We have become aware of increased buying service activities in the Commonwealth. Please be aware that buying services are not permitted under Virginia law.
A buying service, whether compensated by the dealer or by the customer, is engaged in the activity of selling a motor vehicle. Even when that buying service is compensated by the customer, the broker is engaged in activities designed to facilitate the sale of the vehicle to the customer. This is retail sale activity based upon the language of Virginia Code section 46.2-1500 which states as follows:
"Sale at retail" or "retail sale" means the act or attempted act of selling, bartering, exchanging, or otherwise disposing of a motor vehicle to a buyer for his personal use and not for resale.
Under the provisions of the Virginia Code, a license is required for any retail sales activity. One engaging in those activities must be licensed either as a dealer or as a salesperson for a dealer:
§ 46.2-1508. Licenses required.
It shall be unlawful for any person to engage in business in the Commonwealth as a motor vehicle dealer or salesperson without first obtaining a license as provided in this chapter.
If the customer is paying the buying service fee, there is probably no issue of that being a birddog fee from the selling dealer. However, if the buying service, having agreed to be compensated by the customer, negotiates an additional commission from the dealer or negotiates a benefit for the customer so that the customer can obtain the return or at least compensatory value for some or all of the commission paid by the customer, that does implicate the Virginia birddog statute:
§ 46.2-1537. Prohibited solicitation and compensation.
It shall be unlawful for any motor vehicle dealer or salesperson licensed under this chapter, directly or indirectly, to solicit the sale of a motor vehicle through a pecuniarily interested person, or to pay, or cause to be paid, any commission or compensation in any form whatsoever to any person in connection with the sale of a motor vehicle, unless the person is duly licensed as a salesperson employed by the dealer. It shall also be unlawful for any motor vehicle dealer to compensate, in any form whatsoever, any person acting in the capacity of a salesperson as defined in § 46.2-1500 unless that person is licensed as required by this chapter.
Please let us know if you have any questions about buying services. Also, if you are aware of buying services operating in Virginia, please let us know so that we can advise the Motor Vehicle Dealer Board of the activities.