From the Virginia Motor Vehicle Dealer Board, September 2010
At its September meeting, the Virginia Motor Vehicle Dealer Board determined that dealers paying fees for successful leads they receive from the internet vehicle referral service “ZAG.com,” or any other similar service may be in violation of the state’s prohibition against “bird dog” fees. (Virginia Law prohibits dealers from compensating any person in connection with the sale of a motor vehicle, unless the person is licensed as a salesperson employed by the dealer.)
When the dealer sells a vehicle to a buyer referred to them by ZAG.com, the dealer pays ZAG.com a fee ranging from $295. to $395, which the executive director of the MVDB believes is illegal under Virginia’s ban against “bird dog“ fees. The Board agreed with the executive director’s conclusion.
The MVDB cannot take enforcement action against ZAG.com since it is not a licensed entity in the Commonwealth, but the Board can take action against dealers who do pay ZAG.com in connection with the sale of a motor vehicle. (Bird dog payment.)
If you are compensating ZAG. Com or any other unlicensed individuals or companies based on sales of vehicles, you should discontinue this practice immediately. Violations of this law are subject to a $1,000 civil penalty for each bird dog fee paid and possible suspension or revocation of your dealer license.
If you have been paying Zag.com or any other individual or company a bird dog fee, it is strongly suggested that you notify the Board in writing of this action and that you have taken measures to discontinue this practice.
(Adapted with permission from the Washington Area New Automobile Dealer’s Association (WANADA))