It’s understandable that dealers do not enjoy having to think about compliance. The myriad, ever-changing laws, rules and regulations that apply to each deal can be confusing and frustrating. But non-compliance can lead to thousands of dollars in fines, class-action penalties, and damage to the dealership’s reputation – so it’s important to do everything possible to keep up.
Engaging qualified legal counsel is the most effective approach to full compliance, but here are other ways that dealers and their staff can work to protect their deals and the reputation of their dealerships.
Every pencil counts
As you know, a pencil is the proposal that a salesperson uses with customers to outline deal scenarios as the final agreement is being reached. It’s important for your desking solution to automatically save a record of pencils in each customer’s deal jacket.
This will give you the ability to show a regulator, auditor, or plaintiff’s attorney the progression of the deal, and will help head off any claims that a consumer misunderstood the deal. This is particularly important in that the Federal Trade Commission (FTC) and the Consumer Financial Protection Bureau (CFPB) have emphasized the need for transparency in consumer financing of automobile purchases and leases. For example, The Dodd-Frank Act of 2010 has a category for “abusive” trade practices, designed to protect consumers from being taken advantage of due to their lack of understanding.
Consistency is key
Prepare scripts, FAQs and presentations that fairly and honestly state what the aftermarket product is and how much it will cost. This helps ensure that there won’t be credit discrimination.
Create a paper trail – even if it’s digital
Solid documentation creates an environment of transparency for the consumer and a “paper trail” for auditors and regulators.
Each customer’s deal jacket should not only contain a record of pencils, but copies of every document, including all four squares and even less formal correspondence that shows how the deal was formed. Keeping the pencils record, a signed menu, and a plain-language buyer’s order reveals the detailed steps and trade-offs made by both the customer and the dealer.
Make sure that all pertinent deal information is stored in an easily searchable and highly secure location. That will help you build a consistent and transparent sales process and also give you the ability to track pencils by deal, date, user or vehicle status for auditing purposes.
When you follow these steps, you will help protect your dealership and your customers.
For more compliance tips, download the Dealertrack 2024 Compliance Guide. It’s a handy resource for questions about sales and finance compliance all year long.
