August 11, 2008Volume 105, No. 15

NADA publishes guidance on FTC Red Flags RuleVirtual seminars Aug. 26, Sept. 23

BBB tracking ads that violate regulations on advertised price

See BBB, Page 4See Dealer cash, Page 4

The Better Business Bureau, whichmonitorsallvehicleadvertisingbyChi-cagoareadealers,isreportingpricead-vertisementswherenoteveryconsumerwhodesirestopurchaseavehicleisableto purchase that vehicle at the adver-tisedprice.Instead,theadvertisedpriceis available only to certain consumerswhoqualifyforthatprice. ThispracticeviolatesRule475.310of theMotorVehicleAdvertisingRegula-tions,whichstates“Purchasersshallbeable to purchase all vehicles describedby the advertisement at the advertisedprice.”Thatmeansalladvertisedprices,without exception or any condition,mustbeavailabletoeverypossiblecon-sumer. PatriciaKelly,aseniorcounselof theBBBof ChicagoandnorthernIndiana,said her office also has seen recent trends of other violations of the regulations.Kelly noted area ads that may includepriceswherelimitedrebatesarededuct-edfromtheadvertisedprice;wherecer-taindealerincentivesaredeductedfromtheadvertisedpriceandtheincentiveisnotavailabletoall;wherecertaincondi-tionsmustbemetbythedealerortheconsumer before a consumer qualifies for the price; where certain financing

A new publication by the NationalAutomobile Dealers Association helpsdealers abide with the Federal TradeCommission’s new Red Flags Rule.ComplianceismandatoryNov.1. “A Dealer Guide to the FTC RedFlags and Address Discrepancy Rules:ProtectingAgainst IdentifyTheft” ex-plains the requirements and includesdetailed, step-by-step guidance on de-veloping thewrittenprogram requiredundertherule.Alsoincluded:asamplewrittenprogram,worksheetsandothermaterials. AllNADAmembersweremailed a

free copy of the guide about Aug. 1.Thesamplewrittenprogramalsoisfreeto NADA members upon request tome@nada.org.IncludeNADAmemberidentification number in the message. Additional copies of the guide areavailable to members at $40 each, tononmembersat$80each. Theguidewillserveasthebasisfortwo Red Flags Rule virtual seminarshostedbytheNADA,Aug.26andSept.23.Toregisterforoneof theseminars,visit www.nada.org/seminars or call800-248-6323ext.7273.Registrationis$199percomputerconnection.

Navigating new straits of taxable dealer cash Calls to the CATA have subsidedabout theJuly1changeby theIllinoisRevenueDepartment to the treatmentof dealercash,butafewquestionslin-ger. Most dealer cash programs are ex-cluded from the revenue department’spolicy change. The past two editionsof this newsletter detailed that manu-facturerincentivepaymentsaretaxableonlyif theyareconditionedonthere-tailsaleof avehicleandnotuponthesaleof anyothervehicles. Other dealer cash incentives—stairstep payments, dealer hold-back, andmarketingandfacilitypayments,among

others—arenottaxable. The revenue department was veryexplicit about including taxable deal-er cashonSection6,Line1of FormST-556.Lessexplicitwasanyguidanceabout how to itemize that amount onthebuyer’scontract,orhowtonavigatetheconversationwithcustomersaboutthempayingtaxonincentivesthatlikelywouldberetainedbythedealer. Computer software usually is pro-grammed to draw from various linesonthebuyer’scontracttogeneratethesumsonFormST-556.Buttherevenuedepartment offers no direction about

CATA Bulletin August 11, 20082

Who pays for safety gear?

EPA issues final SPCC ruling Afteryearsof rumorsandmisinformationaboutwhatwastocome,theEPArecentlyruledthatdealerswhomaintainmorethan1,320gallonsof oilon-siteandabovegroundstillarerequiredtohaveanSPCCplan.Dealersalsoarerequiredtoprovideperiodic training for thosewhoare expected torespondtoaspill. ASpillPrevention,ControlandCountermeasurePlanisasite-specific for a business’s location, with all containers and connections identified. The plan describes how container spillscanbepreventedandwhatemployeescandowhenaspilloccurs. Thenewregulationsoffersomecostsavingsbecauseali-censedengineerisnotrequiredtoapproveatypicaldealer’splan,saidPhilTroy,presidentof ComplyNet,aCATAalliedmember thathasworkedwithdealers since1984onsafetyandenvironmentalservices. “Basically,”Troysaid,“youcanwriteityourself.Butwrit-ingyourownplan isnotwhere the savingswillbe for thedealer.There’s just toomuch liability.The real savingswillcome every five years when the plans have to be rewritten. “If therehavebeennochangesincontentorlocation,youcancertifythatyourself andsavetheprofessionalfees.” TroysaidComlyNetconsultslicensedengineerstoreviewinitial SPCC drafts. “Just often enough,” he said, “they find somethingwehadn’tcaughtoraskaquestionthatmakesuslookatasituationinanewlight.Andwe’vedonehundredsof theseplans.” ForfacilitiesotherthanafarmthatstartedoperationsonorbeforeAug.16,2002,thefacilitymustmaintainitsexist-ingSPCCplanandamendandimplementtheplannolaterthanJuly1,2009.If thefacilitybeganoperationsafterAug.16,2002throughJuly1,2009,itmustprepareandimplementanSPCCplannolaterthanJuly1,2009.If thefacilitystartsoperationsafterJuly1,2009,itmustprepareandimplementanSPCCplanbeforebeginningoperations.

Businesses,nottheiremployees,mustpurchasewhateversafety gear—also called personal protective equipment orPPE—that theemployeewouldnototherwisewearon thestreet, the Occupational Safety and Health Administrationhasruled. Whilesmallareasof debateremain,thelistincludessafetyglasses,faceshieldsandchemicallyresistantgloves(rubber,nitrileandlatex).Hearingprotectionshouldbeofferedintheformof thesmallfoamplugsthatformtotheear.Respira-torsanddustmasksmayberequired,butonlyafteraformalassessmenthasbeenperformedbyaskilledprofessional. Safety shoes, said Phil Troy of CATA allied memberComplyNet,areonecategorywherenegotiationispossible.“Dealerscanpay for theshoes,offer reimbursementwhenpresented with a paid receipt, offer a flat dollar amount, split thecostorevenrequireaffectedemployeestopayfortheirownsafetyshoes,”Troysaid. Most experts say all service department and body shopworkers should wear shoes with slip-resistant shoes, andthosewhoexposetheirfeettocrushinghazardsshouldwearshoeswithcrush-resistanttoes. TroysaidComplyNetoffersfreesafetygearassessments.Call847-655-2907.

Marketplace Marketing/PromotionsBBAinAutomotiveMarket-ingandManagement,NorthwoodUniversity,May2008.Owned/operatedfullservicemobilecardetailingserviceduringsummermonths,2000-2006.Cultivatedclientsbymail,wordof mouth,togrowbusinessfrom20clientstonearly200.AtNorthwood,participatedinGMACsimulationfocusedonbudgeting,forecastingforfailingdealership. Group finished in first place, only group to reach goals for net profit, CSI rating. Mandi Kern, 231-342-9553.

Learnhowtoincorporateorenhanceanaftermarketbusi-nessatadealership,atafreeCATAManagementEducationSeriesseminaronSept.23.Aregistrationformwillappearinthenexttwoeditionsof thisnewsletter. Speakers include representatives from SEMA—the Spe-cialtyEquipmentMarketAssociation—andacustombuilderwhohascustomizedcarsof alltypes. The 9 a.m.-12 p.m. presentation includes a continentalbreakfast.

Aftermarket seminar at CATA

  The CATA Bulletin is published by theChicago Automobile Trade Association

18W200 Butterfield Rd. Oakbrook Terrace, IL 60181-4810

The CATA Bulletin is published and mailed every other Friday except during the Chicago Auto Show, when it is not published. Listings of items for sale are subject to the approval of the CATA. Candidates for employment must submit a full resume to the Editor. Review past editions dating to 1998 or search by subject at http://cata.drivechicago.com.

Jerry H. Cizek III President, PublisherErik K. Higgins Editor, Director of Dealer Affairs

August 11, 2008 CATA Bulletin 3

CATA’s Chicagoland Dealers Care identifies more funding recipients

ABOVE: CATA Chairman John Phelan (right) and CATA President Jerry Cizek (left) visit the Fox Valley Volkswagen dealership owned by Emir Abinion (second from left) to pres-ent a $5,000 donation to Jim and Ann Pride, who oversee the Jeffrey Pride Foundation for Pediatric Cancer Research. BE-LOW: Phelan hands a $5,000 donation to Operation Support Our Troops-Illinois, Inc. President Deborah Rickert, as Sat-urn of Naperville proprietor George Honiotes and employee CJ Lydon look on.

Chicagoland DealersCare,thenewbenevolenten-tityof theChicagoAutomo-bile Trade Association, hasbestowed $5,000 donationsto two more area nonprofit groups. Thecampaign,whichbe-gan dispensing funds thisspring,providesupto$5,000inmatchinggrantsforadeal-er’s contributions to localcharities.Grantrequestscanbe for a variety of causes:academic programs, culturalarts, performing arts, medi-calresearch,andmore. TheJeffreyPrideFounda-tionforPediatricCancerRe-search and Operation Sup-portOurTroops-Illinois,Inc.are the latest beneficiaries. The former was nominatedfor funding by Emir Abin-ion,presidentof FoxValleyVolkswageninWestChicago.ThelatterwasnominatedbyGeorgeHoniotes,whooper-atesSaturnof Naperville. Jeffrey Pride cancer Abinion has supportedtheJeffreyPrideFoundationfor Pediatric Research sincea neighbor invited him to afund-raiser golf outing forthe foundation eight yearsago. Since then, Abinion hasdonated time, money, vehi-clesandsponsorshipstohelpthefoundationraisefundstobring experimental drugs tomarket for children cancerpatients. Several years afterhebe-gan supporting the JeffreyPride Foundation, Abinionsaidhisnephewwasstrickenwiththesameformof cancer

to which Jeffrey Pride suc-cumbed at age 7. Abinion’snephew, now 17, is cancer-free. “One in300kids isdiag-nosed with pediatric cancerbefore they turn 17,” Abin-

ionsaid.“ChicagolandDeal-ers Care is a great idea toutilizesomeof our(associa-tion)funds.Alotof dealersare embedded in their com-munitiesandsupportworthycauses.”

Troop support Deborah Rickert, presi-dentof SupportourTroops-Illinois, Inc., said the orga-nization is incorporated inIllinois, but it benefits U.S. soldiers from all states withpackages of items that arenot readily available to thetroops in their deployed lo-cations. The packages alsoincludepersonalletters,cardsand notes of support fromthecommunityatlarge. Rickerts said her groupin2007shipped6,000pack-ages,whichweigh25poundsapiece. The postage alonefor those shipments cost$120,000. Thegroup in Julyhostedits third annual Rockin’ forthe Troops event, whichdoublesasafund-raiseranda day for awareness of thetroops and the sacrifices madebythemandtheirfam-ilies.Rickertsaidlastmonth’seventstillisbeingreconciled,but the 2007 edition raised$270,000. Operation Support ourTroops-Illinois,Inc.hireditsfirst paid employee in May. All previous efforts werehandled by up to 300 vol-unteers,whoin2007logged10,000hours. CATA Chairman JohnPhelan, who presented thedonationstothetwogroups,pointstotheeffortasawayextend the good that areadealers do with little or norecognition. “In times like this,” saidPhelan,“everydollarcounts.Every CATA dealer can beproudof thisnewinitiative.”

CATA Bulletin4

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Unemployment claims deflected

August 11, 2008

Congratulations!

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FiveareadealerswerenamedPresident’sCircleWin-nersforbeingtopsellersof GMProtectionPlanandMRPvehicleservicecontracts:Bill Haggertyof Hagger-tyPontiac-GMC(VillaPark);Lee Hoskinsof HoskinsChevrolet(ElkGroveVillage);William Koloseikeof BillKayChevrolet(Lisle);Dan Kurtzof SunriseChevrolet(GlendaleHeights);andMichal Van Itenof VillagePon-tiac-GMC(Naperville). AllnineareaLexusdealersachieved2008Eliteof LexusDealersstatus:Arlington Lexus in Palatine,Bredemann Lexus in Glenview,Lexus of Highland Park,Lexus of Merrillville(Ind.),Lexus of Naper-ville,Lexus of Orland,McGrath Lexus of Chicago,McGrath Lexus of Westmont,andWoodfield Lexus(Schaumburg).

One hundred twenty-five CATA dealer members reported a combined 503unemploymentclaimsduringthe second quarter of 2008to Cambridge IntegratedServices Group, Inc., whichformerly operated as theMartin Boyer Co. Thecompany’s efforts savedthose dealers a total of $1.05 million in benefits by contestingtheclaims. Cambridge monitors anyunemploymentclaimsagainstits clients and contests allunwarranted claims andcharges. The companycounts about 230 CATAdealersamongitsclients. Claims that can beprotested and subsequentlydenied help minimize anemployer’s unemploymenttax rate. The rate can varybetween0.8percentand7.2percent of each employee’sfirst $12,000 in earnings. The 2008averageunemploymenttax rate among Illinois

employers is 3.4 percent,or about $408 annually peremployee. “The unemployment taxisreallytheonlycontrollabletax, in that it’s experience-driven,” said Paul Schardt,senior vice president of Cambridge.Anex-employee’sclaim affects the employer’staxrateforthreeyears. For new enrollees, clientfees amount to $2.60 peremployee, per fiscal quarter. For the fee, Cambridgemonitors all unemploymentclaims; files any appeals; preparesemployerwitnessesfor hearings, as necessary;represents the client atany hearings; verifies the benefit charge statements; and confirms the client’s unemploymenttaxrate. The former MartinBoyer Co. has representedCATAmemberssince1978.To discuss retaining thecompany,callSchardtat312-381-8241.

mustbe taken toobtain theadvertised price but whereonly some will qualify; andsimilarscenarios. “In this day of challeng-ingeconomictimesingener-al,andfordealersespecially,theBBBisawarethatdealersdoneedtoadvertiseaggres-sively to make sales,” Kellysaid. “However, the BBB isalsoawarethattheremustbethat level playing field for all dealerstocompetefairly. “Therefore, the BBB hasbegun to pay particular at-

whether to identify the in-centiveamountasarebateorsomethingelse. “It (taxable dealer cash)needs to be on the bill of sale,” said Susie Lonzerotti,vehicletaxliaisonfortheIl-linois Revenue Department.“But we can’t dictate whereon the bill of sale that ap-

tention to those advertise-ments that advertise a pricethatisnotavailabletoall,inwhateverformthatpricead-vertisement takes, whetherRule 310 alone is violatedorinconjunctionwithothermore specific Rules. “Dealers who advertiseprices that are not availabletoallconsumerswillriskvio-lation letters from the BBBunder the BBB/CATA Ad-vertising Review Program,as we continue to monitoradvertisementswiththegoalthat all dealers can competefairly in these difficult eco-nomiccircumstances.”

pearsbecausetheyareallsetupsodifferently.” As for soothing custom-ers upset about paying thetaxondealer cash that theydon’tget,asuggestedtactistosay,“Yes,wearegettinganextra $250 from the manu-facturer to sell this vehicle,andthat’swhatenablesustosell ittoyouatthepriceweagreedto.”

BBB

Dealer cash

Of morethan4,000con-sumers planning to buy anewvehicle in thenext twoyears,62percentareconsid-ering a hybrid. That figure is upfrom50percentlastyear,according to a J.D. PowerstudyreleasedinJuly. Themainreasoncitedlastyearforconsumersnotcon-sidering hybrids was unfa-miliaritywiththetechnology.But that number is down 6percent year year, and nolongerthetopconcern. Now the top issue forconsumers reportedly is

the “premium of the pow-ertrain.” Customers wantto know whether a hybridwill pay for itself based ontheir driving styles, whetherthey’releasingorbuying,andotherfactors. The study found fewerconsumers this year are in-terestedinE85vehicles—43percentsaidtheywereinter-ested,downfrom47percentlastyear.TheconcernisthatE85vehicles,whichcanrunon as much as 85 percentethanol, may affect agricul-turalproduction.

Survey: Hybrids wanted, but not E85