Dealer Regulation Process

The Department of State is responsible for licensing and regulating vehicle dealers, repair facilities, and mechanics. The following methods are utilized by the Department to regulate vehicle dealers and assure that they adhere to the requirements of Chapter II of the Michigan Vehicle Code and administrative rules.

Section 257.250 of the Michigan Vehicle Code authorizes the Michigan Department of State to conduct investigations and gather evidence against persons who may have violated, or are about to violate, the Michigan Vehicle Code or an administrative rule. Complaints filed by consumers are routinely handled by an investigator of the Department.

The Department's Regulatory Monitoring Division receives thousands of consumer complaints every year. The Division attempts to gather all of the facts in these cases. Dealers can always provide critical information to the Division to assist in the investigation. When consumer complaints are filed, the Division will contact the dealer in one or more of the following ways:

  • Mail. The Division will send the dealer a letter asking for a response to the consumer complaint. The dealer's side of the dispute is very important in resolving the problem. Providing the Division with a written response will help assure the dispute is handled as quickly and fairly as possible.
  • Telephone Contact. A Department investigator may telephone the dealer to discuss the consumer complaint. It is very important that the dealer's side of the dispute be given. Providing the Division with forthright answers and copies of transaction records will assist in a proper resolution of the complaint.
  • Personal Contact. Sometimes in-person visits to dealerships are necessary to investigate complaints. Department investigators will properly identify themselves when contacting the facility. Section 257.251(7) permits the Department investigators and other law enforcement officers to inspect dealers. All records pertaining to sales transactions performed within the past five years must be available for inspection.

Timely and Favorable Responses
When a dealer is contacted by the Regulatory Monitoring Division, a timely response will help ensure that the complaint is handled quickly. Delays in answering letters or telephone calls will only prolong the investigation. Also, failing to cooperate with a Department investigator can result in action being taken against the dealer. Here are some helpful hints:

  • Reply promptly. This may avoid the need for further follow-up;
  • Include copies of all relevant paperwork with your response;
  • When responding to a letter, reply in writing. A written response may avoid the need for further contacts.


When Violations are Alleged
In the course of an investigation or an inspection, the Department investigator may determine that the dealership failed to meet the requirements of the Michigan Vehicle Code. The investigator may find it necessary to issue a Notice of Noncompliance (NNC) which is similar to a "ticket." By issuing a NNC, the Department investigator believes there was enough evidence to justify issuing an alleged violation. Of course, the cited dealer can appeal the NNC to higher levels in the Department. The appeal must be made in writing and must include the reason the dealer believes the violation was inappropriately issued. Supporting documents must be attached. Appeals are sent to: Michigan Department of State, Business Compliance and Regulation Division, Lansing, MI 48918.

Disciplinary Action
When a NNC has been issued; it is the responsibility of the Business Compliance and Regulation Division to determine what disciplinary action, if any, should be taken against the dealer.

  • Depending on the seriousness of the alleged violations, the past record of the dealer, and the action taken to satisfactorily resolve the matter, disciplinary action may range from a warning letter to suspension or revocation of the dealer license.
  • Typically, before action is taken to suspend or revoke a license, the dealer or agent is given an informal opportunity to meet with Department representatives to discuss the matter and, hopefully, reach an agreeable conclusion.
  • Only in the most serious cases, or when an agreeable conclusion cannot be reached, is an administrative hearing held to determine whether it is appropriate to suspend or revoke the license of a dealer or salvage vehicle agent.

Section 257.251 of the Michigan Vehicle Code states each dealer record and inventory shall be open to inspection by a police officer or an authorized officer or investigator of the secretary of state during reasonable or established business hours.


Related Documents
Consumer's Automotive Information and Complaint Kit PDF icon