Legal Issues Facing Car Dealerships in San Antonio

 Posted on August 25, 2025 in Business Law

Owning and operating an automotive dealership comes with its fair share of complexities and challenges. Dealerships may find themselves in legal disputes with customers, vendors, and other parties. They must comply with local, state, and federal laws and regulations, and even a simple oversight can lead to significant penalties for non-compliance.

If you currently own a dealership or plan to soon, understanding your legal responsibilities is crucial. Consider working with a Bexar County business law attorney Geoff Mayfield, Attorney at Law who understands the unique challenges involved with this type of business and can help steer you in the right direction. In this blog, we will discuss just some of the many laws and regulations you need to be aware of as a car dealership owner.

What Information Do Used Car Dealerships Have to Provide to Buyers?

The Federal Trade Commission Buyers Guide law requires certain information to be prominently displayed in a used car that is for sale. You will need to clearly state whether the vehicle comes with a warranty, and if so, what the warranty covers, and for how long. You must also include the vehicle make, model, and year, as well as the VIN. Failure to comply with FTC regulations can lead to costly civil penalties.

The Buyers Guide should also advise customers that oral promises are not as enforceable as written agreements. Additionally, if the transaction for the used car was carried out in Spanish, a Spanish Buyers Guide must be provided with the sale. Some exceptions to the Used Car Rule include motorcycles, vehicles sold for scrap (assuming the dealer has a salvage certificate), and agricultural equipment.

You should also make sure that the Buyers Guide is displayed "prominently and conspicuously," as per the Federal Trade Commission’s official website. This means the guide must be placed in plain view, whether attached to a side-view mirror, on the rear-view mirror, or somewhere else in clear sight of the consumer.

How Does The Equal Credit Opportunity Act Affect Car Dealerships?

It is unlawful to discriminate against customers based on their age, race, national origin, sex, religion, color, or marital status. The Equal Credit Opportunity Act (ECOA) requires dealerships to be free of bias when selling vehicles. The ECOA also prohibits dealerships from asking customers certain questions.

A seemingly innocuous question about a customer’s personal life could be considered an ECOA violation, which may come with heavy fines. The law also requires you to let customers know of your credit decision within 30 days and explain why a customer was denied if their loan was not approved.

Some practices involving markups or "dealer reserves" could also be considered an ECOA violation. For example, imposing junk fees toward customers of a certain race would constitute a violation of the ECOA’s anti-discrimination laws.

Contract Disputes Between Buyers and Sellers at Car Dealerships

A car dealership could experience legal troubles if it is accused of not honoring a contract with a buyer. For instance, if the dealership refuses to fix a vehicle that is covered under the dealership’s warranty, the buyer could take action to compel the dealership to make the repairs. A buyer can seek other remedies for a breach of contract, such as monetary damages.

If you have been accused of violating a contract, our firm can advocate for you in the dispute to protect your interests. We will look for ways to resolve the issue through careful negotiation, but if needed, we are prepared to represent you in litigation.

How Long Do I Have to Transfer a Vehicle’s Title to a Buyer?

If you sell a vehicle and do not yet have the title, you have exactly 30 days to have the title issued in the buyer’s name. Furthermore, failure to complete the title transfer within the time limit could mean that you are liable for traffic tickets and criminal offenses committed with the vehicle. To avoid this, the Texas Department of Motor Vehicles advises car sellers to accompany buyers to the county tax office and ensure that the vehicle title application is filed.

Accusations of Fraud in Car Dealerships

Car dealerships that engage in fraudulent business practices could be exposed to serious penalties. Examples of fraud at a car dealership could include:

• Intentionally misrepresenting critical details about a car, such as its wear-and-tear or history of accidents

• Obscuring a car’s real mileage by tampering with the odometer

• Using "bait and switch" tactics by advertising a car at a favorable price only to withdraw that offer when the customer is in the store

Under Section 17.46 of the Texas Business and Commerce Code, dealerships and other businesses are strictly prohibited from engaging in "false, misleading, or deceptive acts or practices." A violation of this section could expose a dealership to civil liability, as compensation will have to be paid out for the victim’s damages.

How Employment Law Applies to Car Dealerships

It is important to keep your employees informed about their rights and responsibilities. The Fair Labor Standards Act requires that you pay employees for all hours worked. You must also comply with the Equal Employment Opportunity Commission (EEOC), which prohibits workplace discrimination based on race, gender, age, or disability. Examples of discriminatory practices prohibited by EEOC include:

• Paying your female employees less than your male employees for equal work

• Punishing a black employee more harshly than a white employee for the same infraction

• Refusing to hire a qualified employee based solely on their age

• Making job assignments based on ethnic stereotypes

Moreover, if you are accused of punishing an employee at your dealership for filing a discrimination complaint, you could face penalties for retaliation, such as punitive or economic damages.

Contact our San Antonio, TX Car Dealership Attorney

The information above represents just a fraction of the legal concerns faced by car dealerships. Our Bexar County, TX business law attorney provides trustworthy legal advice and skilled advocacy for car dealerships facing legal problems of all kinds.

We have more than 15 years of experience handling legal concerns for business owners in Texas, working toward practical, cost-effective solutions in every case. Call Geoff Mayfield, Attorney at Law at 210-535-0870 to set up a free initial consultation to learn more.