I’ve run across numerous situations where the advice or direction provided by the manufacturer’s representative obviously was not vetted by the legal department.

For example, more than one manufacturer’s rep has told dealers selling new vehicles under an auto maker’s employee purchase plan (A-Plan, VPP, etc.) that it was acceptable to add a subprime acquisition fee to the price of the vehicle if the customer only qualified for subprime financing.

That’s bum information that many dealers accepted and now have a portfolio of potential Truth in Lending violations.

I’ve also seen situations where state and county titling agencies are giving dealers bad advice.

Texas, to name one, accepts the photocopy of a military ID for titling purposes. Admittedly, it accepts about six different forms of identification, but on its official titling form, one of the six acceptable photocopies of identification is a military ID.

Let me be clear on this: It is a violation of federal law [18 U.S.C.S. § 701] to make a photocopy of a military ID.

Now the tough part: There are situations in a car deal where a photocopy of a military ID would help document compliance with various requirements.

Military Rebates

Some auto makers are offering rebates or the equivalent of employee-discount pricing to service people. As with all manufacturer incentives, there are eligibility requirements. As with all manufacturer incentives, there is the possibility or likelihood of incentive audits by the manufacturers.

As smart businesspeople, dealers should retain documentation of the purchaser’s eligibility for that incentive. Most dealers are making a photocopy of the customer’s military ID as proof.

I’ve reviewed a number of the manufacturer’s eligibility and documentation requirements for military incentives. Not one that I’ve seen so far suggests or requires that you make a photocopy of the military ID.

Proof of Identity

A dealer is required to confirm a purchaser’s identity under Dealer-Lender Agreements, the USA Patriot Act and Office of Foreign Assets Control, to name a few. Generally, a photocopy of the purchaser’s driver’s license suffices. But an expired license is not considered a valid identity.

Some states will allow an active-duty military member to drive on state roads with an expired license from the person’s state of legal residence, provided the person has a valid military ID.

The issue becomes a documentation requirement, as stated above. If the driver’s license is expired, and you can’t make a photocopy of the military ID, how does a dealer document the customer has a valid identity?

Dealer Options

Military personnel are well aware that it is illegal to make a copy of their military ID, so you shouldn’t feel any trepidation about asking for additional documents. Here are a few options:

  • Leave and Earnings Statement. It essentially is a military person’s paystub. A valid one gives all the information you need to validate military status. Military personnel are not embarrassed about providing an LES, understand the need to do so and can quickly provide one upon request.
  • Alternative IDs. Some military personnel have alternative forms of acceptable IDs, such as a passport or an unexpired state ID. You can make copies of those and retain in the file.
  • Write It Down. The law does not preclude a business from writing the information from a military ID on a separate form. If you are near a military installation and sell a fair amount of vehicles to military personnel, you may want to develop a form to gather the information and retain a copy in the file.

Continued good luck and good selling.

Gil Van Over is the President of gvo3 & Associates (www.gvo3.com), a national consulting firm that specializes in F&I, Sales, Safeguards and Red Flags compliance.