The Washington Legislature recently took action to change our state’s wholesale vehicle dealer license law to stop out-of-state businesses with no connection to Washington from obtaining licenses to conduct vehicle dealer business outside of our state.
The primary changes to this law include requiring wholesale vehicle dealers to only buy vehicles from, and sell to, other Washington state licensed vehicle dealers. It also prohibits more than three wholesale vehicle dealers from sharing a single business location.
Recently, there has been an 800 percent increase in the monthly number of wholesale vehicle dealer licensing applications submitted to the Department of Licensing. These applications are submitted on behalf of out-of-state individuals by Internet-based companies.
These companies advertise the service of taking care of all of the paperwork necessary to set up a Washington business and obtain a Washington wholesale dealer license on behalf of their clients. As a result, these out-of-state business owners are all located at a handful of addresses in our state including a single address in the small town of Wilbur in Eastern Washington used by more than 300 wholesale vehicle dealers as their place of business.
Because these out-of-state wholesale dealers are not located in Washington or doing business here, it is impossible for the Department of Licensing to monitor, investigate or regulate these businesses.
Our state’s wholesale vehicle dealer license law is set up to provide a lot of operational flexibility to companies that only sell buy and sell vehicles at dealer-only auctions or directly to other vehicle dealers. Dealers with this type of license are prohibited from selling vehicles directly to consumers. However, individuals across the country have been taking advantage of our flexible laws and obtaining these licenses in our state with no intention of doing business here.
Other office buildings in Moses Lake, Everett and Spokane Valley also are set up in a similar way to house out-of-state wholesale dealers who are, on paper at least, located together. There is no evidence that any of the hundreds of wholesale dealers have ever stepped foot in any of these facilities. Instead, they pay monthly rent to the owners of these Internet companies and receive mail forwarding services.
This new law (ESSB 6606) takes effect immediately and the Department of Licensing will soon begin notifying current wholesale vehicle dealer licensees of the new requirements.