Protect your dealership’s ability to issue tags

By Michael G. Charapp
Charapp & Weiss LLP

As sales processes evolve, more functions once the responsibility of others are being done by dealerships. One example is issuing license plates.

For some time, Virginia has allowed dealers to maintain a supply of temporary tags and permanent tags they can issue to vehicle buyers. The ability to issue license plates is important to building customer relationships. You want your buyers to look to your dealership for as many services as possible to keep them coming back.

Virginia now allows dealers to print temporary tags on demand on dealership printers. A dealer need not inventory temporary tags.  When a temporary tag is necessary, the dealership prints it.

With this convenience, however, comes risks. Tags are valuable. Many ill-intentioned drivers will pay substantial sums for a temporary tag or a permanent tag rather than spend the money necessary to get a legitimate tag. You would never risk your dealer license or your ability to issue tags. That does not mean an employee eyeing an improper income opportunity will not abuse the system.

Implement a procedure for protecting against theft and improper sale of tags

  • Carefully secure inventories of license plates. Be sure you have listing of what is in inventory. Limit access to the inventory. Carefully record issuance of tags.
  • Audit supplies of tags. Make sure you have the tags you are supposed to have in inventory. Regularly do a tag audit to be sure nothing has gone missing.
  • Implement a system for issuing tags from your inventory. Put one person in charge. If a group of tags is signed out (e.g., 10 temporary tags to the F&I department to issue with sale of vehicles), make sure there is a log kept and that log is returned when filled in. Always know to whom tags have been issued.
  • Audit the tags used. Compare the number of tags issued to the vehicles sold. Make sure that each temp tag and each permanent tag can be matched up to a dealership transaction.
  • For your print-on-demand system, audit the tags issued. Review the number of tags printed regularly. Make sure that you can match each temp tag printed to a transaction in your dealership. Recently, because of the actions of an independent dealer that was apparently abusing the system, the DMV Commissioner stated that DMV will be monitoring orders for supplies (e.g., plastic display envelopes) as a tip to whether there may be abuse of the print-on-demand system.  Your dealership should do the same.
  • Have a system to return customer tags.  If you remove a customer’s tags from a traded vehicle, be sure to return the tags to the customer.  Have a similar rule if you remove the customer’s temp tags to install permanent tags.  Make sure the temp tags are returned to the customer or destroy the temp tags and keep a record of that.