Pub 20-2021-2022 Issue 1

N E W J E R S E Y C O A L I T I O N O F A U T O M O T I V E R E T A I L E R S I S S U E 1 | 2 0 2 1 12 new jersey auto retailer 2021’s Top Legal Trends For Automobile Dealers BY ERIC L. CHASE Both the ongoing Coronavirus pandemic and the fallout from the 2020 election are expected to have the most legal impact on dealers in 2021 and affect many other issues. Dealers must contend with the consequences of the pandemic as well as anticipated changes in governance and policies. Below is a rundown of the top legal trends that are expected to impact the franchised automotive retailing industry in 2021. COVID-19 COVID-19 changed virtually everything in early 2020. In a matter of weeks, unemployment levels soared from record lows to record highs. Many dealers were closed for up to two months, and buy-sell activity died. Congress took unprecedented action, spending trillions of dollars to pay both people and businesses during short closures and slowdowns. Business for dealers roared back in the summer, and buy-sell transactions were robust in the second half of the year. Unem- ployment dipped under 8%. By the fall of 2020, most dealers had come full circle with brisk sales and service activity. In the final months of 2020, the pandemic surged, again, resulting in the re-impositions of limitations on certain businesses and other activities in several states. Amid this negative news, several phar- maceutical companies developed approved vaccinations in record time. As of the end of March, more than 100 million Americans have been vaccinated, with the pace accelerating as vaccine dis- tribution and processes improve. The expectation is that everyone desiring vaccinations will get them by mid-summer. No one should expect the ways of doing business to return to a pre-COVID “normal” anytime soon. Instead, preventive measures are expected to continue well into 2021. Even after that, dealers will likely continue with standards of hygiene, masking and social distancing. Dealers now readily serve customers at their homes upon request. Pick-ups and deliveries may become as common- place in dealership sales and service as home delivery of meals. Dealers must take care to enforce rules mandated by their states. A rising number of consumers vow to do their car shop- ping and deliveries at home — a phenomenon that already was taking hold before the pandemic struck. Dealers should now operate as if the next pandemic is coming, with strong safety measures and an enhanced virtual capability. Significance of the 2020 Election The 2020 election was like no other in American history. The Senate majority remained in limbo until the January 5, 2021 runoff elections for Georgia’s two senators. Now, with a 50-50 split between the parties, Democrats have control, with Vice President Harris as the tie-breaking vote. Democrats also enjoy a narrower edge than before in the House of Representatives. The Biden administration vows to be focused on the reinvig- oration of regulations, be consumer-oriented, and further the “greening” of American life and business. Dealers must ex- pect legislative and regulatory inf luence that will drive prod- uct development, choice and performance. CAFE standards will be revisited. Electric vehicles will be further encouraged and incentivized; credit questions about racial disparity may see federal investigations of dealer practices; unionization will be encouraged again, and the NLRB will not be sympa- thetic to businesses. President Biden will likely preside over many legislative, executive and regulatory changes that will impact dealers. The Data, Internet, Social Media, Identity Theft and Privacy Minefield For dealers, this topic encompasses a moving set of targets that embrace both opportunity and risk. No dealer can operate suc- cessfully without meaningful emphasis upon cybersecurity and capability, including regular updates in hardware, software and regulatory developments. But enormous dangers and challenges loom because dealerships are vulnerable to cybercrimes, partic- ularly in certain areas of their business. According to a Decem- ber 9, 2019, Automotive News article ( Retailers Prime Targets For Data Theft ), an average of 153 viruses and 84 malicious spam emails are aimed at dealer computer networks and are blocked by technology each day. There are many cyber pitfalls that af- fect dealers, including direct attacks by cybercriminals, identity theft, ransomware and other threats, all of which are surging. We’ve also seen an increase in lawsuits related to the Ameri- cans with Disabilities Act and comparable state laws, claiming that consumers cannot easily access dealer websites with certain impairments. Many dealers have paid substantial settlements