Visit any new car dealership in California and you will see large white stickers prominently displayed on the windows of each vehicle. These stickers list the vehicle’s suggested price, warranty information, optional equipment, fuel economy, safety ratings, and more. Easy access to this data helps buyers make informed decisions and negotiate with confidence.

Not surprisingly, dealers do not choose to display window stickers of their own accord. Title 15 of the U.S. Code makes them do it. In fact, pursuant to this statute, a dealer who removes the sticker prior to sale can be fined and sent to prison.

The federal window sticker law is an example of government regulation of the auto sales industry. Dealers must comply with other regulations as well, with various government agencies overseeing the process. However, of all the mechanisms put in place to protect car buyers, the most effective regulation – the lemon law – was designed to be enforced by consumers themselves. Buyers of defective vehicles covered by warranty can initiate a California lemon law claim to obtain a refund or replacement from the manufacturer.

Who regulates car dealers in California?

Who Regulates Car Dealerships in California?

Below is a description of the entities that regulate auto dealers in California.

If you have questions about the rules governing dealerships or who can enforce them, we encourage you to contact our firm.

Department of Motor Vehicles (DMV)

When California created the DMV in 1915, there were less than 200,000 registered vehicles in the state. Today there are more than 30 million. As the agency has grown through the years, so too have its responsibilities. In addition to registering vehicles and issuing driver’s licenses, the DMV is now tasked with, among other things, the licensing and regulation of auto dealers.

Serving as the licensing authority means that the DMV has direct control over who can and cannot operate a dealership. The application process is quite rigorous. Anyone looking to become a car dealer in California must:

  • Pass a criminal background check
  • Take educational courses and pass a written test
  • Obtain a $50,000 surety bond
  • Comply with property use, front office, signage, and display lot requirements
  • Undergo an on-sight inspection by a DMV officer.

The DMV also requires the licensing of auto “salespeople.” A salesperson is defined as anyone who sells or leases (or supervises the sale or lease of) vehicles on behalf of a dealer. Like dealers, salespeople must pass a background check to ensure they have not been convicted of crimes or engaged in improper conduct relative to their job duties.

New Motor Vehicle Board (NMVB)

The NMVB is technically part of the DMV, although it is overseen by the California State Transportation Agency (CalSTA). The program serves two primary functions. It works to resolve:

  1. Disputes between auto manufacturers and franchised dealerships
  2. Disputes between consumers and manufacturers/dealerships.

With respect to consumer disputes, the NMVB is authorized only to mediate in order to help the parties reach a mutually acceptable resolution. The Board does not have the power to enforce California’s lemon law or to order a manufacturer to comply with the law.

Department of Consumer Affairs (DCA)

Businesses operated with practically no government regulation in the early years of California statehood. Then, in 1876, the legislature passed the Medical Practice Act, bringing regulation to the medical profession. Other industries came under state authority in the following years. In 1970, the DCA was created. The agency now regulates 250 different categories of businesses in California.

The DCA is primarily involved with regulating auto dealerships through its Arbitration Certification Program (ACP). Consumers who believe they may have purchased a lemon vehicle can submit their claim to the ACP. The process is free, an attorney is not required, and participating manufacturers have agreed to abide by the result. But be aware, submitting your lemon law claim to the ACP for arbitration may be harmful to your interests. Here is why:

  • The program is funded by the participating auto manufacturers. (although, by law, decision-making is supposed to be insulated from their influence).
  • You can hire a lemon law attorney to handle your claim through the regular civil court process at no cost to you. Thus, the fact that arbitration is free and does not require an attorney is of no benefit.
  • Any decision rendered against you by the arbitrator can be used as evidence in later civil court proceedings.

If you are considering the ACP as a means of resolving your lemon law claim, we strongly encourage you to schedule a free telephone consultation with one of our attorneys first to discuss potential negative consequences.

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Bureau of Automotive Repair (BAR)

The BAR regulates auto repair services in California, including repairs performed by dealerships. Consumers can visit the BAR website to research a particular auto repair dealer, to access manufacturer-specific warranty information, or to file a complaint.

In a recent fiscal year, the BAR investigated 18,948 complaints submitted by repair shop customers in California. When a complaint is determined to have merit, BAR officers will contact the business on behalf of the consumer and attempt to negotiate additional work, a refund, or an adjustment to the bill.

Office of the Attorney General (OAG)

The California OAG dates back to 1850. The current attorney general is Xavier Becerra – a Sacramento native and the first Latino in state history to hold this position. Prior to serving as attorney general, Mr. Becerra represented downtown Los Angeles (California’s 34th congressional district) in the U.S. House of Representatives.

Most of the state agencies discussed previously have authority to enforce civil statutes and impose fines or other penalties on dealerships that do not comply with the law. Only the OAG has the authority to prosecute crime, however, making it perhaps the most feared regulator of all.

Criminal fraud committed by auto dealers may involve conduct such as:

  • Concealing information that affects the value of a vehicle
  • Knowingly making false statements to induce a purchase
  • Advertising a vehicle as new when it is not
  • Falsifying factory documents
  • Rolling back the mileage on a used car’s odometer
  • Perpetrating various scams related to customer financing.

Factory Warranty Holders

California’s lemon law is a unique and powerful tool. Owners and lessees of defective vehicles do not need to wait for a government agency to take action. They can assert their warranty rights against manufacturers directly. In a sense, consumers become the regulators, which is often the best way to achieve justice in these cases.

When You Need Legal Help

Our attorneys are highly experienced in handling California Lemon Law cases.

If an auto dealer is giving you the runaround with regard to warranty repairs, our lemon law attorneys can help. Call (888) 506-0899 or request a call back using our contact form. We help clients throughout the state, so there’s no need to travel to our office.

You can receive a free case evaluation by phone and there are no fees for our services.

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