In 2021, five plaintiffs representing Wisconsin motor vehicle auctions filed an injunction to prevent the department from implementing the 2018 policy. An order from the Jefferson County Circuit Court, in the case, 21CV172, issued January 11, 2022, prohibited the department from implementing the 2018 policy against the named plaintiffs. The department has continued to enforce the 2018 policy against auctions not involved in the injunction. This has created an uneven playing field for auctions and buyers, leading to potential adverse economic impacts to businesses without fully addressing the problem of illegal vehicle sales.
This new rulemaking would codify the department’s 2021 interpretation of s. 218.34, Stats., requiring all motor vehicle buyers to have been issued a valid buyer’s license from the department prior to bidding on or purchasing vehicles at motor vehicle auctions. A no-action alternative would effectively revert the department back to the original 2004 policy. The department believes this alternative is contradictory to protecting consumer welfare, as it does not address the concerns of unlawful vehicle sales outlined above.
4. Detailed explanation of statutory authority for the rule (including the statutory citation and language):
The department is required to promulgate a rule when interpreting an ambiguous statute under s. 227.10 (1), Stats. Section 227.10 (1), Stats. Statements of policy and interpretations of law; discrimination prohibited (1) Each agency shall promulgate as a rule each statement of general policy and each interpretation of a statute which it specifically adopts to govern its enforcement or administration of that statute. A statement of policy or an interpretation of a statute made in the decision of a contested case, in a private letter ruling under s. 73.035 or in an agency decision upon or disposition of a particular matter as applied to a specific set of facts does not render it a rule or constitute specific adoption of a rule and is not required to be promulgated as a rule. Sections 218.0114 (1) and (4), Stats., set forth the licensing requirement the legislature has adopted for entities to engage in business as a motor vehicle dealer in Wisconsin. Sections 218.0114 (1) and (4), Stats., Licenses, how granted; agreements, filing. (1) No motor vehicle dealer, motor vehicle wholesaler, motor vehicle salesperson, motor vehicle buyer, or sales finance company may engage in business as a motor vehicle dealer, motor vehicle wholesaler, motor vehicle salesperson, motor vehicle buyer, or sales finance company in this state without a license therefor as provided in ss. 218.0101 to 218.0163. If any motor vehicle dealer acts as a motor vehicle salesperson, he or she shall secure a motor vehicle salesperson's license in addition to a motor vehicle dealer license…. (4) Application for a license under this section shall be made to the licensor, at such time, in such form and with such information as the licensor shall require and shall be accompanied by the required fees….
Section 218.34, Stats., prohibits motor vehicle auctions from accepting bids from customers who do not possess a valid motor vehicle dealer, motor vehicle wholesaler, or motor vehicle buyer license. Section, 218.34, Stats., Purchases from a motor vehicle auction
(1) No person may purchase or submit a bid for the purchase of a motor vehicle from a motor vehicle auction unless the following conditions are satisfied:
(a) The person holds a valid motor vehicle dealer, motor vehicle wholesaler, or motor vehicle buyer license.
(b)If licensed as a motor vehicle buyer, the person bids on a vehicle for only one motor vehicle dealer at a time, and uses that dealer's funds when purchasing the vehicle.
(c)The person displays his or her valid motor vehicle dealer, motor vehicle wholesaler, or motor vehicle buyer license to the motor vehicle auction and includes his or her license number on each sheet of any bid submitted to a motor vehicle auction for the purchase of a motor vehicle or other document evidencing the purchase of a motor vehicle from a motor vehicle auction.
(2) No motor vehicle auction may accept a bid for the purchase of a motor vehicle or complete the sale transaction unless the person who submits the bid or offers to purchase a motor vehicle from the motor vehicle auction satisfies the requirements of sub. (1) and the motor vehicle auction verifies that the motor vehicle dealer license, motor vehicle wholesaler license, or motor vehicle buyer license number displayed on the person's license and included on each sheet of that person's bid or other document evidencing the purchase of a motor vehicle are identical.
(3) For each motor vehicle sold by a motor vehicle auction, the motor vehicle auction shall enter on the certificate of title, or on the form or in the automated format used to reassign the title, any information that the department requires to indicate that ownership of the vehicle was transferred by a motor vehicle auction.
Section 218.0111 (1), Stats., requires that the department be the entity to issue all motor vehicle buyer licenses. (1) The department of transportation shall issue the licenses provided for in s. 218.0114 (a) to (fm) and have supervision over the licensees in respect to all of the provisions of ss. 218.0101 to 218.0163, except that the division of banking shall have jurisdiction and control over all of the following: (a) Matters that relate to the sale of motor vehicles on retail installment contracts and the financing and servicing of those retail installment contracts.
(b) Matters that relate to prelease agreements under s. 218.0144 and consumer leases under chs. 421 to 427 and 429. (c)The issuance of licenses to sales finance companies.
Section 218.0152 (3), Stats., authorizes the department to promulgate rules necessary for the effective administration and enforcement of permits it issues. (3) The licensor may promulgate such rules as it considers necessary or proper for the effective administration and enforcement of ss. 218.0101 to 218.0163, but no licensee shall be subject to examination or audit by the licensor except as provided in s. 218.0116 (5). 5. Estimate of amount of time that state employees will spend developing the rule and of other resources necessary to develop the rule
80 hours.
6. List with description of all entities that may be affected by the proposed rule:
This rule will affect all Wisconsin motor vehicle auctions, motor vehicle salvage pool auction, motor vehicle dealers, motor vehicle wholesalers, motorcycle dealers, recreational vehicle dealers, and salvage dealers who attend auctions in this state. The rule will also affect any out-of- state motor vehicle dealers, wholesalers, and salvage dealers who attend auctions in this state.
7. Summary and preliminary comparison with any existing or proposed federal regulation that is intended to address the activities to be regulated by the proposed rule:
There are no known existing or proposed federal regulations meant to address concerns related to purchases of motor vehicles at auction.
8. Anticipated economic impact of implementing the rule (note if the rule is likely to have a significant economic impact on small businesses):
Licensed motor vehicle dealer’s representatives and applicants for motor vehicle buyers’ licenses will likely experience a delay in their ability to participate in auctions. This may lead to a short- term impact of several weeks on licensed dealer’s vehicle inventory and sales. The department does not anticipate significant economic impact to motor vehicle auctions. The department anticipates a positive economic impact to consumers by reducing the incidences of illegal motor vehicle sales.
Contact Person:
Mark Rather
Section Chief – Dealer & Agent Unit
Wisconsin DOT - DMV - Bureau of Vehicle Services 4822 Madison Yards Way, 3rd Floor South
Madison, WI 53705-7986
Office: (608) 264-7000
