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AUCTION HEADLINES COMPLIANCE TIPS

Continued on page 48 Continued from page 39
“For consignment, for a one-lane mobile Mobile auctions entails working with the seller of the product ... without payment
sale is 150 to 200 units, they become so pop- seller to select their inventory in advance so of additional consideration, not negotiat-
ular that we run out of space.” it’s competitive in the marketplace, Morgan ed or separated from the sale of the prod-
explained uct ... and incidental to the sale.”
Challenges remain
She said selecting inventory far enough in Analyzing West Virginia’s warranty ex-
The challenges associated with mobile sales advance is important to allow time to best emption, the court found that (1) Inno-
are similar to those of any auction, according match the right buyer to the right product. vative’s policy was simply a guarantee by
to Jane Morgan, who is president of special- the anti-theft system’s manufacturer of
ty auction divisions at ADESA and oversees Rickey added that a challenge he recognizes the system’s performance, (2) Bare did
mobile auction offerings and helps in geo- is larger competitors within the industry. “As not claim that he purchased the policy
graphic expansions. an auction company, you see groups such as separately from the anti-theft system, and
the larger groups in the industry — AutoNa- (3) the monetary benefit under the policy
“Educating dealers on how mobile sales tions, CarMaxes, they’re figuring out ways to would be paid only to Bare. Therefore,
work, why they should try mobile sales, and do it themselves,” he said. the court concluded that the policy was a
how mobile sales can benefit their business warranty and exempt from West Virginia
may be considered a challenge,” Morgan “The margins I think, are getting skinnier,” insurance law.
said. Rickey went on to say. “Profitability has to
change, we just need to be aggressive and Do you know the rules that apply to the
Space may be a challenge, depending on the provide a service above and beyond our sale of “ancillary” or “aftermarket” prod-
size of a dealer’s lot or the type of inventory, competition.” n ucts during the F&I process? These rules
like if it is a mobile auction for heavy-duty vary by state and by product, and, as
trucks, for example. this case illustrates, a consumer’s lawyer
might allege that insurance laws apply
to the products. If you haven’t had each
product you sell vetted for compliance
under state and federal law, it’s time to
get a move on.

Bare v. Innovative Aftermarket Systems,
LP, 2017 U.S. Dist. LEXIS 68746 (S.D.W.
Va. May 5, 2017)

So there’s this month’s roundup! Stay le-
gal, and we’ll see you next month. n

Tom (thudson@hudco.com) is Of Coun-
sel and Nikki (nmunro@hudco.com) is a
partner in the law firm of Hudson Cook,
LLP. Tom has written several books and is
the publisher of Spot Delivery®, a month-
ly legal newsletter for auto dealers. He is
Editor in Chief of CARLAW®, a monthly
report of legal developments for the auto
finance and leasing industry. Nikki is a
contributing author to the F&I Legal Desk
Book and frequently writes for Spot Deliv-
ery. For information, visit www.counselor-
library.com.

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