Where does an Internet sale really take place? Is an Internet company a broker or a dealer? A model Internet law now being drafted seeks to settle those and other thorny auto e-commerce questions.
The National Association of Motor Vehicle Boards and Commissions believes state statutes must be updated to address the legal issues raised by online marketing. The association expects to publish the model law this year. The hope is that the law will be adopted by state legislatures.
'The Internet model law has to look at whether the states have the right to regulate Internet commerce,' said Rick Alexander, the association's executive director.
Because the Internet is a global medium, some state regulators wonder if online sales are out of their jurisdiction, Alexander said. The federal government regulates interstate commerce.
In addition to jurisdiction, the model law is expected to settle several other issues, including:
Where and when a vehicle sale takes place. Generally, the transaction is complete when the paper work is signed. Since consumers are not executing contracts online, the sale is not taking place online. So if an Internet company delivers a vehicle to an out-of-state customer, what legal requirements must the company meet and what state regulates the sale?
When an Internet company is a dealer and what licensing requirements it must meet. States often require a dealer to do business from a physical location. Some states ban off-site sales. If a Web site displays inventory online, is it a dealer?
When an Internet company is a broker. Some online buying services refer customers to dealers or arrange transactions. Some states ban auto brokering. Are the buying services engaging in auto brokering?
How Internet-related car sales should be taxed. Some states require dealers to pay property taxes on their vehicle inventory. Should Web sites that display virtual inventories by subject to the same taxes?
The organization is asking for input from state attorneys general, the Federal Trade Commission and industry trade associations.