Sunday, April 10, 2011

Is Anyone Else Getting Sick of Consumer Attorneys Cashing In?

I’m sure you’ve heard by now about the dealer who lost a class action lawsuit and was ordered to buy back over 1,500 vehicles from customers whose rewritten contacts were backdated. Another big win for consumer attorneys.

Not surprisingly, the news of this devastating decision has led to plenty of Monday morning quarterbacking. Naturally, the consumer advocate contingent is broadcasting that this is just another example of an unscrupulous dealer who got what was coming to him. On the other hand, most people who know anything about the automotive business realize that this was just another example of sleazy attorneys preying on dealerships for technical violations. I mean, let’s face it, how does a dealer even benefit from backdating a contract? Why would a dealer knowingly break the law? Personally, I don’t think they did. I believe that these were innocent oversights.

It just seems to me like many dealers are making it much too easy for these lawyers by not paying enough attention. So, what can you do to avoid this type of exposure? Obviously, it’s important to not backdate any more contracts. That’s a good start, but what about those other potential legal nightmares? You know the ones I’m talking about: advertising violations, adverse action notices, hidden finance charges, privacy policies, information safeguards, overcharging fees, deferred downpayments, prior vehicle history disclosures, falsified applications, power booking, and so on. And don’t forget the new Red Flags Rule and Risk Based Pricing Notices. I bet the lawyers are licking their chops just thinking about those new opportunities.

Enforcement actions against dealers by regulators have been few and far between, so you may think that it’s easy to fly under the radar. Maybe so, but it’s important to understand that you probably have far less to fear from the FTC or an attorney general than you do from a consumer attorney with your customer’s deal paperwork in his hands.

So, you can stick your head in the sand and keep the lawyers fat and happy, or you can be proactive. It’s really not that difficult. If you haven’t had your deals audited lately, audit them. If your staff hasn’t received compliance training lately, train them. If, despite your best efforts, certain staff members don’t take compliance seriously, replace them.

It’s time to stop the insanity and keep the money in your own pocket – the lawyers have made more than enough.

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