- Co-op/Shared License Issues in Dealer License Scam
- States require that a vehicle must be shown and sold at the business location of the dealer.
- So let’s assume you have a shared license from another state.
- You WILL be allowed into all dealer only auctions. You purchase your first vehicle at the auction. Then you discover….. you do not own it!
- It will be titled assigned to the shared license holder.
- You advertise on Craigslist in your town as an individual. Bingo….this is a violation of Federal Trade Commission advertising guidelines. You must advertise it as a dealer. Plus you have defrauded Craigslist of their fee for dealer listings.
You have also violated the licensing laws of your state.
You are advertising as a dealer with the vehicle being located in your state.
If you are offering for sale, negotiating and agreeing to a price on a car in your state, then you are required to be licensed in your state and this process must take place at a dealer business location.
These services will throw around the idea that you are selling on the Internet.
Know this….. vehicle businesses do NOT sell on the Internet, they ADVERTISE on the Internet.
These co-ops, out of state, dealers, will handle the paperwork and process the sale for a fee.
The paperwork will have to be sent overnight both ways.
As a member of the LLC, you are personally liable for your actions that violate the laws in any state.
Here is a practical co-op problem.
Your potential buyer likes the vehicle.
You explain you will have to send the paperwork to a location in another state.
At that point, a red flag will go up and many buyers will walk away.
They want to drive away in the car……now! “I’ll give you cash. You give me the car.”