FAQ for Vehicle Dealers

If you operate a motor vehicle dealership anywhere in the country, you know that your business--and by extension, your livelihood--hinges on your dealership license. To maintain public trust and to protect the public from bad actors in this industry, states tend to impose strict regulatory standards on car, truck, and motorcycle dealers. Any violation of the state's standards (both real and perceived) could put your dealership license in jeopardy. If you find yourself subject to an investigation, suffice it to say your career could be in flux.

The good news is that in many cases, the worst-case scenario can be averted with the help of an experienced professional license defense attorney. Attorney Joseph D. Lento has successfully helped licensed professionals in New Jersey and New York who are dealing with allegations of wrongdoing and facing possible disciplinary action. If you're a vehicle dealer, it is important to be aware of the possible consequences and how you can protect yourself in case your licensing board takes disciplinary action against you. The following FAQ will discuss some of the most common reasons why dealerships lose their licenses, as well as the disciplinary process and what you can do to protect your license.

What could cause me to lose my dealership license?

Most vehicle dealers face having their license revoked over either a violation of state policies and regulations or a violation of public trust. Some of the more common reasons you could lose your license include, but are not limited to:

  • Fraudulent activity. This category encompasses a wide range of examples, including false advertising, overbilling customers, altering VIN numbers, tampering with odometers, or any other attempt to defraud the public or make misrepresentations to the motor vehicle commission in your state.
  • Failure to conduct your dealership according to state regulations. States have many different rules about how dealerships should operate, from how they display signage and certifications to where they can and cannot sell cars. Violations of these rules can result in losing your license.
  • Failing to keep records or ledgers at the licensed location. State inspectors may show up to look at your books. If you don't keep proper records on-site, or if your record-keeping is sketchy, disciplinary action could result.
  • Selling from non-licensed locations. In some states, dealerships are only allowed to sell from specific locations that have been licensed by the state. Selling from any other location--even if it's just for a one-time event like a charity car wash--can put your license at risk.
  • Unlawful use of dealer plates. Abusing the privilege of using dealer plates (for example, on commercial or for-hire vehicles) may be grounds for revoking your license.
  • Certain criminal convictions. If you've been convicted of a crime related to fraud, theft, or auto-related offenses, you could be disqualified from holding a dealership license. (Incidentally, some states will also revoke your license if any of your employees or people with a controlling interest in your dealership have similar criminal convictions.

What agency will I answer to if I'm accused of wrongdoing as a vehicle dealer?

Every state has its own regulatory structure for licensing and regulating vehicle dealerships. The agency that issued your license is the same agency responsible for handing down disciplinary action if you're accused of violations or misconduct. If you're a licensed dealer in New Jersey, for example, you answer to the Chief Administrator of the New Jersey Motor Vehicle Commission; and in New York, it's the Commissioner of the Department of Motor Vehicles.

Will my dealership license automatically be revoked over an offense or violation?

Typically not. The agency or board responsible for your license will investigate allegations of wrongdoing or violations and take the circumstances into account before deciding on disciplinary action. Lesser violations or extenuating circumstances may result in lesser disciplinary actions that will allow your dealership to stay open (or re-open after a time). The most common such penalties include:

  • License suspension. Your dealership license may be revoked for a specified length of time, with the option to reissue it under certain circumstances.
  • Fines. Many violations simply result in fines (although these can be costly).
  • Probation. Your dealership may be monitored and/or supervised for a time to ensure you stay in compliance.
  • Restricted activities. The state may place limitations on the scope of your license.

Could disciplinary actions hurt my career even if I get to keep my license?

Yes. Although you might be able to keep your dealership license without any severe penalties, most disciplinary actions against a licensee are a matter of public record. That means that other people--including other dealers, manufacturers, and customers--can find out about them. These disciplinary actions will likely stay on your record for some time (depending on the state), which could damage your reputation in the industry and make it harder to do business.

What does the disciplinary process look like?

Each state has its own disciplinary process for vehicle dealers. However, most professional license discipline processes include some or all of the following steps:

  • Complaint or failed inspection. Most disciplinary proceedings against vehicle dealers begin with a formal complaint to the agent or licensing board (typically by a customer) or as a result of reports of violations from a state inspector.
  • Investigation. The licensing agency will launch an investigation to determine whether the complaint has merit.
  • Consent order. In certain states, especially those with board governance, the licensing board may offer to have you sign a consent order as an alternative to a formal hearing--especially if the evidence against you is compelling. A consent order is effectively an admission of guilt and an agreement to submit to disciplinary measures.
  • Hearing. You may be asked to attend a formal hearing to answer the complaint against you. You're invited to have an attorney present for these proceedings.
  • Final determination and disciplinary action. The board or commissioner will issue a formal decision on the penalty it will hand down, up to and including revoking your dealership license.

Keep in mind that at any time during this process, the board or agency can choose to drop the complaint against you if they have not found sufficient evidence or for other reasons. A skilled license defense attorney can help improve your chances of having the complaint dropped with little or no damage to your license.

Should I sign a consent order if one is offered to me?

It depends. A consent order may be in your best interests if the evidence against you is strong and you want to avoid the time and expense of a formal hearing. On the other hand, if you believe you can fight the complaint and win, it may be worth going through with a hearing. An experienced professional license defense attorney can help you make the best decision for your situation.

Why do I need to hire an attorney to help me keep my dealership license?

When you're facing possible disciplinary action over your license, the stakes are high, and the burden of proof is low. Your career and your business depend on keeping your license intact, but licensing agencies don't go by the innocent-until-proven-guilty standard when investigating possible wrongdoing. They only need to be more than 50 percent convinced that the allegations are true in order to suspend or revoke your license. This puts you at a distinct disadvantage.

An experienced professional license defense attorney can help you navigate the disciplinary process, protect your rights, and give you the best possible chance of keeping your dealership license. They can also help you avoid common mistakes that could jeopardize your chances of success. In short, when dealing with a licensing board on your own, the chances of losing your license are high; with proper legal representation, the chances of keeping your license are much better.

Does hiring an attorney make me look guilty?

No, it doesn't. State licensing boards and agencies are used to dealing with attorneys and hiring one does not imply that you have done anything wrong. In fact, employing an attorney is beneficial since, first of all, you have someone on your side who will protect your rights; and second, it sends a message that you care about the matter.

My offense is minor, and I'll probably only be fined. Do I still need an attorney?

It's never wise to underestimate the intentions of the licensing board or regulatory agency. Even if a fine is the standard penalty, the board still has the power to revoke your license even for seemingly minor infractions--and even if you're right about the fines, the fact that your dealership was fined will still be documented in publicly accessible records. Having a competent attorney on your side can help you avoid these consequences. If the alleged violation is truly minor, a good lawyer might be able to negotiate to have the complaint dropped, thus eliminating any disciplinary penalties or fines.

I already lost my dealership license. Is there a way to get it reinstated or get a new license?

Possibly. In some states, you may be eligible to apply for restoration of your dealership license after a specific period of time, subject to certain conditions. You will likely have to show that you have corrected whatever issues caused the violations that caused you to lose your license. You may also have to submit a written explanation as to why you're requesting reinstatement and why the agency should give you another chance. Finally, if you were assessed any fines, you'll have to pay those before the agency issues a new license.

How can a professional license defense attorney help me?

There are many ways in which a license defense attorney can help you if your dealership license is in jeopardy. They can help you understand the accusations against you and what evidence the licensing board has. They can negotiate on your behalf with the licensing board or agency to have the complaint dropped or for reduced penalties, and they can also help you develop a defense strategy to use at your hearing, if it goes that far. In short, an attorney will give you the best possible chance of keeping your license, and if you do lose it, they may be able to help you get it back.

Can any practicing attorney help me with licensing issues?

You have the right to hire any lawyer you choose, but not every lawyer has the expertise and experience to protect you from losing your license. For best results, look for an attorney with specific experience in administrative law and professional license defense. This kind of attorney will better understand the workings of the board and how to navigate the disciplinary process to your best advantage.

I've been notified that my dealership license is under investigation for violations or allegations of wrongdoing. How soon should I contact an attorney?

It's best to contact an attorney as soon as you learn that your license is under investigation. This way, they can begin working on your behalf right away to try to get the complaint dropped or negotiate reduced penalties. If you wait until after you receive a notice of hearing, it may be too late to avoid having your license suspended or revoked because the board or commissioner has already been at work developing a case against you. The sooner you hire an attorney, the more opportunities you'll have to resolve the complaint early in the process, possibly without even needing to attend a hearing.

If you are a licensed automobile, truck, boat, or motorcycle dealer who is facing possible disciplinary action from the state, the loss of your license could be utterly devastating to your career. Don't risk your future by facing the allegations without experienced legal counsel. Contact the Lento Law Firm at (888) 535-3686 today to discuss your case and your options.


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