Transportation networks like Uber and Lyft may be familiar to us now, but they were practically unheard of 5 years ago. For prospective customers, cars and trucks once used for ridesharing services like these represent a new kind of pre-owned vehicle: one that is subject to certain assumptions and open to certain legal challenges. How should dealers handle selling these vehicles and disclosing their histories?
For many auto dealers, this complexity can lead to lost revenue, disputes with purchasers, state and federal enforcement actions and more. At the very least, it all adds up to a whole lot of paperwork.
California law, for example, mandates that when selling a vehicle, a dealer must disclose anything and everything material to the customer’s decision to purchase the vehicle. That includes theft, repairs, accidents and any prior uses of the vehicle, including whether it was driven as a taxi or limo.
The current state of the transportation network industry complicates things. Whether due to high mileages or squeamishness over the number of people who have sat in the vehicle, some buyers may not want to buy a car that’s been used in a ridesharing service such as Uber or Lyft.
However, detecting the particulars of a vehicle’s history isn’t always a simple feat. “The first line of defense is the consumer’s disclosure,” says Shane McCallan, Vice President of Auto Advisory Services. Some customers will divulge the details during trade-in. Other times, an Uber or Lyft sticker—or the imprint of a sticker—will make it obvious. Sometimes, the information emerges during credit allocations, when the individual trading in the vehicle may list their source of income as “Uber” or “Lyft.”
Another clear indicator? The vehicle’s odometer. If a two-year-old car has 180,000 miles on it, it was probably used as an Uber or Lyft vehicle.
Just a Reminder: We’re not your lawyer (of course, right?) Since we’re not, remember that this article’s for informational purposes and not intended to provide legal advice.
Jonathan also recommends investigating the details of the prior legal owner. Companies such as Xchange, Bama and Breeze specialize in financing and leasing vehicles to Uber and Lyft drivers. Make sure to look into the vehicle’s insurance history, as many providers offer specific ridesharing coverage.
For those of you in California, a couple new forms make it easy to disclose a vehicle’s ridesharing history: LAWCA-96135 and LAWCA-UVHD. The former is an intake form, which you fill out when the previous owner releases the vehicle, while the latter should be given to the purchasing customer to disclose the fact that the vehicle was used for ridesharing.
What Auto Dealers Can Do to Keep Up
Ridesharing represents only one uncertainty among many for auto dealers. Compli provides a way for dealers to manage regulatory changes across multiple locations in a way that is scalable, accurate and defensible. Our auto dealer workforce compliance management system integrates policies, guidelines and trainings, and automates delivery of information based on employees’ roles.
We partner with subject matter experts such as AAS to import guidelines such the new 553 form with instructions on how to fill out all elements of the form and room to capture attestations from key employees. Our system gives organizations access to up-to-the-minute federal and state laws, as well as dealership-specific policies.