Thursday, November 11, 2010

Updated Privacy Notices Due By Year End

On December 1, 2009 the federal agencies responsible for administering the Graham-Leach-Bliley Act (“GLBA”) and the Fair Credit Reporting Act (“FCRA”) issued revised regulations that financial institutions, including auto dealerships, may use to meet the new privacy notice requirements under the Acts. The focus of the revised regulation is on a new Model Form that will make it easier for consumers to understand how financial institutions collect and share information about consumers. The regulation provides a safe harbor provision for institutions that use the model form exactly as written.

Use of the new model form is not required. Dealers may develop their own updated Privacy Notice but they must ensure that their notices comply with all of the requirements of GLBA and the Privacy Rule. The benefit of the using the Model Privacy Notice is that, if completed as required by the instructions and delivered properly; it will provide a safe harbor for compliance. In order to take advantage of the safe harbor protection, dealers must begin using the new model form by December 31, 2010.

The Privacy Rule applies to car dealers who:

• Extend credit to someone (for example, through a retail installment contract) in connection with the purchase of a car for personal, family, or household use;

• Arrange for someone to finance or lease a car for personal, family, or household use; or

• Provide financial advice or counseling to individuals.

Fortunately, compliance should be reasonably easy. The agencies have developed a Privacy Notice Online Form Builder to assist in creating your new notice. Following are links to the Form Builders:

Saturday, November 6, 2010

You Can’t Fix It If You Don’t Measure It

If your sales staff told you that they had a 50% closing ratio, would you take their word for it? I suspect not – you would probably track all of their opportunities to determine the true percentage. Most dealerships measure a vast number of items on a daily basis. After all, you can’t manage what you don’t measure, right?

How about the level of compliance and ethical behavior in your dealership? Is that something you measure or do you just take everyone’s word for it? Have you really thought about how your staff is conducting itself in these areas? Is it possible that some of these thoughts are floating around?

“We’ve always done it this way – haven’t been caught yet”

“Hey, if we get sued, that’s what insurance is for.”

“Compliance is not in my pay plan. I’ll do whatever it takes to make a decent paycheck.”

Sure, you can bury your head in the sand and hope for the best, but is it really worth finding out the hard way that you were mistaken, or that your customers are not being treated the way you expect?

Instead, why not follow a few simple steps?

1. Audit your operation to determine where you really stand.

2. Have your staff properly trained in all aspects of legal compliance.

3. Once trained, have them sign a code of ethics which will not only help protect the dealership, but let everyone know that the organization is serious about compliance and ethical behavior.

These steps are easy and far more affordable than the costs associated with lawsuits, regulatory actions and, most importantly, hits to your valuable reputation. Don’t find out the hard way that your operation isn’t as clean as you thought it was.