon request. 


N. "Finance" or "loan." 

Words such as "finance" or "loan" shall not be used in a motor vehicle dealer advertiser's 

firm name or trade name unless that person is actually engaged in the financing of motor 

vehicles. 

O. "Special arrangement or relationship" advertisements 

Statements such as "big volume buying power," "manufacturer's outlet," "factory authorized 

outlet," and "factory wholesale outlet," shall not be used. Any term that gives the consumer 

the impression the dealer has a special arrangement with the manufacturer or distributor as 

compared to similarly situated dealers, is misleading and shall not be used. 

P. Records retention. 

Advertisers shall maintain the original or a clear facsimile copy of all ads in a manner that 

permits systematic retrieval for a period of 60 days subsequent to the expiration date of the 

advertisement. 

PART III ENFORCEMENT 

24VAC22-30-40. Administrative and civil penalties. 

A. Violations of any regulated advertising practice may, in the discretion of the board or 

executive director, be addressed by a written warning to the licensee as an initial step in the 

enforcement process. 

109

B. Any single violation of a regulated advertising practice may also, after an informal fact 

finding proceeding as provided in the Administrative Process Act, §9-6.14:1 et seq. of the Code 

of Virginia, result in an assessment of a civil penalty up to $1,000. 

C. Subsequent, same or similar violations may, after an informal fact finding proceeding as 

provided in the Administrative Process Act, §9-6.14:1 et seq. of the Code of Virginia, result in 

an assessment of a civil penalty up to the $1,000 and may also be grounds for denying, 

suspending or revoking a license subject to the hearing requirements pursuant to §46.2-1576 of 

the Act, either or both. 

110

24VAC22-30-50. Appeals. 

The action of the board in suspending, revoking or refusing any license or in imposing a 

monetary civil penalty against the licensee shall be subject to judicial review as provided in 

§§46.2-1577 and 46.2-1578 of the Act. 


111

24VAC22-30-60. Other enforcement. 

This chapter and the provisions of Article 9 (§46.2-1580 et seq.) of Chapter 15 of Title 46.2 of 

the Code of Virginia shall be in addition to and not a substitute for the powers and authority 

granted pursuant to the provisions of the Virginia Consumer Protection Act (§59.1-196 et seq.) 

or of any other provision of the Code of Virginia. 

112

TABLE OF CONTENTS FOR FEDERAL REGULATIONS 

LEASING REGULATIONS (REGULATION M).......................................................112 Through 121 

Amount due at lease signing, how to disclose...................112-114 

Clear and conspicuous standard..............................................112 

FAQ on advertising consumer leases.......................................118 

Lease rate advertising...............................................................121 

TV or radio advertising of a lease.............................................120 

TRUTH IN LENDING (REGULATION Z)........................................................................................123 

ADVERTISING OF WARRANTY AND GUARANTEES................................................................126 

DEALER GUIDE TO THE USED CAR RULE..........................................................129 Through 133 

“As is” or implied warranty......................................................131 

Buyer’s guide............................................................................130 

Definition of used.....................................................................129 

Limited or full warranty, definition..........................................132 

Remainder of manufacturer’s warranty...................................132 

Service contracts.......................................................................133 

Spanish requirements...............................................................130 

Who must comply.....................................................................129 

FTC GUIDE TO WORD “FREE”.......................................................................................................134 

BAIT ADVERTISING..........................................................................................................................137 

INTERNET ADVERTISING...............................................................................................139 AND 140

COMMENTS CONCERNING FEDERAL REGULATION M, 12CFR 213.7 

The Board proposed to extend the alternate disclosure provision to television 

advertisements. The majority of commenters supported this proposal. They agreed that 

television has the same time and space constraints as radio and that the alternate 

disclosure provision allows consumers the opportunity to obtain lease information in a 

format that can be retained and studied at a convenient time. 

The Board also solicited comment on whether constraints similar to those for television 

and radio advertisements exist for print advertisements. Although some commenters 

encouraged imposing the same standard for both broadcast and print media, the majority 

of commenters did not support the application of the alternative disclosure rules to print 

media. Much of the oral and written disclosure information in a broadcast is difficult for 

lessors to provide and for consumers to comprehend or retain. The Board believes that 

lessors have the ability to more efficiently provide the required disclosures in print 

format. And generally, print advertisements are easier to retain for use by consumers who 

are shopping for a lease. Therefore, the Board has extended the alternate disclosure 

provision to television but not to print media. 

7(b) Clear and conspicuous standard. 

In response to commenters' request for guidance on the clear and conspicuous standard 

for advertisements, the Board clarifies that an advertisement must be understandable and 

readable. For example, very fine print in a television advertisement or detailed and 

rapidly stated information in a radio advertisement does not meet the clear and 

conspicuous requirement if consumers cannot see and read or comprehend all of the 

information required to be disclosed. Further, in the official commentary, the Board 

proposed to require that lease disclosures appear on a television screen at a minimum of 

five seconds to meet the clear and conspicuous standard. Upon further analysis, the 

Board believes that this "five second" rule, which was referred to in a case by the Federal 

Trade Commission, is inadequate as a test for the clear and conspicuous standard. 

Therefore, the Board is withdrawing the "five second" rule as a standard to be used for 

television advertisements. 

7(b)(1) Amount due at lease signing. 

The proposal sought to address misleading advertisements primarily in which a lessor 

refers to a low or no capitalized cost reduction (down payment) and, in small print lists 

other up-front charges such as an acquisition fee, a security deposit, the first monthly 

lease payment. The Board proposed that a reference in an advertisement to any 

component of the total amount due at lease signing may not be more prominently 

displayed than the required disclosure of the total amount of payments due at lease 

signing. 

112

COMMENTS CONCERNING FEDERAL REGULATION M, 12 CFR 213.7 

The majority of commenters supported the proposed requirement, stating that it would 

minimize deceptive practices and that it provided clarity to the clear and conspicuous 

standard. However, a number of commenters opposed the adoption of an equal 

prominence rule. They believed the proposed rule was overbroad, and suggested that the 

final rule should ensure that the prominence rule is not triggered when the only payment 

due at lease inception is the first scheduled periodic payment. Several commenters sought 

further clarification on the clear and conspicuous standard. 

The final rule provides an exception to the prominence test for the periodic payment. 

Stating the amount of any periodic payment will not trigger the prominence rule. The rule 

is triggered by oral or written references (which includes electronic media such as the 

Internet) to any other component of the total amount due at lease signing. The Board 

believes the final rule addresses some of the concerns about lease advertisements without 

adding significant burden on lessors or interfering with the effective marketing of their 

products. The final rule does not specify what terms are to be advertised, but only that 

components of the total amount due at lease signing cannot be emphasized without giving 

equal prominence to the disclosure of the total amount due itself. Lessors can advertise 

lease transactions without including any C.A. disclosures. Disclosures are only required 

when certain "trigger" terms are included in the advertisement. The C.A. requires only 

disclosure of the total due, not an itemization of its component parts, in advertisements. 

Such an itemization is provided in the transaction-specific disclosures 

7(b)(2) Advertisement of a lease rate. 

As discussed in the supplementary information to § 213.4(s), if a percentage rate is 

stated in an advertisement, a notice must accompany the rate. The notice must be placed 

next to the rate without any other intervening language or symbols. For example, a lessor 

may not state a rate with an asterisk and make the disclosure in a different location in the 

advertisement or lease document. The notice states that this percentage may not measure 

the overall cost of financing the lease. In addition, with the exception of the notice 

required by § 213.4(s), the rate cannot be more prominent than the disclosures in the 

advertisement required by § 213.4. 

7(c) Catalogs and multi-page advertisements. 

Section 7(c) is adopted as substantially proposed, with no substantive change from the 

former rule. 

7(d) Advertisement of terms that require additional disclosure 

In paragraph 7(d)(2)(iii), the word "such" prior to "payments under the lease," 

inadvertently omitted in the proposal, is inserted back in the paragraph. 

In complying with paragraph 7(d)(2)(iv), lessors are required to provide a sum certain if 

the purchase option is available at the end of the term. Referring to a source for 

113

COMMENTS CONCERNING FEDERAL REGULATION M, 12 CFR 213.7 

determining a sum certain in the future complies with this requirement. Statements of a 

lease-end price such as "negotiated price" or "fair market value" do not comply with the 

requirement of this paragraph. 

7(e) Alternative disclosures—telephone or radio advertisements. 

Section 336 of the Riegle Community Development and Regulatory Improvement Act of 

1994 (Pub. L. 103-325, 108 Stat. 2160) amends § 184 of the C.A. to provide an 

alternative disclosure scheme for radio lease advertisements. In radio advertisements, 

lessors are permitted to substitute a reference to a toll-free telephone number or to a print 

advertisement for the disclosures about the purchase option and the end-of-term liability. 

When calling an advertised toll-free number, if a consumer obtains a recording that 

provides several dialing options--such as providing directions to the lessor's place of 

business--the option allowing the consumer to request lease disclosures should be 

provided early in the phone message to ensure that disclosure information is not obscured 

by other information. 

In keeping with the purpose of the statutory amendment, the final rule requires language 

to accompany the telephone number indicating that all required disclosures are available 

by calling the toll-free number. Without language such as, "call 1-800-000-0000 for 

details about costs and terms," consumers are not put on notice that disclosures may be 

obtained by calling the toll-free number. A specific reference to disclosures in print 

advertisements is also required. 

Code of Federal Regulations 

114

§ 213.7 Advertising. 

Title 12. Banks and Banking 

Chapter II. Federal Reserve System 

Part 213. Consumer Leasing (Regulation M) 

(12 CFR 213.7) 

(a) General rule. An advertisement for a consumer lease may state that a specific lease of 

property at specific amounts or terms is available only if the lessor usually and 

customarily leases or will lease the property at those amounts or terms. 

(b) Clear and conspicuous standard. Disclosures required by this section shall be made 

clearly and conspicuously. 

(1) Amount due at lease signing. Except for the statement of a periodic payment, 

any affirmative or negative reference to a charge that is a part of the disclosure 

required under paragraph (d)(2)(ii) of this section, shall not be more prominent 

than that disclosure. 

(2) Advertisement of a lease rate. If a lessor provides a percentage rate in an 

advertisement, the rate shall not be more prominent than any of the disclosures in 

§ 213.4, with the exception of the notice in § 213.4(s) required to accompany the 

rate; and the lessor shall not use the term "annual percentage rate," "annual lease 

rate," or equivalent term. 

(c) Catalogs and multipage advertisements. A catalog or other multipage advertisement 

that provides a table or schedule of the required disclosures shall be considered a single 

advertisement if, for lease terms that appear without all the required disclosures, the 

advertisement refers to the page or pages on which the table or schedule appears. 

FEDERAL REGULATION M 12 CFR 213.7 

115

(d) Advertisement of terms that require additional disclosure. 

(1) Triggering terms. An advertisement that states any of the following items shall contain 

the disclosures required by paragraph (d)(2), except as provided in paragraphs (e) and (f) of 

this section: 

(i) The amount of any payment; 

(ii) A statement of any capitalized cost reduction or other payment (or that no 

payment is required prior to or at consummation or by delivery, if delivery occurs after 

consummation. 

2) Additional terms. An advertisement stating any item listed in paragraph (d)(1) of this 

section shall also state the following items: 

(i) That the transaction advertised is a lease; 

(ii) The total amount due prior to or at consummation or by delivery, if delivery 

occurs after consummation; 

(iii) The number, amounts, and due dates or periods of scheduled payments under 

the lease; 

(iv) A statement of whether or not a security deposit is required. 

(v) A statement that an extra charge may be imposed at the end of the lease term 

where the lessee’s liability (if any) is based on the difference between the residual value of 

the leased property and its realized value at the end of the lease term. 

(e) Alternative disclosures--merchandise tags. A merchandise tag stating any item listed 

in paragraph (d)(1) of this section may comply with paragraph (d)(2) of this section by 

referring to a sign or display prominently posted in the lessor's place of business that 

contains a table or schedule of the required disclosures. 

(f) Alternative disclosures--television or radio advertisements. 

(1) Toll-free number or print advertisement. An advertisement made through television or 

radio stating any item listed in paragraph (d)(1) of this section complies with paragraph 

(d)(2) of this section if the advertisement states the items listed in paragraphs (d)(2)(i)-(iii) 

of this section, and: 

FEDERAL REGULATION M 12 CFR 213.7 

116

(i) Lists a toll-free telephone number along with a reference that such 

number may be used by consumers to obtain the information required by 

paragraph (d)(2) of this section; or 

(ii) Directs the consumer to a written advertisement in a publication of general 

circulation in the community served by the media station, including the name and the 

date of the publication, with a statement that information required by paragraph (d)(2) of 

this section is included in the advertisement. The written advertisement shall be 

published beginning at least three days before and ending at least ten days after the 

broadcast. 

(2) Establishment of toll-free number. 

(i) The toll-free telephone number shall be available for no fewer than ten days, 

beginning on the date of the broadcast. 

(ii) The lesser shall provide the information required by paragraph (d) (2) of this 

section orally, or in writing upon request. 

Questions Concerning Advertising Consumer Leases 

117

If you advertise consumer leases, the rules for lease ads - the Consumer Leasing Act 

(CLA) and Regulation M - have been amended. These changes streamline and update the 

required disclosures, which are designed to help consumers shop and compare lease 

terms. These rules became effective October 1, 1998 

These are some frequently asked questions about the general advertising requirements 

of the CLA and Regulation M, the revised disclosure requirements, and the liability for 

violations. 

General Requirements 

Q. What's a consumer lease? 

A. A lease of personal property to an individual for more than four months for 

personal, family or household use where the total contractual obligation is not more than 

$25,000. 

Q. Who's covered? 

A. Lessors, automobile dealers, merchants - in short, anyone who advertises 

consumer leases must comply with the advertising disclosure requirements spelled out in 

the CLA and Regulation M. 

Q. Are the media covered? 

A. No. 

Q. What's a lease ad? 

A. Any message that invites, offers or announces to the public the availability of a 

consumer lease, whether in visual, oral or print (including electronic) media. That 

includes: 

• Messages in newspapers, magazines, leaflets, catalogs, and fliers; 

• messages on radio, television and public address systems; 

• direct mail; 

• telephone solicitations; 

• signs or displays; and 

• online information, such as the Internet. 


Q. What's clear and conspicuous disclosure? 

118

A. The required disclosures in your ad must be reasonably understandable. That 

is, consumers must be able to see and read or hear, and understand the information. This 

requirement applies to all mandatory disclosures, including those offered through a tollfree 

(or collect or local) telephone number. 

Q. What terms can the ad offer? 

A. The terms offered must be usually and customarily available. 

Q. What terms trigger disclosures in the revised regulation? 

A. If your ad includes any of these triggering terms: 

• statement of any capitalized cost reduction or other payment required 

before or a consummation, or by delivery if delivery takes place after 

consummation, or that no payment is required 

• the amount of any payment. 

Then it must include these disclosures clearly and conspicuously: 

• that the transaction advertised is a lease, 

• the total amount due before or at consummation, or by delivery if delivery 

takes place after consummation, 

• the number, amounts and due dates or periods of scheduled payments 

under the lease, 

• whether or not a security deposit is required, and : 

• in leases where the consumer's liability is based on the difference between 

the property's residual value and its realized value at the end of the lease term 

that an extra charge may be imposed at the end of the lease term. 

Q. What disclosure rules apply to the total amount due at consummation or delivery? 

A. Keep in mind the following: 

The total amount due must be stated. If you also choose to itemize the total amount, 

the total amount must still be clear and conspicuous, that is, readable and understandable 

to consumers. 

Except for the periodic payment, any positive or negative reference to a charge that is 

part of the total amount cannot be more prominent than the total amount. 


If third-party fees that vary by state or locality - such as taxes, license or registration 

are involved, your ad may give a total including the fees based on a particular state or 

119

locality while explaining that fact and the fact that such fees vary by state or locality or, 

exclude the fees from the total but disclose that fact. 

Q. What if my ad promotes several leased items? 

A. If a triggering term appears, you can use an example of one or more typical 

leases if you disclose the required terms that apply to each. The examples must be 

labeled as such and must reflect representative lease terms made available to consumers. 

Q. Is there a special option for radio and TV ads? 

A. The triggering terms and required disclosures described above apply to lease 

ads. But, if your radio or TV ad refers clearly and conspicuously to a toll-free (or collect 

or local) phone number, and if you follow certain procedures you can limit the 

information provided in your radio or TV ad. To use this approach, your radio or TV ad 

still must clearly and conspicuously state: 

that the transaction advertised is a lease, 

the total amount due before or at consummation, or by delivery if delivery occurs 

after consummation, and ; 

lease. 

the number, amounts, and due dates or periods of scheduled payments under the 

Your ad also must indicate that consumers can get all the required disclosures 

through the toll-free (or collect or local) phone number or print ad. The latter must 

include the publication's name and date. 

Q. Are there other special procedures for the toll-free (or collect or local) phone number 

and print ads? 

A. Yes, the toll-free (or collect or local) phone number must be established no 

later than the ad's air date and continue for at least 10 days after the air date. 

Callers must be given all the required disclosures early in the message. A clear 

and conspicuous written copy of the disclosures also must be given to anyone who asks 

for it. 


Print ads must appear in a general circulation publication in the community served by 

the media station. A newspaper circulated nationally, such as USA Today or the Wall 

120

Street Journal, could meet this requirement. The ad must appear at least three days before 

the radio or TV ad airs, and continue for at least 10 days after the air date. The print ad 

must clearly and conspicuously include all the required disclosures. 

Q. How do I advertise a lease rate? 

A. Your ad must include the following statement near the rate without any 

intervening language or symbols: "This percentage may not measure the overall cost of 

financing the lease." In addition, except for the notice, the rate cannot appear more 

prominently than any terms in the ad that are required written disclosures under the 

amended CLA and Regulation M, such as "gross capitalized cost," "residual value" and 

others. Nor can you refer to the rate as an "annual percentage rate," "annual lease rate," or 

other equivalent term. 

FEDERAL TRADE COMMISSION 

TRUTH IN LENDING 

REGULATION Z 

121

It is the Dealer's responsibility to become familiar with the provision and compliance 

with 

Regulation Z but there has been some misunderstanding in regard to truth-in-lending as it 

pertains to "trigger terms". In the past, several Virginia dealers have been cited and fined 

by the Motor Vehicle Dealer Board for these particular violations and, in Maryland, the 

Attorney General's office has indicated that they will be enforcing these rules in 

cooperation with the FTC. 

The trigger terms are these: 

1. Any amount or percentage of down payment 

2. The amount of any payment 

3. The number of payments or period of repayment 

4. The amount of any Finance Charge 

Once you do use a trigger term you must disclose the following: 

a. The amount of any down payment 

b. The terms of repayment 

c. The APR 

Remember, APR is not, of itself, a trigger term. If you state " 1.9% available" no other 

credit information needs to be included. BUT, if you advertise "'1.9% for 24 Months" the 

time 

period becomes a "trigger term" and you then must list the required disclosures 

This particular requirement is one of the biggest causes of citations and 

fines by various regulatory agencies 

You will find a more detailed explanation of Regulation Z as it applies to “trigger terms” on the 

following pages 

Advertising Finance Rates 

Basic Rule Regulation Z 

122

The basic requirement for advertising closed-end credit is this: if your ad shows the 

finance charge as a rate, that rate must be stated as an "annual percentage rate," using that 

term or the abbreviation "APR." Your ad must state the annual percentage rate, even if it 

is the same as the simple interest rate. So, a dealer who wants to advertise low-rate 

financing made available by the manufacturer, your advertisement would read, for 

example, "5.9% annual percentage rate" or "5.9%APR." If you want to show only a rate, 

and the APR is stated in the ad, no other credit information need be included: the 

"triggering term" requirement does not apply because the rate and APR are not 

triggering terms. 

TRUTH IN LENDING 

The following information is offered to assist the dealer in complying with the 

Motor Vehicle Dealer Advertising Practices and Enforcement regulations. 

It is the dealer’s responsibility to become familiar with all provisions of the Federal 

Truth in Lending Act ( Regulation Z) and to ensure dealership advertisements are 

in compliance with these Federal directives. 

If one of the following “Trigger Terms” is stated in the ad: 

1. Amount or percentage of down payment (“0 Down” or “No Money down” is not 

considered a trigger term) 

2. Amount of payment 

3. number of payment 

4. Period of repayment 

5. amount of finance charge (in dollars) 

Then the following required disclosures are needed: 

(Amount or % down), (# of months), payments at ___$___ per 

,week, etc. at _%__ APR. 

(month 

*APR by itself is not considered a trigger term but is a requirement in the disclosure 

** All disclosures must be clear and conspicuous. 

CLOSED-END CREDIT DISCLOSURES( REGULATION Z) 

The main requirements governing advertising of closed-end credit concern 

"triggering terms" and "finance rates." These requirements may apply to a single 

advertisement. 

123

Triggering Terms 

If you advertise closed-end credit with a "triggering term," you also must disclose other 

major terms, including the annual percentage rate. This rule is intended to ensure that all 

important terms of a credit plan, not just the most attractive ones, appear in an ad. 

The triggering terms for closed-end credit are: 

(1) The amount of the down payment (expressed as either a percentage or dollar 

amount), in a "credit sale" transaction. 

Examples: 

"10% down""$1000 down""90% financing" "trade-in with $1000 appraised value 

required" 

(2) The amount of any payment (expressed as either a percentage or dollar amount). 

(3) The terms of repayment 

(4) The amount of any finance charge. 

Some statements about credit terms are too general to trigger additional disclosures. 

Examples of terms that do not trigger the required disclosures are: 

"No down payment" "Easy monthly payments" "Loans available at 5% below our 

standard APR" "Low down payment accepted" "Terms to fit your budget" "Financing 

available." 

General statements, such as "take years to pay" or "no closing costs," do not trigger 

further disclosures because they do not state or suggest the period of repayment or down 

payment cost. In contrast, the statement "drive it home for $199," which implies that the 

required cash down payment is no more than $199, does trigger full disclosure. Similarly, 

a statement such as "up to 48 months to pay" lists the period of repayment and triggers 

disclosure. In general, the more specific the statement, the more likely it is to trigger 

additional disclosures 

Required Disclosures: 

If your ad for closed-end credit uses a triggering term, it also must include the following 

information: 

1.The amount or percentage of the down-payment; 

2.The terms of repayment; and 

3.The "annual percentage rate," using that term or the abbreviation "APR." If the annual 

percentage raw may be increased after consummation of the credit transaction, that fact 

also must be stated. 

The amount or percentage of the "down payment" need not be shown directly, as long as 

it can be determined from the ad. For example, "10% cash required 

CLOSED-END CREDIT DISCLOSURES (REGULATION Z) 

from buyer" or "credit terms require minimum $1000 trade-in" would satisfy the 

disclosure requirement. 

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The "terms of repayment" may be expressed in a variety of ways, as long as they convey 

the required information. For example, an automobile finance company might use unit 

cost to disclose repayment terms: "48 monthly payments of $23.44 for each $1000 

borrowed." Similarly, the length of the loan can be expressed as the number of payments 

or the time period of the loan 

Sample Disclosure The following disclosure of car financing offered by the dealer would 

comply with the law if printed clearly and conspicuously: Special close-out sale this weekend. 

Any in-stock Chevy Citation, only 5% down, 5.9% APR (on approved credit). Example: 

48 monthly payments of $224.95. 

Advertising Finance Rates 

Basic Rule 

The second basic requirement for advertising closed-end credit is this: if your ad 

shows the finance charge as a rate, that rate must be stated as an "annual percentage rate," 

using that term or the abbreviation "APR." Your ad must state the annual percentage rate, 

even if it is the same as the simple interest rate. So, if you are a car dealer who wants to 

advertise low-rate financing made available by the manufacturer, your advertisement 

would read, for example, "5.9% annual percentage rate" or "5.9%APR." If you want to 

show only a rate, and the APR is stated in the ad, no other credit information need be 

included: the "triggering term" requirement does not apply because the rate and APR are 

not triggering terms. Thus, an advertisement could simply state, "Assume 10% annual 

percentage rate" or "10% annual percentage rate mortgages available." 

No credit ad may state an "add-on" rate (for example, "6% add-on"). This rate is 

misleading because it is significantly lower than the annual percentage rate, and its use in 

an ad violates the law. 

CODE OF Federal Regulations 

Title 16. Commercial Practices 

Chapter I. FEDERAL TRADE COMMISSION 

PART 239 -- GUIDES FOR THE ADVERTISING OF WARRANTIES AND (16 

CFR 139.1 et seq.) GUARANTEES 

125

239.1 Purpose and scope of the guides: 

The Guides for the Advertising of Warranties and Guarantees are intended to help 

advertisers avoid unfair or deceptive practices in the advertising of warranties or 

guarantees. The Guides are based upon Commission cases, and reflect changes in 

circumstances brought about by the Magnuson-Moss Warranty Act (15 U.S.C. 2301 et 

seq.) and the FTC rules promulgated pursuant to the Act (16 CFR Parts 701 and 702). 

The Guides do not purport to anticipate all possible unfair or deceptive acts or practices 

in the advertising of warranties or guarantees and the Guides should not be interpreted to 

limit the Commission's authority to proceed against such acts or practices under section 5 

of the Federal Trade Commission Act. The Commission may bring an action under 

section 5 against any advertiser who misrepresents the product or service offered, who 

misrepresents the terms or conditions of the warranty offered, or who employs other 

deceptive or unfair means. 

Section 239.2 of the Guides applies only to advertisements for written warranties on 

consumer products, as ``written warranty'' and ``consumer product'' are defined in the 

Magnuson-Moss Warranty Act, 15 U.S.C. 2301, that are covered by the Rule on Pre-Sale 

Availability or Written Warranty Terms, 16 CFR Part 702. The other sections of the 

Guides apply to the advertising of any warranty or guarantee. 

239.2 Disclosures in warranty or guarantee advertising. 

(a) If an advertisement mentions a warranty or guarantee that is offered on the advertised 

product, the advertisement should disclose, with such clarity and prominence as will be 

noticed and understood by prospective purchasers, that prior to sale, at the place where 

the product is sold, prospective purchasers can see the written warranty or guarantee for 

complete details of the warranty coverage. 

In television advertising, the Commission will regard any disclosure of the pre-sale 

availability of warranties as complying with this Guide if the advertisement makes the 

necessary disclosure simultaneously with or immediately following the warranty claim 

and the disclosure is made in the audio portion, or, if in the video portion, it remains on 

the screen for at least five seconds. 

Examples: The following are examples of disclosures sufficient to convey to prospective 

purchasers that, prior to sale, at the place where the product is sold, they can see the 

written warranty or guarantee for complete details of the warranty coverage. These 

examples are for both print and broadcast advertising. These examples are illustrative, 

not exhaustive. In each example, the portion of the advertisement that mentions the 

warranty or guarantee is in regular type and the disclosure is in italics. 

A. ``The XYZ washing machine is backed by our limited 1-year warranty. For complete 

details, see our warranty at a dealer near you.'' 

B. ``The XYZ bicycle is warranted for 5 years. Some restrictions may apply. See a copy 

FTC Guides for Advertising, 16 CFR 239.2 

D. ``See our full 2 year warranty at the store nearest you.'' 

E. ``Don't take our word -- take our warranty. See our limited 2 year warranty where you 

shop.'' 

(b) If an advertisement in any catalogue, or in any other solicitation2 (FOOTNOTE) for 

mail order sales or for telephone order sales mentions a warranty or guarantee that is 

126

offered on the advertised product, the advertisement should disclose, with such clarity 

and prominence as will be noticed and understood by prospective purchasers, that 

prospective purchasers can obtain complete details of the written warranty or guarantee 

free from the seller upon specific written request or from the catalogue or other 

solicitation (whichever is applicable). 

239.3 “SATISFACTION GUARANTEES” AND SIMILAR REPRESENTATIONS 

IN ADVERTISING; DISCLOSURE IN ADVERTISING THAT MENTIONS 

“SATISFACTION GUARANTEES” OR SIMILAR REPRESENTATIONS: 

(a) A seller or manufacturer should use the terms “Satisfaction Guarantee,” “Money 

Back Guarantee,” “Free Trial Offer,” or similar representations in advertising only if the 

seller or manufacturer, as the case may be, refunds the full purchase price of the 

advertised product at the purchaser’s request. 

(b) An advertisement that mentions a “Satisfaction Guarantee” or a similar 

representation should disclose, with such clarity and prominence as will be noticed and 

understood by prospective purchasers, any material limitations or conditions that apply to 

the “Satisfaction Guarantee” or similar representation. 

Examples: These examples are for both print and broadcast advertising. These examples 

are illustrative, not exhaustive. 

Example A: (In an advertisement mentioning a satisfaction guarantee that is conditioned 

upon return of the unused portion within 30 days) “We guarantee your satisfaction. If not 

completely satisfied with Acme Spot Remover, return the unused portion with in 30 days 

for a full refund.” 

Example B: (In an advertisement mentioning a satisfaction guarantee that is conditioned 

upon of the product in its original packaging) “Money Back Guarantee! Just return the 

ABC watch in its original package and ABC will fully refund your money.” 

239.4 ``Lifetime'' and similar representations. 

If an advertisement uses ``lifetime,'' ``life,'' or similar representations to describe the 

duration of a warranty or guarantee, then the advertisement should disclose, with such 

clarity and prominence as will be noticed and understood by prospective purchasers, the 

life to which the representation refers. 

Examples: These examples are for both print and broadcast advertising. These examples 

are illustrative, not exhaustive. 

Example A: (In an advertisement mentioning a lifetime guarantee on an automobile 

muffler where the duration of the guarantee is measured by the life of the car in which it 

FTC Guides for Advertising, 16 CFR 239.2 

is installed) `Òur lifetime guarantee on the Whisper Muffler protects you for as long as 

your car runs--even if you sell it, trade it, or give it away!'' 

Example B: (In an advertisement mentioning a lifetime guarantee on a battery where the 

duration of the warranty is for as long as the original purchaser owns the car in which it 

was installed) `Òur battery is backed by our lifetime guarantee. Good for as long as you 

own the car!'' 

127

239.5 Performance of warranties or guarantees. 

A seller or manufacturer should advertise that a product is warranted or guaranteed 

only if the seller or manufacturer, as the case may be, promptly and fully performs its 

obligations under the warranty or guarantee. 

A Dealer’s Perspective to the Used Car Rule 

Most car dealers who sell used vehicles must comply with the Federal Trade 

Commission’s (FTC) Used Car Rule. In fact, car dealers who sell more than five used 

vehicles in a 12-month period must comply with the Rule. Banks and financial 

institutions are exempt from the Rule, as are businesses that sell vehicles to their 

employees, and lessors who sell a leased vehicle to a lessee, an employee of the lessee, or 

a buyer found by the lessee. 

128

The Used Car Rule applies in all states except Maine and Wisconsin. These two states are 

exempt because they have similar regulations that require dealers to post disclosures on 

used vehicles. The Rule applies in the District of Columbia, Puerto Rico, Guam, the U.S. 

Virgin Islands, and America Samoa. 

This booklet defines the Rule’s requirements, explains how to prepare and display the 

Buyers Guide, and offers a compliance checklist. 

You must post a Buyer’s Guide before you “offer” a used vehicle for sale. A vehicle is 

offered for sale when you let a customer inspect it for the purpose of buying it, even if the 

car is not fully prepared for delivery. This requirement also applies to used vehicles for 

sale on your lot through consignment, power of attorney, or other agreement. At public 

auctions, dealers and the auction company must comply. The Rule does not apply at 

auctions that are closed to consumers. 

Previously titled or not, any vehicle driven for purposes other than moving or test 

driving, is considered a used vehicle, including light-duty vans, light-duty trucks, 

demonstrators, and program cars that meet the following specifications: 

• a gross vehicle weight rating (GVWR) of less than 8,500 pounds; 

• a curb weight of less than 6,000 pounds; and 

• a frontal area of less than 64 square feet 

Exceptions to the Rule are: 

• motorcycles; 

• any vehicle sold for scrap or parts if the dealer submits title documents to the 

appropriate state authority and obtains a salvage certification; and 

• agricultural equipment 

The Buyers Guide 


A disclosure document that gives consumers important purchasing and warranty 

information, the Buyers Guide tells consumers: 

• whether the vehicle is being sold “as is” or with a warranty; 

129

• what percentage of the repair costs a dealer will pay under warranty; 

• that oral promises are difficult to enforce; 

• to get all promises in writing; 

• to keep the Buyers Guide for reference after the sale; 

• the major mechanical and electrical systems on the car, as well as some of the 

major problems that consumers should look for; and to ask to have the car inspected by 

an independent mechanic before they buy. 

If you conduct a used car transaction in Spanish, you must post a Spanish language 

Buyers Guide on the vehicle before you offer it for sale. 

The Buyers Guide must be posted prominently and conspicuously on or in a vehicle 

when a car is available for sale, and in such a way that both sides are readable. That 

means you can hang the Guide from the rear-view mirror inside the car or on a side-view 

mirror outside the car. The Guide also can be attached to the side window. A Guide in a 

glove compartment, trunk or under the seat is not conspicuous. 

You may remove the Guide for a test drive, but you must replace it as soon as the test 

drive is over. 

Vehicle Information 

At the top of the Guide, fill in the name and address of your dealership and the name and 

telephone number of the person the consumer should contact with complaints. You may 

use a rubber stamp or preprint you Guide with this information. 

Optional Signature Line 


You may include a signature line on the Guide and you may ask the buyer to sign to 

acknowledge that he or she has received the Guide. If you opt for a signature line, you 

must include a disclosure near it that says: “ I hereby acknowledge receipt of the Buyers 

Guide at the closing of this sale.” This language can be preprinted on the form. The 

signature line and the required disclosure must appear in the space provided for the name 

of the individual to be contacted in the event of complaints after the sale. 

130

Warranty Information 

The Buyers Guide has two versions: One says “ As Is-No Warranty;” the other says 

“Implied Warranties Only” 

As Is-No Warranty. If state law allows it, and you choose not to offer a warranty - written 

or implied – you must use the “As Is-No Warranty” on the Guide. 

Implied Warranties Only. 

In states that limit or prohibit the elimination of implied warranties, you must use the 

“Implied Warranties Only” version and check the box next to the “Implied Warranties 

Only” heading if you don’t offer a written warranty. (See the example.) 

Warranty. 

If you offer the vehicle with an express warranty, you must check the box next to the 

heading “Warranty” and complete that section of the Guide. Warranties required by state 

law must be disclosed in this section. Your state Attorney General can tell you about state 

warranty requirements. 

State Law. 

In some states, use of the “As Is-No Warranty” Buyers Guide may be legally sufficient to 

eliminate implied warranties. In other states “as is” sales are allowed only if specific 

action is taken or certain language is used. For example, some states may require you to 

eliminate implied warranties by using special language and/or a document other than the 

Guide. If you’re not sure which version of the Buyers Guide you should use or if you 

have questions about state requirements, contact the FTC or your state Attorney General. 

Is the Warranty “Full” or “Limited”? 

For a warranty to be considered “full”: 


Warranty service must be provided to anyone who owns the vehicle during the 

warranty period. Warranty service must be provided free of charge when necessary, even 

for services like removing and reinstalling a system covered by the warranty. 

131

The consumer must be able to choose either a replacement or a refund if the 

vehicle can’t be repaired after a reasonable number of tries. 

The consumer is not required to take any action to receive service, except to 

give notice that service is needed. Service must be rendered after notice unless the 

warrantor can demonstrate that it is reasonable to require consumers to do more than give 

notice. 

The length of implied warranties must not be limited. 

The warranty is considered “limited” if any of these conditions don’t apply. 

What Percentage of Costs Does the Warranty Cover? 

Fill in the percentage of parts and labor costs covered by the warranty in the 

spaces provided. If a deductible applies, put an asterisk next to the number and explain 

the deductible in the “systems covered/duration” section. For example, “ * A $50 

deductible applies to each repair visit.” (See the sample.) 

What systems are Covered? For how Long? 

There’s one column to list the systems covered, and another to list the length of the 

warranty for each system. In the left hand column, you must specify each system that’s 

covered by the warranty. The Rule prohibits the use of shorthand phrases such as “drive 

train” or “power train” because it’s not always clear what specific components are 

included. In the right hand column, you must state the length of the warranty for each 

system. If all systems are covered for the same length of time, you may state the duration 

once. 

What if the Manufacturer’s Warranty Still Applies? 

If the manufacturer’s warranty hasn’t expired, disclose this fact by checking the 

“Warranty” box and including this disclosure in the “systems covered/duration” section: 

“MANUFACTURER’S WARRANTY STILL APPLIES”. The manufacturer’s original 


warranty has not expired on the vehicle. Consult the manufacturer’s warranty booklet for 

details as to warranty coverage, service location, etc.” 

If the consumer must pay to get coverage under the manufacturer’s warranty, you may 

not check the “Warranty” box. Such coverage is considered a service contract. However, 

you may check the “warranty” box if you pay more than the price of the vehicle to get the 

coverage. If you provide a warranty in addition to the unexpired manufacturer’s 

warranty, explain the terms of your warranty on the Buyers Guide. (Sample Warranty) 

132

Where Should Negotiated Warranty Changes Be Included? 

If you and the consumer negotiate changes in the warranty, the Buyers Guide must reflect 

the changes. For example, if you offer to cover 50 percent of the cost of parts and labor 

for certain repairs, but agree to cover 100 percent of the cost of parts and labor after 

negotiating with the customer, you must cross out the “50 percent” disclosure and write 

in “100 percent.” Similarly, if you first offer the vehicle “as is” but then agree to provide 

a warranty, you must cross out the “As Is-No Warranty” disclosure and complete the 

“Warranty” section of the Buyers Guide properly. 

What About Service Contracts? 

If you offer a service contract for repairs, check the box next to the words “Service 

Contract.” However, if your state regulates service contracts as the “business of 

insurance,” you don’t have to check this box. Check with your Attorney General or state 

insurance commissioner to find out if your state regulates service contracts. 

What Do I Have to Give the Buyer at the Sale? 

You must give the buyer the original or a copy of the vehicle’s Buyers Guide at the sale. 

The Guide must reflect all final changes. 

If you offer a written warranty or if the manufacturer’s warranty still applies, you also 

must comply with the Magnuson-Moss Warranty Act and other FTC Rules, including the 

“Warranty Disclosure Rule.” The Warranty Act prohibits you from eliminating implied 

warranties when you provide a written warranty. It also requires you to identify your 

warranty as either “full” or “limited.” The Warranty Disclosure Rule requires your 

warranty to be clear and easy to read, and to include certain information about the 

coverage of the warranty. The warranty information you provide on the Buyers Guide is 

not sufficient to meet federal disclosure requirements for written warranties. Therefore, 

your written warranty and Buyers Guide should be two separate documents. Another 

federal Rule – the FTC’s Rule on Pre-Sale Availability of Written Warranty Terms – 

requires that you make written warranties available to consumers before they buy. 

Code of Federal Regulation 

Title 16. Commercial Practices 

Chapter I. Federal Trade Commission 

Part 251. FTC GUIDE CONCERNING USE OF THE WORD “FREE” 

AND SIMILAR REPRESENTATIONS 

§ 251.1 The guide. 

(a) General. 

133

(1) The offer of ``Free'' merchandise or service is a promotional device frequently used to 

attract customers. Providing such merchandise or service with the purchase of some other 

article or service has often been found to be a useful and valuable marketing tool. 

(2) Because the purchasing public continually searches for the best buy, and regards the 

offer of ``Free'' merchandise or service to be a special bargain, all such offers must be 

made with extreme care so as to avoid any possibility that consumers will be misled or 

deceived. 

Representative of the language frequently used in such offers are ``Free'', ``Buy 1-Get 1 

Free'', ``2-for-1 Sale'', ``50% off with purchase of Two'', ``1[cent] Sale'', etc. (Related 

representations that raise many of the same questions include ``---- Cents-Off'', ``Half- 

Price Sale'', ``\1/2\ Off'', etc. See the Commission's ``Fair Packaging and Labeling 

Regulation Regarding `Cents-Off' and Guides Against Deceptive Pricing.'') 

(b) Meaning of ``Free''. 

(1) The public understands that, except in the case of introductory offers in connection 

with the sale of a product or service (See paragraph (f) of this section), an offer of ``Free'' 

merchandise or service is based upon a regular price for the merchandise or service 

which must be purchased by consumers in order to avail themselves of that which is 

represented to be ``Free''. In other words, when the purchaser is told that an article is 

``Free'' to him if another article is purchased, the word ``Free'' indicates that he is paying 

nothing for that article and no more than the regular price for the other. Thus, a purchaser 

has a right to believe that the merchant will not directly and immediately recover, in 

whole or in part, the cost of the free merchandise or service by marking up the price of 

the article which must be purchased, by the substitution of inferior merchandise or 

service, or otherwise. 

(2) The term regular when used with the term price, means the price, in the same 

quantity, quality and with the same service, at which the seller or advertiser of the 

product or service has openly and actively sold the product or service in the geographic 

market or trade area in which he is making a ``Free'' or similar offer in the most recent 

and regular course of business, for a reasonably substantial period of time, i.e., a 30-day 

period. For consumer products or services which fluctuate in price, the ``regular'' price 

FTC Guide Concerning Use of the word “free”, 16 CFR 251.1 

shall be the lowest price at which any substantial sales were made during the aforesaid 

30-day period. Except in the case of introductory offers, if no substantial sales were 

made, in fact, at the ``regular'' price, a ``Free'' or similar offer would not be proper. 

(c) Disclosure of conditions. 

When making ``Free'' or similar offers all the terms, conditions and obligations upon 

which receipt and retention of the ``Free'' item are contingent should be set forth clearly 

and conspicuously at the outset of the offer so as to leave no reasonable probability that 

134

the terms of the offer might be misunderstood. Stated differently, all of the terms, 

conditions and obligations should appear in close conjunction with the offer of ``Free'' 

merchandise or service. For example, disclosure of the terms of the offer set forth in a 

footnote of an advertisement to which reference is made by an asterisk or other symbol 

placed next to the offer, is not regarded as making disclosure at the outset. However, 

mere notice of the existence of a ``Free'' offer on the main display panel of a label or 

package is not precluded provided that: 

(1) the notice does not constitute an offer or identify the item being offered ``Free'', (2) 

the notice informs the customer of the location, elsewhere on the package or label, where 

the disclosures required by this section may be found, (3) no purchase or other such 

material affirmative act is required in order to discover the terms and conditions of the 

offer, and (4) the notice and the offer are not otherwise deceptive. 

(d) Supplier's responsibilities. 

Nothing in this section should be construed as authorizing or condoning the illegal setting 

or policing of retail prices by a supplier. However, if the supplier knows, or should know, 

that a ``Free'' offer he is promoting is not being passed on by a reseller, or otherwise is 

being used by a reseller as an instrumentality for deception, it is improper for the supplier 

to continue to offer the product as promoted to such reseller. He should take appropriate 

steps to bring an end to the deception, including the withdrawal of the ``Free'' offer. 

(e) Resellers' participation in supplier's offers. 

Prior to advertising a ``Free'' promotion, a supplier should offer the product as promoted 

to all competing resellers as provided for in the Commission's ``Guides for Advertising 

Allowances and Other Merchandising Payments and Services.'' In advertising the ``Free'' 

promotion, the supplier should identify those areas in which the offer is not available if 

the advertising is likely to be seen in such areas, and should clearly state that it is 

available only through participating resellers, indicating the extent of participation by the 

use of such terms as ``some'', `àll'', `à majority'', or `à few'', as the case may be. 

FTC Guide Concerning Use of the word “free”, 16 CFR 251.1 

(f) Introductory offers. 

(1) No ``Free'' offer should be made in connection with the introduction of a new product 

or service offered for sale at a specified price unless the offeror expects, in good faith, to 

discontinue the offer after a limited time and to commence selling the product or service 

promoted, separately, at the same price at which it was promoted with the ``Free'' offer. 

(2) In such offers, no representation may be made that the price is 

for one item and that the other is ``Free'' unless the offeror expects, 

in good faith, to discontinue the offer after a limited time and to 

135

commence selling the product or service promoted, separately, at the same price at which 

it was promoted with a ``Free'' offer. 

(g) Negotiated sales. 

If a product or service usually is sold at a price arrived at through bargaining, rather than 

at a regular price, it is improper to represent that another product or service is being 

offered ``Free'' with the sale. The same representation is also improper where there may 

be a regular price, but where other material factors such as quantity, quality, or size are 

arrived at through bargaining. 

(h) Frequency of offers. 

So that a ``Free'' offer will be special and meaningful, a single size of a product or a 

single kind of service should not be advertised with a ``Free'' offer in a trade area for 

more than 6 months in any 12-month period. At least 30 days should elapse before 

another such offer is promoted in the same trade area. No more than three such offers 

should be made in the same area in any 12-month period. In such period, the offeror's 

sale in that area of the product in the size promoted with a ``Free'' offer should not exceed 

50 percent of the total volume of his sales of the product, in the same size, in the area. 

(i) Similar terms. 

Offers of ``Free'' merchandise or services which may be deceptive for failure to meet the 

provisions of this section may not be corrected by the substitution of such similar words 

and terms as ``gift'', ``given without charge'', ``bonus'', or other words or terms which 

tend to convey the impression to the consuming public that an article of merchandise or 

service is ``Free''. 

BAIT ADVERTISING 

BAIT ADVERTISING IS AN ALLURING BUT INSICERE OFFER TO SELL A 

PRODUCT OR SERVICE WHICH THE ADVERTISER IN TRUTH DOES NOT 

INTEND OR WANT TO SELL. ITS PURPOSE IS TO SWITCH CONSUMERS FROM 

BUYING THE ADVERTISED MERCHANDISE, IN ORDER TO SELL SOMETHING 

ELSE, USUALLY AT A HIGHER PRICE OR ON A BASIS MORE 

ADVANTAGEOUS TO THE ADVERTISER. THE PRIMARY AIM OF A BAIT 

ADVERTISEMENT IS TO OBTAIN LEADS AS TO PERSONS INTERESTED IN 

BUYING MERCHANDISE OF THE TYPE SO ADVERTISED. 

Bait advertisement. 

136

No advertisement containing an offer to sell a product should be published when the offer 

is not a bona fide effort to sell the advertised product. 

Initial offer. 

(a) No statement or illustration should be used in any advertisement which creates a false 

impression of the grade, quality, make value, currency of model, size, color usability, or 

origin of the product offered, or which may otherwise misrepresent the product in such a 

manner that later, on disclosure of the true facts, the purchaser may be switched from the 

advertised product to another. 

(b) Even though the true facts are subsequently made known to the buyer, the law is 

violated if the first contact or interview is secured by deception. 

Discouragement of purchase of advertised merchandise. 

No act or practice should be engaged in by an advertiser to discourage the purchase of the 

advertised merchandise as part of a bait scheme to sell other merchandise. Among acts or 

practices which will be considered in determining if an advertisement is a bona fide offer 

are: 

(a) The refusal to show, demonstrate, or sell the product offered in accordance with the 

terms of the offer, 

(b) The disparagement by acts or words of the advertised product or the disparagement of 

the guarantee, credit terms, availability of service, repairs or parts, or in any other 

respect, in connection with it, 

(c) The failure to have available at all outlets listed in the advertisement a sufficient 

quantity of the advertised product to meet reasonably anticipated demands, unless the 

advertisement clearly and adequately discloses that supply is limited and/or the 

merchandise is available only at designated outlets, 

BAIT ADVERTISING 

(d) The refusal to take orders fro the advertised merchandise to be delivered within a 

reasonable period of time; 

(e) The showing or demonstrating of a product which is defective, unusable or 

impractical for the purpose represented or implied in the advertisement, 

(f) Use of a sales plan or method of compensation for salesmen or penalizing salesmen, 

designed to prevent or discourage them from selling the advertised product. 

Switch after sale. 

137

No practice should be pursued by a advertiser, in the event of sale of the advertised 

product, of “unselling” with the intent and purpose of selling other merchandise in its 

stead. Among acts or practices which will be considered in determining if the initial sale 

was in good faith, and not a stratagem to sell other merchandise, are: 

(a) Accepting a deposit for the advertised product, then switching the purchaser to a 

higher-priced product, 

(b) Failure to make delivery of the advertised product within a reasonable time or to 

make a refund, 

(c) Disparagement by acts or words of the advertised product, or the disparagement of the 

guarantee, credit terms, availability of service, repairs, or in any other respect, in 

connection with it, 

(d) The delivery of the advertised product which is defective, unusable or impractical for 

the purpose represented or implied in the advertisement. 

INTERNET ADVERTISING 

Who’s reaching a global market? Advertisers on the Internet. A new frontier for 

advertisers and marketers, the Internet is connecting you to customers from Boston to 

Bali with text, interactive graphics, video and audio. 

If you’re thinking about advertising on the Internet, remember that many of the 

same rules that apply to other forms of advertising apply to electronic marketing. These 

rules and guidelines protect businesses and consumers – and help maintain the credibility 

of the Internet as an advertising medium. The Federal Trade Commission (FTC) has 

prepared this guide to give you an overview of some of the laws it enforces. 

138

GENERAL OFFERS AND CLAIMS: PRODUCTS AND SERVICES 

The Federal Trade Commission Act gives the FTC the tools it needs to act in 

the interest of all consumers to prevent deceptive and unfair acts or practices. In 

interpreting Section 5 of the Act, the Commission has determined that a representation, 

omission, or practice is deceptive if it is likely to: mislead consumers; and affect 

consumers’ behavior or decisions about the product or service. 

In addition, an act or practice is unfair if the injury it causes, or is likely to cause, is: 

• substantial; 

• not outweighed by other benefits; and; 

• not reasonably avoidable 

The FTC Act prohibits unfair or deceptive advertising in any medium and that 

now includes the Internet. That is, advertising must tell the truth and not mislead 

consumers. A claim can be misleading if relevant information is left out or if the claim 

implies something that’s not true. For example, a lease advertisement for an automobile 

that promotes “$0 Down” may be misleading if significant and undisclosed charges are 

due at lease signing. 

In addition, claims must be substantiated, especially when they concern health, 

safety, or performance. The type of evidence may depend on the product, the claims, and 

what experts believe necessary. If your ad specifies a certain level of support for a claim 

– “tests show X” – you must have at least that level of support. 

INTERNET ADVERTISING 

Sellers are responsible for claims they make about their products and services. Third 

parties – such as advertising agencies or web site designers and catalog marketers – also 

may be liable for making or disseminating deceptive representations if they participate in 

the preparation or distribution of the advertising, or know about the deceptive claims. 

Advertising agencies or website designers are responsible for reviewing the 

information used to substantiate ad claims. They may not simply rely on an advertiser’s 

assurance that the claims are substantiated. In determining whether an ad agency should 

be held liable, the FTC looks at the extent of the agency’s participation in the 

preparation of the challenged ad, and whether the agency knew or should have known 

that the ad included false or deceptive claims. 

139

To protect themselves, catalog marketers should ask for material to back up 

claims rather than repeat what the manufacturer says about the product. If the 

manufacturer doesn’t come forward with proof or turns over proof that looks 

questionable, the catalog marketer should see a yellow “caution light” and proceed 

appropriately, especially when it comes to extravagant performance claims, health or 

weight loss promises, or earnings guarantees. In writing ad copy, catalogers should stick 

to claims that can be supported. Most important, catalog marketers should trust their 

instincts when a product sounds too good to be true. 

Other points to consider: 

Disclaimers and disclosures must be clear and conspicuous. That is, consumers 

must be able to notice, read or hear, and understand the information. Still, a disclaimer or 

disclosure alone usually is not enough to remedy a false or deceptive claim. 

Demonstrations must show how the product will perform under normal use. 

Refunds must be made to dissatisfied consumers – if you promised to make them. 

140

323 ADVERTISING 

DISTRICT OF COLUMBIA 

DCMR 16 CONSUMER PROTECTION 

323.1 No dealer shall in any advertisement for the sale of a motor vehicle use any word or phrase which is 

deceptive misleading or which is bait advertising. 

323.2 No dealer shall in any advertisement for the sale of a motor vehicle use any qualification or 

condition such as “upon approved credit” or any similar statement to justify an advertisement 

offering extremely low down payments or terms which can be granted only to a relatively few of the 

persons responding to, or expected to respond to, the advertisement. 

323.3 As used in this section, the term “bait advertising” means an alluring but insincere offer to sell a 

motor vehicle which the advertiser in truth does not intend or want to sell, the purpose thereof being 

to switch purchasers from buying the advertised merchandise in order to sell something else, usually 

at a higher price or on a basis more advantageous to the advertiser. 

323.4 The primary aim of bait advertising is to obtains leads as to persons interested in buying 

merchandise of the type so advertised. 

323.5 When ever the amount of the down payment is shown in any advertisement there shall be included, 

immediately adjacent to the amount of the down payment, a clear, conspicuous and non-deceptive 

statement of the cash sale price of the vehicle. 

323.6 If either the amount or number of the installment payments are mentioned in any advertisement, then 

both the amount and number of those payments shall be mentioned and with equal prominence and 

clarity and immediately adjacent to each other. 

323.7 In any printed advertisement of the price or terms of sale of any motor vehicle, any qualification or 

condition in connection with the price or terms shall be printed immediately adjacent to the price or 

terms in type of such size and style and in such words and manner as that is clearly, conspicuously 

and non-deceptively sets forth any such qualification or condition 

323.8 When any person licensed under this chapter advertises by means of radio or television the price or 

terms of sale of any motor vehicle, the advertisement shall be so phrased and delivered as to be in 

consonance with and consistent with the spirit and intent of this section. 

323.9 For the purposes of this section, any qualification or condition shall be printed in twelve (12) point 

type or type one half (½) the size of the type used for the price or terms which are qualified or 

conditioned, whichever is greater. 

323.10 The provisions of this section shall not apply to any printed advertisement in which none of the type 

used exceeds twelve (12) point in size. 

119

AUTOMOTIVE TRADE GROUPS 

AMERICAN INTERNATIONAL AUTO DLRS ASSOC. www.aida.com 703 519 7800 

MARYLAND NEW CAR AND TRUCK DEALERS ASSOC 301 261 1717 

NATIONAL AUTOMOBILE DEALERS ASSOCIATION www.nada.com 703 821 7000 

VIRGINIA AUTO DEALERS ASSOCIATION (VADA) www.vada.com 804 359 3578 

WASHINGTON AREA NEW AUTOMOBILE DEALERS 

ASSOCIATION (WANADA) www.wanada.org 202 237 7200 

CONSUMER ORGANIZATIONS 

AUTOCAP (Washington Metro area www.wanada org/autocap 202 237 7200 

AAA www.aaamidatlantic.com 703 222 6211 

ALEXANDRIA OFFICE OF CONSUMER AFFAIRS 703 838 4350 

ARLINGTON COUNTY OFFICE OF CONSUMER AFFAIRS 703 358 3260 

BETTER BUSINESS BUREAU (BBB, WASHINGTON) 202 393 8000 

CENTER FOR AUTO SAFETY 202 328 7700 

COUNCIL OF THE BETTER BUSINESS BUREAUS, (BBB) 703 276 0100 

EASTERN SHORE OFFICE OF CONSUMER AFFAIRS 410 543 6642 

FAIRFAX COUNTY CONSUMER AFFAIRS 703 222 8435 

HOWARD COUNTY OFFICE OF CONSUMER AFFAIRS 410 313 6420 

MONTGOMERY COUNTY CONSUMER AFFAIRS 240 777 3636 

PRINCE GEORGES COUNTY OFFICE OF CONSUMER AFFAIRS 301 952 5323 

WESTERN MARYLAND OFFICE OF CONSUMER AFFAIRS 301 791 4780

ARBITRATION AND MEDIATION PROGRAMS 

AUTOLINE ( GM, NISSAN , TOYOTA) 800 955 5100 

CHRYSLER CUSTOMER ARBITRATION BOARD 301 464 4040 

FORD CONSUMER APPEALS BOARD 800 392 3673 

MARYLAND: 

STATE AGENCIES 

MARYLAND ATTORNEY GENERALS OFFICE 410 528 8662 

D C METRO 301 470 7534 

MOTOR VEHICLE ADMINISTRATION DEALER LICENSING 410 768 7535 

MARYLAND STATE POLICE SAFETY INSPECTION DIVISION 410 768 1735 

MARYLAND POLICE BARRACKS: 

ROCKVILLE 301 424 2101 

FORESTVILLE 301 568 8101 

COLLEGE PARK 301 345 3101 

HOWARD COUNTY 410 799 2101 

WALDORF 301 645 1500 

MARYLAND INSURANCE COMMISSIONER 410 333 6300 

VIRGINIA: 

VIRGINIA ATTORNEY GENERAL’S OFFICE 804 786 2116 

VIRGINIA OFFICE OF CONSUMER AFFAIRS 800 552 9963 

VIRGINIA INSPECTION SERVICE DIVISION 703 358 3800 

VIRGINIA INSURANCE COMMISSIONER 804 786 7694 

VIRGINIA DEPARTMENT OF MOTOR VEHICLES 804 367 0098 

VIRGINIA DEALER MOTOR VEHICLE BOARD 804 367 1100 

STATE AGENCIES ( CONTINUED ) 

VIRGINIA DEPT OF TRANS (VDOT) 703 383 8368

DISTRICT OF COLUMBIA 

BETTER BUSINESS BUREAU (BBB) 202 393 8000 

D C DEPARTMENT OF PUBLIC WORKS 202 727 0544 

D C OFFICE OF CONSUMER AFFAIRS 202 727 7000 

D C MOTOR VEHICLES ADMINISTRATION 202 727 6681 

DISTRICT INSURANCE COMMISSION 202 727 7424 

INSPECTION DIVISION 202 727 6816 

MULTI-DOOR PROGRAM (DIV OF DC SUPERIOR COURTS) 202 879 1549 

GOVERNMENT AGENCIES 

NATIONAL HIGHWAY TRAFFIC SAFETY ASSOCIATION 

PUBLIC AFFAIRS 202 366 1836 

SAFETY STANDARDS 202 366 0842 

RECALL HOTLINE 800 424 9393 

U S DEPARTMENT OF TRANSPORTATION 202 366 0123 

ENVIRONMENTAL PROTECTION AGENCY (EPA) 202 260 2090 

EQUAL EMPLOYMENT OPPORTUNITY COMMISSION (EEOC) 202 663 4900 

FEDERAL TRADE COMMISSION (FTC) 202 326 2000 

OCCUPATIONAL SAFETY AND HEALTH ADMINISTRATION (OSHA) 202 219 8148 

UNITED STATES CHAMBER OF COMMERCE 202 659 6000 

FEDERAL HIGHWAY ADMINISTRATION 410 962 0077 

AUTOMOBILE FINANCING COMPANIES 

CHRYSLER FINANCIAL CORPORATION 410 872 5100

CONSUMER FINANCE CORPORATION 703 287 7386 

FORD MOTOR CREDIT MARYLAND 301 948 7711 

FORD MOTOR CREDIT, VIRGINIA 703 749 9191 

FRANKLIN ACCEPTANCE CORPORATION 301 474 2900 

GENERAL MOTORS ACCEPTANCE CORPORATION (GMAC ) 800 200 4622 

MID ATLANTIC FINANCE CORPORATION 301 883 9400 

NISSAN CREDIT 

PRIMUS AUTOMOTIVE FINANCIAL SERVICES 410 715 2960 

PROVIDENT AUTOMOTIVE 410 281 7968 

TOYOTA CREDIT 

TRANEX CREDIT CORPORATION 317 487 6600 

UNIVERSAL UNDERWRITERS ACCEPTANCE CORPORATION 800 842 8415 

METROPOLITAN AREA BANKING INSTITUTIONS 

CHEVY CHASE BANK 703 610 5900 

CRESTAR BANK, VIRGINIA 703 691 4588 

CRESTAR BANK, MARYLAND 301 699 7082 

FIRST UNION NATIONAL BANK 703 760 6298 

FIRST VIRGINIA BANK 703 241 3101 

NATIONS BANK 703 760 8510 

CREDIT INFORMATION 

EQUIFAX 301 680 2212

TRANS UNION 410 712 4844 

MANUFACTURER’S CUSTOMER ASSISTANCE NUMBER 

ACURA www.acura.com 800 382 2238 

ALFA ROMEO www.alfaromeo.com 407 856 5000 

AUDI www.audi.com 800 822 2834 

BMW www.bmw.com 800 831 1117 

BUICK www.buick.com 800 521 7300 

CADILLAC www.cadillac.com 800 458 8006 

CHEVROLET www.chevrolet.com 800 222 1020 

CHRYSLER www.chrysler.com 800 992 1997 

DAEWOO www.daewoo.com 877 463 2396 

DAIHATSU 

www.daewoous.com 

DODGE www.4adodge.com 800 992 1997 

FERRARI www.ferrari.com 201 816 2684 

FORD www.ford.com 800 392 3673 

GMC TRUCK www.gmc.com 800 462 8782 

HONDA www.honda.com 800 990 2020 

HYUNDAI www.hyundai.com 800 633 5151 

INFINITI www.infiniti/usa.com 800 662 6200 

ISUZU www.isuzu.com 800 255 6727 

JAGUAR www.jaguarcars.com 800 524 8279 

JEEP/EAGLE www.jeep.com 800 992 1997 

MANUFACTURER’S CUSTOMER ASSISTANCE NUMBERS ( CONTINUED) 

KIA www.kia.com 800 333 4542

LEXUS www.lexus.com 800 255 3987 

LINCOLN MERCURY www.lincolnvehicles.com 800 521 4140 

LOTUS www.lotuscars.com 404 245 6887 

MASERATI www.masserati it 410 646 6400 

MAZDA www.mazdausa.com 800 639 1000 

MERCEDES www.mb.com 800 367 6372 

MITSUBISHI www.mitsubishi.com 800 222 0037 

NISSAN www.nissan/usa.com 800 647 7261 

OLDSMOBILE www.oldsmobile.com 800 442 6537 

PEUGEOT www.peugot.com 201 935 8400 

PLYMOUTH www.chrysler.com 800 992 1997 

PONTIAC www.pontiac.com 800 762 2737 

PORSCHE www.usa.porsche.com 800 545 8039 

RENAULT www.renault.com 800 992 1997 

ROLLS ROYCE www.rolls-royce.com 201 967 9100 

SAAB www.saabusa.com 800 955 9007 

SATURN www.saturn.com 800 553 6000 

SUBARU www.subaru.com 800 782 2783 

SUZUKI www.suzuki.com 800 934 0934 

TOYOTA www.toyota.com 800 443 4999 

VOLKSWAGEN www.volkswagen.com 800 822 8987 

VOLVO www. volvo.com 800 458 1552

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