tag:blogger.com,1999:blog-42671170319676307122024-03-13T04:48:04.405-07:00Car Dealer Compliance CentralCutting Edge Compliance News and Information For Automobile, Truck, RV, and Powersports Dealers Brought to You by Compliance Expert Jim Radogna. Because a Courtroom is NOT the Place to Learn the Rules...Anonymoushttp://www.blogger.com/profile/03663210774947932184noreply@blogger.comBlogger76125tag:blogger.com,1999:blog-4267117031967630712.post-35983090627744618032017-08-20T12:45:00.004-07:002017-08-20T12:45:42.661-07:00Dealers Have a New Cop on the Beat to Worry About<div class="prose" itemprop="articleBody">
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<span style="font-size: small;"><a href="https://2.bp.blogspot.com/-VU5rEBzOEsM/WZnmm0Z7bDI/AAAAAAAAAj8/OewLR9ht1-si6NGTEyBTICxqBbeLWdWzACLcBGAs/s1600/AAEAAQAAAAAAAArkAAAAJGMxOTdlZmQ0LWQ3MzQtNDcxZC04ZWEyLTlmYzU3ZWNiNmFjMA.jpg" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" data-original-height="350" data-original-width="850" height="129" src="https://2.bp.blogspot.com/-VU5rEBzOEsM/WZnmm0Z7bDI/AAAAAAAAAj8/OewLR9ht1-si6NGTEyBTICxqBbeLWdWzACLcBGAs/s320/AAEAAQAAAAAAAArkAAAAJGMxOTdlZmQ0LWQ3MzQtNDcxZC04ZWEyLTlmYzU3ZWNiNmFjMA.jpg" width="320" /></a></span></div>
<span style="font-size: small;">As if dealers don’t have
enough regulators and lawyers targeting them for real or imagined
compliance issues, it appears that there may be a new player on the
field – their lenders.</span><br />
<br />
<span style="font-size: small;">Here’s why: a major automotive finance company, Santander Consumer
USA, recently agreed to a $26 million settlement with the attorneys
general of Massachusetts and Delaware for allegedly working with car
dealerships that falsified or inflated borrowers’ incomes. According the
complaint, “Santander knew which dealers had high rates of borrower
defaults, which exaggerated the value of cars, and even identified a
group of ‘fraud dealers’ who inflated borrowers’ incomes to get buyers
into larger loans than they could afford. Yet Santander continued to do
business with those dealers and failed to rein in their practices”. </span><br />
<br />
<span style="font-size: small;">In addition to the settlement, the Massachusetts AG announced that
her office is conducting an ongoing investigation of other lenders and
auto dealers.</span><br />
<br />
<span style="font-size: small;">As a result, more and more finance companies will likely be taking a
proactive approach to detecting and preventing fraud perpetrated by
dealer employees. This includes more information sharing of dealer risk
and fraud patterns among lenders and enhanced pattern recognition
technology that flags high-risk dealers.</span><br />
<br />
<span style="font-size: small;">Up until now, often the worst-case scenario for dealers caught
falsifying credit information by their lenders has typically been having
to repurchase the contracts in question – basically a slap on the
wrist. Although there have been instances where finance companies have
reported dealer fraud to law enforcement, that has been a relatively
rare occurrence. With the Santander settlement, it seems likely that
lenders will be far more motivated to report dealer misdeeds if for no
other reason than to protect their own interests.</span><br />
<br />
<span style="font-size: small;">Some in the industry have opined that with the new administration,
dealer regulation will be reduced. Perhaps the federal agencies will be
reined in but it’s certainly conceivable that state and local agencies
will pick up the slack. For instance, last month the NYC Department of
Consumer Affairs announced that it is seeking more than $2 million
dollars in consumer restitution and fines from an auto group. Among the
allegations – you guessed it – falsifying consumer credit applications.</span><br />
<br />
<span style="font-size: small;">For those who feel that taking the risk is worth it since “we’ve
always done it this way”, keep in mind that these practices may
constitute bank fraud. So, you may want to ask yourself a simple
question while assessing the downside of getting caught: is my job worth
going to prison for?</span></div>
Anonymoushttp://www.blogger.com/profile/03663210774947932184noreply@blogger.com0tag:blogger.com,1999:blog-4267117031967630712.post-17962320397110827392016-09-30T11:32:00.000-07:002016-09-30T11:32:22.512-07:00The FTC Strikes Again – and This Time it’s a Game-Changer<!--[if !mso]>
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</o:shapelayout></xml><![endif]-->Back in January of 2014, I wrote in my article <a href="http://collegeofautomotivemanagement.blogspot.com/2014/01/the-ftc-strikes-again-you-aint-seen.html" rel="nofollow noopener" target="_blank">The FTC Strikes Again – You Ain’t Seen Nothing Yet</a> that “<i>although it may seem that the FTC is only the ‘dealer advertising cop’, they are expanding their reach in several other areas</i>”. Well, that prediction has come home to roost in a big way.<br />
<br />
This week, the FTC charged nine California auto dealerships and
their owners with using a wide range of deceptive and unfair sales and
financing practices.<br />
<br />
In addition to deceptive advertising (among the worst of which was
advertising $38 down/$38 month when the actual deal was $2695 due at
signing and payments of $179 after the first 6 months), the dealers were
accused of the following:<br />
<ul class="actions article-actions article-footer-actions">
<li><div class="dropdown-wrapper js-dropdown">
<div class="prose" itemprop="articleBody">
<ul>
<li>Subjecting non-English speaking consumers and individuals with
poor credit, to deceptive, misleading, and unfair practices when
offering add-on products and services or when arranging financing</li>
<li>Packing additional charges for add-on products and service into the amount financed without consumers’ informed consent</li>
<li>Deceptively claiming that such add-on products are required as a
condition of the purchase or financing of the vehicle or will improve
consumers’ chances of obtaining financing</li>
<li>Deceptive and unfair tactics to pressure consumers to agree to
different financing terms or have otherwise refused to honor the
contract (“yo-yo practices.”)</li>
<li>Dealership employees and their families posting positive,
five-star reviews of the dealerships on websites that deceptively
purport to be objective or independent</li>
<li>Selecting and pre-printing add-on products on the sales and
financing forms, such as the F&I product menus, pre-contract
disclosures, and the contract, before discussing or presenting them to
the consumer</li>
<li>Rushing consumers through the closing process and simply indicating to consumers where to sign</li>
<li>Having consumers sign blank documents</li>
<li>Telling consumers that they would not be charged the cost of the add-on products when in fact they were</li>
<li>Telling consumers that they could cancel the add-on products
within a specified time for a refund and failing to process the
paperwork or have claiming to have lost the paperwork, resulting in
delayed cancellations or lower refund payments</li>
<li>Approving deals to customers with risky credit before bank
financing had been secured in order to increase their sales numbers
knowing that the dealership was not going to be able to secure bank
financing on the offered terms</li>
<li>Representing to consumers that they must sign the new contract when dealers failed to assign financing</li>
<li>Refusing to return the consumer’s down payment or trade-in vehicle </li>
<li>Having consumers’ vehicles repossessed where consumers had valid, binding contracts</li>
</ul>
<br />
It appears that the FTC obtained information about the dealers’ practices from both consumers and former dealership employees.<br />
<br />
Here’s the ultimate game-changer: unlike earlier FTC actions where
there have been no initial monetary penalties, it looks like this one is
going to be very, very expensive. The FTC is requesting that the court
assess both injunctive relief and relief to redress injury to consumers
including but not limited to, rescission or reformation of contracts,
restitution, the refund of monies paid, and the disgorgement of
ill-gotten monies; and the FTC’s costs and legal fees.<br />
<br />
The stakes have gone up – way up. Dealers nationwide need to get serious about compliance. Today.</div>
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</ul>
Anonymoushttp://www.blogger.com/profile/03663210774947932184noreply@blogger.com3tag:blogger.com,1999:blog-4267117031967630712.post-77202200368832652442016-02-26T18:04:00.000-08:002016-02-26T18:04:37.256-08:00Compliance vs. Ethics: The Lines are Getting Blurry in the Car Business<div class="separator" style="clear: both; text-align: center;">
<a href="https://2.bp.blogspot.com/-BpLw9io_F70/VtEDxShmC5I/AAAAAAAAAeo/1PSQclYnwHk/s1600/Just%2BBecause.png" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" src="https://2.bp.blogspot.com/-BpLw9io_F70/VtEDxShmC5I/AAAAAAAAAeo/1PSQclYnwHk/s1600/Just%2BBecause.png" /></a></div>
Ethics
and compliance are different from each other, but both are vitally
important to the long-term success of dealerships and automotive
professionals. Often the terms “unethical” and “illegal” are used
interchangeably. Ethics is personal - it means the process of discerning
what the correct action is. Law is impersonal and requires no
discernment, just compliance. Ethics refers to moral principles and
values that guide a person or an organization, and ethical conduct
refers to knowing the difference between right and wrong and choosing to
do what is right. A company or person can be unethical without breaking
laws.<br />
<br />
For instance, it’s not illegal per se to charge different prices for
the same F&I products – and many finance practitioners do so on a
regular basis. They’ll charge one customer $795 for GAP and another
$1500 for the same coverage because “X Bank allows that much”. Another
example I recently read about is that some dealers charge a “certified
pre-owned” fee to customers on CPO vehicles they sell. Although that
practice may be against OEM guidelines, it’s not necessarily unlawful
from a strict legal standpoint.<br />
<br />
One more illustration of dubious ethics in my opinion is vehicles
that are marketed as a “CarFax One Owner”, even when the “one owner” was
a rental car company. Even though the “one owner” statement may be
technically true, the descriptions I’ve seen for some of these vehicles
are questionable at best: “With just one previous owner, who treated
this vehicle like a member of the family, you'll really hit the jackpot
when you drive home with this terrific car”; “This 2010 Elantra is for
Hyundai fans that are searching for that babied, one-owner creampuff”
and “From the looks of it, I'd say this car has been garage kept and
babied regularly. If only my wife treated me as nice!!!”<br />
<br />
Now some will argue that these statements are just harmless puffery
that is intended to make the vehicles stand out, but isn’t it safe to
assume that most consumers place more value in a true one-owner car than
a prior rental? Even if the dealership discloses the vehicles’ previous
histories at some point, is it OK for the first contact with a consumer
to be secured by misleading claims? Even if it’s legal, is it truly
ethical?<br />
<br />
The reality of the car business is that pay plans and sales quotas
can sometimes make acting ethically a challenge. Dealership personnel
may be under continuous pressure to abandon their personal standards to
achieve sales goals. The actions of salespeople mirror the behavior and
expectations of their managers. The words and actions of sales and
F&I managers often reflects the moral and ethical considerations of
top management’s philosophy.<br />
<br />
Ethics can be a very personal decision and different people will have
different opinions about the above scenarios, but here’s where the
lines have gotten blurry: While I agree that “profit is not a dirty
word”, it appears that regulators and consumer attorneys have been
redefining what is “legal” by applying their own interpretations of
“ethical” standards.<br />
<br />
In the last few years we’re seeing more and more enforcement actions
and lawsuits against dealers for a number of seemingly “legal”
activities. Recent cases have charged dealerships with assessing dealer
fees that were deemed excessive even though they aren’t regulated by
state laws. Another target for regulators is pricing of add-on products.
For instance, NY Attorney General Schneiderman said in a statement
announcing a $14 million settlement “New York consumers must beware: Car
dealerships sometimes pad their pockets by charging for worthless
after-sale items, which inflate the price of their car. These items are
often ones that consumers don’t need, did not ask for and often are not
even told about. Businesses need to make a profit to survive, but it’s
illegal to do so by duping consumers.” Whether or not these products are
“worthless” is a matter of opinion, but these consumer watchdogs seem
to think so.<br />
<br />
Another notable case is where a dealer group agreed to pay $1.6
million to settle a class-action lawsuit that claimed the dealerships
sold car buyers an over-priced window etch package (and they were only
charging $295!)<br />
<br />
Former CFPB official Rick Hackett had this to say at an industry
event: “If I found out that Walmart set the price of their products at
different levels, and they were all the same product, and they were just
hoping I would buy one for $20.95 because I was a particularly gullible
consumer, I’d be grumpy. That’s the bureau’s perspective of variable
pricing of ancillary products.”<br />
<br />
We can complain all we want that it’s not fair for the government to
limit our profits but it’s clear that they’ve drawn a line in the sand
and there’s no relief in sight.<br />
<br />
But here’s the good news. Taking an ethical approach has several benefits beyond just avoiding legal issues:<br />
<br />
<b>Increased Closing Ratios</b><b> and Higher Product Penetrations </b>-
Higher levels of satisfaction with the selling process result in higher
closing rates and higher sales. The more people trust you, the more
likely they will buy from you.<br />
<br />
<b>Lower Cancellations and Chargebacks</b> – How many times
do your customers read the contract after the sale and realize they
paid much more than they thought? How many times are credit unions,
insurance companies, friends or family members telling your customers
they paid too much? Even if you hold their feet to the fire for
non-cancellable products, what are the chances you’ll ever see that
customer again?<br />
<br />
<b>Improved Reputation</b> (your REAL reputation, not
necessarily the one you “manage” online) - A dealership’s reputation is
difficult, if not impossible, to maintain when staff members depend on
“old school” practices. Customers often make decisions during a vehicle
sale transaction that they come to regret after the “ether has worn
off”. You can be sure they’re telling somebody about the transaction. Or
perhaps they’re telling thousands of people online?<br />
<br />
<b>Increased Customer Satisfaction</b> - Lack of ethical
behavior and old school tactics invariably diminish the customer
experience. Nobody likes surprises. Sure, you made the deal but are your
customers truly satisfied with your processes or do you just wear them
down? At the end of the day higher customer satisfaction translates into
more repeat and referral business.<br />
<br />
<b>Increased Customer Loyalty</b> - Customers only have
loyalty if you earn it from them. Ethical processes help build customer
loyalty and retention. You’ll find that customers will be willing to
spend more when they feel they’re buying from a business they can trust.<br />
<br />
<b>You’ll Exceed Customer Expectations</b> - Your potential
customers have unprecedented access to information in real time. The
increase in the amount of data available to consumers has brought them a
quick and easy way to analyze not only different prices but also to
identify who they want to do business with. Car shoppers simply have too
many choices and will quickly discard dealers they feel are hiding
something. Holding back information or playing fast and loose with the
truth will only make them trust you less.<br />
<br />
<b>You’ll Stand Out From Your Competition</b> – Progressive
dealers can easily differentiate themselves by marketing their ethical
processes and demonstrating their honesty. Consumers will respond -
after all, how many consumers prefer old-school tactics?<br />
<br />
Good ethics can be the pot of gold at the end of the rainbow. An
ethical business model can greatly enhance your sales, reputation,
customer retention, and bottom line. The most successful dealerships
have not only a standard of “don’t break the law” but a standard of
“always do the right things”.<br />
<br />
Here’s something to think about: If you treat each customer as you
would like your mother to be treated, you’re most likely practicing good
ethics. After all, it was probably your mom who first said “just
because you can, doesn’t mean you should.”<br />
<div class="items">
</div>
Anonymoushttp://www.blogger.com/profile/03663210774947932184noreply@blogger.com2tag:blogger.com,1999:blog-4267117031967630712.post-62421355448065758112016-02-03T18:10:00.001-08:002016-02-03T18:10:58.066-08:00F&I Fact vs. Fiction<!--[if gte mso 9]><xml>
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<br />
<div class="separator" style="clear: both; text-align: center;">
<a href="http://1.bp.blogspot.com/-0XLwc3uS_Yc/VrKytpvgqwI/AAAAAAAAAeU/7KsU_hcmTGE/s1600/Fact%2Bv%2BFiction.jpg" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" height="120" src="http://1.bp.blogspot.com/-0XLwc3uS_Yc/VrKytpvgqwI/AAAAAAAAAeU/7KsU_hcmTGE/s200/Fact%2Bv%2BFiction.jpg" width="200" /></a></div>
<div class="MsoNormal" style="line-height: normal; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto;">
<span style="color: windowtext; font-family: "Times New Roman",serif; font-size: 12.0pt; mso-bidi-language: AR-SA; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-US;">It’s not uncommon for me to be asked to weigh in
on the occasional compliance conundrum posed on some social media forum. Many
such inquiries involve disagreements about long-held beliefs in F&I and whether
or not they’re legally valid. </span></div>
<div class="MsoNormal" style="line-height: normal; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto;">
<br /></div>
<div class="MsoNormal" style="line-height: normal; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto;">
<span style="color: windowtext; font-family: "Times New Roman",serif; font-size: 12.0pt; mso-bidi-language: AR-SA; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-US;">So I’ve decided to take a crack at clarifying
some of the issues surrounding these pervasive compliance myths. Now, there’s
no legal advice here — just my thoughts based on a bit of common sense and my
years of being a compliance car guy. Ultimately, it’s up to you to decide what
works best for you, your customers and your dealership.</span></div>
<div class="MsoNormal" style="line-height: normal; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto;">
<br /></div>
<div class="MsoNormal" style="line-height: normal; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto;">
<b><span style="color: windowtext; font-family: "Times New Roman",serif; font-size: 12.0pt; mso-bidi-language: AR-SA; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-US;">Myth No. 1: The 300% rule is a compliance tool</span></b></div>
<div class="MsoNormal" style="line-height: normal; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto;">
<br /></div>
<div class="MsoNormal" style="line-height: normal; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto;">
<span style="color: windowtext; font-family: "Times New Roman",serif; font-size: 12.0pt; mso-bidi-language: AR-SA; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-US;">Many F&I processes that started out as solid
sales techniques have somehow morphed into compliance requirements. The 300%
rule is a great example of this phenomenon. I wholeheartedly agree with this
rule from a sales perspective. As they say, you’ll miss 100% of the shots you
don’t take. But as a compliance requirement, I’m not so sure.</span></div>
<div class="MsoNormal" style="line-height: normal; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto;">
<br /></div>
<div class="MsoNormal" style="line-height: normal; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto;">
<span style="color: windowtext; font-family: "Times New Roman",serif; font-size: 12.0pt; mso-bidi-language: AR-SA; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-US;">First, let’s look at why failing to adhere to
the 300% rule is considered a compliance blunder. A common rationale is that if
you don’t offer protection products to your customers that they end up needing,
you can be sued. I have, in fact, heard of lawsuits where a customer wasn’t
offered credit life insurance, subsequently died and the spouse sued the
dealership.</span></div>
<div class="MsoNormal" style="line-height: normal; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto;">
<br /></div>
<div class="MsoNormal" style="line-height: normal; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto;">
<span style="color: windowtext; font-family: "Times New Roman",serif; font-size: 12.0pt; mso-bidi-language: AR-SA; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-US;">However, this scenario seems far less likely
when it comes to other products. For instance, credit life insurance is only
available from the dealer at the time of sale, so there may indeed be an
obligation to inform eligible customers of its availability. On the other hand,
many other products sold in the F&I office are available elsewhere. I
recently purchased a new car, and within days my inbox was full of offers from
independent service-contract providers. I’m not sure even the most desperate
attorney would want to file a lawsuit against a dealer for not offering
products that are readily available on the open market.</span></div>
<div class="MsoNormal" style="line-height: normal; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto;">
<br /></div>
<div class="MsoNormal" style="line-height: normal; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto;">
<span style="color: windowtext; font-family: "Times New Roman",serif; font-size: 12.0pt; mso-bidi-language: AR-SA; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-US;">But some F&I pros insist on practicing the
300% rule without exception and having a signed declination sheet in every deal
jacket to avoid claims of discriminatory treatment. Discrimination is defined
as treatment of an individual or group based on their actual or perceived
membership in a certain group or social category, “in a way that is worse than
the way people are usually treated.”</span></div>
<div class="MsoNormal" style="line-height: normal; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto;">
<span style="color: windowtext; font-family: "Times New Roman",serif; font-size: 12.0pt; mso-bidi-language: AR-SA; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-US;">In my view, if you fail to offer all of your
customers all of your products all of the time, it would be a big hill to climb
to prove that you’re being discriminatory. On the other hand, if you adhere to
the 300% rule but offer your products at different prices, that
discrimination claim may very well be low-hanging legal fruit. But there are
other potential issues that subscribing to the 300% rule could raise.</span></div>
<div class="MsoNormal" style="line-height: normal; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto;">
<br /></div>
<div class="MsoNormal" style="line-height: normal; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto;">
<span style="color: windowtext; font-family: "Times New Roman",serif; font-size: 12.0pt; mso-bidi-language: AR-SA; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-US;">Let’s say, for example, you present your
customer with 100% of your products and she says, “I’ll take it all.” So far,
so good, right? But you then discover your lender won’t allow you to finance it
all. Besides the obvious customer satisfaction issues, you’ve made an offer on
which you can’t deliver. Is it conceivable that a lawyer may try to make a
contractual legal issue out of that? It certainly wouldn’t surprise me. The
same applies with max loan-to-value (LTV) or amount-financed callbacks. If you
present 100% of your products in these scenarios, I suggest you let the
customer know up front how much more money he or she will need to come up
with. </span></div>
<div class="MsoNormal" style="line-height: normal; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto;">
<br /></div>
<div class="MsoNormal" style="line-height: normal; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto;">
<span style="color: windowtext; font-family: "Times New Roman",serif; font-size: 12.0pt; mso-bidi-language: AR-SA; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-US;">There are also situations where the customer
shouldn’t be offered all of your products. For instance, you wouldn’t sell GAP
protection on a cash or low LTV deal (especially when the LTV falls below state
or lender limitations), or a service contract on a car that’s exceeded your
program’s mileage limit. Offering such products in these situations could result
in deceptive practices or fraud claims.</span></div>
<div class="MsoNormal" style="line-height: normal; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto;">
<span style="color: windowtext; font-family: "Times New Roman",serif; font-size: 12.0pt; mso-bidi-language: AR-SA; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-US;">The same principle applies to declination
sheets. They certainly come in handy when a customer complains that he wasn’t
offered a product that turned out to be needed. But the significance of
declination sheets as a compliance tool has been somewhat overstated, in my
opinion. From a sales standpoint, declination sheets can provide you with one
additional chance to sell products, but they should be used accurately.
Products that aren’t available to particular customers shouldn’t show up on
their declination sheets. If they do, they should be marked “N/A” or
“Unavailable.”</span></div>
<div class="MsoNormal" style="line-height: normal; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto;">
<br /></div>
<div class="MsoNormal" style="line-height: normal; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto;">
<b><span style="color: windowtext; font-family: "Times New Roman",serif; font-size: 12.0pt; mso-bidi-language: AR-SA; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-US;">Myth No. 2: It’s illegal to give a customer a
copy of their credit report</span></b></div>
<div class="MsoNormal" style="line-height: normal; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto;">
<br /></div>
<div class="MsoNormal" style="line-height: normal; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto;">
<span style="color: windowtext; font-family: "Times New Roman",serif; font-size: 12.0pt; mso-bidi-language: AR-SA; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-US;">This myth has no basis in law, as far as I am
aware. In fact, the Fair Credit Reporting Act specifically states that a credit
bureau provider cannot prohibit a user (the dealer) from disclosing the
contents of the credit report to the consumer. However, contracts with some
credit bureau providers may prohibit the dealer from giving the consumer a copy
of his or her credit report.</span></div>
<div class="MsoNormal" style="line-height: normal; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto;">
<br /></div>
<div class="MsoNormal" style="line-height: normal; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto;">
<span style="color: windowtext; font-family: "Times New Roman",serif; font-size: 12.0pt; mso-bidi-language: AR-SA; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-US;">Telling customers it’s illegal to give them a
copy of their credit report when that information is inaccurate is not a good
idea, at least in my opinion. On the other hand, telling the customer you can’t
hand over a copy of his or her credit report because your company’s contract
with the credit reporting agency prohibits it is accurate and true. There’s
never a downside to telling the truth.</span></div>
<div class="MsoNormal" style="line-height: normal; margin-bottom: 3.75pt;">
<br /></div>
<div class="MsoNormal" style="line-height: normal; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto;">
<b><span style="color: windowtext; font-family: "Times New Roman",serif; font-size: 12.0pt; mso-bidi-language: AR-SA; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-US;">Myth No. 3: It’s illegal to highlight a
contract</span></b></div>
<div class="MsoNormal" style="line-height: normal; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto;">
<br /></div>
<div class="MsoNormal" style="line-height: normal; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto;">
<span style="color: windowtext; font-family: "Times New Roman",serif; font-size: 12.0pt; mso-bidi-language: AR-SA; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-US;">Many automotive professionals believe that this
is a no-no because you can be accused of “leading” the customer to sign the
highlighted areas without reading the rest of the contract. In reality, you can
lead a customer by pointing your finger to the signature sections and saying,
“Sign here.” It appears this folklore originated with a case where a creditor
utilizing a motor vehicle pawn contract was sued for failure to disclose the
APR as conspicuously as other disclosures on the contract.</span></div>
<div class="MsoNormal" style="line-height: normal; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto;">
<br /></div>
<div class="MsoNormal" style="line-height: normal; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto;">
<span style="color: windowtext; font-family: "Times New Roman",serif; font-size: 12.0pt; mso-bidi-language: AR-SA; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-US;">The court ruled that the creditor violated the
Truth in Lending Act (TILA) because it put dashes and arrows pointing to the
due date, thereby making the due date disclosure more conspicuous than the APR
and finance charge. So there was far more going on than highlighting. In fact,
according to the court’s decision, there was handwriting and other markings on
the contract, and the annual percentage rate on the contract was 304.24%. No
surprise there.</span></div>
<div class="MsoNormal" style="line-height: normal; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto;">
<br /></div>
<div class="MsoNormal" style="line-height: normal; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto;">
<span style="color: windowtext; font-family: "Times New Roman",serif; font-size: 12.0pt; mso-bidi-language: AR-SA; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-US;">So while highlighting customer signature areas
probably isn’t a big issue, make sure certain TILA disclosures aren’t more
prominent than others. Of course, if you work with a lender that won’t accept a
contract with highlighted signatures, you’ll probably want to avoid the
practice altogether.</span></div>
<div class="MsoNormal" style="line-height: normal; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto;">
<br /></div>
<div class="MsoNormal" style="line-height: normal; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto;">
<b><span style="color: windowtext; font-family: "Times New Roman",serif; font-size: 12.0pt; mso-bidi-language: AR-SA; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-US;">Myth No. 4: A contract is valid once signed by
both parties, even if the customer hasn’t taken physical delivery</span></b></div>
<div class="MsoNormal" style="line-height: normal; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto;">
<br /></div>
<div class="MsoNormal" style="line-height: normal; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto;">
<span style="color: windowtext; font-family: "Times New Roman",serif; font-size: 12.0pt; mso-bidi-language: AR-SA; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-US;">The validity of this statement depends on where
you conduct business. Some states specifically define when a contract is
considered valid. For instance, California law states that “a sale is deemed
completed and consummated when the purchaser of the vehicle has paid the
purchase price, or, in lieu thereof, has signed a purchase contract or security
agreement and has taken physical possession or delivery of the vehicle.”</span></div>
<div class="MsoNormal" style="line-height: normal; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto;">
<br /></div>
<div class="MsoNormal" style="line-height: normal; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto;">
<span style="color: windowtext; font-family: "Times New Roman",serif; font-size: 12.0pt; mso-bidi-language: AR-SA; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-US;">So before you attempt to hold a customer’s feet
to the fire prior to the delivery of the vehicle, you may want to check the
laws in your state.</span></div>
<div class="MsoNormal" style="line-height: normal; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto;">
<br /></div>
<div class="MsoNormal" style="line-height: normal; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto;">
<b><span style="color: windowtext; font-family: "Times New Roman",serif; font-size: 12.0pt; mso-bidi-language: AR-SA; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-US;">Myth No. 5: Menus are required to disclose the
base payment</span></b></div>
<div class="MsoNormal" style="line-height: normal; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto;">
<br /></div>
<div class="MsoNormal" style="line-height: normal; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto;">
<span style="color: windowtext; font-family: "Times New Roman",serif; font-size: 12.0pt; mso-bidi-language: AR-SA; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-US;">This has been the subject of much spirited
debate in F&I circles. First, menus are not required by law at all. In
fact, contrary to popular opinion, even California doesn’t require the use of a
menu. All that is required is a “pre-contract disclosure” that shows the
monthly installment payment with and without the optional products or services.</span></div>
<div class="MsoNormal" style="line-height: normal; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto;">
<br /></div>
<div class="MsoNormal" style="line-height: normal; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto;">
<span style="color: windowtext; font-family: "Times New Roman",serif; font-size: 12.0pt; mso-bidi-language: AR-SA; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-US;">So, really, there is no such thing as a legally
compliant menu as some vendors claim. But it’s not a bad idea to include the
base payment in your menu presentation (and in your write-up as well).</span></div>
<div class="MsoNormal" style="line-height: normal; margin-bottom: 3.75pt;">
<br /></div>
<div class="MsoNormal" style="line-height: normal; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto;">
<b><span style="color: windowtext; font-family: "Times New Roman",serif; font-size: 12.0pt; mso-bidi-language: AR-SA; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-US;">Myth No. 6: Everyone must be charged the same
doc fee</span></b></div>
<div class="MsoNormal" style="line-height: normal; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto;">
<br /></div>
<div class="MsoNormal" style="line-height: normal; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto;">
<span style="color: windowtext; font-family: "Times New Roman",serif; font-size: 12.0pt; mso-bidi-language: AR-SA; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-US;">This notion again stems from worries about
discrimination claims. The thought is that if a dealership charges one customer
a fee, it has to charge everyone the same fee to avoid potential litigation.</span></div>
<div class="MsoNormal" style="line-height: normal; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto;">
<span style="color: windowtext; font-family: "Times New Roman",serif; font-size: 12.0pt; mso-bidi-language: AR-SA; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-US;">So, could charging varying doc fees attract the
attention of regulators? Well, we’ve certainly heard enough about alleged discrimination
in rate markups over the last few years. And as recent actions by the Consumer
Financial Protection Bureau (CFPB) and Department of Justice (DOJ) show, even
if there’s no intent to discriminate, you can still face fines if protected
classes pay more than non-protected classes.</span></div>
<div class="MsoNormal" style="line-height: normal; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto;">
<br /></div>
<div class="MsoNormal" style="line-height: normal; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto;">
<span style="color: windowtext; font-family: "Times New Roman",serif; font-size: 12.0pt; mso-bidi-language: AR-SA; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-US;">So the easy answer is to just charge everyone
the same doc fee, right? Perhaps. But here’s the rub: Doc fees are
dealer-imposed charges and therefore not mandatory; only government fees
are compulsory. So it is improper to tell a customer that you must charge them
the fee, as you could be setting yourself up for a deceptive practices claim.
Some states, like Washington, require you to inform the customer that the doc
fee is negotiable.</span></div>
<div class="MsoNormal" style="line-height: normal; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto;">
<br /></div>
<div class="MsoNormal" style="line-height: normal; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto;">
<span style="color: windowtext; font-family: "Times New Roman",serif; font-size: 12.0pt; mso-bidi-language: AR-SA; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-US;">So to avoid potential discrimination claims, be
sure you can show proof that any downward deviations in fees are for valid
business reasons, such as needing to match the doc fee offered by a competitive
dealer in order to close the deal. Remember, documentation is key.</span></div>
<div class="MsoNormal" style="line-height: normal; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto;">
<br /></div>
<div class="MsoNormal" style="line-height: normal; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto;">
<b><span style="color: windowtext; font-family: "Times New Roman",serif; font-size: 12.0pt; mso-bidi-language: AR-SA; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-US;">Myth No. 7: Payment ranges up to $XX are
allowed</span></b></div>
<div class="MsoNormal" style="line-height: normal; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto;">
<br /></div>
<div class="MsoNormal" style="line-height: normal; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto;">
<span style="color: windowtext; font-family: "Times New Roman",serif; font-size: 12.0pt; mso-bidi-language: AR-SA; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-US;">To many regulators and plaintiffs’ attorneys,
using a payment range in certain circumstances could be a sign of payment
packing. While it’s generally acceptable to quote a range of payments using an
average APR before the customer’s credit report is pulled, once a credit
profile is accessed, a best practice is to quote an exact payment.</span></div>
<div class="MsoNormal" style="line-height: normal; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto;">
<br /></div>
<div class="MsoNormal" style="line-height: normal; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto;">
<span style="color: windowtext; font-family: "Times New Roman",serif; font-size: 12.0pt; mso-bidi-language: AR-SA; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-US;">Let’s say you’ve pulled the customer’s credit
but aren’t sure what her rate is because you’re waiting for a callback from the
bank. If you pencil the deal back with a payment range, it’s a good idea to
include an APR range as well. Once you determine the actual terms of the deal,
a final base payment should be disclosed. Also, if you’re using a payment range
to account for variations in days to first payment, you should disclose the
exact payment at each level. In other words, never give any impression that
would allow a regulator or court to infer that the payments quoted are in any
way misleading.</span></div>
<div class="MsoNormal" style="line-height: normal; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto;">
<br /></div>
<div class="MsoNormal" style="line-height: normal; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto;">
<span style="color: windowtext; font-family: "Times New Roman",serif; font-size: 12.0pt; mso-bidi-language: AR-SA; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-US;">So there you have it: my take on some of
F&I’s most common compliance myths. Again, how you handle these issues may
depend on the laws in your state and your individual processes and
philosophies. You may agree or disagree with my analysis and that’s OK. My goal
here is not to steer you in any particular direction, but to simply give you
something to think about beyond the status quo.</span></div>
Anonymoushttp://www.blogger.com/profile/03663210774947932184noreply@blogger.com1tag:blogger.com,1999:blog-4267117031967630712.post-61413662361016720622016-02-02T17:06:00.000-08:002016-02-04T12:51:45.668-08:00Dealer Fees Under Attack<!--[if gte mso 9]><xml>
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<div class="MsoNormal">
<span style="font-family: "verdana" , sans-serif; font-size: 12.0pt; line-height: 115%;">Two recent actions for alleged dealer
fee violations in South Carolina and Indiana are a potential cause for concern
in other states due to the likelihood of copycat legal actions. While these
states had no caps on dealer fees, a private lawsuit in South Carolina resulted
in a $3.6 million verdict and an attorney general action in Indiana resulted in
a $625K settlement. Both cases alleged that the dealers overcharged customers
because their fees did not reflect expenses actually incurred by the dealers
for services. </span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-family: "verdana" , sans-serif; font-size: 12.0pt; line-height: 115%;">Although the state doesn’t offer
guidance on what dealers can charge, the court in South Carolina interpreted
“closing fee” to mean a “predetermined set fee for the reimbursement of closing
costs, but only those actually incurred by the dealer and necessary to the
closing transaction.” Under that interpretation, the court reasoned that the
dealer had to provide evidence it calculated the cost comprising its closing
fee, which it could not do. Further, a justice stated “Although we agree that
the Closing Fee Statute is a disclosure statement and the department serves as
a repository for the required filings, we find that the Closing Fee Statute
does more than require disclosure of the 'Closing Fee.'”</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-family: "verdana" , sans-serif; font-size: 12.0pt; line-height: 115%;">According to a press
release from the office of Indiana attorney general “Under Indiana’s Motor
Vehicle Dealer Unfair Practices Act, auto dealers cannot require a motor
vehicle purchaser to pay a document preparation fee unless the fee reflects expenses
actually incurred for the preparation of documents and was negotiated by and
disclosed to the customer.” The dealer was found to have charged doc fees
around $479, which the AG ruled was higher than could be justified to cover
costs. </span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-family: "verdana" , sans-serif; font-size: 12.0pt; line-height: 115%;">Indiana law is more specific than South
Carolina as far as the requirement that actual expenses be calculated: “It is
an unfair practice for a dealer to require a purchaser of a motor vehicle as a
condition of the sale and delivery of the motor vehicle to pay a document
preparation fee, unless the fee:</span></div>
<ul>
<li><span style="font-family: "verdana" , sans-serif; font-size: 12.0pt; line-height: 115%;">Reflects expenses actually incurred for
the preparation of documents;</span></li>
<li><span style="font-family: "verdana" , sans-serif; font-size: 12.0pt; line-height: 115%;">Was affirmatively disclosed by the
dealer;</span></li>
<li><span style="font-family: "verdana" , sans-serif; font-size: 12.0pt; line-height: 115%;">Was negotiated by the dealer and the
purchaser;</span></li>
<li><span style="font-family: "verdana" , sans-serif; font-size: 12.0pt; line-height: 115%;">Is not for the preparation, handling, or
service of documents that are incidental to the extension of credit; and</span></li>
<li><span style="font-family: "verdana" , sans-serif; font-size: 12.0pt; line-height: 115%;">Is set forth on a buyer’s order or
similar agreement by a means other than preprinting.”</span></li>
</ul>
<div class="MsoNormal">
<span style="font-family: "verdana" , sans-serif; font-size: 12.0pt; line-height: 115%;">Other states, such as Connecticut, have
regulations that are similar to South Carolina’s in that they primarily address
disclosure of the dealer fee but do not offer guidance on the amount a dealer
can charge: “A ‘dealer conveyance fee’ or ‘processing fee’ means a fee charged
by a dealer to recover reasonable costs for processing all documentation and
performing services related to the closing of a sale, including, but not
limited to, the registration and transfer of ownership of the motor vehicle
which is the subject of the sale.” </span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-family: "verdana" , sans-serif; font-size: 12.0pt; line-height: 115%;">So, in a private lawsuit or AG action in
a state like Connecticut, the questions may well be what amount is considered
“reasonable” and how are the costs justified?</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-family: "verdana" , sans-serif; font-size: 12.0pt; line-height: 115%;">Although all cases are different,
information from the South Carolina court may lend some insight on how to avoid
or defend against dealer fee attacks. The following excerpts from the case
would seem relevant:</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-family: "verdana" , sans-serif; font-size: 12.0pt; line-height: 115%;">The dealership’s expert witness in the
SC case testified that the dealership’s average closing costs, which were
$506.96, greatly exceeded the $299 fee the plaintiff paid. But in calculating
the average closing cost, he included expenses for the salaries of finance and
sales managers, the building, utilities and outside services.” The court
disagreed. “All of these are general operating expenses and not directly tied
to the closing of motor vehicle sales. If a motor vehicle dealer wishes to be
compensated for these expenses, it may include them as part of the overall
purchase price of a vehicle.”</span></div>
<div class="MsoNormal">
<span style="font-family: "verdana" , sans-serif; font-size: 12.0pt; line-height: 115%;"> </span></div>
<div class="MsoNormal">
<span style="font-family: "verdana" , sans-serif; font-size: 12.0pt; line-height: 115%;">The court further opined that the term
"cost" in the context of the "Closing Fee" Statute
"would refer to the amount of money a dealer is required to expend to
perform the services it provides to a customer at closing, and to otherwise
comply with the disclosure, documentation, and record retention requirements
imposed under state and federal law. While we recognize the difficulty a dealer
may face in determining the exact amount of a specific purchaser's closing fee
prior to closing, we agree with the trial judge's interpretation that the
amount charged must bear some relation to the actual expenses incurred for the
closing.”</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-family: "verdana" , sans-serif; font-size: 12.0pt; line-height: 115%;">The court emphasized that a
"closing fee" is not limited to expenses incurred for document
preparation, retrieval, and storage. However, any costs sought to be recovered
by a dealer under a closing fee charge must be directly related to the services
rendered and expenses incurred in closing the purchase of a vehicle. Given that
each vehicle purchase is different, compliance with the "Closing Fee"
Statute does not require that the dealer hit the "bull's-eye" for
each purchase. A dealer may comply with the statute by setting a closing fee in
an amount that is an average of the costs actually incurred in all closings of
the prior year.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-family: "verdana" , sans-serif; font-size: 12.0pt; line-height: 115%;">Based on the above, some ideas for what
may constitute “reasonable costs for processing all documentation and
performing services related to the closing of a sale” include:</span></div>
<div class="MsoNormal">
<br /></div>
<ul>
<li><span style="font-family: "verdana" , sans-serif; font-size: 12.0pt; line-height: 115%;">Processing and submission of credit
applications to finance companies*</span></li>
<li><span style="font-family: "verdana" , sans-serif; font-size: 12.0pt; line-height: 115%;">Preparation of finance or lease
documents*</span></li>
<li><span style="font-family: "verdana" , sans-serif; font-size: 12.0pt; line-height: 115%;">Preparation and submission of vehicle
registrations both manually and electronically with the DMV</span></li>
<li><span style="font-family: "verdana" , sans-serif; font-size: 12.0pt; line-height: 115%;">Filing and releasing security liens on
purchased and traded vehicles as contractually required by lending institutions</span></li>
<li><span style="font-family: "verdana" , sans-serif; font-size: 12.0pt; line-height: 115%;">Processing applications for new or
duplicate title documents with the DMV</span></li>
<li><span style="font-family: "verdana" , sans-serif; font-size: 12.0pt; line-height: 115%;">Processing the pay-off of an existing
lien on any vehicle offered in trade</span></li>
<li><span style="font-family: "verdana" , sans-serif; font-size: 12.0pt; line-height: 115%;">DMS (Dealer Management System) costs to
process paperwork</span></li>
<li><span style="font-family: "verdana" , sans-serif; font-size: 12.0pt; line-height: 115%;">Software such as Dealertrack or RouteOne
to investigate credit*, print required disclosures, and run Red Flags and OFAC
checks </span></li>
<li><span style="font-family: "verdana" , sans-serif; font-size: 12.0pt; line-height: 115%;">Forms, toner, etc.</span></li>
<li><span style="font-family: "verdana" , sans-serif; font-size: 12.0pt; line-height: 115%;">Compliance training and auditing costs</span></li>
<li><span style="font-family: "verdana" , sans-serif; font-size: 12.0pt; line-height: 115%;">Fees to attorneys for vetting documents </span></li>
</ul>
<div class="MsoNormal">
<span style="font-size: x-small;"><span style="font-family: Verdana,sans-serif;">* Some states prohibit the inclusion of fees to process loan documents in the dealer fee</span></span><br />
<br /></div>
<div class="MsoNormal">
<span style="font-family: "verdana" , sans-serif; font-size: 12.0pt; line-height: 115%;">OTHER DEALER FEE ISSUES</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-family: "verdana" , sans-serif; font-size: 12.0pt; line-height: 115%;"><b>TILA Disclosures</b> - Other lawsuits have
claimed that the dealer fee is a finance charge for federal Truth in Lending
Act (TILA) disclosure purposes. To avoid this, it’s important to also charge
dealer fees on comparable cash transactions. Since you obviously wouldn’t incur
credit-related costs listed above on cash transactions, the SC court’s
suggested method of averaging the costs in all closings of the prior year would
appear to be beneficial.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-family: "verdana" , sans-serif; font-size: 12.0pt; line-height: 115%;"><b>Negotiation of Dealer Fees</b> – Although a
number of state regulations indicate that dealer fees must be negotiated with
customers, this raises concerns about potential discrimination claims. The
reasoning is that if a dealership charges one customer a fee of any kind they
have to charge everyone the same fee, or they open themselves up to a lawsuit.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-family: "verdana" , sans-serif; font-size: 12.0pt; line-height: 115%;">Another fear is that charging a different
dealer fee to different customers is “illegal”. This does not appear to be the
case unless state law specifically prohibits dealerships from charging any
customer a different doc fee amount than any other customer. The only state of
which I’m aware that has such a prohibition is West Virginia.<span style="mso-spacerun: yes;"> </span>In a 2014 case brought by the West Virginia
Automobile & Truck Dealers Association against Ford Motor Company, the
court disagreed that charging different doc fees is prohibited by West Virginia
Consumer Credit and Protection Act, but agreed that guidance from the West
Virginia Motor Vehicle Dealers Advisory Board prohibits dealerships from
charging any customer a higher doc fee than any other customer. (Arguably, this
is not a violation of WV law and thus not “illegal” per se, but simply guidance
from the WVMVDAB who’s “statutory purpose is to assist and to advise the Commissioner
of the Division of Motor Vehicles on the administration of laws regulating the
motor vehicle industry; to work with the commissioner in developing new laws,
rules or policies regarding the motor vehicles industry; and to give the
commissioner such further advice and assistance as he or she may from time to
time require.” Regardless, WV dealers are bound to follow the Dealer Advisory
Board’s directions).</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-family: "verdana" , sans-serif; font-size: 12.0pt; line-height: 115%;">So the easy answer is to just charge
everyone the same doc fee, right? Perhaps. But here’s the rub:
Conveyance/Processing fees are dealer-imposed charges and therefore not
mandatory - only government fees are compulsory. So it is improper to tell a
customer that you MUST charge them the fee – this could lead to a deceptive
practices claim. </span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-family: "verdana" , sans-serif; font-size: 12.0pt; line-height: 115%;">So how do you avoid potential
discrimination claims? By being able to show proof that any downward deviations
in fees are for valid business reasons. For example, if a manufacturer limits
the doc fee for an employee purchase, that reason should be documented in
writing and a copy kept in the deal jacket. Another example would be that a
competitive dealer offered a lower doc fee that you needed to match to make the
deal. Again, documentation is key. This follows the same line of reasoning as
NADA’s Fair Credit Compliance Program for rate markups.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<i><span style="font-family: "verdana" , sans-serif; font-size: 12.0pt; line-height: 115%;">The information presented in this
article is solely the opinion of the author and is not intended to convey or
constitute legal advice, and is not a substitute for obtaining legal advice
from a qualified attorney. You should not act upon any such information without
first seeking qualified professional counsel on your specific matter.</span></i></div>
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<![endif]-->Anonymoushttp://www.blogger.com/profile/03663210774947932184noreply@blogger.com3tag:blogger.com,1999:blog-4267117031967630712.post-48867417948565943452014-12-13T19:27:00.000-08:002014-12-13T19:45:03.066-08:00The FTC Strikes AGAIN - What a Surprise!<div class="separator" style="clear: both; text-align: center;">
</div>
<div class="separator" style="clear: both; text-align: center;">
<br /></div>
<br />
<div style="text-align: left;">
<a href="http://4.bp.blogspot.com/-BXkKkN61kSA/VI0GQZwFRwI/AAAAAAAAAYk/secSjbfsnQ0/s1600/FTCBiglogo-gavel.jpg" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" src="http://4.bp.blogspot.com/-BXkKkN61kSA/VI0GQZwFRwI/AAAAAAAAAYk/secSjbfsnQ0/s1600/FTCBiglogo-gavel.jpg" height="111" width="200" /></a></div>
<div style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">The Federal Trade Commission
started the year by making a major statement regarding how they feel about
questionable auto dealer advertising practices with their <a href="http://www.ftc.gov/news-events/press-releases/2014/01/ftc-announces-sweep-against-10-auto-dealers" target="_blank">Operation Steer Clear</a> action in January. Just to remind us
that they weren't kidding around, they've apparently decided to end the year
with a splash: <a href="http://www.ftc.gov/news-events/press-releases/2014/12/ftc-takes-action-against-two-auto-dealership-chains-violating" target="_blank">FTC Takes Action Against Two Auto Dealership Chains For
Violating 2012 Orders Prohibiting Deceptive Advertising of Vehicle Costs</a>.</span></div>
<div style="text-align: justify;">
<br /></div>
<div style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">As I predicted in my January
22nd post, <a href="http://collegeofautomotivemanagement.blogspot.com/2014/01/the-ftc-strikes-again-you-aint-seen.html" target="_blank">The FTC Strikes Again - You Ain't Seen Nothing Yet</a>, dealer
advertising is on the FTC's radar and they're not going away anytime soon.</span></div>
<div style="text-align: justify;">
<br /></div>
<div style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">According to media accounts,
one of the dealers cited in the most recent action stated "Was it fair?
Absolutely not. The reason we settled it was because it was less expensive than
to go to court." </span></div>
<div style="text-align: justify;">
<br /></div>
<div style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">Well, as we parents are so
fond of telling our children: "Life isn't fair..."</span></div>
<div style="text-align: justify;">
<br /></div>
<div style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">This dealer and his legal
counsel apparently feel that the FTC has not been clear in delineating their
expectations regarding compliant advertising. Perhaps that's true, but after
attending the FTC's dealer advertising press conference this past March, I'm
not sure I completely agree. As I outlined in the post <a href="http://collegeofautomotivemanagement.blogspot.com/2014/03/key-takeaways-from-ftcs-dealer.html" target="_blank">Key Takeaways from the FTC's Dealer Advertising Webinar</a>, it
seems to me that the FTC has been pretty forthcoming about their perspectives
regarding proper advertising.</span></div>
<div style="text-align: justify;">
<br /></div>
<div style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">I've said it many times
before and I'll say it once again: If you’re not sure that your advertising is
compliant, don’t guess! It makes sense to have your advertisements reviewed,
and edited if necessary, by someone knowledgeable before publication. It may cost a
few bucks, but it’s a small price to pay.</span></div>
<div style="text-align: justify;">
<br /></div>
<div style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">$360,000 (plus legal fees)
and bad press seems like a really high price to pay for guessing wrong.</span></div>
<div style="text-align: justify;">
<br /></div>
<div style="text-align: justify;">
<span style="font-family: "Verdana",sans-serif;">For a quick refresher on how
regulators view advertising, you may want to check out this post: <a href="http://collegeofautomotivemanagement.blogspot.com/2012/11/10-advertising-guidelines-that-every_24.html" target="_blank">10 Advertising Guidelines That Every Dealer Should Be Familiar
With.</a> </span></div>
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<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="List Number 5"/>
<w:LsdException Locked="false" Priority="10" QFormat="true" Name="Title"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="Closing"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="Signature"/>
<w:LsdException Locked="false" Priority="1" SemiHidden="true"
UnhideWhenUsed="true" Name="Default Paragraph Font"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="Body Text"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="Body Text Indent"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="List Continue"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="List Continue 2"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="List Continue 3"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="List Continue 4"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="List Continue 5"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="Message Header"/>
<w:LsdException Locked="false" Priority="11" QFormat="true" Name="Subtitle"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="Salutation"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="Date"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="Body Text First Indent"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="Body Text First Indent 2"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="Note Heading"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="Body Text 2"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="Body Text 3"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="Body Text Indent 2"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="Body Text Indent 3"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="Block Text"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="Hyperlink"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="FollowedHyperlink"/>
<w:LsdException Locked="false" Priority="22" QFormat="true" Name="Strong"/>
<w:LsdException Locked="false" Priority="20" QFormat="true" Name="Emphasis"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="Document Map"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="Plain Text"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="E-mail Signature"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="HTML Top of Form"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="HTML Bottom of Form"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="Normal (Web)"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="HTML Acronym"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="HTML Address"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="HTML Cite"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="HTML Code"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="HTML Definition"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="HTML Keyboard"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="HTML Preformatted"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="HTML Sample"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="HTML Typewriter"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="HTML Variable"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="Normal Table"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="annotation subject"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="No List"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="Outline List 1"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="Outline List 2"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="Outline List 3"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="Table Simple 1"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="Table Simple 2"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="Table Simple 3"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="Table Classic 1"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="Table Classic 2"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="Table Classic 3"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="Table Classic 4"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="Table Colorful 1"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="Table Colorful 2"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="Table Colorful 3"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="Table Columns 1"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="Table Columns 2"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="Table Columns 3"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="Table Columns 4"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="Table Columns 5"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="Table Grid 1"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="Table Grid 2"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="Table Grid 3"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="Table Grid 4"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="Table Grid 5"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="Table Grid 6"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="Table Grid 7"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="Table Grid 8"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="Table List 1"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="Table List 2"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="Table List 3"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="Table List 4"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="Table List 5"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="Table List 6"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="Table List 7"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="Table List 8"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="Table 3D effects 1"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="Table 3D effects 2"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="Table 3D effects 3"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="Table Contemporary"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="Table Elegant"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="Table Professional"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="Table Subtle 1"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="Table Subtle 2"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="Table Web 1"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="Table Web 2"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="Table Web 3"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="Balloon Text"/>
<w:LsdException Locked="false" Priority="39" Name="Table Grid"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="Table Theme"/>
<w:LsdException Locked="false" SemiHidden="true" Name="Placeholder Text"/>
<w:LsdException Locked="false" Priority="1" QFormat="true" Name="No Spacing"/>
<w:LsdException Locked="false" Priority="60" Name="Light Shading"/>
<w:LsdException Locked="false" Priority="61" Name="Light List"/>
<w:LsdException Locked="false" Priority="62" Name="Light Grid"/>
<w:LsdException Locked="false" Priority="63" Name="Medium Shading 1"/>
<w:LsdException Locked="false" Priority="64" Name="Medium Shading 2"/>
<w:LsdException Locked="false" Priority="65" Name="Medium List 1"/>
<w:LsdException Locked="false" Priority="66" Name="Medium List 2"/>
<w:LsdException Locked="false" Priority="67" Name="Medium Grid 1"/>
<w:LsdException Locked="false" Priority="68" Name="Medium Grid 2"/>
<w:LsdException Locked="false" Priority="69" Name="Medium Grid 3"/>
<w:LsdException Locked="false" Priority="70" Name="Dark List"/>
<w:LsdException Locked="false" Priority="71" Name="Colorful Shading"/>
<w:LsdException Locked="false" Priority="72" Name="Colorful List"/>
<w:LsdException Locked="false" Priority="73" Name="Colorful Grid"/>
<w:LsdException Locked="false" Priority="60" Name="Light Shading Accent 1"/>
<w:LsdException Locked="false" Priority="61" Name="Light List Accent 1"/>
<w:LsdException Locked="false" Priority="62" Name="Light Grid Accent 1"/>
<w:LsdException Locked="false" Priority="63" Name="Medium Shading 1 Accent 1"/>
<w:LsdException Locked="false" Priority="64" Name="Medium Shading 2 Accent 1"/>
<w:LsdException Locked="false" Priority="65" Name="Medium List 1 Accent 1"/>
<w:LsdException Locked="false" SemiHidden="true" Name="Revision"/>
<w:LsdException Locked="false" Priority="34" QFormat="true"
Name="List Paragraph"/>
<w:LsdException Locked="false" Priority="29" QFormat="true" Name="Quote"/>
<w:LsdException Locked="false" Priority="30" QFormat="true"
Name="Intense Quote"/>
<w:LsdException Locked="false" Priority="66" Name="Medium List 2 Accent 1"/>
<w:LsdException Locked="false" Priority="67" Name="Medium Grid 1 Accent 1"/>
<w:LsdException Locked="false" Priority="68" Name="Medium Grid 2 Accent 1"/>
<w:LsdException Locked="false" Priority="69" Name="Medium Grid 3 Accent 1"/>
<w:LsdException Locked="false" Priority="70" Name="Dark List Accent 1"/>
<w:LsdException Locked="false" Priority="71" Name="Colorful Shading Accent 1"/>
<w:LsdException Locked="false" Priority="72" Name="Colorful List Accent 1"/>
<w:LsdException Locked="false" Priority="73" Name="Colorful Grid Accent 1"/>
<w:LsdException Locked="false" Priority="60" Name="Light Shading Accent 2"/>
<w:LsdException Locked="false" Priority="61" Name="Light List Accent 2"/>
<w:LsdException Locked="false" Priority="62" Name="Light Grid Accent 2"/>
<w:LsdException Locked="false" Priority="63" Name="Medium Shading 1 Accent 2"/>
<w:LsdException Locked="false" Priority="64" Name="Medium Shading 2 Accent 2"/>
<w:LsdException Locked="false" Priority="65" Name="Medium List 1 Accent 2"/>
<w:LsdException Locked="false" Priority="66" Name="Medium List 2 Accent 2"/>
<w:LsdException Locked="false" Priority="67" Name="Medium Grid 1 Accent 2"/>
<w:LsdException Locked="false" Priority="68" Name="Medium Grid 2 Accent 2"/>
<w:LsdException Locked="false" Priority="69" Name="Medium Grid 3 Accent 2"/>
<w:LsdException Locked="false" Priority="70" Name="Dark List Accent 2"/>
<w:LsdException Locked="false" Priority="71" Name="Colorful Shading Accent 2"/>
<w:LsdException Locked="false" Priority="72" Name="Colorful List Accent 2"/>
<w:LsdException Locked="false" Priority="73" Name="Colorful Grid Accent 2"/>
<w:LsdException Locked="false" Priority="60" Name="Light Shading Accent 3"/>
<w:LsdException Locked="false" Priority="61" Name="Light List Accent 3"/>
<w:LsdException Locked="false" Priority="62" Name="Light Grid Accent 3"/>
<w:LsdException Locked="false" Priority="63" Name="Medium Shading 1 Accent 3"/>
<w:LsdException Locked="false" Priority="64" Name="Medium Shading 2 Accent 3"/>
<w:LsdException Locked="false" Priority="65" Name="Medium List 1 Accent 3"/>
<w:LsdException Locked="false" Priority="66" Name="Medium List 2 Accent 3"/>
<w:LsdException Locked="false" Priority="67" Name="Medium Grid 1 Accent 3"/>
<w:LsdException Locked="false" Priority="68" Name="Medium Grid 2 Accent 3"/>
<w:LsdException Locked="false" Priority="69" Name="Medium Grid 3 Accent 3"/>
<w:LsdException Locked="false" Priority="70" Name="Dark List Accent 3"/>
<w:LsdException Locked="false" Priority="71" Name="Colorful Shading Accent 3"/>
<w:LsdException Locked="false" Priority="72" Name="Colorful List Accent 3"/>
<w:LsdException Locked="false" Priority="73" Name="Colorful Grid Accent 3"/>
<w:LsdException Locked="false" Priority="60" Name="Light Shading Accent 4"/>
<w:LsdException Locked="false" Priority="61" Name="Light List Accent 4"/>
<w:LsdException Locked="false" Priority="62" Name="Light Grid Accent 4"/>
<w:LsdException Locked="false" Priority="63" Name="Medium Shading 1 Accent 4"/>
<w:LsdException Locked="false" Priority="64" Name="Medium Shading 2 Accent 4"/>
<w:LsdException Locked="false" Priority="65" Name="Medium List 1 Accent 4"/>
<w:LsdException Locked="false" Priority="66" Name="Medium List 2 Accent 4"/>
<w:LsdException Locked="false" Priority="67" Name="Medium Grid 1 Accent 4"/>
<w:LsdException Locked="false" Priority="68" Name="Medium Grid 2 Accent 4"/>
<w:LsdException Locked="false" Priority="69" Name="Medium Grid 3 Accent 4"/>
<w:LsdException Locked="false" Priority="70" Name="Dark List Accent 4"/>
<w:LsdException Locked="false" Priority="71" Name="Colorful Shading Accent 4"/>
<w:LsdException Locked="false" Priority="72" Name="Colorful List Accent 4"/>
<w:LsdException Locked="false" Priority="73" Name="Colorful Grid Accent 4"/>
<w:LsdException Locked="false" Priority="60" Name="Light Shading Accent 5"/>
<w:LsdException Locked="false" Priority="61" Name="Light List Accent 5"/>
<w:LsdException Locked="false" Priority="62" Name="Light Grid Accent 5"/>
<w:LsdException Locked="false" Priority="63" Name="Medium Shading 1 Accent 5"/>
<w:LsdException Locked="false" Priority="64" Name="Medium Shading 2 Accent 5"/>
<w:LsdException Locked="false" Priority="65" Name="Medium List 1 Accent 5"/>
<w:LsdException Locked="false" Priority="66" Name="Medium List 2 Accent 5"/>
<w:LsdException Locked="false" Priority="67" Name="Medium Grid 1 Accent 5"/>
<w:LsdException Locked="false" Priority="68" Name="Medium Grid 2 Accent 5"/>
<w:LsdException Locked="false" Priority="69" Name="Medium Grid 3 Accent 5"/>
<w:LsdException Locked="false" Priority="70" Name="Dark List Accent 5"/>
<w:LsdException Locked="false" Priority="71" Name="Colorful Shading Accent 5"/>
<w:LsdException Locked="false" Priority="72" Name="Colorful List Accent 5"/>
<w:LsdException Locked="false" Priority="73" Name="Colorful Grid Accent 5"/>
<w:LsdException Locked="false" Priority="60" Name="Light Shading Accent 6"/>
<w:LsdException Locked="false" Priority="61" Name="Light List Accent 6"/>
<w:LsdException Locked="false" Priority="62" Name="Light Grid Accent 6"/>
<w:LsdException Locked="false" Priority="63" Name="Medium Shading 1 Accent 6"/>
<w:LsdException Locked="false" Priority="64" Name="Medium Shading 2 Accent 6"/>
<w:LsdException Locked="false" Priority="65" Name="Medium List 1 Accent 6"/>
<w:LsdException Locked="false" Priority="66" Name="Medium List 2 Accent 6"/>
<w:LsdException Locked="false" Priority="67" Name="Medium Grid 1 Accent 6"/>
<w:LsdException Locked="false" Priority="68" Name="Medium Grid 2 Accent 6"/>
<w:LsdException Locked="false" Priority="69" Name="Medium Grid 3 Accent 6"/>
<w:LsdException Locked="false" Priority="70" Name="Dark List Accent 6"/>
<w:LsdException Locked="false" Priority="71" Name="Colorful Shading Accent 6"/>
<w:LsdException Locked="false" Priority="72" Name="Colorful List Accent 6"/>
<w:LsdException Locked="false" Priority="73" Name="Colorful Grid Accent 6"/>
<w:LsdException Locked="false" Priority="19" QFormat="true"
Name="Subtle Emphasis"/>
<w:LsdException Locked="false" Priority="21" QFormat="true"
Name="Intense Emphasis"/>
<w:LsdException Locked="false" Priority="31" QFormat="true"
Name="Subtle Reference"/>
<w:LsdException Locked="false" Priority="32" QFormat="true"
Name="Intense Reference"/>
<w:LsdException Locked="false" Priority="33" QFormat="true" Name="Book Title"/>
<w:LsdException Locked="false" Priority="37" SemiHidden="true"
UnhideWhenUsed="true" Name="Bibliography"/>
<w:LsdException Locked="false" Priority="39" SemiHidden="true"
UnhideWhenUsed="true" QFormat="true" Name="TOC Heading"/>
<w:LsdException Locked="false" Priority="41" Name="Plain Table 1"/>
<w:LsdException Locked="false" Priority="42" Name="Plain Table 2"/>
<w:LsdException Locked="false" Priority="43" Name="Plain Table 3"/>
<w:LsdException Locked="false" Priority="44" Name="Plain Table 4"/>
<w:LsdException Locked="false" Priority="45" Name="Plain Table 5"/>
<w:LsdException Locked="false" Priority="40" Name="Grid Table Light"/>
<w:LsdException Locked="false" Priority="46" Name="Grid Table 1 Light"/>
<w:LsdException Locked="false" Priority="47" Name="Grid Table 2"/>
<w:LsdException Locked="false" Priority="48" Name="Grid Table 3"/>
<w:LsdException Locked="false" Priority="49" Name="Grid Table 4"/>
<w:LsdException Locked="false" Priority="50" Name="Grid Table 5 Dark"/>
<w:LsdException Locked="false" Priority="51" Name="Grid Table 6 Colorful"/>
<w:LsdException Locked="false" Priority="52" Name="Grid Table 7 Colorful"/>
<w:LsdException Locked="false" Priority="46"
Name="Grid Table 1 Light Accent 1"/>
<w:LsdException Locked="false" Priority="47" Name="Grid Table 2 Accent 1"/>
<w:LsdException Locked="false" Priority="48" Name="Grid Table 3 Accent 1"/>
<w:LsdException Locked="false" Priority="49" Name="Grid Table 4 Accent 1"/>
<w:LsdException Locked="false" Priority="50" Name="Grid Table 5 Dark Accent 1"/>
<w:LsdException Locked="false" Priority="51"
Name="Grid Table 6 Colorful Accent 1"/>
<w:LsdException Locked="false" Priority="52"
Name="Grid Table 7 Colorful Accent 1"/>
<w:LsdException Locked="false" Priority="46"
Name="Grid Table 1 Light Accent 2"/>
<w:LsdException Locked="false" Priority="47" Name="Grid Table 2 Accent 2"/>
<w:LsdException Locked="false" Priority="48" Name="Grid Table 3 Accent 2"/>
<w:LsdException Locked="false" Priority="49" Name="Grid Table 4 Accent 2"/>
<w:LsdException Locked="false" Priority="50" Name="Grid Table 5 Dark Accent 2"/>
<w:LsdException Locked="false" Priority="51"
Name="Grid Table 6 Colorful Accent 2"/>
<w:LsdException Locked="false" Priority="52"
Name="Grid Table 7 Colorful Accent 2"/>
<w:LsdException Locked="false" Priority="46"
Name="Grid Table 1 Light Accent 3"/>
<w:LsdException Locked="false" Priority="47" Name="Grid Table 2 Accent 3"/>
<w:LsdException Locked="false" Priority="48" Name="Grid Table 3 Accent 3"/>
<w:LsdException Locked="false" Priority="49" Name="Grid Table 4 Accent 3"/>
<w:LsdException Locked="false" Priority="50" Name="Grid Table 5 Dark Accent 3"/>
<w:LsdException Locked="false" Priority="51"
Name="Grid Table 6 Colorful Accent 3"/>
<w:LsdException Locked="false" Priority="52"
Name="Grid Table 7 Colorful Accent 3"/>
<w:LsdException Locked="false" Priority="46"
Name="Grid Table 1 Light Accent 4"/>
<w:LsdException Locked="false" Priority="47" Name="Grid Table 2 Accent 4"/>
<w:LsdException Locked="false" Priority="48" Name="Grid Table 3 Accent 4"/>
<w:LsdException Locked="false" Priority="49" Name="Grid Table 4 Accent 4"/>
<w:LsdException Locked="false" Priority="50" Name="Grid Table 5 Dark Accent 4"/>
<w:LsdException Locked="false" Priority="51"
Name="Grid Table 6 Colorful Accent 4"/>
<w:LsdException Locked="false" Priority="52"
Name="Grid Table 7 Colorful Accent 4"/>
<w:LsdException Locked="false" Priority="46"
Name="Grid Table 1 Light Accent 5"/>
<w:LsdException Locked="false" Priority="47" Name="Grid Table 2 Accent 5"/>
<w:LsdException Locked="false" Priority="48" Name="Grid Table 3 Accent 5"/>
<w:LsdException Locked="false" Priority="49" Name="Grid Table 4 Accent 5"/>
<w:LsdException Locked="false" Priority="50" Name="Grid Table 5 Dark Accent 5"/>
<w:LsdException Locked="false" Priority="51"
Name="Grid Table 6 Colorful Accent 5"/>
<w:LsdException Locked="false" Priority="52"
Name="Grid Table 7 Colorful Accent 5"/>
<w:LsdException Locked="false" Priority="46"
Name="Grid Table 1 Light Accent 6"/>
<w:LsdException Locked="false" Priority="47" Name="Grid Table 2 Accent 6"/>
<w:LsdException Locked="false" Priority="48" Name="Grid Table 3 Accent 6"/>
<w:LsdException Locked="false" Priority="49" Name="Grid Table 4 Accent 6"/>
<w:LsdException Locked="false" Priority="50" Name="Grid Table 5 Dark Accent 6"/>
<w:LsdException Locked="false" Priority="51"
Name="Grid Table 6 Colorful Accent 6"/>
<w:LsdException Locked="false" Priority="52"
Name="Grid Table 7 Colorful Accent 6"/>
<w:LsdException Locked="false" Priority="46" Name="List Table 1 Light"/>
<w:LsdException Locked="false" Priority="47" Name="List Table 2"/>
<w:LsdException Locked="false" Priority="48" Name="List Table 3"/>
<w:LsdException Locked="false" Priority="49" Name="List Table 4"/>
<w:LsdException Locked="false" Priority="50" Name="List Table 5 Dark"/>
<w:LsdException Locked="false" Priority="51" Name="List Table 6 Colorful"/>
<w:LsdException Locked="false" Priority="52" Name="List Table 7 Colorful"/>
<w:LsdException Locked="false" Priority="46"
Name="List Table 1 Light Accent 1"/>
<w:LsdException Locked="false" Priority="47" Name="List Table 2 Accent 1"/>
<w:LsdException Locked="false" Priority="48" Name="List Table 3 Accent 1"/>
<w:LsdException Locked="false" Priority="49" Name="List Table 4 Accent 1"/>
<w:LsdException Locked="false" Priority="50" Name="List Table 5 Dark Accent 1"/>
<w:LsdException Locked="false" Priority="51"
Name="List Table 6 Colorful Accent 1"/>
<w:LsdException Locked="false" Priority="52"
Name="List Table 7 Colorful Accent 1"/>
<w:LsdException Locked="false" Priority="46"
Name="List Table 1 Light Accent 2"/>
<w:LsdException Locked="false" Priority="47" Name="List Table 2 Accent 2"/>
<w:LsdException Locked="false" Priority="48" Name="List Table 3 Accent 2"/>
<w:LsdException Locked="false" Priority="49" Name="List Table 4 Accent 2"/>
<w:LsdException Locked="false" Priority="50" Name="List Table 5 Dark Accent 2"/>
<w:LsdException Locked="false" Priority="51"
Name="List Table 6 Colorful Accent 2"/>
<w:LsdException Locked="false" Priority="52"
Name="List Table 7 Colorful Accent 2"/>
<w:LsdException Locked="false" Priority="46"
Name="List Table 1 Light Accent 3"/>
<w:LsdException Locked="false" Priority="47" Name="List Table 2 Accent 3"/>
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<![endif]-->Anonymoushttp://www.blogger.com/profile/03663210774947932184noreply@blogger.com6tag:blogger.com,1999:blog-4267117031967630712.post-82170732629885042022014-12-09T09:05:00.000-08:002014-12-09T09:05:10.952-08:00Winning the Battle and Losing the WarJust over 4 years ago, I wrote an article about how much damage an irate customer can do in the digital age: <a href="http://collegeofautomotivemanagement.blogspot.com/2010/08/unhappy-car-buyer-gets-110000-views-on.html" target="_blank">Unhappy Car Buyer Gets 110,000 Views on YouTube</a>.<br />
<br />
<div class="separator" style="clear: both; text-align: center;">
<a href="http://2.bp.blogspot.com/-yD97KwrTMBI/VIcrX_eyeiI/AAAAAAAAAYI/yC3ANqBUdhc/s1600/tugofwar.jpeg" imageanchor="1" style="clear: right; float: right; margin-bottom: 1em; margin-left: 1em;"><img border="0" src="http://2.bp.blogspot.com/-yD97KwrTMBI/VIcrX_eyeiI/AAAAAAAAAYI/yC3ANqBUdhc/s1600/tugofwar.jpeg" /></a></div>
In a nutshell, the customer’s initial complaint was that the car he purchased had problems and he
wanted his money back, but a good portion of the disparaging video he produced dealt with how the
customer was saddled with what he felt was an unfair arbitration agreement by the dealer. The customer wanted to have the case heard in court and the dealer wanted to have an arbitrator decide the case.<br />
<br />
This case has been going on for over 7 years and it appears that it's finally been resolved. The dealer was able keep the case out of court and with an arbitrator (they won that battle). But - the arbitrator ruled against the dealer and awarded the customer $10,393 plus legal fees of $324,724. Ouch!<br />
<br />
As if that's not bad enough, the YouTube video trashing the dealer now has over 1.3 MILLION views!<br />
<br />
By the way, this battle was over a used car that sold for roughly $9,000...<br />
<br />
The obvious question seems to be: was it worth it? <br />
<br />
How does <i>your</i> dealership handle customer complaints???<br />
<br />
<br />
<br />
<br />Anonymoushttp://www.blogger.com/profile/03663210774947932184noreply@blogger.com0tag:blogger.com,1999:blog-4267117031967630712.post-37023737780942975232014-11-20T19:05:00.000-08:002014-11-20T19:05:51.603-08:00Think Compliance Isn’t Your Problem? Think Again<!--[if gte mso 9]><xml>
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<br />
<div class="Body" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<span style="color: windowtext; font-family: "Verdana",sans-serif; font-size: 12.0pt; line-height: 115%;">News broke recently about 5 dealership employees that were
arrested and face federal charges of conspiracy, bank fraud, wire fraud, and
aggravated identity-theft. This brings the total to 7 employees at the same
dealership who have been indicted so far this year. Not very pretty.</span><span style="color: windowtext; font-family: "Verdana",sans-serif; font-size: 12.0pt; line-height: 115%; mso-bidi-font-family: Verdana; mso-fareast-font-family: Verdana;"></span></div>
<div class="Body" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="separator" style="clear: both; text-align: center;">
<a href="http://4.bp.blogspot.com/-byBzeNrEIpA/VG6ruRrH3LI/AAAAAAAAAWM/F1ivSKuV0-Y/s1600/compliancebigtrouble.jpg" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" src="http://4.bp.blogspot.com/-byBzeNrEIpA/VG6ruRrH3LI/AAAAAAAAAWM/F1ivSKuV0-Y/s1600/compliancebigtrouble.jpg" height="126" width="200" /></a></div>
<div class="Body" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<span style="color: windowtext; font-family: "Verdana",sans-serif; font-size: 12.0pt; line-height: 115%;">Now you may be thinking that these folks must have engaged in
<i>really</i> outrageous behavior to get arrested, especially by the feds.
You’re likely also thinking that this could never happen to you – and you may
be right. But before you ignore this as something that only happens to people
in other dealerships, you might want to read on. </span><span style="color: windowtext; font-family: "Verdana",sans-serif; font-size: 12.0pt; line-height: 115%; mso-bidi-font-family: Verdana; mso-fareast-font-family: Verdana;"></span></div>
<div class="Body" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="Body" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<span style="color: windowtext; font-family: "Verdana",sans-serif; font-size: 12.0pt; line-height: 115%;">For a number of reasons I’ll get into shortly, my take on
this latest government action is that there’s a profound change occurring in
the car business legal environment – not only for dealers, but for everyone who
plies their trade selling cars. I know, I know - you’ve heard this all before –
but please stay with me for a little bit. </span><span style="color: windowtext; font-family: "Verdana",sans-serif; font-size: 12.0pt; line-height: 115%; mso-bidi-font-family: Verdana; mso-fareast-font-family: Verdana;"></span></div>
<div class="Body" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="Body" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<span style="color: windowtext; font-family: "Verdana",sans-serif; font-size: 12.0pt; line-height: 115%;">It’s no secret that for the last few years federal and state
regulators have sent a clear signal that they’re fed up with what they consider
to be deceptive practices in the auto industry -- and they’ve placed a bulls-eye
squarely on the backs of car dealers. But where the game is changing the most
is that instead of just hitting up dealers with their typical arsenal of fines,
lawsuits and consent decrees, the Powers-That-Be have apparently decided to go
directly after dealership staff. Eye-opening to say the least.</span><span style="color: windowtext; font-family: "Verdana",sans-serif; font-size: 12.0pt; line-height: 115%; mso-bidi-font-family: Verdana; mso-fareast-font-family: Verdana;"></span></div>
<div class="Body" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="Body" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<span style="color: windowtext; font-family: "Verdana",sans-serif; font-size: 12.0pt; line-height: 115%;">Since it’s likely that you don’t go to work every day with
the intention of getting charged with a crime, you might want to hear about
some significant takeaways from this recent action as I see it:</span></div>
<div class="Body" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="Body" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<b style="mso-bidi-font-weight: normal;"><span style="color: windowtext; font-family: "Verdana",sans-serif; font-size: 12.0pt; line-height: 115%;">The indictments
resulted from practices that have been around for many years and still are
common in some dealerships</span></b><span style="color: windowtext; font-family: "Verdana",sans-serif; font-size: 12.0pt; line-height: 115%;"> – The charges included
creating or altering documents to submit to financial institutions to show
inflated income, misrepresenting proof of a customer's residency, unlawful use
of a customer's personal identification, listing accessories not actually
included on a vehicle so a financial institution would increase its loan
amount, utilizing straw buyers, and quoting customers an inflated monthly
vehicle loan payment so that a finance manager could add a service contract and
GAP insurance without the customer realizing it. In carspeak, that’s kinking
credit apps and stips, power booking, straw purchases, and payment packing –
sound familiar?</span></div>
<div class="Body" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="Body" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<b style="mso-bidi-font-weight: normal;"><span style="color: windowtext; font-family: "Verdana",sans-serif; font-size: 12.0pt; line-height: 115%;">Virtually all positions
in the sales department were caught up in the operation</span></b><span style="color: windowtext; font-family: "Verdana",sans-serif; font-size: 12.0pt; line-height: 115%;"> – Sales managers, a finance manager, a GSM, and 3
salespeople were indicted. So if you’re involved in any aspect of selling a
car, you could be at risk. </span><span style="color: windowtext; font-family: "Verdana",sans-serif; font-size: 12.0pt; line-height: 115%; mso-bidi-font-family: Verdana; mso-fareast-font-family: Verdana;"></span></div>
<div class="Body" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="Body" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<b style="mso-bidi-font-weight: normal;"><span style="color: windowtext; font-family: "Verdana",sans-serif; font-size: 12.0pt; line-height: 115%;">The idea that only
employers are responsible for any illegal activities that occur at their
dealership is simply not valid - </span></b><span style="color: windowtext; font-family: "Verdana",sans-serif; font-size: 12.0pt; line-height: 115%;">There’s no
indication in the media stories that the dealership owners were named in the
indictment – just the employees (although news that 7 of your employees were
arrested can’t be good for business).</span><span style="color: windowtext; font-family: "Verdana",sans-serif; font-size: 12.0pt; line-height: 115%; mso-bidi-font-family: Verdana; mso-fareast-font-family: Verdana;"></span></div>
<div class="Body" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="Body" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<b style="mso-bidi-font-weight: normal;"><span style="color: windowtext; font-family: "Verdana",sans-serif; font-size: 12.0pt; line-height: 115%;">Multiple law
enforcement agencies were involved</span></b><span style="color: windowtext; font-family: "Verdana",sans-serif; font-size: 12.0pt; line-height: 115%;"> – The U.S.
Attorney’s office, the FBI and the IRS all participated in this operation.
Thought you only had to worry about the CFPB and FTC looking over your
shoulder?</span><span style="color: windowtext; font-family: "Verdana",sans-serif; font-size: 12.0pt; line-height: 115%; mso-bidi-font-family: Verdana; mso-fareast-font-family: Verdana;"></span></div>
<div class="Body" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="Body" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<b style="mso-bidi-font-weight: normal;"><span style="color: windowtext; font-family: "Verdana",sans-serif; font-size: 12.0pt; line-height: 115%;">It’s easier than you
think to get caught</span></b><span style="color: windowtext; font-family: "Verdana",sans-serif; font-size: 12.0pt; line-height: 115%;"> – According to media
accounts, a confidential informant who had previously worked at the dealership
“provided multiple volunteered audio recordings regarding the loan fraud,
documented proof of the loan fraud, and miscellaneous documentation he acquired
during his employment at dealership” to the FBI. So not only are dealership
employees at risk of exposure for illegal practices from disgruntled customers,
their co-workers could also implicate them.</span><span style="color: windowtext; font-family: "Verdana",sans-serif; font-size: 12.0pt; line-height: 115%; mso-bidi-font-family: Verdana; mso-fareast-font-family: Verdana;"></span></div>
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<br /></div>
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<b style="mso-bidi-font-weight: normal;"><span style="color: windowtext; font-family: "Verdana",sans-serif; font-size: 12.0pt; line-height: 115%;">The potential penalties
are very real and quite devastating</span></b><span style="color: windowtext; font-family: "Verdana",sans-serif; font-size: 12.0pt; line-height: 115%;"> - According
to the media stories, the maximum penalty for conspiracy is five years in
prison and a $250,000 fine. The maximum penalty for bank fraud is 30 years in
prison and a $1 million fine. The maximum penalty for wire fraud is 20 years in
prison and a $250,000 fine. The minimum penalty for aggravated identity theft
is two years in prison. And if those numbers aren’t bad enough to shake you up,
here’s something else to think about: even if these employees are found not
guilty - was it worth being criminally charged, having their reputations
ruined, paying legal fees, losing their livelihood and likely having to change
professions?</span><span style="color: windowtext; font-family: "Verdana",sans-serif; font-size: 12.0pt; line-height: 115%; mso-bidi-font-family: Verdana; mso-fareast-font-family: Verdana;"></span></div>
<div class="Body" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="Body" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<span style="color: windowtext; font-family: "Verdana",sans-serif; font-size: 12.0pt; line-height: 115%;">Quite frankly, many dealership employees get caught up in
risky behavior not because they’re bad people, but because they simply don’t
know any better. In many cases the old-timers have taught the new hires the “</span><span lang="NL" style="color: windowtext; font-family: "Verdana",sans-serif; font-size: 12.0pt; line-height: 115%; mso-ansi-language: NL;">old school</span><span style="color: windowtext; font-family: "Verdana",sans-serif; font-size: 12.0pt; line-height: 115%;">”
way of doing business. It’s not unusual for dealership employees who have never
been properly trained to simply rely on doing business the way it’s always been
done.</span><span style="color: windowtext; font-family: "Verdana",sans-serif; font-size: 12.0pt; line-height: 115%; mso-bidi-font-family: Verdana; mso-fareast-font-family: Verdana;"></span></div>
<div class="Body" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="Body" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<span style="color: windowtext; font-family: "Verdana",sans-serif; font-size: 12.0pt; line-height: 115%;">Obviously, compliance training is vital for all dealership
personnel, but it goes beyond that. The missing element in most compliance
programs is that employees are taught what not to do but given no guidance on
how to be successful doing things the right way. Let’s face it, sales
department staff members are put under tremendous pressure to “make the
numbers”. In the absence of proper knowledge and skills, this can lead to the
temptation to step over the line legally and the rationalization that “everyone
else is doing it that why, why shouldn’t I?”</span><span style="color: windowtext; font-family: "Verdana",sans-serif; font-size: 12.0pt; line-height: 115%; mso-bidi-font-family: Verdana; mso-fareast-font-family: Verdana;"></span></div>
<div class="Body" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="Body" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<span style="color: windowtext; font-family: "Verdana",sans-serif; font-size: 12.0pt; line-height: 115%;">The answer is <i>complete</i> education. When dealership
personnel learn skills like loan underwriting guidelines, subprime financing
and proper deal structuring, it eliminates the need for kinking credit apps,
power booking and straw purchases. This goes hand-in-hand with superior sales
training to teach employees how to build relationships with customers so that
they can land them on the right vehicle that fits their budget and credit
profile – again eliminating the need to “</span><span lang="DA" style="color: windowtext; font-family: "Verdana",sans-serif; font-size: 12.0pt; line-height: 115%; mso-ansi-language: DA;">fudge</span><span style="color: windowtext; font-family: "Verdana",sans-serif; font-size: 12.0pt; line-height: 115%;">” things because the
customer “needs more income” </span><span lang="NL" style="color: windowtext; font-family: "Verdana",sans-serif; font-size: 12.0pt; line-height: 115%; mso-ansi-language: NL;">or doesn</span><span style="color: windowtext; font-family: "Verdana",sans-serif; font-size: 12.0pt; line-height: 115%;">’t have enough down payment. Next, when
F&I personnel become better at selling products, there’s no longer the need
to “</span><span lang="FR" style="color: windowtext; font-family: "Verdana",sans-serif; font-size: 12.0pt; line-height: 115%; mso-ansi-language: FR;">pack payments</span><span style="color: windowtext; font-family: "Verdana",sans-serif; font-size: 12.0pt; line-height: 115%;">” in order to increase their numbers.</span><span style="color: windowtext; font-family: "Verdana",sans-serif; font-size: 12.0pt; line-height: 115%; mso-bidi-font-family: Verdana; mso-fareast-font-family: Verdana;"></span></div>
<div style="line-height: 115%; margin-bottom: .0001pt; margin: 0in;">
<br /></div>
<div class="Body" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<span style="color: windowtext; font-family: "Verdana",sans-serif; font-size: 12.0pt; line-height: 115%;">In my humble opinion, it’s really pretty simple. By becoming
better educated on doing things the right way, you’ll not only be far more
successful, but you’ll sleep better at night. Sounds like a win-win to me.</span><span style="color: windowtext; font-family: "Verdana",sans-serif; font-size: 12.0pt; line-height: 115%; mso-bidi-font-family: Verdana; mso-fareast-font-family: Verdana;"></span></div>
<div class="Body" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<br /></div>
<div class="Body" style="margin-bottom: .0001pt; margin-bottom: 0in;">
<span style="color: windowtext; font-family: "Verdana",sans-serif; font-size: 12.0pt; line-height: 115%;">Good luck and good selling!</span><span style="color: windowtext; font-family: "Verdana",sans-serif;"></span></div>
Anonymoushttp://www.blogger.com/profile/03663210774947932184noreply@blogger.com0tag:blogger.com,1999:blog-4267117031967630712.post-56532873293936585182014-09-09T18:28:00.000-07:002014-11-08T11:15:53.743-08:00Are You in Good Hands?<!--[if gte mso 9]><xml>
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<a href="http://1.bp.blogspot.com/-pqJetFeoYj8/U4KYge4Uj7I/AAAAAAAAAVs/BChJVC4n2bo/s1600/goodhands.jpg" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" src="http://1.bp.blogspot.com/-pqJetFeoYj8/U4KYge4Uj7I/AAAAAAAAAVs/BChJVC4n2bo/s1600/goodhands.jpg" /></a></div>
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<span style="font-family: "Calibri","sans-serif"; mso-ascii-theme-font: minor-latin; mso-hansi-theme-font: minor-latin;">A common rationalization for some dealers to
be less than diligent in their compliance efforts is “my insurance will cover
any claim”. Well, that theory took a serious hit recently when a federal judge agreed
with two insurance companies that denied coverage in lawsuits against a large
public auto group. The court found that since the dealerships’ employees “intentionally
misled” customers, the insurers were within their rights in refusing to cover
the claims.</span></div>
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<br /></div>
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<span style="font-family: "Calibri","sans-serif"; mso-ascii-theme-font: minor-latin; mso-hansi-theme-font: minor-latin;">A little
history is in order. The auto group had been named as a defendant in at least
three lawsuits concerning its sales to consumers of window etch. The suits
alleged that the dealerships had failed to disclose that the price of the etch
product was included in the amount of financing they obtained and that
employees told purchasers and lessees that they had to purchase etch in order
to obtain financing. In addition, plaintiffs alleged that the dealers provided
them with forms with blank prices and the prices were not disclosed in any of
the transaction documents.</span></div>
<div class="MsoNormal" style="line-height: 115%;">
<br /></div>
<div class="MsoNormal" style="line-height: 115%;">
<span style="font-family: "Calibri","sans-serif"; mso-ascii-theme-font: minor-latin; mso-hansi-theme-font: minor-latin;">The
Insurance companies had issued the dealer group at least three separate
liability policies, and each of the policies included an Auto Dealer Enhancement
Package that provided liability coverage for sums an “insured legally must pay
as damages arising from an occurrence because of an alleged or actual negligent
act or error or omission by an insured resulting from a violation of
truth-in-lending laws.” </span></div>
<div class="MsoNormal" style="line-height: 115%;">
<br /></div>
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<span style="font-family: "Calibri","sans-serif"; mso-ascii-theme-font: minor-latin; mso-hansi-theme-font: minor-latin;">The dealer
group alleged that the types of claims and allegations made in the underlying suits
fell within the scope of coverage provided in the Auto Dealer Enhancement
Package. The insurance companies disagreed.</span></div>
<div class="MsoNormal" style="line-height: 115%;">
<br /></div>
<div class="MsoNormal" style="line-height: 115%; mso-outline-level: 1;">
<span style="font-family: "Calibri","sans-serif"; mso-ascii-theme-font: minor-latin; mso-hansi-theme-font: minor-latin;">Here’s why: liability policies typically
cover only the negligence of the insured, and will not apply to results of
willful or intentional acts by the insured. Common exclusions from insurance
policy coverage can include:</span></div>
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<br /></div>
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<li><span style="font-family: Symbol; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;"><span style="mso-list: Ignore;"><span style="font: 7.0pt "Times New Roman";"></span></span></span><span style="font-family: "Calibri","sans-serif"; mso-ascii-theme-font: minor-latin; mso-hansi-theme-font: minor-latin;">Intentional
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<li><span style="font-family: Symbol; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;"><span style="mso-list: Ignore;"><span style="font: 7.0pt "Times New Roman";"></span></span></span><span style="font-family: "Calibri","sans-serif"; mso-ascii-theme-font: minor-latin; mso-hansi-theme-font: minor-latin;">Illegal or
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<li><span style="font-family: Symbol; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;"><span style="mso-list: Ignore;"><span style="font: 7.0pt "Times New Roman";"></span></span></span><span style="font-family: "Calibri","sans-serif"; mso-ascii-theme-font: minor-latin; mso-hansi-theme-font: minor-latin;">Intentional
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any profit or advantage to which you are not legally entitled</span></li>
<li><span style="font-family: Symbol; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;"><span style="mso-list: Ignore;"><span style="font: 7.0pt "Times New Roman";"></span></span></span><span style="font-family: "Calibri","sans-serif"; mso-ascii-theme-font: minor-latin; mso-hansi-theme-font: minor-latin;">Claims
arising out of false advertising or misrepresentation in advertising</span></li>
<li><span style="font-family: Symbol; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;"><span style="mso-list: Ignore;"><span style="font: 7.0pt "Times New Roman";"></span></span></span><span style="font-family: "Calibri","sans-serif"; mso-ascii-theme-font: minor-latin; mso-hansi-theme-font: minor-latin;">Antitrust,
unfair competition, restraint of trade, unfair or deceptive business practices,
or violations of any consumer protection laws</span></li>
<li><span style="font-family: Symbol; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;"><span style="mso-list: Ignore;"><span style="font: 7.0pt "Times New Roman";"></span></span></span><span style="font-family: "Calibri","sans-serif"; mso-ascii-theme-font: minor-latin; mso-hansi-theme-font: minor-latin;">Claims
against you that are brought by or on behalf of any federal, state or local
government agency </span></li>
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arising out of any wrongful act committed with the knowledge that it was a
wrongful act</span></li>
<li><span style="font-family: Symbol; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;"><span style="mso-list: Ignore;"><span style="font: 7.0pt "Times New Roman";"></span></span></span><span style="font-family: "Calibri","sans-serif"; mso-ascii-theme-font: minor-latin; mso-hansi-theme-font: minor-latin;">Claims
arising out of the same wrongful act or series of continuous, repeated or
related wrongful acts, alleging the same or similar facts</span></li>
</ul>
<br />
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<br /></div>
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<span style="font-family: "Calibri","sans-serif"; mso-ascii-theme-font: minor-latin; mso-hansi-theme-font: minor-latin;">In finding
for the insurance companies, the court stated “fraudulent misrepresentations
and nondisclosures were done intentionally with the full knowledge of and at
the direction of the principals of the dealer as a 'pattern and practice' of
doing business."</span></div>
<div class="MsoNormal" style="line-height: 115%;">
<br /></div>
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<span style="font-family: "Calibri","sans-serif"; mso-ascii-theme-font: minor-latin; mso-hansi-theme-font: minor-latin;">Ouch.</span></div>
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<br /></div>
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<span style="font-family: "Calibri","sans-serif"; mso-ascii-theme-font: minor-latin; mso-hansi-theme-font: minor-latin;">Now when you
think about it, there are any number of compliance missteps that may be
considered “intentional” under the above guidelines. A few that come to mind
are payment packing, bait & switch advertising, price gouging, failure to
sell at advertised price, falsifying credit applications – you get the picture.</span></div>
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<br /></div>
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<span style="font-family: "Calibri","sans-serif"; mso-ascii-theme-font: minor-latin; mso-hansi-theme-font: minor-latin;">Here’s the
bigger picture: by training employees to operate compliantly and ethically, the
dealership’s exposure will be greatly limited, but more importantly, customers
will be happier, and sales will increase. I recently read this comment from a
student enrolled in Automotive Career Training at the College of Auto
Management that really hit the nail on the head:</span></div>
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<br /></div>
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<span style="font-family: "Calibri","sans-serif"; mso-ascii-theme-font: minor-latin; mso-hansi-theme-font: minor-latin;">”First allow
me to say that this course is definitely essential to the growth of the
automotive industry as whole! I am in my 6th year in the industry. In that time
I have been a sales consultant, floor manager, and an internet manager but at
no point in time was I approached or sat down and discussed the ethics laws of
how to rest assured that my practice was legal or law abiding. This leads you
to believe that all is fair as long as the customer agrees and consents -
whether they understand or not is not really my problem or concern.</span></div>
<div style="line-height: 115%; margin-bottom: .0001pt; margin: 0in;">
<span style="font-family: "Calibri","sans-serif"; mso-ascii-theme-font: minor-latin; mso-hansi-theme-font: minor-latin;">Personally this course helped me draw the
line between a great salesman and a crafty con artist per se. Just because you
can get customers to say yes doesn't mean you did a good job selling them a
vehicle. You could have done a great job of deceiving them during the whole
process. After going through this course, I realized that a lot of practices
that I thought were "the car business" actually are not. As a person
who prides himself on honesty and integrity, this course has opened my eyes to
true accountability on what is legal and what is not legal (since the customer
most likely doesn't know and the dealership may not teach you). </span></div>
<div style="line-height: 115%; margin-bottom: .0001pt; margin: 0in;">
<span style="font-family: "Calibri","sans-serif"; mso-ascii-theme-font: minor-latin; mso-hansi-theme-font: minor-latin;">Also I know that this course will separate me
from other candidates who do not have the knowledge. I know that I am an asset
to a company and their practices in the case of an audit or any accusations
that may face them knowing that me as an employee, on any level, am well
familiar with the laws and legal practices of the industry. So they can rest
assured that I will not put their dealership on "the 6 o'clock
news". </span></div>
<div style="line-height: 115%; margin-bottom: .0001pt; margin: 0in;">
<span style="font-family: "Calibri","sans-serif"; mso-ascii-theme-font: minor-latin; mso-hansi-theme-font: minor-latin;">I plan to take this knowledge and use it how
it should be used! Help build trust for my dealership, build stronger relationships
with customers, and advance my career the right way. Learn how to sell opposed
to mislead. Thank you for offering this knowledge.”</span></div>
<div style="line-height: 115%; margin-bottom: .0001pt; margin: 0in;">
<br /></div>
<div style="line-height: 115%; margin-bottom: .0001pt; margin: 0in;">
<span style="font-family: "Calibri","sans-serif"; mso-ascii-theme-font: minor-latin; mso-hansi-theme-font: minor-latin;">So I ask this simple question: is it better for
dealers to spend their time worrying about whether their insurance company will
pay a claim if they get caught up in a compliance lawsuit or train their people
to think like the gentleman above? It seems to me that the answer is obvious.</span></div>
<div style="line-height: 115%; margin-bottom: .0001pt; margin: 0in;">
<br /></div>
<div style="line-height: 115%; margin-bottom: .0001pt; margin: 0in;">
<span style="font-family: "Calibri","sans-serif"; mso-ascii-theme-font: minor-latin; mso-hansi-theme-font: minor-latin;">In my humble opinion, the Good Hands People
dealers should be focused on is not an insurance company - but the people who
serve their customers every day. The rest will take care of itself.</span></div>
Anonymoushttp://www.blogger.com/profile/03663210774947932184noreply@blogger.com0tag:blogger.com,1999:blog-4267117031967630712.post-21412728284175750182014-07-16T14:33:00.000-07:002014-11-08T16:56:13.336-08:00When Do Not Call Really Does Mean Do Not Call<!--[if gte mso 9]><xml>
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<br />
<div class="separator" style="clear: both; text-align: center;">
<a href="http://1.bp.blogspot.com/-dhcO0Zbtu7c/UbuLfRvO6NI/AAAAAAAAANI/WuKUIQc9XaE/s1600/DNCphone.jpg" imageanchor="1" style="clear: right; float: right; margin-bottom: 1em; margin-left: 1em;"><img border="0" src="http://1.bp.blogspot.com/-dhcO0Zbtu7c/UbuLfRvO6NI/AAAAAAAAANI/WuKUIQc9XaE/s1600/DNCphone.jpg" /></a></div>
<div class="MsoNormal" style="line-height: 115%; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto;">
<span style="font-family: "Trebuchet MS",sans-serif;">The
National Do Not Call Rules (DNC) have been around for quite a while but I find
that a surprising number of dealership employees think that the rules don’t
apply to them. I often hear statements like “Hey, we’re not telemarketers, we’re
just doing follow-up”. Unfortunately, it’s not that simple. So I thought it was
time for a refresher on the rules and some suggestions on how to avoid
potential legal pitfalls.</span></div>
<div class="MsoNormal" style="line-height: 115%; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto;">
<br /></div>
<span style="font-family: "Trebuchet MS",sans-serif;">
</span><br />
<div class="MsoNormal" style="line-height: 115%; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto;">
<span style="font-family: "Trebuchet MS",sans-serif;">The DNC
rules state that it’s against the law to call, for selling purposes, any number
on the National Do Not Call registry, but there are some exceptions.<span style="mso-spacerun: yes;"> </span>For instance, under the “existing business
relationship” exception, a dealership may call a consumer with whom it has an
established business relationship for a limited time after the consumer's last
purchase, delivery, or payment - even if the consumer's number is on the
National Do Not Call Registry.<span style="mso-spacerun: yes;"> </span>Also, dealership
staff may call a consumer for a shorter period of time after the consumer makes
an inquiry or submits a lead to the company.<span style="mso-spacerun: yes;"> </span></span></div>
<div class="MsoNormal" style="line-height: 115%; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto;">
<br /></div>
<span style="font-family: "Trebuchet MS",sans-serif;">
</span><br />
<div class="MsoNormal" style="line-height: 115%; margin-bottom: 12.0pt; mso-margin-top-alt: auto;">
<span style="font-family: "Trebuchet MS",sans-serif;">One
caveat: if a consumer asks you not to call, the staff may not call, even if
there is an established business relationship. In that case, the dealership
must honor the request not to call and loses the
right to call the consumer, regardless of whether the consumer continues to do
business with the dealership. <span style="mso-bidi-font-weight: bold;">As a
result, in addition to the National Do Not Call List, dealerships must maintain
an internal Do Not Call list of any consumers who specifically request that the
dealership not call them. This is the tricky part at many dealerships.</span></span></div>
<span style="font-family: "Trebuchet MS",sans-serif;">
</span><br />
<div class="MsoNormal" style="line-height: 115%; margin-bottom: 12.0pt; mso-margin-top-alt: auto;">
<span style="font-family: "Trebuchet MS",sans-serif;">What
type of calls do the DNC rules cover? Covered calls are those made for “commercial” or
“selling” purposes that offer to provide or arrange to provide goods or
services to consumers. It’s pretty simple, if you’re calling to try to sell
something – anything – the rules apply. If you’re calling for any other reason,
you’re probably OK.</span></div>
<span style="font-family: "Trebuchet MS",sans-serif;">
</span><br />
<div style="line-height: 115%;">
<span style="font-family: "Trebuchet MS",sans-serif;">So what
constitutes an “existing business relationship”? There are two types of
established business relationships, both of which are time-limited:</span></div>
<span style="font-family: "Trebuchet MS",sans-serif;">
</span><br />
<div style="line-height: 115%;">
<span style="font-family: "Trebuchet MS",sans-serif;">1) A dealership
may call a consumer if that consumer has purchased, rented, or leased the
business’s goods or services, or if a financial transaction has taken place.
The time limitation on this relationship is 18 months after that sale or
transaction. </span></div>
<span style="font-family: "Trebuchet MS",sans-serif;">
</span><br />
<div class="MsoNormal" style="line-height: 115%; margin-bottom: 12.0pt; mso-margin-top-alt: auto;">
<span style="font-family: "Trebuchet MS",sans-serif;">2) If a consumer hasn’t purchased
from you, you can call them only if they have made an inquiry or submitted an
application to your company, such as a request for a quote. In these cases you
can only call up to three months after the original inquiry (NOTE: this time-frame may be further limited by state law. For instance, California only allows for calls to be made for 30 days after an inquiry is made). This exception
applies when a consumer visits the dealership and inquires about purchasing,
calls for information, or submits an internet lead. The test for whether
there's been an inquiry (and thus there could be an established business
relationship even where a purchase or transaction hasn't been completed) is
that an inquiry has been made of a nature to create an expectation on the part
of the consumer that a particular company will call them. So, if a consumer
merely called to inquire about business hours or location, that wouldn't do the
trick, but asking about a company's products or services, or submitting an
application or lead, would.</span></div>
<span style="font-family: "Trebuchet MS",sans-serif;">
</span><br />
<div class="MsoNormal" style="line-height: 115%; margin-bottom: 12.0pt; mso-margin-top-alt: auto;">
<span style="font-family: "Trebuchet MS",sans-serif;">Another
exception is if a consumer has given the dealership express written permission
to call, you may call even if the consumer's number is on the National DNC
Registry. The consumer must give express
agreement in writing to receive calls placed by the seller, including the
number to which calls may be made, and the consumer’s signature. The signature
may be a valid electronic signature, if the agreement is reached online. The consumer
can revoke this permission at any time by asking to be placed on your <i>internal</i>
DNC list.</span></div>
<div class="MsoNormal" style="line-height: 115%; margin-bottom: 12.0pt; mso-margin-top-alt: auto;">
<span style="font-family: "Trebuchet MS",sans-serif;">Even permissible calls have
restrictions on time of day. They can't be made before 8 a.m. or after 9 p.m.
local time at the called party's location. Sellers are also prohibited from
blocking the transmission of caller ID information. </span></div>
<span style="font-family: "Trebuchet MS",sans-serif;">
</span><br />
<div class="MsoNormal" style="line-height: 115%; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto;">
<span style="font-family: "Trebuchet MS",sans-serif;">There's a safe harbor for sellers
that have made a good faith effort to comply with the national DNC rules and a
dealership would not be liable for violations that result from an error if the
company has made a good faith effort to provide consumers with an opportunity
to exercise their do-not-call rights. To fall within the safe harbor, the
dealership must demonstrate that, as part of its routine business practice:</span></div>
<span style="font-family: "Trebuchet MS",sans-serif;">
</span><br />
<ul type="disc"><ol start="1" type="1">
<li class="MsoNormal" style="line-height: 115%; mso-list: l1 level2 lfo1; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto; tab-stops: list 1.0in;"><span style="font-family: "Trebuchet MS",sans-serif;">It has established and implemented
written procedures to comply with the do-not-call rules; </span></li>
<li class="MsoNormal" style="line-height: 115%; mso-list: l1 level2 lfo1; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto; tab-stops: list 1.0in;"><span style="font-family: "Trebuchet MS",sans-serif;">It has trained its personnel, and any
entity assisting in its compliance, in the procedures established
pursuant to the DNC rules; </span></li>
<li class="MsoNormal" style="line-height: 115%; mso-list: l1 level2 lfo1; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto; tab-stops: list 1.0in;"><span style="font-family: "Trebuchet MS",sans-serif;">It has maintained and recorded a list
of telephone numbers the seller may not contact; </span></li>
<li class="MsoNormal" style="line-height: 115%; mso-list: l1 level2 lfo1; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto; tab-stops: list 1.0in;"><span style="font-family: "Trebuchet MS",sans-serif;">It uses a process to prevent
telemarketing to any telephone number of any list established pursuant to
the DNC rules employing a version of the DNC registry obtained from the
administrator of the registry within a time-frame specified by rule (the
search is required to be made at least once every 31 days); and </span></li>
<li class="MsoNormal" style="line-height: 115%; mso-list: l1 level2 lfo1; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto; tab-stops: list 1.0in;"><span style="font-family: "Trebuchet MS",sans-serif;">Any subsequent call otherwise violating
the DNC rules is the result of error. </span></li>
</ol>
</ul>
<span style="font-family: "Trebuchet MS",sans-serif;">
</span><br />
<div class="MsoNormal" style="line-height: 115%; margin-bottom: 12.0pt; mso-margin-top-alt: auto;">
<br /></div>
<div class="MsoNormal" style="line-height: 115%; margin-bottom: 12.0pt; mso-margin-top-alt: auto;">
<span style="font-family: "Trebuchet MS",sans-serif;">So, how do you stay on top of
these regulations? The good news is that many CRM programs do much of the heavy
lifting in terms of flagging consumers on the National DNC list. The not-so-good
news is that your CRM can only do so much. Often, decisions must be made at the
dealership level as to the validity and timing of established business
relationships and consumer placement on the dealership’s internal DNC list.
Following are suggestions for staying compliant with DNC rules (for dealers who
have a CRM system that automatically accesses the National DNC Registry): </span></div>
<ul>
<li><span style="font-family: "Trebuchet MS",sans-serif;">All
dealership employees should be trained on DNC rules and on how to identify
customers flagged as “Do Not Call” in your CRM. Your CRM provider should be
asked to provide comprehensive training to ensure that there are no
misunderstandings about the system’s capabilities. </span></li>
<li><span style="font-family: "Trebuchet MS",sans-serif;">The
dealership should appoint a single point-of-contact who is well-versed in the
DNC regulations to administer the program (Compliance Coordinator). </span></li>
<li><span style="font-family: "Trebuchet MS",sans-serif;">The DNC
Compliance Coordinator should develop and maintain an internal company DNC
list.</span></li>
<li><span style="font-family: "Trebuchet MS",sans-serif;">All consumer
requests to be added to the dealership’s internal DNC list should be routed to
the Compliance Coordinator. He or she will be responsible for maintaining the
list and flagging the consumers in the CRM. All dealership employees must
report any customer Do Not Call request (written or verbal) to the Compliance
Coordinator.</span></li>
<li><span style="font-family: "Trebuchet MS",sans-serif;">All
dealership employees should be instructed that any consumer request not to be
contacted (even casual requests) must be immediately reported to the Compliance
Coordinator. This includes requests to receptionists and customers telling
salespeople “hey, don’t call me anymore”.</span></li>
<li><span style="font-family: "Trebuchet MS",sans-serif;">All
decisions as to whether or not a consumer falls into the “established business
relationship” exception or “express permission to call” exception should be
made by the Compliance Coordinator. In other words, no one flagged as “Do Not
Call” in the CRM should be called without permission from the Compliance
Coordinator.</span></li>
<li><span style="font-family: "Trebuchet MS",sans-serif;">These
directives should be made a part of the company’s Human Resources process,
included in the employee handbook and new-hire orientation, and strictly
enforced. Employees should be informed in writing that knowingly calling a
person on the Do Not Call list without permission from the Compliance
Coordinator is a serious breach of company rules and can lead to disciplinary
action. This is vital to ensure safe harbor protection for the dealership in
the case of errors. </span></li>
</ul>
<br />
<div style="line-height: 115%;">
<span style="font-family: "Trebuchet MS",sans-serif;">If the
dealership doesn’t have a CRM system that tracks the DNC list, they are
required to search the National DNC Registry every 31 days. If new numbers have
been added to the registry they are required to drop them from their call
lists. The Federal Trade Commission has set up a specific website that
businesses can use to access the registry:
https://telemarketing.donotcall.gov/profile/create.aspx. When a business
accesses the site for the first time a profile will need to be created by
including identifiable information about the business. Organizations that
subscribe to more than five area codes will be required to pay a fee to access
data on the registry. </span></div>
<div style="line-height: 115%;">
<br /></div>
<span style="font-family: "Trebuchet MS",sans-serif;">
</span><br />
<div style="line-height: 115%;">
<span style="font-family: "Trebuchet MS",sans-serif;">So there you
have it. The rules are not very complicated but compliance can be tricky and is
vitally important. Violators of these rules can be fined up to $16,000 per
incident<a href="http://www.blogger.com/null" name="exempt"></a> and consumers can bring private actions. In this
age of greatly enhanced enforcement actions and lawsuits against dealers, it
makes sense to pay attention.</span></div>
<span style="font-family: "Trebuchet MS",sans-serif;">
</span>Anonymoushttp://www.blogger.com/profile/03663210774947932184noreply@blogger.com3tag:blogger.com,1999:blog-4267117031967630712.post-34553091699226591792014-03-20T11:19:00.001-07:002014-03-21T15:39:14.433-07:00Key Takeaways from the FTC’s Dealer Advertising Webinar<div class="MsoNormal" style="line-height: normal;">
<span style="font-size: small;"><span style="font-family: Verdana,sans-serif;">On March 19<sup>th</sup>, 2014 two FTC attorneys, Mark
Lassman and Carole Reynolds, participated in an NADA-sponsored
webinar titled <i>Comply with Federal
Advertising Regulations</i>. While much of the information is unchanged from
what we’ve seen in the past few months, Mr. Lassman and Ms. Reynolds revealed
some additional, and sometimes troubling, revelations that dealers everywhere
need to be aware of:</span></span></div>
<div class="MsoNormal" style="line-height: normal;">
<span style="font-size: small;"><span style="font-family: Verdana,sans-serif;"></span></span></div>
<ul>
<li><span style="font-size: small;"><span style="font-family: Verdana,sans-serif;">Even if a dealership
follows their state advertising regulations to the letter, the FTC may bring an
action based upon their interpretation of federal advertising guidelines and
the net impression your ad gives to consumers. According to the FTC, a customer
is not required to “figure out” what the ad terms mean. If the agency
feels the ad is confusing in any way, the ad is likely to be considered misleading
in their opinion. They cautioned against using industry terms of art in
disclaimers that customers may not understand. </span></span></li>
<li><span style="font-size: small;"><span style="font-family: Verdana,sans-serif;">Disclosures must be clear and conspicuous to convey the information that qualifies the claim; and must be easily noticed and understood by customers.</span></span><!--[if gte mso 9]><xml>
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</ul>
<ul>
<li><span style="font-size: small;">When you use disclaiming
statements remember the “4 Ps":<br /><div class="MsoNormal" style="line-height: normal; margin-bottom: 0.0001pt;">
<b>Prominence</b> - Can consumers see and read it, or hear it? Small print and
rapid fire delivery in TV, radio and website banners should be avoided.</div>
</span><span style="font-size: small;"><b>Placement -</b></span><span style="font-size: small;"> Is it where the customer would look? Caution: turned sideways
on the ad is to be avoided.</span><span style="font-size: small;"><b> </b></span><span style="font-size: small;"><br /></span><span style="font-size: small;"><b>Proximity</b></span><span style="font-size: small;"> -
Is it near the claim it qualifies? Caution: back of direct mail; multiple
clicks away is not close.</span><span style="font-size: small;"><b> </b></span><span style="font-size: small;"><br /></span><span style="font-size: small;"><b>Presentation - </b></span><span style="font-size: small;">Is the wording and format easy for consumers to understand? Caution: avoid industry Jargon, or technical terms; buried in fine print;
multiple asterisks; gray or light print; loud music.</span><span style="font-size: small;"></span><span style="font-size: small;"></span></li>
</ul>
<span style="font-size: small;"><span style="font-family: Verdana,sans-serif;">
</span></span><br />
<ul>
<li><span style="font-size: small;"><span style="font-family: Verdana,sans-serif;">In Radio and TV Ads, you
can limit the required information, but you must include a reference to a toll
free number or print ad published at least three (3) days before the radio or
TV spot. References to a website for further information do not meet the FTC ACT
requirements.</span></span></li>
<li><span style="font-size: small;"><span style="font-family: Verdana,sans-serif;">When a dealer
advertises $0 Down, that means no money out of pocket to take advantage of
financing terms as far as the FTC is concerned. Disclaimers to the contrary are
not acceptable. </span></span></li>
<li><span style="font-size: small;"><span style="font-family: Verdana,sans-serif;">The notion
that the term “down payment” and “payments due at signing” are mutually
exclusive and somehow OK to say $0 down payment when other upfront
payments fees are due in lease ads is
false from the FTC’s standpoint. They made no bones about it; they have and
will prosecute dealers who engage in this practice as false advertising since
the net impression of the ad is false.</span></span></li>
<li><span style="font-size: small;"><span style="font-family: Verdana,sans-serif;">The
overriding basis for the FTC choosing to bring disciplinary actions is when the
net impression an ad has is false even if small print disclaimers are present.</span></span></li>
<li><span style="font-size: small;"><span style="font-family: Verdana,sans-serif;">They also warned
dealers that they, and not their ad agency or media company, will be held
liable for advertising violations. </span></span></li>
<li><span style="font-size: small;"><span style="font-family: Verdana,sans-serif;">Numerous questions
erupted about the “Factory Review and Pre-Approval” being relied upon and the
feeling that that absolves the dealer. The FTC simply stated “Absolutely
Not” - the dealer is responsible.</span></span></li>
<li><span style="font-size: small;"><span style="font-family: Verdana,sans-serif;">They made a
point that EVERY AD, EVERY MEDIUM, EVERY DAY can be considered by them to be a
separate violation. They stated as an example that if a print ad was copied and
published to the dealer’s website and then also put on social media sites, that
is three ad violations in their opinion. </span></span></li>
<li><span style="font-size: small;"><span style="font-family: Verdana,sans-serif;">FTC remedies can
include: cease and desist orders of 20 years duration; equitable relief including rescission, redress, injunctions; frozen assets and sale of assets; bans from business; and civil penalties up to $16,000 per violation. These remedies can be brought against companies and individuals.</span></span></li>
<li><span style="font-size: small;"><span style="font-family: Verdana,sans-serif;">The FTC may also bring criminal charges for intentional violations.</span></span></li>
<li><span style="font-size: small;"><span style="font-family: Verdana,sans-serif;">Deceptive appearing claims in ads lead to discovery of other Truth in Lending Act (TILA) claims.</span></span></li>
<li><span style="font-size: small;"><span style="font-family: Verdana,sans-serif;">In addition to standard
advertising mediums, additional areas that are covered include billboards,
emails, mobile messages, windows and in-store displays, electronic displays,
service area waiting rooms, handouts in parking lots, and auto displays at
shopping malls, athletic events, or near colleges. Any media, any place. </span></span></li>
<li><span style="font-size: small;"><span style="font-family: Verdana,sans-serif;">Actionable Misrepresentations
can occur at any point in the sales process including ads and marketing,
training materials, greeting as the customer walks into the dealership, test
drives, point-of-sale, finance or lease discussion, add-ons presentation, and
can occur in any language.</span></span>
</li>
</ul>
<span style="font-size: small;"><span style="font-family: Verdana,sans-serif;"></span></span><br />
<div class="MsoNormal" style="line-height: normal;">
<span style="font-size: small;"><span style="font-family: Verdana,sans-serif;">The FTC attorneys strongly recommended that dealers have their ads reviewed for compliance with both federal and state guidelines by qualified professionals prior to
publication. In addition, employees should be trained early and often.</span></span></div>
Anonymoushttp://www.blogger.com/profile/03663210774947932184noreply@blogger.com0tag:blogger.com,1999:blog-4267117031967630712.post-86133460425142045692014-02-15T09:12:00.001-08:002014-02-15T09:12:50.298-08:00Benefits of Compliance & Ethics Training<iframe allowfullscreen="" frameborder="0" height="315" src="//www.youtube.com/embed/n6EWHFXmElA?rel=0" width="560"></iframe><br />Anonymoushttp://www.blogger.com/profile/03663210774947932184noreply@blogger.com0tag:blogger.com,1999:blog-4267117031967630712.post-62108924984114729332014-02-09T11:09:00.000-08:002014-02-21T20:09:16.395-08:00Compliance Solutions<iframe allowfullscreen="" frameborder="0" height="315" src="//www.youtube.com/embed/aO3-PLcPHBQ?rel=0" width="560"></iframe><br />Anonymoushttp://www.blogger.com/profile/03663210774947932184noreply@blogger.com0tag:blogger.com,1999:blog-4267117031967630712.post-32091483853575069652014-01-22T15:19:00.000-08:002016-09-30T08:33:55.220-07:00The FTC Strikes Again – You Ain’t Seen Nothing Yet<!--[if gte mso 9]><xml>
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<br />
<div class="MsoNormal">
<span style="font-family: "verdana" , sans-serif;"><span style="font-size: small;">Here
we go again. </span></span></div>
<span style="font-family: "verdana" , sans-serif;">
</span><br />
<span style="font-family: "verdana" , sans-serif;">
</span><br />
<div class="MsoNormal">
<span style="font-family: "verdana" , sans-serif;"><span style="font-size: small;">As
if the CFPB/DOJ $98 million penalty against Ally Bank in December wasn’t
enough, more regulators are starting off 2014 with a bang. On January 9<sup>th</sup>,
the FTC and the County of Los Angeles Department of Consumer Affairs held a
press conference announcing a nationwide enforcement action targeting deceptive
auto dealer advertisements. The action, dubbed "Operation Steer
Clear", resulted in the voluntary settlement of complaints against nine
dealerships and continuing action against another. This was the FTC’s third
enforcement action against “deceptive” auto dealer advertising in the last few
years. The first was in March of 2012 when they cited 5 dealers for trade
payoff claims. The second was against 2 dealers in September of 2013 for rebate
disclosures.</span></span></div>
<span style="font-family: "verdana" , sans-serif;">
</span><br />
<span style="font-family: "verdana" , sans-serif;">
</span><br />
<div class="separator" style="clear: both; text-align: center;">
<span style="font-family: "verdana" , sans-serif;"><span style="font-size: small;"><a href="http://1.bp.blogspot.com/-pwofBuI5dwE/UuBRKLp0yWI/AAAAAAAAAUs/-uY1Sp6s1fU/s1600/FTClogo-gavel.jpg" imageanchor="1" style="clear: right; float: right; margin-bottom: 1em; margin-left: 1em;"><img border="0" src="https://1.bp.blogspot.com/-pwofBuI5dwE/UuBRKLp0yWI/AAAAAAAAAUs/-uY1Sp6s1fU/s1600/FTClogo-gavel.jpg" /></a></span></span></div>
<div class="MsoNormal">
<span style="font-family: "verdana" , sans-serif;"><span style="font-size: small;">So,
how significant is this? I imagine the answer depends on how well my crystal
ball is functioning today, but before you blow this off as yet another “fear
factor” article by a compliance guy, you might want to hear me out - if for no
other reason than the future of your business may depend on it.</span></span></div>
<span style="font-family: "verdana" , sans-serif;">
</span><br />
<span style="font-family: "verdana" , sans-serif;">
</span><br />
<div class="MsoNormal">
<span style="font-family: "verdana" , sans-serif;"><span style="font-size: small;">Still
with me? Good. To start, let’s do a little math: The FTC nabbed a total of 17
dealers for alleged ad violations over the course of almost 2 years. Now,
considering that there are over 60,000 new and used car dealers in America, it
would seem that the chances of having the FTC show up at your door are pretty
slim, right?</span></span></div>
<span style="font-family: "verdana" , sans-serif;">
</span><br />
<span style="font-family: "verdana" , sans-serif;">
</span><br />
<div class="MsoNormal">
<span style="font-family: "verdana" , sans-serif;"><span style="font-size: small;">Before
you breathe a sigh of relief and move on with business as usual, I suggest you
bear with me for a few more minutes as we explore the bigger picture about what
patterns are emerging with the FTC and other regulators and what it can mean to
your dealership.</span></span></div>
<span style="font-family: "verdana" , sans-serif;">
</span><br />
<span style="font-family: "verdana" , sans-serif;">
</span><br />
<div class="MsoNormal">
<span style="font-family: "verdana" , sans-serif;"><span style="font-size: small;"><b>What Did We
Learn From the “Operation Steer Clear” Press Conference?</b></span></span></div>
<span style="font-family: "verdana" , sans-serif;">
</span><br />
<span style="font-family: "verdana" , sans-serif;">
</span><br />
<div class="MsoNormal">
<span style="font-family: "verdana" , sans-serif;"><span style="font-size: small;">In
my humble opinion, this most recent action (and accompanying media blitz) gave
a great deal of insight into what’s going on in the minds and hearts of the dealer
cops. Let’s take a look at some takeaways from the January 9<sup>th</sup> Press
Conference:</span></span></div>
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<span style="font-family: "verdana" , sans-serif;"><span style="font-size: small;"><b>There’s a New Sheriff in Town.</b> Well, not exactly new, but it certainly
seems like it. The Dodd-Frank Act passed by Congress in 2010 gave the FTC new and
expanded authority regarding motor vehicle dealers.<b> </b>Even
though we haven’t heard all that much from them up until now, it’s important to
understand that<b> </b>while<b> </b>government
agencies may not move very quickly, they do move – especially when they
identify a target. Just because there have been relatively few FTC actions in
the last three years doesn’t mean that they haven’t been working on their
gameplan. In the press conference, the FTC was very forthcoming about the fact
that this is just the tip of the iceberg and made it abundantly clear that
their target of choice right now is auto dealerships. Jessica Rich, the
FTC’s director of the Bureau of Consumer Protection, cited the passage in the
Dodd-Frank Act that named the FTC as the “primary enforcers” of auto dealers.
“We took that mandate very seriously, and we are going to be bringing a lot of
enforcement in the auto area,” she said. “We have a lot of investigations in
the pipeline.” Rich also stated
“We would say that the timing of this has to do with the Dodd-Frank Act.”</span></span></div>
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<span style="font-family: "verdana" , sans-serif;"><span style="font-size: small;"><b>They’re Extending
Their Reach.</b>
Sure, there are plenty of car dealers and not very many enforcers, but don’t
let that lull you into a false sense of security. The FTC indicated in no
uncertain terms that they’re seeking to level the playing field by inviting
their friends to the party. They’re partnering
with local agencies in their investigations. Ms. Rich indicated that investigative
information sharing and enforcement partnering is taking place with state
agencies for state enforcement (including possible license revocation) in order
to expand enforcement reach where FTC does not have jurisdiction. </span></span></div>
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<span style="font-family: "verdana" , sans-serif;"><span style="font-size: small;">Sorry to bring up a name that’s so 2013, but the FTC also entered into a
“Memorandum of Understanding” with the CFPB. The two agencies have agreed
to meet regularly, compare notes on investigations, and share consumer
complaints. The FTC will mostly cooperate
with the CFPB on auto finance matters. Yep, even though the CFPB is “exempt”
from direct oversight of most dealers, the FTC sure isn’t. So don’t be
surprised if they start paying attention to your financing activities along
with your advertising.</span></span></div>
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<span style="font-family: "verdana" , sans-serif;"><span style="font-size: small;">The Dodd-Frank Act also gives state Attorneys General increased
enforcement authority for violations of federal consumer protection law as well
as state law such as Unfair and Deceptive Acts and Practices statutes. Richard
Cordray, the CFPB director and a former Ohio attorney general, has made clear
his desire to augment the CFPB’s power through attorneys general. So, it sounds
like the CFPB, FTC, and AGs will all be working together in chasing down what
they perceive as “big, bad car dealers”. Are you ready for this three-headed
monster?</span></span></div>
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<span style="font-family: "verdana" , sans-serif;"><span style="font-size: small;"><b>They’re Fishing Where the Big Fish and the
Little Fish Are.</b> The first
two FTC dealer advertising actions were in relatively small markets, but this time
they came to Southern California as this is considered the largest car buying
market in the country in their opinion. One of the California dealers was the
top-selling Honda dealer in the country in 2013. Both franchise and independent
dealers were cited. In other words, it seems that ALL dealers are being
targeted, so there’s nowhere to hide. These regulators apparently don’t buy into
the concepts of “too big to fail” or “too small to matter”.</span></span></div>
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<span style="font-family: "verdana" , sans-serif;"><span style="font-size: small;"><b>They’re Not Just Waiting for Something to
Happen.</b> Traditionally, dealers didn’t
have to worry much about compliance issues as long as they didn’t have too many
customers complaining. That’s not necessarily so anymore. According to Ms.
Rich, the agency has directed their internal enforcement division to get proactive
and aggressive in the automotive space. One of those directives is to proactively
review advertisements to supplement the traditional reactive investigations they’ve
relied on when they received consumer complaints. So it doesn’t matter if your
customers object to your advertising or not, you’re still at risk. The FTC will
gather violation information from not only consumer complaints, but state agencies
and their own monitoring.</span></span></div>
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<span style="font-family: "verdana" , sans-serif;"><span style="font-size: small;"><b>The Potential Downside is Huge.</b> While the FTC stated that they generally
don’t go for monetary fines on first action (although they may demand consumer
refunds), they will seek injunctive relief to stop specific conduct. Consent
Degrees or judgments will be put in place for a minimum of 20 Years. If there
are any new violations during that time, the FTC will seek aggressive
enforcement and fines. In addition, dealers under a consent decree or judgment
are generally required to put training in place, file reports periodically, and
maintain copies of their ads. All dealer
records, including ad records, must be kept for minimum of 5 years on a rolling
basis and the agency retains the right to conduct periodic compliance reviews.
How would you like having the FTC breathing down your neck for 20 years? Makes
it kind of tough to advertise aggressively with that kind of pressure doesn’t
it? Your competitors will no doubt be delighted.</span></span></div>
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<span style="font-family: "verdana" , sans-serif;"><span style="font-size: small;">Violations of the consent decree
can result in fines up to $16,000 per occurrence. Fines are generally
calculated on a per-occurrence/per-day basis. Consumer transactions in the ad period,
specific vehicle sales, and advertising reach of the ad can all be factors.
When asked how the fines will be calculated, Ms. Rich stated that if an
unlawful advertisement goes up on Day 1 and the dealer keeps it up until Day 90,
or the FTC enforcement unit catches it on Day 90, the dealer would be liable
for 90 days of violations at $16,000 per day. Ouch!</span></span></div>
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<span style="font-family: "verdana" , sans-serif;"><span style="font-size: small;">And of course, this doesn’t
include potential enforcement actions taken by state agencies for the same
violations, including possible action against your dealer license, or the
reputation damage you will suffer. So, for those of you who think that the
potential downside is just a slap on the wrist or that fines are a “cost of
doing business”, it may be time to think again.</span></span></div>
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<span style="font-family: "verdana" , sans-serif;"><span style="font-size: small;"><b>What Else is Going on at the FTC?</b></span></span></div>
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<span style="font-family: "verdana" , sans-serif;"><span style="font-size: small;">Although it may seem that the FTC is only the “dealer advertising cop”,
they are expanding their reach in several other areas. According to the FTC, since
2011 they have been gathering information on possible consumer protection
issues that may arise in the sale, financing or lease of motor vehicles through
a series of roundtables and by seeking public comments. Some areas they are
apparently looking at include, but are not limited to, spot deliveries; payment
packing; vehicle leasing; unfair, deceptive, and abusive practices; and
arbitration agreements. </span></span></div>
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<span style="font-family: "verdana" , sans-serif;"><span style="font-size: small;">Recent FTC enforcement actions include Buyers Guide, Information Safeguards,
and Risk Based Pricing Notice violations.</span></span></div>
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<span style="font-family: "verdana" , sans-serif;"><span style="font-size: small;"><b>So How Do You
Protect Yourself From this Onslaught?</b></span></span></div>
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<span style="font-family: "verdana" , sans-serif;"><span style="font-size: small;">It’s
actually pretty simple, but it’s not easy…unless you get help.</span></span></div>
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<span style="font-family: "verdana" , sans-serif;"><span style="font-size: small;">·<span style="-moz-font-feature-settings: normal; -moz-font-language-override: normal; font-size-adjust: none; font-stretch: normal; font-style: normal; font-variant: normal; font-weight: normal; line-height: normal;">
</span>First, make
a commitment to take compliance seriously. The Ostrich Syndrome (sticking your
head in the sand), just doesn’t cut it anymore. These regulators are not going
away. It’s time to invest in a comprehensive compliance program.</span></span></div>
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<span style="font-family: "verdana" , sans-serif;"><span style="font-size: small;">·<span style="-moz-font-feature-settings: normal; -moz-font-language-override: normal; font-size-adjust: none; font-stretch: normal; font-style: normal; font-variant: normal; font-weight: normal; line-height: normal;">
</span>Ensure that
your entire staff is properly trained in all areas of compliance, including
advertising. The days of having just your F&I staff compliance-trained are
behind us. The FTC and other regulators are focusing on ALL aspects of vehicle
sales and leasing, from “the curb to the keys”. Salespeople, sales managers,
and F&I personnel all need to know the rules and be held accountable for
ethical behavior.</span></span></div>
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<span style="font-family: "verdana" , sans-serif;"><span style="font-size: small;">·<span style="-moz-font-feature-settings: normal; -moz-font-language-override: normal; font-size-adjust: none; font-stretch: normal; font-style: normal; font-variant: normal; font-weight: normal; line-height: normal;">
</span>If you’re
not sure, don’t guess! Invest in an advertising review service and give your
staff access to expert advice such as a compliance hotline. It may cost a few
bucks, but it’s a small price to pay.</span></span></div>
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<span style="font-family: "verdana" , sans-serif;"><span style="font-size: small;">·<span style="-moz-font-feature-settings: normal; -moz-font-language-override: normal; font-size-adjust: none; font-stretch: normal; font-style: normal; font-variant: normal; font-weight: normal; line-height: normal;">
</span>Be selective
about where you get your advice. Chances are your F&I product providers are
not really “experts” in compliance, nor are your advertising agencies or
marketing companies, despite claims to the contrary. Automotive compliance is a
very specialized area that requires full time focus by industry experts – it’s
a constantly moving target.</span></span></div>
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<span style="font-family: "verdana" , sans-serif;"><span style="font-size: small;">If you
really feel that your dealership has a handle on compliance, good for you. But
just keep in mind that the 10 dealers that got caught up in this latest action
probably thought they had it “handled” too. Better to be safe than sorry.</span></span></div>
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<span style="font-family: "verdana" , sans-serif;">
</span>Anonymoushttp://www.blogger.com/profile/03663210774947932184noreply@blogger.com1tag:blogger.com,1999:blog-4267117031967630712.post-17462256548793522812014-01-18T10:34:00.000-08:002014-01-18T10:34:35.437-08:00Dealer Compliance Trends to Watch in 2014<!--[if gte mso 9]><xml>
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<![endif]--><b style="mso-bidi-font-weight: normal;"><span style="font-family: "Arial","sans-serif"; font-size: 11.0pt;"> </span></b>
<br />
<div style="margin-bottom: .0001pt; margin: 0in;">
<b style="mso-bidi-font-weight: normal;"><span style="font-family: "Arial","sans-serif"; font-size: 11.0pt;">CFPB
Happenings:</span></b></div>
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<br /></div>
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<span style="font-family: Symbol; font-size: 11.0pt; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;"><span style="mso-list: Ignore;">·<span style="font: 7.0pt "Times New Roman";">
</span></span></span><span style="font-family: "Arial","sans-serif"; font-size: 11.0pt;">The
CFPB does not have direct supervisory authority over franchised dealers but we’ve
already seen how they are attempting to regulate auto dealers through the financial
institutions that they assign their contracts to. The CFPB also extends their
regulatory reach by partnering with and sharing complaint investigations and
enforcement initiatives with other agencies, such as the FTC and state
enforcement agencies that DO have direct supervisory authority over automotive dealers.
Case in point…</span></div>
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<br /></div>
<div style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .5in; margin-right: 0in; margin-top: 0in;">
<span style="font-family: "Arial","sans-serif"; font-size: 11.0pt;">CFPB
is soliciting consumer complaints on their website: “Currently, we are handling
complaints about vehicle loans and installment loans with large banks. If a
complaint is against a large bank, we will handle it directly. If however a
complaint involves a small bank or a nonbank, we will refer it to another
federal agency with the authority to handle it. If this happens, we will
immediately notify the consumer and identify which agency the complaint was
referred to. Over time we will expand our complaint handling functionality to
include nonbank auto lenders in order to more directly assist consumers with
these complaints.”</span></div>
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<br /></div>
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<span style="font-family: Symbol; font-size: 11.0pt; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;"><span style="mso-list: Ignore;">·<span style="font: 7.0pt "Times New Roman";">
</span></span></span><span style="font-family: "Arial","sans-serif"; font-size: 11.0pt;">The
CFPB grew from about 970 employees as of the end of FY 2012 to 1,335 employees
as of the end of FY 2013. Their budget grew from $162 million in 2011 to $518
million in 2013. Jeff Langer, an experienced attorney with a strong industry
background, will be joining the CFPB to serve as Assistant Director,
Installment and Liquidity Lending Markets and overseeing auto and student
lending. </span></div>
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<br /></div>
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<span style="font-family: Symbol; font-size: 11.0pt; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;"><span style="mso-list: Ignore;">·<span style="font: 7.0pt "Times New Roman";">
</span></span></span><span style="font-family: "Arial","sans-serif"; font-size: 11.0pt;">The
CFPB’s top priority is that every consumer transaction be transparent and
properly documented. Director Richard Corday stated “if anyone is
uncertain about our resolve, let me do my best to dispel that uncertainty. We
will make every effort to do the job that Congress has set out for us, which is
to identify and root out unlawful, discriminatory lending practices, including
practices that, in the words of the Supreme Court, are “fair in form but
discriminatory in operation.” We intend to create a fair marketplace for all
consumers.” </span></div>
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<br /></div>
<div style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .5in; margin-right: 0in; margin-top: 0in; mso-list: l3 level1 lfo1; text-indent: -.25in;">
<span style="font-family: Symbol; font-size: 11.0pt; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;"><span style="mso-list: Ignore;">·<span style="font: 7.0pt "Times New Roman";">
</span></span></span><span style="font-family: "Arial","sans-serif"; font-size: 11.0pt;">Through
its scrutiny of auto lending, the CFPB is also examining how consumers fare
with ancillary products, such as theft protection, service contracts and GAP.
This will likely be more disruptive than the regulators’ interest in dealer
mark-up. When selling F&I products, dealers should make sure that the
consumer practices and information for these products are robust and
transparent. Excessive markups on these products can lead to lawsuits by
customers, scrutiny by regulators and a bad reputation in the dealership's
community. Whenever the same product or service is offered to a customer at a
different price than other customers are charged, a claim of discrimination
becomes a possibility – especially when those sales are made to “protected
classes”. </span></div>
<div class="MsoNormal">
<br /></div>
<div style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .5in; margin-right: 0in; margin-top: 0in;">
<span style="font-family: "Arial","sans-serif"; font-size: 11.0pt;">Charging
"whatever the market will bear” for F&I products is increasingly
dangerous. In a few states, prices are regulated by the state, but for the most
part there is little regulation so far. Dealers should consider price caps or
maximum markups regardless of whether they are state-regulated or not. In
addition, fair and consistent pricing will likely lead to higher product
penetrations and more profits.</span></div>
<div style="margin-bottom: .0001pt; margin: 0in;">
<br /></div>
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<span style="font-family: Symbol; font-size: 11.0pt; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;"><span style="mso-list: Ignore;">·<span style="font: 7.0pt "Times New Roman";">
</span></span></span><span style="font-family: "Arial","sans-serif"; font-size: 11.0pt;">Protecting
service members from creditor abuse is also priority for the CFPB. Last June,
the bureau ordered U.S. Bank and Dealers' Financial Services to refund a total
of $6.5 million to military service members who received auto loans through the
MILES program. The CFPB said the companies sometimes minimized the cost and
exaggerated coverage of extended service contracts and GAP. The bureau ordered
DFS to rewrite disclosures to emphasize that add-on products are optional, that
they don't have to be financed along with the vehicle, and that financing the
products costs more than paying cash. The charges included:</span></div>
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<span style="font-family: "Arial","sans-serif"; font-size: 11.0pt; mso-fareast-font-family: Arial;"><span style="mso-list: Ignore;">1.<span style="font: 7.0pt "Times New Roman";">
</span></span></span><u><span style="font-family: "Arial","sans-serif"; font-size: 11.0pt;">Understating the costs of the vehicle service contract</span></u><span style="font-family: "Arial","sans-serif"; font-size: 11.0pt;">: DFS claimed in
marketing materials that the vehicle service contract would add just “a few
dollars” to the customer’s monthly payment when it actually added an average of
$43 per month.</span></div>
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<span style="font-family: "Arial","sans-serif"; font-size: 11.0pt; mso-fareast-font-family: Arial;"><span style="mso-list: Ignore;">2.<span style="font: 7.0pt "Times New Roman";">
</span></span></span><u><span style="font-family: "Arial","sans-serif"; font-size: 11.0pt;">Understating the costs of the insurance</span></u><span style="font-family: "Arial","sans-serif"; font-size: 11.0pt;">: Similarly, DFS told
some customers that the insurance policy would cost only a few cents a day,
when the true cost averaged 42 cents a day, or more than $100 a year.</span></div>
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<span style="font-family: "Arial","sans-serif"; font-size: 11.0pt; mso-fareast-font-family: Arial;"><span style="mso-list: Ignore;">3.<span style="font: 7.0pt "Times New Roman";">
</span></span></span><u><span style="font-family: "Arial","sans-serif"; font-size: 11.0pt;">Misleading consumers about product benefits</span></u><span style="font-family: "Arial","sans-serif"; font-size: 11.0pt;">: The MILES marketing
materials also deceptively suggested that the vehicle service contract would
protect servicemembers from all expensive car repairs, when many basic parts
were not covered.</span></div>
<div style="margin-bottom: .0001pt; margin: 0in;">
<br /></div>
<div style="margin-bottom: .0001pt; margin: 0in;">
<b style="mso-bidi-font-weight: normal;"><span style="font-family: "Arial","sans-serif"; font-size: 11.0pt;">The CFPB
has been the “Shiny Object” but…</span></b></div>
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<br /></div>
<div style="margin-bottom: .0001pt; margin: 0in;">
<b style="mso-bidi-font-weight: normal;"><span style="font-family: "Arial","sans-serif"; font-size: 11.0pt;">Other
Regulators are at Work:</span></b></div>
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<br /></div>
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<span style="font-family: Symbol; font-size: 11.0pt; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;"><span style="mso-list: Ignore;">·<span style="font: 7.0pt "Times New Roman";">
</span></span></span><span style="font-family: "Arial","sans-serif"; font-size: 11.0pt;">The Dodd - Frank Act passed by Congress in
2010 gave the FTC new and expanded authority regarding motor vehicle dealers.</span><span style="font-family: "Arial","sans-serif"; font-size: 11.0pt;"> </span></div>
<div style="margin-bottom: .0001pt; margin: 0in;">
<br /></div>
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<span style="font-family: Symbol; font-size: 11.0pt; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;"><span style="mso-list: Ignore;">·<span style="font: 7.0pt "Times New Roman";">
</span></span></span><span style="font-family: "Arial","sans-serif"; font-size: 11.0pt;">Although
it may seem that the FTC is only the “dealer advertising cops”, they are
expanding their reach in several other areas.</span></div>
<div style="margin-bottom: .0001pt; margin: 0in;">
<br /></div>
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<span style="font-family: Symbol; font-size: 11.0pt; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;"><span style="mso-list: Ignore;">·<span style="font: 7.0pt "Times New Roman";">
</span></span></span><span style="font-family: "Arial","sans-serif"; font-size: 11.0pt;">Since
2011, the FTC has been gathering information on possible consumer protection
issues that may arise in the sale, financing or lease of motor vehicles through
a series of roundtables and by seeking public comments. Some areas the FTC is
looking at are:</span></div>
<div class="MsoListParagraphCxSpFirst" style="margin-left: 1.0in; mso-add-space: auto; mso-list: l5 level1 lfo3; tab-stops: list 1.0in; text-indent: -.25in;">
<span style="font-family: Symbol; font-size: 10.0pt; mso-bidi-font-family: Symbol; mso-bidi-font-size: 11.0pt; mso-fareast-font-family: Symbol;"><span style="mso-list: Ignore;">·<span style="font: 7.0pt "Times New Roman";">
</span></span></span><span style="font-family: "Arial","sans-serif"; font-size: 11.0pt;">Dealer
interest rate markups</span></div>
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<span style="font-family: Symbol; font-size: 10.0pt; mso-bidi-font-family: Symbol; mso-bidi-font-size: 11.0pt; mso-fareast-font-family: Symbol;"><span style="mso-list: Ignore;">·<span style="font: 7.0pt "Times New Roman";">
</span></span></span><span style="font-family: "Arial","sans-serif"; font-size: 11.0pt;">Spot
Delivery</span></div>
<div class="MsoListParagraphCxSpLast" style="margin-left: 1.0in; mso-add-space: auto; mso-list: l5 level1 lfo3; tab-stops: list 1.0in; text-indent: -.25in;">
<span style="font-family: Symbol; font-size: 10.0pt; mso-bidi-font-family: Symbol; mso-bidi-font-size: 11.0pt; mso-fareast-font-family: Symbol;"><span style="mso-list: Ignore;">·<span style="font: 7.0pt "Times New Roman";">
</span></span></span><span style="font-family: "Arial","sans-serif"; font-size: 11.0pt;">Payment
Packing</span></div>
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<span style="font-family: Symbol; font-size: 10.0pt; mso-bidi-font-family: Symbol; mso-bidi-font-size: 11.0pt; mso-fareast-font-family: Symbol;"><span style="mso-list: Ignore;">·<span style="font: 7.0pt "Times New Roman";">
</span></span></span><span style="font-family: "Arial","sans-serif"; font-size: 11.0pt;">Vehicle
Leasing</span></div>
<div style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: 1.0in; margin-right: 0in; margin-top: 0in; mso-list: l5 level1 lfo3; tab-stops: list 1.0in; text-indent: -.25in;">
<span style="font-family: Symbol; font-size: 10.0pt; mso-bidi-font-family: Symbol; mso-bidi-font-size: 11.0pt; mso-fareast-font-family: Symbol;"><span style="mso-list: Ignore;">·<span style="font: 7.0pt "Times New Roman";">
</span></span></span><span style="font-family: "Arial","sans-serif"; font-size: 11.0pt;">Unfair
and Deceptive Practices</span></div>
<div style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .5in; margin-right: 0in; margin-top: 0in;">
<br /></div>
<div style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .5in; margin-right: 0in; margin-top: 0in; mso-list: l3 level1 lfo1; text-indent: -.25in;">
<span style="font-family: Symbol; font-size: 11.0pt; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;"><span style="mso-list: Ignore;">·<span style="font: 7.0pt "Times New Roman";">
</span></span></span><span style="font-family: "Arial","sans-serif"; font-size: 11.0pt;">Jessica
Rich, the FTC’s director of the Bureau of Consumer Protection, cited the
passage in the Dodd-Frank Wall Street Reform and Consumer Act — the law that
created the Consumer Financial Protection Bureau when it was passed in 2010 —
that named the FTC as the “primary enforcers” of auto dealers. “We took that
mandate very seriously, and we are going to be bringing a lot of enforcement in
the auto area,” she said. “We have a lot of investigations in the pipeline.”</span></div>
<div style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .5in; margin-right: 0in; margin-top: 0in; mso-list: l3 level1 lfo1; text-indent: -.25in;">
<span style="font-family: Symbol; font-size: 11.0pt; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;"><span style="mso-list: Ignore;">·<span style="font: 7.0pt "Times New Roman";">
</span></span></span><span style="font-family: "Arial","sans-serif"; font-size: 11.0pt;">Additionally,
the CFPB entered into a “Memorandum of Understanding” with the FTC. The
two agencies have agreed to meet regularly, compare notes on investigations,
and share consumer complaints.</span></div>
<div style="margin-bottom: .0001pt; margin: 0in;">
<br /></div>
<div style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .5in; margin-right: 0in; margin-top: 0in; mso-list: l3 level1 lfo1; text-indent: -.25in;">
<span style="font-family: Symbol; font-size: 11.0pt; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;"><span style="mso-list: Ignore;">·<span style="font: 7.0pt "Times New Roman";">
</span></span></span><span style="font-family: "Arial","sans-serif"; font-size: 11.0pt;">The
Dodd-Frank Act also gives state Attorneys General (with which the CFPB also has
cooperation agreements) increased enforcement authority for violations of
federal consumer protection law as well as state law such as Unfair and
Deceptive Acts and Practices statutes. The CFPB, FTC, and AGs will now be
working together. Richard Cordray, the CFPB director and a former Ohio attorney
general, has made clear his desire to augment the CFPB’s power through
attorneys general.</span></div>
<div style="margin-bottom: .0001pt; margin: 0in;">
<br /></div>
<div style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .5in; margin-right: 0in; margin-top: 0in; mso-list: l3 level1 lfo1; text-indent: -.25in;">
<span style="font-family: Symbol; font-size: 11.0pt; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;"><span style="mso-list: Ignore;">·<span style="font: 7.0pt "Times New Roman";">
</span></span></span><span style="font-family: "Arial","sans-serif"; font-size: 11.0pt;">The
CFPB and DOJ also signed an agreement that has facilitated strong coordination
between the two agencies on fair lending enforcement. Under this agreement, the
CFPB will refer matters to DOJ when the CFPB has reason to believe there is a
pattern or practice of lending discrimination. </span></div>
<div style="margin-bottom: .0001pt; margin: 0in;">
<br /></div>
<div style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .5in; margin-right: 0in; margin-top: 0in; mso-list: l3 level1 lfo1; text-indent: -.25in;">
<span style="font-family: Symbol; font-size: 11.0pt; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;"><span style="mso-list: Ignore;">·<span style="font: 7.0pt "Times New Roman";">
</span></span></span><span style="font-family: "Arial","sans-serif"; font-size: 11.0pt;">On
Monday, January 13, 2014, the US DOJ and US Attorney’s office announced a
lawsuit against two Buy Here Pay Here independent used car dealerships for violating
the federal Equal Credit Opportunity Act (ECOA) and violating the state’s
Unfair and Deceptive Trade Practices Act.<span style="mso-spacerun: yes;">
</span></span></div>
<div style="margin-bottom: .0001pt; margin: 0in;">
<br /></div>
<div style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .5in; margin-right: 0in; margin-top: 0in; mso-list: l3 level1 lfo1; text-indent: -.25in;">
<span style="font-family: Symbol; font-size: 11.0pt; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;"><span style="mso-list: Ignore;">·<span style="font: 7.0pt "Times New Roman";">
</span></span></span><span style="font-family: "Arial","sans-serif"; font-size: 11.0pt;">The
case claims sited grounds for the actions stemmed from dealers were ““reverse
redlining” by targeting African-American customers with installment sale contracts
containing inflated sales prices, down payments and increased interest rates
without meaningfully assessing the customers’ credit.” </span></div>
<div style="margin-bottom: .0001pt; margin: 0in;">
<br /></div>
<div style="margin-bottom: .0001pt; margin: 0in;">
<b style="mso-bidi-font-weight: normal;"><span style="font-family: "Arial","sans-serif"; font-size: 11.0pt;">Recent
F&I-Related Enforcement Targets:</span></b></div>
<div style="margin-bottom: .0001pt; margin: 0in;">
<br /></div>
<div style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .5in; margin-right: 0in; margin-top: 0in; mso-list: l2 level1 lfo4; tab-stops: list .5in; text-indent: -.25in;">
<span style="font-family: Symbol; font-size: 10.0pt; mso-bidi-font-family: Symbol; mso-bidi-font-size: 11.0pt; mso-fareast-font-family: Symbol;"><span style="mso-list: Ignore;">·<span style="font: 7.0pt "Times New Roman";">
</span></span></span><span style="font-family: "Arial","sans-serif"; font-size: 11.0pt;">Automotive
Lenders - The CFPB and DOJ ratcheted up the pressure in December with a consent
order in which Ally Financial Inc. settled accusations of discrimination for
$98 million. Ally also agreed to monitor auto dealers more closely and reduce
what Ally calls the "perceived disparity" that minorities may face
obtaining auto loans. </span></div>
<div style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .5in; margin-right: 0in; margin-top: 0in;">
<br /></div>
<div style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .5in; margin-right: 0in; margin-top: 0in;">
<span style="font-family: "Arial","sans-serif"; font-size: 11.0pt;">This
could also lead to some consumers who get a refund suing the dealership that
allegedly discriminated against them. Ally will implement a compliance program
to prevent future discrimination. The program will include dealer education;
prompt corrective action against dealers when there are dealer disparities; and
portfolio-wide analysis of pricing data for disparities. Until Ally’s
compliance program effectively eliminates disparities, Ally will pay harmed
consumers each year under the order. In the alternative, <i style="mso-bidi-font-style: normal;">Ally can move away from dealer markups to a non-discretionary dealer
compensation structure,</i> which would eliminate its obligation to monitor the
fair lending risk of ongoing dealer markups. </span></div>
<div style="margin-bottom: .0001pt; margin: 0in;">
<br /></div>
<div style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .5in; margin-right: 0in; margin-top: 0in; mso-list: l2 level1 lfo4; tab-stops: list .5in; text-indent: -.25in;">
<span style="font-family: Symbol; font-size: 10.0pt; mso-bidi-font-family: Symbol; mso-bidi-font-size: 11.0pt; mso-fareast-font-family: Symbol;"><span style="mso-list: Ignore;">·<span style="font: 7.0pt "Times New Roman";">
</span></span></span><span style="font-family: "Arial","sans-serif"; font-size: 11.0pt;">In
a direct dealer case, last September a Los Angeles dealer settled with the DOJ
for $125k for alleged rate markup discrimination.</span></div>
<div style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .5in; margin-right: 0in; margin-top: 0in;">
<br /></div>
<div style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .5in; margin-right: 0in; margin-top: 0in; mso-list: l2 level1 lfo4; tab-stops: list .5in; text-indent: -.25in;">
<span style="font-family: Symbol; font-size: 10.0pt; mso-bidi-font-family: Symbol; mso-bidi-font-size: 11.0pt; mso-fareast-font-family: Symbol;"><span style="mso-list: Ignore;">·<span style="font: 7.0pt "Times New Roman";">
</span></span></span><span style="font-family: "Arial","sans-serif"; font-size: 11.0pt;">There
has been an uptick in enforcement actions for falsification of credit
applications, including:</span></div>
<div style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: 1.0in; margin-right: 0in; margin-top: 0in; mso-list: l2 level2 lfo4; tab-stops: list 1.0in; text-indent: -.25in;">
<span style="font-family: "Courier New"; font-size: 10.0pt; mso-bidi-font-size: 11.0pt; mso-fareast-font-family: "Courier New";"><span style="mso-list: Ignore;">o<span style="font: 7.0pt "Times New Roman";">
</span></span></span><span style="font-family: "Arial","sans-serif"; font-size: 11.0pt;">A
Chicago-area dealer in December</span></div>
<div style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: 1.0in; margin-right: 0in; margin-top: 0in; mso-list: l2 level2 lfo4; tab-stops: list 1.0in; text-indent: -.25in;">
<span style="font-family: "Courier New"; font-size: 10.0pt; mso-bidi-font-size: 11.0pt; mso-fareast-font-family: "Courier New";"><span style="mso-list: Ignore;">o<span style="font: 7.0pt "Times New Roman";">
</span></span></span><span style="font-family: "Arial","sans-serif"; font-size: 11.0pt;">2
Charleston-area dealers on December</span></div>
<div style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: 1.0in; margin-right: 0in; margin-top: 0in; mso-list: l2 level2 lfo4; tab-stops: list 1.0in; text-indent: -.25in;">
<span style="font-family: "Courier New"; font-size: 10.0pt; mso-bidi-font-size: 11.0pt; mso-fareast-font-family: "Courier New";"><span style="mso-list: Ignore;">o<span style="font: 7.0pt "Times New Roman";">
</span></span></span><span style="font-family: "Arial","sans-serif"; font-size: 11.0pt;">A
Birmingham dealer in October</span></div>
<div style="margin-bottom: .0001pt; margin: 0in;">
<br /></div>
<div style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .5in; margin-right: 0in; margin-top: 0in; mso-list: l2 level1 lfo4; tab-stops: list .5in; text-indent: -.25in;">
<span style="font-family: Symbol; font-size: 10.0pt; mso-bidi-font-family: Symbol; mso-bidi-font-size: 11.0pt; mso-fareast-font-family: Symbol;"><span style="mso-list: Ignore;">·<span style="font: 7.0pt "Times New Roman";">
</span></span></span><span style="font-family: "Arial","sans-serif"; font-size: 11.0pt;">In
September 2013, A Washington dealer forfeited $1.75 million for failure to
report cash transactions exceeding $10,000.</span></div>
<div style="margin-bottom: .0001pt; margin: 0in;">
<br /></div>
<div style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .5in; margin-right: 0in; margin-top: 0in; mso-list: l2 level1 lfo4; tab-stops: list .5in; text-indent: -.25in;">
<span style="font-family: Symbol; font-size: 10.0pt; mso-bidi-font-family: Symbol; mso-bidi-font-size: 11.0pt; mso-fareast-font-family: Symbol;"><span style="mso-list: Ignore;">·<span style="font: 7.0pt "Times New Roman";">
</span></span></span><span style="font-family: "Arial","sans-serif"; font-size: 11.0pt;">Risk
Based Pricing Notices<b style="mso-bidi-font-weight: normal;"> - </b>The Federal
Trade Commission announced in December the settlement of its first
enforcement action for alleged violations of the FCRA risk-based pricing rule. Under
the settlement, Time Warner Cable agreed to pay a civil penalty of $1.9 million
to settle charges of failing to provide the required risk-based pricing
notices to consumers. In addition to imposing the $1.9 million civil penalty,
the settlement enjoins TWC from failing to comply with the Rule.</span></div>
<div style="margin-bottom: .0001pt; margin: 0in;">
<br /></div>
<div style="margin-bottom: .0001pt; margin: 0in;">
<b style="mso-bidi-font-weight: normal;"><span style="font-family: "Arial","sans-serif"; font-size: 11.0pt;">Other
Recent Dealer Issues:</span></b></div>
<div style="margin-bottom: .0001pt; margin: 0in;">
<br /></div>
<div style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .5in; margin-right: 0in; margin-top: 0in; mso-list: l1 level1 lfo5; tab-stops: list .5in; text-indent: -.25in;">
<span style="font-family: Symbol; font-size: 10.0pt; mso-bidi-font-family: Symbol; mso-bidi-font-size: 11.0pt; mso-fareast-font-family: Symbol;"><span style="mso-list: Ignore;">·<span style="font: 7.0pt "Times New Roman";">
</span></span></span><span style="font-family: "Arial","sans-serif"; font-size: 11.0pt;">On
January 9, 2014— The FTC announced “Operation Steer Clear”, an aggressive
action to halt false vehicle advertising; 10 motor vehicle dealers, franchised
and independent were investigated and prosecuted in cooperation with state regulatory
authorities. Settlements with Consent Decree terms up to 20 Years were reached
in 9 of the 10 cases.<span style="mso-spacerun: yes;"> </span></span></div>
<div style="margin-bottom: .0001pt; margin: 0in;">
<br /></div>
<h1 style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .5in; margin-right: 0in; margin-top: 0in; mso-list: l1 level1 lfo5; tab-stops: list .5in; text-indent: -.25in;">
<span style="font-family: Symbol; font-size: 10.0pt; font-weight: normal; mso-bidi-font-family: Symbol; mso-bidi-font-size: 11.0pt; mso-bidi-font-weight: bold; mso-fareast-font-family: Symbol;"><span style="mso-list: Ignore;">·<span style="font: 7.0pt "Times New Roman";">
</span></span></span><span style="font-family: "Arial","sans-serif"; font-size: 11.0pt; font-weight: normal; mso-bidi-font-weight: bold;">In 2013, The FTC cited 11 Arkansas
Dealers for not displaying Buyers Guides.</span></h1>
<h1 style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .5in; margin-right: 0in; margin-top: 0in; mso-list: l1 level1 lfo5; tab-stops: list .5in; text-indent: -.25in;">
<span style="font-family: Symbol; font-size: 10.0pt; font-weight: normal; mso-bidi-font-family: Symbol; mso-bidi-font-size: 11.0pt; mso-bidi-font-weight: bold; mso-fareast-font-family: Symbol;"><span style="mso-list: Ignore;">·<span style="font: 7.0pt "Times New Roman";">
</span></span></span><span style="font-family: "Arial","sans-serif"; font-size: 11.0pt; font-weight: normal; mso-bidi-font-weight: bold;">In June of 2012, the FTC cited a
Georgia dealer for violating the Information Safeguards Rule.</span></h1>
<div style="margin-bottom: .0001pt; margin: 0in;">
<br /></div>
<div style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .5in; margin-right: 0in; margin-top: 0in; mso-list: l1 level1 lfo5; tab-stops: list .5in; text-indent: -.25in;">
<span style="font-family: Symbol; font-size: 10.0pt; mso-bidi-font-family: Symbol; mso-bidi-font-size: 11.0pt; mso-fareast-font-family: Symbol;"><span style="mso-list: Ignore;">·<span style="font: 7.0pt "Times New Roman";">
</span></span></span><span style="font-family: "Arial","sans-serif"; font-size: 11.0pt;">This
past December, the CFPB released preliminary research on the use of arbitration
clauses in connection with consumer financial products and services. This is
significant since class action complaints against auto dealers have increased
since the early 2000s.</span></div>
<div style="margin-bottom: .0001pt; margin: 0in;">
<br /></div>
<div style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .5in; margin-right: 0in; margin-top: 0in; mso-list: l1 level1 lfo5; tab-stops: list .5in; text-indent: -.25in;">
<span style="font-family: Symbol; font-size: 10.0pt; mso-bidi-font-family: Symbol; mso-bidi-font-size: 11.0pt; mso-fareast-font-family: Symbol;"><span style="mso-list: Ignore;">·<span style="font: 7.0pt "Times New Roman";">
</span></span></span><span style="font-family: "Arial","sans-serif"; font-size: 11.0pt;">In
November, the NY attorney general settled with a dealer for $135k.The dealer
was cited with adding a bogus $499 “administrative fee”.</span></div>
<div style="margin-bottom: .0001pt; margin: 0in;">
<br /></div>
<div style="margin-bottom: .0001pt; margin: 0in;">
<b style="mso-bidi-font-weight: normal;"><span style="font-family: "Arial","sans-serif"; font-size: 11.0pt;">Politics:</span></b></div>
<div style="margin-bottom: .0001pt; margin: 0in;">
<br /></div>
<div style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .5in; margin-right: 0in; margin-top: 0in; mso-list: l0 level1 lfo6; tab-stops: list .5in; text-indent: -.25in;">
<span style="font-family: Symbol; font-size: 10.0pt; mso-bidi-font-family: Symbol; mso-bidi-font-size: 11.0pt; mso-fareast-font-family: Symbol;"><span style="mso-list: Ignore;">·<span style="font: 7.0pt "Times New Roman";">
</span></span></span><span style="font-family: "Arial","sans-serif"; font-size: 11.0pt;">Sen.
Elizabeth Warren cited a study conducted by the Bipartisan Policy Center that
calls for Congress to close the dealer loophole. “It makes no sense to me that
there should be any exception here for consumers who are being tricked out of
billions of dollars every year on car loans,” Warren said.</span></div>
<div style="margin-bottom: .0001pt; margin: 0in;">
<br /></div>
<div style="margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .5in; margin-right: 0in; margin-top: 0in; mso-list: l0 level1 lfo6; tab-stops: list .5in; text-indent: -.25in;">
<span style="font-family: Symbol; font-size: 10.0pt; mso-bidi-font-family: Symbol; mso-bidi-font-size: 11.0pt; mso-fareast-font-family: Symbol;"><span style="mso-list: Ignore;">·<span style="font: 7.0pt "Times New Roman";">
</span></span></span><span style="font-family: "Arial","sans-serif"; font-size: 11.0pt;">You
never know how this will play out, but high-profile cases like Ally, MILES, and
“deceptive” dealer advertising actions set the “anti-dealer” tone.</span></div>
Anonymoushttp://www.blogger.com/profile/03663210774947932184noreply@blogger.com0tag:blogger.com,1999:blog-4267117031967630712.post-90617354332683086202014-01-02T20:10:00.002-08:002014-01-03T16:02:08.926-08:00F&I Trends to Watch in 2014<div class="separator" style="clear: both; text-align: center;">
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<div class="separator" style="clear: both; text-align: center;">
<a href="http://3.bp.blogspot.com/-cU4M6yhc5iA/Ur8tPW908bI/AAAAAAAAAT4/1wD5z5pmH0s/s1600/lawsuit.jpg" imageanchor="1" style="clear: right; float: right; margin-bottom: 1em; margin-left: 1em;"><img border="0" height="149" src="http://3.bp.blogspot.com/-cU4M6yhc5iA/Ur8tPW908bI/AAAAAAAAAT4/1wD5z5pmH0s/s200/lawsuit.jpg" width="200" /></a></div>
<div style="margin-bottom: .0001pt; margin: 0in;">
<b><span style="font-family: "Verdana","sans-serif"; font-size: 10.0pt;">CFPB and DOJ Order Ally to Pay $80 Million
to Consumers Harmed by Discriminatory Auto Loan Pricing</span></b></div>
<div style="margin-bottom: .0001pt; margin: 0in;">
<i><span style="font-family: "Verdana","sans-serif"; font-size: 10.0pt;">Ally to Pay Additional $18 Million in Civil
Penalties for Harming More Than 235,000 Minority Borrowers</span></i><span style="font-family: "Verdana","sans-serif"; font-size: 10.0pt;"></span></div>
<div style="margin-bottom: .0001pt; margin: 0in;">
<span style="font-family: "Verdana","sans-serif"; font-size: 10.0pt;">WASHINGTON, D.C. <b><span style="font-family: "Verdana","sans-serif";">—</span></b> The Consumer
Financial Protection Bureau (CFPB) and Department of Justice (DOJ) today
ordered Ally Financial Inc. and Ally Bank (Ally) to pay $80 million in damages
to harmed African-American, Hispanic, and Asian and Pacific Islander borrowers
and $18 million in penalties. The CFPB and DOJ determined that more than
235,000 minority borrowers paid higher interest rates for their auto loans
between April 2011 and December 2013 because of Ally’s discriminatory pricing
system. Today’s orders represent the federal government’s largest auto loan
discrimination settlement in history. </span></div>
<div style="margin-bottom: .0001pt; margin: 0in;">
<span style="font-family: "Verdana","sans-serif"; font-size: 10.0pt;"><a href="http://www.consumerfinance.gov/newsroom/cfpb-and-doj-order-ally-to-pay-80-million-to-consumers-harmed-by-discriminatory-auto-loan-pricing/" target="_blank">Click Here to Read Full Story in consumerfinance.gov</a></span></div>
<h1 style="margin-bottom: .0001pt; margin: 0in;">
<span style="font-family: "Verdana","sans-serif"; font-size: 10.0pt;">Car dealer accused of trying to get fraud
witness — his uncle — killed </span></h1>
<div style="margin-bottom: .0001pt; margin: 0in;">
<span style="font-family: "Verdana","sans-serif"; font-size: 10.0pt;">A suburban car dealer plotted to kill his
uncle in a doomed attempt to beat a federal fraud case, prosecutors allege.</span></div>
<div style="margin-bottom: .0001pt; margin: 0in;">
<span style="font-family: "Verdana","sans-serif"; font-size: 10.0pt;"><a href="http://www.suntimes.com/news/crime/23706483-418/car-dealer-accused-of-trying-to-get-fraud-witness-killed.html" target="_blank">Click Here to Read Full Story in The Chicago Sun Times<span style="color: blue;"><br />
</span></a></span></div>
<div style="margin-bottom: .0001pt; margin: 0in;">
<br /></div>
<h1 style="margin-bottom: .0001pt; margin: 0in;">
<span style="font-family: "Verdana","sans-serif"; font-size: 10.0pt;">Sikh salesman settles suit against Lexus
dealership</span></h1>
<div style="margin-bottom: .0001pt; margin: 0in;">
<span style="font-family: "Verdana","sans-serif"; font-size: 10.0pt;">A car salesman, who is a member of the Sikh
religion, has won a lawsuit against a Lexus dealership, where he had applied
for work. The dealership had a policy that the prospective salesman said
violated his religious beliefs. </span></div>
<div style="margin-bottom: .0001pt; margin: 0in;">
<span style="font-family: "Verdana","sans-serif"; font-size: 10.0pt;"><a href="http://www.dealersedge.com/ME2/dirmod.asp?sid=&nm=&type=news&mod=News&mid=9A02E3B96F2A415ABC72CB5F516B4C10&tier=3&nid=AF0913FAB6CC45BB94B07EA353BF4693" target="_blank">Click Here to Read Full Story in DealersEdge</a></span></div>
<h1 style="margin-bottom: .0001pt; margin: 0in;">
<span style="font-family: "Verdana","sans-serif"; font-size: 10.0pt;">Lawsuit accuses some employees at 2
Charleston-area auto dealerships of using sham trade-ins to boost sales </span></h1>
<h1 style="margin-bottom: .0001pt; margin: 0in;">
<span style="font-family: "Verdana","sans-serif"; font-size: 10.0pt; font-weight: normal;">A newly filed lawsuit
alleges that some employees at two Charleston area auto dealerships
participated in a scheme to dupe low-income buyers into purchasing vehicles
they couldn't afford.</span><span style="font-family: "Verdana","sans-serif"; font-size: 10.0pt;"></span></h1>
<div style="margin-bottom: .0001pt; margin: 0in;">
<span style="font-family: "Verdana","sans-serif"; font-size: 10.0pt;"><a href="http://www.postandcourier.com/article/20131224/PC16/131229744/1005/lawsuit-accuses-some-employees-at-auto-dealerships-of-using-sham-trade-ins-to-boost-sales" target="_blank">Click Here to Read Full Story in the Post & Courier </a></span></div>
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<span style="font-family: "Verdana","sans-serif"; font-size: 10.0pt;"><span style="mso-tab-count: 1;"> </span></span></div>
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Anonymoushttp://www.blogger.com/profile/03663210774947932184noreply@blogger.com0tag:blogger.com,1999:blog-4267117031967630712.post-6233754834350137832013-11-26T12:54:00.000-08:002013-11-26T12:54:39.688-08:00Financing a Sale to Military Personnel Necessitates Extra Precautions by F&I Personnel<br />
<div style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;">
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" style="height: 168px; margin-left: -9px; margin-right: -8px; margin-top: 0px; width: 279px;" width="200" /></div>
<span style="font-size: small;"><span style="font-family: Verdana,sans-serif;">A financed automobile transaction
is often mistakenly thought of as a contract between the customer and the
lending source.<span> </span>From a strict legal perspective,
this is not true. A financed automobile purchase transaction is actually a two
legal (but related) transactions. The first transaction is a contract of
purchase that contains finance terms existing between the selling dealer and
the buyer. Absent statutory waiting periods existing in some states, a finance
contract for the purchase of a vehicle is a binding contract between the Dealer
and the Buyer once fully consummated (i.e. executed contract <span> </span>or in some states, executed contract plus vehicle
delivery thus triggering the title transfer). The second legal transaction is
created by the dealer’s successful assignment of its rights under the purchase
contract to a lender. When selling or leasing a vehicle on financing terms to
an active duty member of the armed forces, you or your lenders ability to
enforce the financing terms of the contract may be minimized by federal law
protections.</span></span><br />
<br />
<span style="font-size: small;"><span style="font-family: Verdana,sans-serif;">For active duty military
customers, additional federal law protections exist in the form of the
Servicemembers Civil Relief Act of 2003<sup>1, </sup>(“SCRA”). This includes
insulation from litigation and judgments, the ability to delay court actions,
and what is known as the “6% Rule” for finance contracts for automobile and
other consumer credit financing.
</span></span><br />
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<span style="font-size: small;"><span style="font-family: Verdana,sans-serif;">
</span></span><div class="MsoNormal" style="text-align: justify;">
<span style="font-size: small;"><span style="font-family: Verdana,sans-serif;"><b>What is the 6% Rule? <span> </span></b></span></span></div>
<span style="font-size: small;"><span style="font-family: Verdana,sans-serif;">
</span></span><div class="MsoNormal" style="text-align: justify;">
<br /></div>
<span style="font-size: small;"><span style="font-family: Verdana,sans-serif;">
</span></span><div class="MsoNormal" style="text-align: justify;">
<span style="font-size: small;"><span style="font-family: Verdana,sans-serif;">Quite simply, once a service
member is called to active duty where their yearly earnings are reduced as a
result thereof, the borrower has a legal right to a reduction in any consumer
finance interest rate to no more than 6% beginning on the date active duty
begins through one year after active duty is terminated. Once demanded, any
interest amount in excess of 6% is forgiven by law.<span> </span>The lender would have to adjust the interest
rate for this borrower down to 6% and write-off the difference.<span> </span>Application of this rule may cause the lender
to charge back an assigned contract, especially if military status was not
properly determined by the F&I representative and provided as part of the
financing documents submitted at the time of contract assignment.<span> </span></span></span></div>
<span style="font-size: small;"><span style="font-family: Verdana,sans-serif;">
</span></span><div class="MsoNormal" style="text-align: justify;">
<br /></div>
<span style="font-size: small;"><span style="font-family: Verdana,sans-serif;">
</span></span><div class="MsoNormal" style="text-align: justify;">
<span style="font-size: small;"><span style="font-family: Verdana,sans-serif;">Aside from the potential interest
rate impact, enforcing a court judgment, especially one resulting from a
customer not appearing in court (i.e. a default judgment), against an active
duty member of the military is difficult, if not impossible, in some
circumstances. At best it can be a long drawn out process.</span></span></div>
<span style="font-size: small;"><span style="font-family: Verdana,sans-serif;">
</span></span><div class="MsoNormal" style="text-align: justify;">
<br /></div>
<span style="font-size: small;"><span style="font-family: Verdana,sans-serif;">
</span></span><div class="MsoNormal" style="text-align: justify;">
<span style="font-size: small;"><span style="font-family: Verdana,sans-serif;"><span style="color: #373737;">Courts usually apply the SCRA to require that the
plaintiff (usually a dealer or lender) provide a military affidavit (also
called a non-military affidavit, SCRA Affidavit, Affidavit of Military Service,
and many other iterations) to attest to whether the defendant is subject to the
protections of the SCRA. </span><span style="color: #373737;"> </span></span></span></div>
<span style="font-size: small;"><span style="font-family: Verdana,sans-serif;">
</span></span><div class="MsoNormal" style="text-align: justify;">
<br /></div>
<span style="font-size: small;"><span style="font-family: Verdana,sans-serif;">
</span></span><div class="MsoNormal" style="text-align: justify;">
<span style="font-size: small;"><span style="font-family: Verdana,sans-serif;">Students of the College of
Automotive Management are taught key compliance laws and how to ensure they do
not violate them, including proper disclosures and forms needed to protect
themselves and their dealership from both inadvertent mistakes as well as
intentional legal compliance violations.</span></span> <span style="mso-spacerun: yes;"> </span></div>
<div class="MsoNormal" style="background: white; margin-left: 4.5pt; text-indent: -4.5pt;">
<sup><span style="color: #373737; font-size: 8.0pt; mso-bidi-font-size: 12.0pt;">1</span></sup><sup><span style="color: #373737; font-size: 16.0pt; mso-bidi-font-size: 12.0pt;"> </span></sup><span style="color: windowtext; font-size: 8.0pt;">The <i style="mso-bidi-font-style: normal;">Servicemembers Civil Relief Act <span style="mso-spacerun: yes;"> </span>of 2003</i>; </span><span style="font-size: 8.0pt; mso-bidi-font-size: 10.0pt; mso-bidi-font-weight: bold;">Public Law 108-189; 50
U.S.C. App. §§501–596 (19 Dec 2003);as amended by Public Law 108-<span style="mso-spacerun: yes;"> </span>454 (10 Dec 2004.)</span></div>
<div class="MsoNormal" style="background: white; margin-left: 4.5pt; text-indent: -4.5pt;">
<br /></div>
<div class="MsoNormal" style="background: white; margin-left: 4.5pt; text-indent: -4.5pt;">
<i style="mso-bidi-font-style: normal;"><span style="mso-bidi-font-weight: bold;">--
Submitted by Marc Bonanni, Esq. 11/26/13</span><span style="color: #333333;"></span></i></div>
Anonymoushttp://www.blogger.com/profile/03663210774947932184noreply@blogger.com0tag:blogger.com,1999:blog-4267117031967630712.post-84065805040427966502013-11-15T08:16:00.000-08:002013-11-15T08:16:05.585-08:00Breaking Compliance News - November 2013<div class="separator" style="clear: both; text-align: center;">
<a href="http://1.bp.blogspot.com/-XmiNP7S2fRg/UoZIHCI6NAI/AAAAAAAAATY/nFv54yWqEpE/s1600/lawsregulations.jpg" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" src="http://1.bp.blogspot.com/-XmiNP7S2fRg/UoZIHCI6NAI/AAAAAAAAATY/nFv54yWqEpE/s1600/lawsregulations.jpg" /></a></div>
<b>N.Y. Regulator Reaches $135K Settlement With Dealer </b><br />
NEW YORK — Attorney General Eric T. Schneiderman’s office reached a
settlement yesterday with N.R. Automotive Inc.. The dealership, which
was doing business as New Rochelle Toyota, will repay a total of $86,826
to 174 customers who were charged a bogus administrative fee.<br />
<a href="http://www.fi-magazine.com/news/story/2013/11/n-y-regulator-reaches-135k-settlement-with-dealer.aspx?ref=enews-thursday-20131114&utm_campaign=enews-thursday-20131114&utm_source=Email&utm_medium=Enewsletter" target="_blank">Click Here to Read Full Story in F&I and Showroom Magazine </a><br />
<br />
<b>Dealer Settles With State</b><br />
A New Jersey used-car dealer agreed to pay the state $66,000 in civil
penalties and investigative and legal cost reimbursements to settle
claims the store misrepresented vehicles.<br />
<a href="http://usedcarnews.com/newsletters-sp-719629445/news-now/7010-dealer-settles-with-state?utm_source=contactology&utm_medium=email&utm_campaign=DealerSettleswithState" target="_blank">Click Here to Read Full Story in Used Car News</a> <br />
<br />
<b>Large Dealer Admits to Breaking Transaction Law</b><br />
The largest volume used-car dealership in the state of Washington
pleaded guilty and was sentenced for failure to file a monetary
transaction report. <br />
<a href="http://usedcarnews.com/newsletters-sp-719629445/news-now/6959-large-dealer-admits-to-breaking-transaction-law?utm_source=contactology&utm_medium=email&utm_campaign=LargeDealerAdmitstoBreakingTransactionLaw" target="_blank">Click Here to Read Full Story in Used Car News</a><br />
<br />
<b>Dealer Pays to Settle Religious Discrimination Lawsuit </b><br />
Elk Grove car dealership has agreed to pay a former
employee $158,000 and revise its personnel policy to settle a religious
discrimination lawsuit.<br />
<a href="http://www.sacbee.com/2013/09/27/5775664/maita-chevrolet-pays-to-settle.html" target="_blank">Click Here to Read Full Story in The Sacramento Bee</a><br />
<br />
<b>Disparate Impact Challenge Ends in Settlement</b><br />
WASHINGTON and MOUNT HOLLY, N.J. — On the eve of a public forum on auto
lending, hosted by the Consumer Financial Protection Bureau at its
Washington, D.C., headquarters, a town council in N.J. voted to settle a
housing discrimination case that relied on a much-disputed legal theory
called “disparate impact.” The Consumer Financial Protection Bureau
(CFPB) is currently using the theory in its review of the indirect
financing channel.<br />
<a href="http://www.fi-magazine.com/news/story/2013/11/disparate-impact-challenge-ends-in-settlement-on-eve-of-cfpb-forum.aspx?ref=enews-thursday-20131114&utm_campaign=enews-thursday-20131114&utm_source=Email&utm_medium=Enewsletter" target="_blank">Click Here to Read Full Story in F&I and Showroom Magazine </a><br />
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<div style="color: black; font: 10pt sans-serif; height: 1px; overflow: hidden; text-align: left; text-transform: none; width: 1px;">
<br />Read more here: http://www.sacbee.com/2013/09/27/5775664/maita-chevrolet-pays-to-settle.html#storylink=cpy</div>
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<br />Anonymoushttp://www.blogger.com/profile/03663210774947932184noreply@blogger.com0tag:blogger.com,1999:blog-4267117031967630712.post-474809835608268522013-05-19T18:47:00.000-07:002013-05-19T18:47:14.114-07:00Are Your Desking Practices Putting Your Dealership At Risk?<!--[if gte mso 9]><xml>
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<div class="separator" style="clear: both; text-align: center;">
<a href="http://1.bp.blogspot.com/-VRLYLE2mZ9g/UZl_MWKRQYI/AAAAAAAAAM0/8mG6v7KPRe8/s1600/Desking-fast-lease-Software.jpg" imageanchor="1" style="clear: right; float: right; margin-bottom: 1em; margin-left: 1em;"><img border="0" height="320" src="http://1.bp.blogspot.com/-VRLYLE2mZ9g/UZl_MWKRQYI/AAAAAAAAAM0/8mG6v7KPRe8/s320/Desking-fast-lease-Software.jpg" width="318" /></a></div>
<div class="jmattext" style="line-height: 115%; margin: 0in 0in 0.0001pt;">
<span style="font-family: Verdana,sans-serif;"><span style="font-size: small;">Despite NADA’s landmark victory in getting
most auto dealers exempted from direct oversight by the Consumer Financial Protection
Bureau (CFPB), it looks like the agency has found a back-door way to make life
more difficult for dealerships. The Bureau recently announced that lenders that
offer auto loans through dealerships will be held responsible for “unlawful,
discriminatory pricing at the dealership level”. The Bureau has indicated that
it sees a potential for discriminatory pricing caused by the policies of some
indirect auto lenders that allow auto dealers to mark-up lender-established buy
rates and that compensate dealers for those markups in the form of reserve. Their
rationale is that because of the incentives these policies create, and the
discretion they permit, there is a significant risk that they will result in
pricing disparities on the basis of race, national origin, and potentially
other prohibited bases. A central issue is that lenders traditionally leave it
up to dealerships to set the final interest rate customers pay on their
indirect auto loans arranged by dealerships. The CFPB guidance calls for additional
compliance burdens on lenders who purchase Retail Installment Contracts from
dealers and expects those lenders to take “remedial action” with dealers when
necessary. As the old
saying goes, “stuff” rolls downhill.</span></span></div>
<span style="font-family: Verdana,sans-serif;"><span style="font-size: small;">
</span></span><div style="line-height: 115%; margin: 0in 0in 0.0001pt;">
<br /></div>
<span style="font-family: Verdana,sans-serif;"><span style="font-size: small;">
</span></span><div class="jmattext" style="line-height: 115%; margin: 0in 0in 0.0001pt;">
<span style="font-family: Verdana,sans-serif;"><span style="font-size: small;">Here’s the problem: the CFPB is citing the
concept of “disparate impact” - which is purely a statistical analysis - in
evaluating potentially discriminatory dealer rate markups. Only the numbers
matter, not the intent or even the knowledge of the creditor. So, even if a
lender or dealer didn't intend to discriminate, they may still be held liable
for perceived discrimination against protected classes. You can be doing
everything completely neutral or unbiased but if there is a statistically
significant adverse impact on a protected class, you can still be held
responsible under the Equal Credit Opportunity Act (ECOA).</span></span></div>
<span style="font-family: Verdana,sans-serif;"><span style="font-size: small;">
</span></span><div style="line-height: 115%; margin: 0in 0in 0.0001pt;">
<br /></div>
<span style="font-family: Verdana,sans-serif;"><span style="font-size: small;">
</span></span><div style="line-height: 115%; margin: 0in 0in 0.0001pt;">
<span style="font-family: Verdana,sans-serif;"><span style="font-size: small;">The CFPB further recommends that indirect
auto lenders take steps to ensure that they are operating in compliance with
fair lending laws as applied to dealer markup and compensation policies. These
steps may include revising dealer markup policies, eliminating dealer
discretion to markup buy rates, and compensating dealers using a different
mechanism that does not result in discrimination, such as flat fees per
transaction.</span></span></div>
<span style="font-family: Verdana,sans-serif;"><span style="font-size: small;">
</span></span><div class="jmattext" style="line-height: 115%; margin: 0in 0in 0.0001pt 0.5in;">
<br /></div>
<span style="font-family: Verdana,sans-serif;"><span style="font-size: small;">
</span></span><div class="jmattext" style="line-height: 115%; margin: 0in 0in 0.0001pt;">
<span style="font-family: Verdana,sans-serif;"><span style="font-size: small;">As a result of these announcements, at least
one major bank has already sent a letter to dealers indicating that it will “periodically
review dealer portfolios, addressing indications of potential discrimination”. The
letter also stated in part “if you are unable to provide any explanation for the pricing
differences, or if we continue to identify unexplained differences in your
pricing to protected classes on a prohibited basis, we will consider taking
further action”.</span></span></div>
<span style="font-family: Verdana,sans-serif;"><span style="font-size: small;">
</span></span><div class="jmattext" style="line-height: 115%; margin: 0in 0in 0.0001pt;">
<br /></div>
<span style="font-family: Verdana,sans-serif;"><span style="font-size: small;">
</span></span><div class="jmattext" style="line-height: 115%; margin: 0in 0in 0.0001pt;">
<span style="font-family: Verdana,sans-serif;"><span style="font-size: small;">Who knows what these “actions” could include - perhaps disruptive
audits or even demands for repurchase of a dealer’s entire portfolio?</span></span></div>
<span style="font-family: Verdana,sans-serif;"><span style="font-size: small;">
</span></span><div class="MsoNormal" style="line-height: 115%;">
<br /></div>
<span style="font-family: Verdana,sans-serif;"><span style="font-size: small;">
</span></span><div class="MsoNormal" style="line-height: 115%;">
<span style="font-family: Verdana,sans-serif;"><span style="font-size: small;">While it remains to be seen whether this will
ultimately affect how dealerships get compensated for arranging financing, it’s
clear that the government intends to carefully scrutinize dealer loan-pricing
practices. </span></span></div>
<span style="font-family: Verdana,sans-serif;"><span style="font-size: small;">
</span></span><div class="MsoNormal" style="line-height: 115%;">
<br /></div>
<span style="font-family: Verdana,sans-serif;"><span style="font-size: small;">
</span></span><div class="jmattext" style="line-height: 115%; margin: 0in 0in 0.0001pt;">
<span style="font-family: Verdana,sans-serif;"><span style="font-size: small;">Now that’s not to say that any of this makes
sense. It certainly seems like a stretch that dealers are discriminating
against consumers. But keep in mind that while it’s quite likely that
allegations of pricing discrimination in connection with dealer participation are
questionable at best, the potential liability is real and dealers should pay close
attention. Consumer advocates have been pushing the idea that dealer participation
is evil for quite some time and the government is
obviously buying into it. Keep
in mind that while the CFPB may not have direct jurisdiction over dealers, they
have working partnerships with the DOJ, FTC. and state attorneys general and could
refer matters to those agencies for action against the dealerships. As if that’s not bad enough, plaintiff’s
attorneys will almost certainly be on the watch for potential claims of Unfair
and Deceptive Acts and Practices (UDAP). </span></span></div>
<span style="font-family: Verdana,sans-serif;"><span style="font-size: small;">
</span></span><div class="MsoNormal" style="line-height: 115%;">
<br /></div>
<span style="font-family: Verdana,sans-serif;"><span style="font-size: small;">
</span></span><div class="jmattext" style="line-height: 115%; margin: 0in 0in 0.0001pt;">
<span style="font-family: Verdana,sans-serif;"><span style="font-size: small;">So if
your bank, regulator, or an attorney sent you a letter, how would you respond? Following are suggestions on policies
and processes that may help favorably position your dealership in the event of a
fair lending inquiry.</span></span></div>
<span style="font-family: Verdana,sans-serif;"><span style="font-size: small;">
</span></span><div class="jmattext" style="line-height: 115%; margin: 0in 0in 0.0001pt;">
<br /></div>
<span style="font-family: Verdana,sans-serif;"><span style="font-size: small;">
</span></span><div class="jmattext" style="line-height: 115%; margin: 0in 0in 0.0001pt;">
<span style="font-family: Verdana,sans-serif;"><span style="font-size: small;"><b>Implement a desking and fair lending policy at your dealership that
addresses how payments are quoted. </b>Dealership
personnel need to be careful that the processes they use to quote payments avoid
any impression of discriminatory practices. The key is consistency. </span></span></div>
<span style="font-family: Verdana,sans-serif;"><span style="font-size: small;">
</span></span><div class="MsoNormal" style="line-height: 115%;">
<br /></div>
<span style="font-family: Verdana,sans-serif;"><span style="font-size: small;">
</span></span><div class="jmattext" style="line-height: 115%; margin: 0in 0in 0.0001pt 0.5in; text-indent: -0.25in;">
<span style="font-family: Verdana,sans-serif;"><span style="font-size: small;"><span>·<span style="-moz-font-feature-settings: normal; -moz-font-language-override: normal; font-size-adjust: none; font-stretch: normal; font-style: normal; font-variant: normal; font-weight: normal; line-height: normal;">
</span></span>If the
dealership runs credit before presenting the first pencil, a good best practice
can be to quote all payments initially with a standard (maximum) rate markup. So,
for the first pencil, all customers will be quoted the buy rate for the tier
they qualify for plus the established markup (e.g. two points) with variances
only allowed for competitive and non-discriminatory purposes. If the rate is
lowered in negotiations, the reason for the variance should be documented in
writing (e.g. to match a rate offered by the customer’s credit union, or to bring the
customer within budget, etc.). This
way the dealership can show that their practices are consistent, fair, and non-discriminatory
and justify why
certain rates were higher than others even though the consumers were in the
same tier. All exception notices should be kept in the deal jacket and care
should be taken not to state the same reason on every deal where there is an
exception made.</span></span></div>
<span style="font-family: Verdana,sans-serif;"><span style="font-size: small;">
</span></span><div class="MsoNormal" style="line-height: 115%;">
<br /></div>
<span style="font-family: Verdana,sans-serif;"><span style="font-size: small;">
</span></span><div class="jmattext" style="line-height: 115%; margin: 0in 0in 0.0001pt 0.5in; text-indent: -0.25in;">
<span style="font-family: Verdana,sans-serif;"><span style="font-size: small;"><span>·<span style="-moz-font-feature-settings: normal; -moz-font-language-override: normal; font-size-adjust: none; font-stretch: normal; font-style: normal; font-variant: normal; font-weight: normal; line-height: normal;">
</span></span>If the store
doesn’t run credit before the first pencil quote, there can be a “store rate” that
is used for all customers. This rate could be based on an average rate of sold
deals over the last 90 days. Keep in mind that establishing an accurate store rate is
difficult due to the wide range of credit tiers, so running credit before
quoting rate is a safer fair lending practice. Another reason why pulling a
credit report before quoting a payment reduces risk is that in doing so every
quote will be based upon the actual credit-worthiness of the consumer. By
“guessing” what rate the customer qualifies for, the possibility of making a
mistake is greatly enhanced and it becomes more difficult to document a
consistent, non-discriminatory process. In cases where you can’t pull credit
before quoting a payment, a best-practice can be to inform those consumers that
you are quoting a payment based upon their qualifying for “A” tier credit and
that they may not qualify. <span> </span>Any exceptions
to quoting rate based on actual credit standing should be documented.</span></span></div>
<span style="font-family: Verdana,sans-serif;"><span style="font-size: small;">
</span></span><div class="jmattext" style="line-height: 115%; margin: 0in 0in 0.0001pt;">
<br /></div>
<span style="font-family: Verdana,sans-serif;"><span style="font-size: small;">
</span></span><div class="jmattext" style="line-height: 115%; margin: 0in 0in 0.0001pt 0.5in; text-indent: -0.25in;">
<span style="font-family: Verdana,sans-serif;"><span style="font-size: small;"><span>·<span style="-moz-font-feature-settings: normal; -moz-font-language-override: normal; font-size-adjust: none; font-stretch: normal; font-style: normal; font-variant: normal; font-weight: normal; line-height: normal;">
</span></span>Always use a good faith effort in quoting the rate that you think the
customer will qualify for. You shouldn’t rely on only the finance department to
know rates and program guidelines; the desk needs to know as well.</span></span></div>
<span style="font-family: Verdana,sans-serif;"><span style="font-size: small;">
</span></span><div class="MsoNormal" style="line-height: 115%;">
<br /></div>
<span style="font-family: Verdana,sans-serif;"><span style="font-size: small;">
</span></span><div style="line-height: 115%; margin: 0in 0in 0.0001pt;">
<span style="font-family: Verdana,sans-serif;"><span style="font-size: small;"><b>Use full
disclosure when quoting payments</b>. Customers
should be given all the necessary deal terms, including the selling price,
trade allowance, payoff, down payment, rebates, the amount financed, payment,
term and rate. This will also help eliminate the potential for payment packing
or UDAP claims. Avoid using payment ranges, especially after credit has been
run.</span></span></div>
<span style="font-family: Verdana,sans-serif;"><span style="font-size: small;">
</span></span><div style="line-height: 115%; margin: 0in 0in 0.0001pt;">
<br /></div>
<span style="font-family: Verdana,sans-serif;"><span style="font-size: small;">
</span></span><div class="jmattext" style="line-height: 115%; margin: 0in 0in 0.0001pt;">
<span style="font-family: Verdana,sans-serif;"><span style="font-size: small;"><b>Make sure
everyone is on the same page.</b> If rates
are quoted at the sales desk, that rate should not change in the F&I office
unless there’s a valid reason. Practices such as lowering rates to encourage
product sales should be avoided (this can also lead to other compliance issues
as well). If there is a legitimate reason to adjust a rate in F&I, there should
be written documentation. Everyone in the dealership tasked with quoting
payments should be trained on your desking policies and the same
payment-quoting practices should be used in all departments, including
internet, fleet, and special finance. </span></span></div>
<span style="font-family: Verdana,sans-serif;"><span style="font-size: small;">
</span></span><div style="line-height: 115%; margin: 0in 0in 0.0001pt;">
<br /></div>
<span style="font-family: Verdana,sans-serif;"><span style="font-size: small;">
</span></span><div class="jmattext" style="line-height: 115%; margin: 0in 0in 0.0001pt;">
<span style="font-family: Verdana,sans-serif;"><span style="font-size: small;"><b>Train,
monitor, and enforce compliance. </b><span> </span>Many dealership employees are promoted to
management positions based solely on their ability to sell cars, and are
provided with little or no training. As a result, there is often a
lack of loan underwriting knowledge at the desk & F&I level. Managers should
have a high-level understanding of credit bureau interpretation, loan
underwriting guidelines, and deal structuring in order to produce consistent,
logical pencils and structures that are not potentially discriminatory. Traditional
sales and F&I training typically don’t provide those forms of education and
curriculum. An investment in comprehensive training will go a long way
towards protecting the dealership. In addition, regular audits should be
performed and all employees should be held accountable for strict adherence to
company policies.</span></span></div>
<span style="font-family: Verdana,sans-serif;"><span style="font-size: small;">
</span></span><div class="jmattext" style="line-height: 115%; margin: 0in 0in 0.0001pt;">
<br /></div>
<span style="font-family: Verdana,sans-serif;"><span style="font-size: small;">
</span></span><div class="jmattext" style="line-height: 115%; margin: 0in 0in 0.0001pt;">
<span style="font-family: Verdana,sans-serif;"><span style="font-size: small;">Of course, this
entire discussion may be moot if the consumer advocates somehow get their way
and are successful in outlawing dealer rate markups. Let’s hope that doesn’t happen,
but if it does I’m sure the industry will overcome adversity as it always has
and continue to prosper. That said, I believe the suggestions above are good
business practices whether the current dealer compensation system remains the
same or we move to flat fee- only compensation. Well-thought-out and consistent
processes, transparency, and education are always recipes for success.</span></span></div>
Anonymoushttp://www.blogger.com/profile/03663210774947932184noreply@blogger.com4tag:blogger.com,1999:blog-4267117031967630712.post-62446069862593305662013-03-30T12:06:00.000-07:002013-03-31T20:59:57.752-07:00Finance Reserve – Should It Stay or Should It Go Now?<span style="font-family: Verdana,sans-serif;"><br /></span>
<i><span style="font-family: Verdana,sans-serif;"><span style="font-size: small;">This is a guest post by Eric Anders<span style="font-size: small;">e</span>n, the President of the College of Automotive Management. With the government's ongoing attack on dealership practices, dealers and their staff need to step up their game to remain competitive and protect themselves against legal pitfalls. Dealerships that employ highly-skilled professionals will certainly prosper despite any changes brought on by government regulations. In my opinion, the College of Automotive Management offers the absolute best-in-the-industry training and development for automotive professionals.</span></span></i><br />
<span style="font-family: Verdana,sans-serif;"><br /></span>
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<span style="font-size: small;"><span style="font-family: Verdana,sans-serif;"><b>Finance
Reserve – Should It Stay or Should It Go Now?</b></span></span></div>
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<span style="font-family: Verdana,sans-serif;">by Eric Andersen <b><br /></b></span></div>
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<br /></div>
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<span style="font-family: Verdana,sans-serif;">Well
stay of course! But unfortunately that’s likely not going to
happen.</span></div>
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<div class="separator" style="clear: both; text-align: center;">
<span style="font-family: Verdana,sans-serif;"><a href="http://2.bp.blogspot.com/-myeUqvxOG7Q/UVc0Vi5HyrI/AAAAAAAAAMU/6is1qgXAZmY/s1600/CFPB.jpg" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" height="111" src="http://2.bp.blogspot.com/-myeUqvxOG7Q/UVc0Vi5HyrI/AAAAAAAAAMU/6is1qgXAZmY/s200/CFPB.jpg" width="200" /></a></span></div>
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<span style="font-family: Verdana,sans-serif;">If
there is one thing our country’s current administration has proven, it’s that
they will regulate what they decide they want to regulate – and won’t stop
until they do. If their new agency, the U.S. Consumer Financial
Protection Bureau, is bent on putting the screws to auto dealers and their
entrepreneurial spirit, they probably won’t stop building a case for a decision
they have probably already made. Hence
we will continue to see “breaking news” from this agency like the recent
article dated March 28<sup>th</sup>, 2013 entitled<b> </b><a href="http://www.autonews.com/article/20130328/RETAIL/130329852/auto-loans-prompt-1585-complaints-to-new-u-s-consumer-watchdog#axzz2P3CxM2oN" target="_blank">Auto Loans Prompt 1,585 Complaints to New U.S.Consumer Watchdog.</a></span></div>
<br />
<span style="font-family: Verdana,sans-serif;"><i><a href="http://www.autonews.com/article/20130328/RETAIL/130329852/auto-loans-prompt-1585-complaints-to-new-u-s-consumer-watchdog#" target="_blank"></a></i></span><br />
<div class="MsoNormal" style="mso-margin-bottom-alt: auto; mso-margin-top-alt: auto;">
<span style="font-family: Verdana,sans-serif;"><b>
</b>
</span></div>
<div class="MsoNormal" style="mso-margin-bottom-alt: auto; mso-margin-top-alt: auto;">
<b><span style="font-family: Verdana,sans-serif;">So
what is to be done?</span></b></div>
<div class="MsoNormal" style="mso-margin-bottom-alt: auto; mso-margin-top-alt: auto;">
<br /></div>
<span style="font-family: Verdana,sans-serif;">
</span><br />
<div class="MsoNormal" style="mso-margin-bottom-alt: auto; mso-margin-top-alt: auto;">
<span style="font-family: Verdana,sans-serif;">Well
after the ranting and raving is over (and I’m done now), the only logical thing
to do is create a list of solutions and get in front of the problem. Offense
is a great defense. Instead of spending any more time worrying or
debating, we can use the circumstances to focus on creating new opportunities to increase total profits per sale.</span></div>
<div class="MsoNormal" style="mso-margin-bottom-alt: auto; mso-margin-top-alt: auto;">
<br /></div>
<span style="font-family: Verdana,sans-serif;">
</span><br />
<div class="MsoNormal" style="mso-margin-bottom-alt: auto; mso-margin-top-alt: auto;">
<span style="font-family: Verdana,sans-serif;"><b>Step
1:</b> <b>Determine what is most important to your company (the
dealership). </b></span></div>
<span style="font-family: Verdana,sans-serif;">
</span><br />
<div class="MsoNormal" style="mso-margin-bottom-alt: auto; mso-margin-top-alt: auto;">
<span style="font-family: Verdana,sans-serif;">Due
to a landslide of factors including factory incentives, the world wide web, and
consumer opinion transparency, CSI should become every dealer’s number one
priority and objective – above all else. When you stop and consider it,
reserve profits are the only profit source in a dealership that produces ZERO
CSI benefits. Paying for a vehicle comes with benefits. Paying for
F&I products, parts or service comes with benefits. But paying for
finance reserve does absolutely nothing to promote higher CSI. In fact, if
abused, it can do the opposite (which is the agency’s case, blown out of
proportion). If CSI is more important to the company than reserve
profits, then the thought process to find other positive solutions to increase
profits per sale despite the loss of reserve can be continued.</span></div>
<div class="MsoNormal" style="mso-margin-bottom-alt: auto; mso-margin-top-alt: auto;">
<br /></div>
<span style="font-family: Verdana,sans-serif;">
</span><br />
<div class="MsoNormal" style="mso-margin-bottom-alt: auto; mso-margin-top-alt: auto;">
<span style="font-family: Verdana,sans-serif;"><b>Step
2: Change your pay plans now.</b></span></div>
<span style="font-family: Verdana,sans-serif;">
</span><br />
<div class="MsoNormal" style="mso-margin-bottom-alt: auto; mso-margin-top-alt: auto;">
<span style="font-family: Verdana,sans-serif;">If
you have pay plans for F&I Managers, Sales Managers or Salespeople right
now that give them more incentive to increase the reserve rate vs. sell more
valuable products and services to the customer, change them now. Who is
more valuable to you? The insurance agent providing you with your car
insurance, or the insurance agent that provides you with your car insurance,
homeowners policy, health plan, and life insurance? The more business
customers do with your company, the more valuable your company is to them, and
the more meaningful that relationship is, and the harder it is to break. Redirect
pay plans to focus more on aftermarket and F&I product sales income than reserve
income. Then if reserve does go away, you won’t have an exodus of people
because they previously relied on reserve income too heavily.</span></div>
<div class="MsoNormal" style="mso-margin-bottom-alt: auto; mso-margin-top-alt: auto;">
<br /></div>
<span style="font-family: Verdana,sans-serif;">
</span><br />
<div class="MsoNormal" style="mso-margin-bottom-alt: auto; mso-margin-top-alt: auto;">
<span style="font-family: Verdana,sans-serif;"><b>Step
3: Develop aftermarket and F&I product sales skills – from top to bottom,
and track it.</b></span></div>
<span style="font-family: Verdana,sans-serif;">
</span><br />
<div class="MsoNormal" style="mso-margin-bottom-alt: auto; mso-margin-top-alt: auto;">
<span style="font-family: Verdana,sans-serif;">Salespeople
and Desk Managers have a dramatic influence on F&I product
penetration. Provide training on how introducing the benefits of F&I
products early and often in the sales process benefits everyone. Then
reward salespeople and desk managers for achieving higher aftermarket and
F&I product penetrations and thereby offset any loss of reserve income with
valuable, CSI building F&I product income. In the future, when
customers have big problems, they can be solved when claims are paid and
thereby solidify customer loyalty while creating more repeat business
opportunities (to replace vehicles when totaled, lost, or damaged). Also
provide F&I Managers with “continuous” F&I product training, <span style="mso-bidi-font-weight: bold;">AND</span> F&I sales process training to
maximize their abilities to achieve higher product penetrations as soon as
possible. Track the aftermarket and F&I product penetration of
everyone involved and publish the results frequently. That helps keep
everyone’s eye on the ball! </span></div>
<div class="MsoNormal" style="mso-margin-bottom-alt: auto; mso-margin-top-alt: auto;">
<br /></div>
<span style="font-family: Verdana,sans-serif;">
</span><br />
<div class="MsoNormal" style="mso-margin-bottom-alt: auto; mso-margin-top-alt: auto;">
<span style="font-family: Verdana,sans-serif;"><b>Step
4: Develop loan underwriting expertise at the desk and F&I level</b></span></div>
<span style="font-family: Verdana,sans-serif;">
</span><br />
<div class="MsoNormal" style="mso-margin-bottom-alt: auto; mso-margin-top-alt: auto;">
<span style="font-family: Verdana,sans-serif;">Programs
like CUDL have become popular, despite paying lower reserve commissions than
captives or banks, because they create additional profit opportunities for the
dealer. Having these programs and knowing how to use them makes the
dealer more money. That’s due to their unique loan underwriting policies.
Perhaps a deal can ONLY be made due to a lower rate, or better terms provided
to a member of a credit union that can’t otherwise be obtained at a
traditional lender, even though the traditional lender offers a chance for more
reserve profits. If desk managers or F&I managers don’t know about, or
understand how to maximize those lending options the dealership is not
competitive and will lose a lot more income than reserve profits. Make it a priority
to ensure every desk manager and F&I manager becomes an expert at A&B
Lending programs including local credit union options, leasing, special
finance, and other loan underwriting and deal structuring disciplines in
order to ensure maximum total gross profits are obtained and no sales
opportunities are missed.</span></div>
<div class="MsoNormal" style="mso-margin-bottom-alt: auto; mso-margin-top-alt: auto;">
<br /></div>
<span style="font-family: Verdana,sans-serif;">
</span><br />
<div class="MsoNormal" style="mso-margin-bottom-alt: auto; mso-margin-top-alt: auto;">
<span style="font-family: Verdana,sans-serif;">Once
a dealership implements solutions to achieve all four steps, the increase in
total profits for the dealership now, and later, can dwarf whatever reserve
income may be lost later if the current administration continues to get its
way. And you can continue to triumph, due to your optimism and entrepreneurial,
never-say-die spirit!</span></div>
<div class="MsoNormal" style="mso-margin-bottom-alt: auto; mso-margin-top-alt: auto;">
<br /></div>
<div class="MsoNormal" style="mso-margin-bottom-alt: auto; mso-margin-top-alt: auto;">
<br /></div>
<div class="MsoNormal" style="mso-margin-bottom-alt: auto; mso-margin-top-alt: auto;">
<span style="font-family: Verdana,sans-serif;"><a href="http://4.bp.blogspot.com/-JqeUu01O1nw/UVcsrzHJOfI/AAAAAAAAAMM/WCgn2y3OV4Q/s1600/CollegeofAMLogo.jpg" style="margin-left: 1em; margin-right: 1em;"><img border="0" src="http://4.bp.blogspot.com/-JqeUu01O1nw/UVcsrzHJOfI/AAAAAAAAAMM/WCgn2y3OV4Q/s1600/CollegeofAMLogo.jpg" /></a> </span></div>
<div style="text-align: left;">
<span style="font-family: Verdana,sans-serif;"><span style="font-size: small;"><i><span style="color: black;"><span style="color: black; line-height: 150%;">Welcome
to the College of
Automotive Management,
the world’s premier automotive management and loan underwriting school. </span></span><span style="color: black; line-height: 150%;">The
heroes of our story are the thousands of graduates who have attended the
College since 1992. As they implemented their new knowledge and skills they
created their own stories of success in the automotive and lending industries. Today, they are the owners, managers, leaders and influencers of the industry
and helping to champion the positive changes towards higher profits through customer
satisfaction and legal compliance. </span><a href="http://www.collegeofautomotive.com/">http://www.collegeofautomotive.com/</a></i></span></span></div>
<div align="justify">
<span style="font-family: Verdana,sans-serif;"><br /></span></div>
<div class="separator" style="clear: both; text-align: center;">
<a href="http://4.bp.blogspot.com/-JqeUu01O1nw/UVcsrzHJOfI/AAAAAAAAAMM/WCgn2y3OV4Q/s1600/CollegeofAMLogo.jpg" style="margin-left: 1em; margin-right: 1em;"><br /></a></div>
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<span style="font-family: Verdana,sans-serif;">
</span>Anonymoushttp://www.blogger.com/profile/03663210774947932184noreply@blogger.com0tag:blogger.com,1999:blog-4267117031967630712.post-81116031305229498902013-03-17T12:29:00.000-07:002013-03-17T12:29:23.447-07:0010 Things to Consider Before You Blow Off the Idea of Transparency<!--[if gte mso 9]><xml>
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<div class="separator" style="clear: both; text-align: center;">
<span style="font-size: large;"><a href="http://2.bp.blogspot.com/-2RShy8V57is/UUYYwxkQlDI/AAAAAAAAALg/pEcDWXW5ep0/s1600/poweroftransparency.png" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" height="156" src="http://2.bp.blogspot.com/-2RShy8V57is/UUYYwxkQlDI/AAAAAAAAALg/pEcDWXW5ep0/s320/poweroftransparency.png" width="320" /></a></span></div>
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<span style="font-size: large;"><span style="font-family: "Calibri","sans-serif";">Dealers
are constantly looking for ways to get an edge in the digital age, yet many
continue to follow the same sales and advertising practices that they’ve been
using for decades. The problem is that the game has changed and consumers have
access to much more information and choices than ever before. In the past the
dealer controlled all of the information, but today it’s just the opposite. Any
information you offer is now carefully scrutinized and validated by a vast
amount of online data. As a result, the likelihood of old-school sales
practices backfiring has increased substantially. </span></span></div>
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<br /></div>
<div class="MsoNormal" style="line-height: 115%;">
<span style="font-size: large;"><span style="font-family: "Calibri","sans-serif";">So
what type of “old-school” practices am I talking about? How about pricing
vehicles without disclosing that there are rebates that most people don’t qualify
for; trade-in values where the selling price is increased; trade under-allowances;
withholding information on phone pops and internet leads (“just get ‘em in”);
write-ups and F&I presentations (four-squares & payment packing); bait
& switch advertising; and non-disclosure of vehicle histories and add-on
fees?</span></span></div>
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<br /></div>
<div class="MsoNormal" style="line-height: 115%;">
<span style="font-size: large;"><span style="font-family: "Calibri","sans-serif";">I
have spoken to many people who think this new-fangled transparency talk is just
nonsense. After all, we’ve been doing business the same way for decades and
it’s been wildly successful. If it ain’t broke we’d be stupid trying to fix it.</span></span></div>
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<br /></div>
<div class="MsoNormal" style="line-height: 115%;">
<span style="font-size: large;"><span style="font-family: "Calibri","sans-serif";">I
get it. I’ll be the first to admit that I spent most of my career as a poster
child for the “but we’ve always done it this way” mindset. My thinking has
changed though. I’ve had the privilege of meeting some amazingly-smart
automotive thought-leaders who have taught me that there’s more to success then
the “whatever it takes to make a deal” mentality. While the business-as-usual
way of thinking sure is comfortable, I’ve come to realize that it’s probably
not the key to long-term success. So before you discount the idea of
transparency in your dealership, you may want to consider these 10 potential
benefits.</span></span></div>
<div class="MsoNormal" style="line-height: 115%;">
<br /></div>
<div class="MsoNormal" style="line-height: 115%;">
<span style="font-size: large;"><b><span style="font-family: "Calibri","sans-serif";">Increase
Lead Conversion</span></b><span style="font-family: "Calibri","sans-serif";"> - <span>The ultimate goal is still to “get ‘em in”
and close the deal, but for an increasing number of shoppers, transparency is
the only thing that will get them in. Not being upfront about details used to
have its benefits. Up until recently, the salesperson could control the selling
process because he or she controlled the information. Today, it’s just the
opposite - consumers have all the information they need at their fingertips. If
you resist answering customer’s questions, chances are you’ll never hear from
them again.</span></span></span></div>
<div class="MsoNormal" style="line-height: 115%;">
<br /></div>
<div class="MsoNormal" style="line-height: 115%;">
<span style="font-size: large;"><b><span style="font-family: "Calibri","sans-serif";">Increase
Closing Ratios</span></b><span style="font-family: "Calibri","sans-serif";"> - <span>Higher levels of satisfaction with the
selling process result in higher closing rates and higher sales. A recent survey
by Maritz Research of over 163,000 Americans found that</span> <span>64.0% are completely satisfied when one
person with pricing authority negotiates a car deal vs. 20.7% when two or more
with no pricing authority are involved.</span></span></span></div>
<div class="MsoNormal" style="line-height: 115%;">
<br /></div>
<div class="MsoNormal" style="line-height: 115%;">
<span style="font-size: large;"><b><span style="font-family: "Calibri","sans-serif";">Improve
Your Reputation</span></b><span style="font-family: "Calibri","sans-serif";"> (your REAL reputation, not necessarily the one you
“manage” online) - A dealership’s reputation is difficult, if not impossible,
to maintain when staff members depend on “old school” practices.</span><span style="font-family: "Calibri","sans-serif";"> <span>Customers often make decisions during a vehicle sale transaction that
they come to regret after the “ether has worn off”.</span> <span>You can be sure they’re telling somebody
about the transaction.<span> </span>Or perhaps
they’re telling thousands of people online?</span></span></span></div>
<div class="MsoNormal" style="line-height: 115%;">
<br /></div>
<div class="MsoNormal" style="line-height: 115%;">
<span style="font-size: large;"><b><span style="font-family: "Calibri","sans-serif";">Avoid
Legal Problems</span></b><span style="font-family: "Calibri","sans-serif";"> - <span>State & federal regulators frequently
target “non-transparent” dealer practices as unfair and deceptive. These
practices include bait and switch advertising, failure to sell at advertised
prices, payment packing, vehicle history disclosures, yo-yo financing, improper
fee disclosure, and misleading pricing. </span></span></span></div>
<div class="MsoNormal" style="line-height: 115%;">
<br /></div>
<div class="MsoNormal" style="line-height: 115%;">
<span style="font-size: large;"><span style="font-family: "Calibri","sans-serif";">But it ain’t illegal if you don’t get caught, right?</span></span></div>
<div class="MsoNormal" style="line-height: 115%;">
<br /></div>
<div class="MsoNormal" style="line-height: 115%;">
<span style="font-size: large;"><span style="font-family: "Calibri","sans-serif";">The new reality is that “getting “caught” is no
longer likely to be just a fine and slap on the wrist. Regulators now have a
new trick up their sleeve - using the media to humiliate those dealers caught
in order to intimidate others. There’s plenty of political capital in going
after car dealers for ambitious regulators. These regulators want press, and
the tougher and more far-reaching the press the better. </span><span style="font-family: "Calibri","sans-serif";">As a result, <span>the severity of the offenses is often exaggerated (</span>think about
what the </span><a href="http://ftc.gov/opa/2012/03/autoloans.shtm"><span style="font-family: "Calibri","sans-serif";">FTC</span></a><span style="font-family: "Calibri","sans-serif";"> did to those 5 unfortunate dealers
last year). You need to ask yourself what the cost of that kind of negative
publicity would be.</span></span></div>
<div class="MsoNormal" style="line-height: 115%;">
<br /></div>
<div class="MsoNormal" style="line-height: 115%;">
<span style="font-size: large;"><b><span style="font-family: "Calibri","sans-serif";">Increase
Customer Satisfaction</span></b><span style="font-family: "Calibri","sans-serif";">
- Lack of transparency and old school tactics invariably diminish the customer
experience. Nobody likes surprises. Sure, you made the deal but are your
customers truly satisfied with your processes or do you just wear them down?</span></span></div>
<div class="MsoNormal" style="line-height: 115%;">
<span style="font-size: large;"><span style="font-family: "Calibri","sans-serif";">At the end of the day higher customer satisfaction translates
into more repeat and referral business.</span><span style="font-family: "Calibri","sans-serif";"></span></span></div>
<div class="MsoNormal" style="line-height: 115%;">
<br /></div>
<div class="MsoNormal" style="line-height: 115%;">
<span style="font-size: large;"><b><span style="font-family: "Calibri","sans-serif";">Increase
Customer Loyalty</span></b><span style="font-family: "Calibri","sans-serif";"> - <span>Customers only have loyalty if you earn it
from them. </span></span></span></div>
<div class="MsoNormal" style="line-height: 115%;">
<span style="font-size: large;"><span style="font-family: "Calibri","sans-serif";">Transparent
processes help build customer loyalty and retention. You’ll find that customers
will be willing to spend more when they feel they’re buying from a business
they can trust.</span></span></div>
<div class="MsoNormal" style="line-height: 115%;">
<br /></div>
<div class="MsoNormal" style="line-height: 115%;">
<span style="font-size: large;"><b><span style="font-family: "Calibri","sans-serif";">Your
Customers Have Unprecedented Access to Information in Real Time</span></b><span style="font-family: "Calibri","sans-serif";"> - A recent JD Power report
highlights a growing trend called 'Showrooming' where prospects sitting in your
showroom are actually price competing your deal with another dealership using their
mobile devices. <span>Consumers not only have
more access to information but also have access to more dealers. </span>In the
past, consumers were limited to dealers in their local area. The increase in
the amount of information available to consumers has brought consumers a quick
and easy way to analyze not only different prices via internet quotes but also
to identify <i>who they want to do business with. </i>Customers simply have too
many choices and will quickly discard dealers they feel are hiding something.
Holding back information will only make them trust you less.</span></span></div>
<div class="MsoNormal" style="line-height: 115%;">
<br /></div>
<div class="MsoNormal" style="line-height: 115%;">
<span style="font-size: large;"><b><span style="font-family: "Calibri","sans-serif";">Reduce
Chargebacks</span></b><span style="font-family: "Calibri","sans-serif";"> – What
happens <span>after the ether wears off and
the customer goes home and reads the contract? I’ve found that the percentage
of chargebacks and cancellations is directly related to transparency in sales
and finance processes. For instance, staff members who participate in payment
packing typically have a much higher chargeback rate. Once customers figure out
that the “protection package” wasn’t really only a “few extra bucks a month”,
they want to know why. You can only hope they don’t ask an attorney that
question.</span></span></span></div>
<div class="MsoNormal" style="line-height: 115%;">
<br /></div>
<div class="MsoNormal" style="line-height: 115%;">
<span style="font-size: large;"><b><span style="font-family: "Calibri","sans-serif";">You’ll
Stand Out From Your Competition</span></b><span style="font-family: "Calibri","sans-serif";">
– Let’s face it, <span>there just aren’t a
great number of dealers who are transparent yet. Progressive dealers can easily
differentiate themselves by marketing their transparent processes and demonstrating
their honesty. Consumers will respond - after all, how many consumers prefer
old-school tactics?</span></span></span></div>
<div class="MsoNormal" style="line-height: 115%;">
<br /></div>
<div class="MsoNormal" style="line-height: 115%;">
<span style="font-size: large;"><b><span style="font-family: "Calibri","sans-serif";">Transparency
is what consumers have been begging for so why not treat them the way they want
to be treated?</span></b><span style="font-family: "Calibri","sans-serif";"> – Here’s a hint: it’s happens to be the right thing
to do. In my opinion, subjecting customers to old-school processes doesn’t give
them the respect they deserve. Just because you can doesn’t mean you should. </span></span></div>
<div class="MsoNormal" style="line-height: 115%;">
<br /></div>
<div class="MsoNormal" style="line-height: 115%;">
<span style="font-size: large;"><span style="font-family: "Calibri","sans-serif";">The
good news is that transparency can be the pot of gold at the end of the
rainbow. A transparent business model can greatly enhance your sales,
reputation, customer retention, and bottom line. But first you must find the
vision and courage it takes to break down deep-rooted stereotypes and embrace transparency.<span></span></span></span></div>
<div class="MsoNormal" style="line-height: 115%;">
<br /></div>
<div class="MsoNormal" style="line-height: 115%;">
<span style="font-size: large;"><span style="font-family: "Calibri","sans-serif";">I’ve said it before and I’ll say it again:
Transparency is not a dirty word but complacency is. Do you have the vision and
courage it takes to embrace transparency and go from being good to being great?</span></span></div>
<br />
Anonymoushttp://www.blogger.com/profile/03663210774947932184noreply@blogger.com5tag:blogger.com,1999:blog-4267117031967630712.post-76848211416409749252013-03-06T15:35:00.001-08:002013-03-06T15:35:45.612-08:00Using Questionable Reputation Management Tactics Is Risky Business<!--[if gte mso 9]><xml>
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<div class="MsoNormal" style="line-height: 115%;">
<span style="font-size: small;"><span style="font-family: Verdana,sans-serif;"><span style="line-height: 115%;">There’s no doubt that it
takes a lot of hard work and dedication to maintain your online reputation, and
it may be tempting to look for ways to ease the burden. One way is to hire a
company that specializes in reputation management. </span><span style="line-height: 115%;">There are plenty of companies out there that offer
seemingly quick and easy ways to improve your online ratings. </span><span style="line-height: 115%;">Unfortunately,
some of these review companies may be using “Black Hat” techniques and putting dealers
that use their services at risk. A classic example is </span><span style="line-height: 115%;">the dealership that
suffered devastating reputation damage a few years ago because of the
review-posting practices of a company they hired. A customer </span><span style="line-height: 115%;">discovered that suspicious “reviewers” were writing
5-star reviews about all kinds of businesses and dealerships across the nation
on the same day. </span><span style="line-height: 115%;"></span></span></span></div>
<span style="font-size: small;"><span style="font-family: Verdana,sans-serif;">
</span></span><div style="line-height: 115%; margin: 0in 0in 0.0001pt;">
<br /></div>
<span style="font-size: small;"><span style="font-family: Verdana,sans-serif;">
</span></span><div class="MsoNormal" style="line-height: 115%;">
<span style="font-size: small;"><span style="font-family: Verdana,sans-serif;"><span style="line-height: 115%;">Another area of concern is the
activity of a company’s own employees. The Federal Trade Commission charged a
California marketing company </span><span style="line-height: 115%;">with
deceptive advertising after it found that the company’s employees were posing
as ordinary consumers posting positive reviews online. Even worse, The Florida
Attorney General sued an auto dealership for violations of Florida’s Deceptive
and Unfair Trade Practices Act, for its employees allegedly posting fake
reviews. </span></span></span></div>
<span style="font-size: small;"><span style="font-family: Verdana,sans-serif;">
</span></span><div class="MsoNormal" style="line-height: 115%;">
<br /></div>
<span style="font-size: small;"><span style="font-family: Verdana,sans-serif;">
</span></span><div class="MsoNormal" style="line-height: 115%;">
<span style="font-size: small;"><span style="font-family: Verdana,sans-serif;"><span style="line-height: 115%;">FTC
guidelines require companies to ensure that their posts are completely accurate
and not misleading, and planting or allowing fake reviews is a clear violation.
Dealers may also face liability if employees review their employer’s services
or products without disclosing the employment relationship. <span class="style411"><span style="color: windowtext; line-height: 115%;">The FTC
requires the disclosure of all “material connections” between a reviewer and
the company that is being reviewed. These connections can be any relationship
between a reviewer and the company that could affect the credibility a consumer
gives to that reviewer’s statements, such as an employment or business
relationship.</span></span></span><span style="line-height: 115%;"> So if </span><span style="line-height: 115%;">employees, friends, family, or vendors post reviews
to prop up a dealership’s online reputation, they must clearly disclose any
relationship they have with the company. </span><span style="line-height: 115%;">In addition, all reviews must be
an honest opinion based on a real experience. Reviewers must never endorse a
product or service that they have not used personally or create any other form
of false endorsement.</span></span></span></div>
<span style="font-size: small;"><span style="font-family: Verdana,sans-serif;">
</span></span><div class="MsoNormal" style="line-height: 115%;">
<br /></div>
<span style="font-size: small;"><span style="font-family: Verdana,sans-serif;">
</span></span><div class="MsoNormal" style="line-height: 115%;">
<span style="font-size: small;"><span style="font-family: Verdana,sans-serif;"><span style="line-height: 115%;">Failure
to follow these regulations can result in substantial penalties. In recent
actions, the New York Attorney General fined a company $300,000 for ordering
its employees to write fake reviews and the FTC ordered another company to pay
$250,000 for fake reviews posted by the company's affiliate marketers. In the
Florida dealership case, the lawsuit seeks restitution for harmed consumers,
civil penalties of up to $15,000 per violation, attorneys’ fees and costs, and
injunctive relief. </span></span></span></div>
<span style="font-size: small;"><span style="font-family: Verdana,sans-serif;">
</span></span><div style="line-height: 115%; margin: 0in 0in 0.0001pt;">
<br /></div>
<span style="font-size: small;"><span style="font-family: Verdana,sans-serif;">
</span></span><div style="line-height: 115%; margin: 0in 0in 0.0001pt;">
<span style="font-size: small;"><span style="font-family: Verdana,sans-serif;">The FTC
has stated that companies are fully responsible and liable for all
inappropriate actions of their employees, their vendors, and any advocates they
recruit. While reviewers may also be held personally liable for statements made
in the course of their endorsements, the
FTC has indicated that its enforcement activities will generally focus on companies
receiving the reviews.</span></span></div>
<span style="font-size: small;"><span style="font-family: Verdana,sans-serif;">
</span></span><div style="line-height: 115%; margin: 0in 0in 0.0001pt;">
<br /></div>
<span style="font-size: small;"><span style="font-family: Verdana,sans-serif;">
</span></span><div class="MsoNormal" style="line-height: 115%;">
<span style="font-size: small;"><span style="font-family: Verdana,sans-serif;"><span style="line-height: 115%;">Paid-for
reviews are another area that regulators are cracking down on. </span><span style="line-height: 115%;">The
practice of offering a free oil change or gas card to a customer in exchange
for a good survey has long been frowned upon by manufacturers. Because there
are no factory gatekeepers when it comes to online ratings, it may seem
tempting to offer customers an incentive to post a positive review. The good
news is that you can if you want to; the not-so-good news is that the FTC </span><span style="line-height: 115%;">requires that any reviewer provided with <span>any form of compensation </span>for posting a
review must fully disclose the source and nature of any compensation received.</span><span style="line-height: 115%;"> So, if
you pay for reviews and the reviewers fail to disclose their compensation, you
may face liability. This is an area where it’s easy to get caught and besides
the legal danger, your reputation will likely take a big hit. </span></span></span></div>
<span style="font-size: small;"><span style="font-family: Verdana,sans-serif;">
</span></span><div class="MsoNormal" style="line-height: 115%;">
<br /></div>
<span style="font-size: small;"><span style="font-family: Verdana,sans-serif;">
</span></span><div class="MsoNormal" style="line-height: 115%;">
<span style="font-size: small;"><span style="font-family: Verdana,sans-serif;"><span style="line-height: 115%;">While </span><span style="line-height: 115%;">paying
someone to write a review is not illegal as long as it is disclosed to the
reader, doing so would likely hamper the review's credibility. In addition, the
dealer would be responsible for holding the reviewer accountable for properly
disclosing the compensation. In other words, paid-for reviews are probably not
worth the trouble.</span><span style="line-height: 115%;"></span></span></span></div>
<span style="font-size: small;"><span style="font-family: Verdana,sans-serif;">
</span></span><div class="MsoNormal" style="line-height: 115%;">
<br /></div>
<span style="font-size: small;"><span style="font-family: Verdana,sans-serif;">
</span></span><div class="MsoNormal" style="line-height: 115%;">
<span style="font-size: small;"><span style="font-family: Verdana,sans-serif;"><span style="line-height: 115%;">Besides the potential legal ramifications, fake, paid-for,
and “on behalf of” reviews </span><span style="line-height: 115%;">violate the
Terms of Service for most review sites. </span><span style="line-height: 115%;">Google, Yelp, and others
are cracking down on reviews written by someone hired or paid by a business, </span><span style="line-height: 115%;">and violations could result in having <span>reviews removed</span></span><span style="line-height: 115%;"> or
worse, </span><span style="line-height: 115%;">being banned </span><span style="line-height: 115%;">and causing a dip in your
search rankings. There’s also the very real possibility that after getting
caught gaming the system, no one will trust your reviews ever again.</span><span style="line-height: 115%;"></span></span></span></div>
<span style="font-size: small;"><span style="font-family: Verdana,sans-serif;">
</span></span><div class="MsoNormal" style="line-height: 115%;">
<br /></div>
<span style="font-size: small;"><span style="font-family: Verdana,sans-serif;">
</span></span><div class="MsoNormal" style="line-height: 115%;">
<span style="font-size: small;"><span style="font-family: Verdana,sans-serif;"><span style="line-height: 115%;">This past summer Google deleted hundreds of reviews
from a number of dealerships for what they described as “suspicious behavior”
and “spammy” content. Unfortunately, it seems that they went over the top and
deleted many legitimate reviews, but the fact remains that they are looking
very closely at the review-posting process. </span><span style="line-height: 115%;">Google wants to
ensure that reviews are posted from real people and not agents acting on a consumer’s
behalf. There are a number of companies that offer business owners a service
that will call their customers, collect a review, and post it on Google. This
violates Google’s policies and those reviews will eventually be removed for
spam.</span></span></span></div>
<span style="font-size: small;"><span style="font-family: Verdana,sans-serif;">
</span></span><div style="line-height: 115%; margin: 0in 0in 0.0001pt;">
<br /></div>
<span style="font-size: small;"><span style="font-family: Verdana,sans-serif;">
</span></span><div style="line-height: 115%; margin: 0in 0in 0.0001pt;">
<span style="font-size: small;"><span style="font-family: Verdana,sans-serif;">Yelp has long been notorious for
filtering reviews on their site, but recently they have gone even further. Apparently,
they set up a sting operation to help uncover companies that purchase fake
positive reviews, then calling out the offenders and showing the world its
evidence. Consumer Alerts have shown up on Yelp reviews that say “We caught
someone red-handed trying to buy reviews for this business. We weren’t fooled,
but wanted you to know because buying reviews not only hurts consumers, but
also honest businesses who play by the rules”.</span></span></div>
<span style="font-size: small;"><span style="font-family: Verdana,sans-serif;">
</span></span><div style="line-height: 115%; margin: 0in 0in 0.0001pt;">
<br /></div>
<span style="font-size: small;"><span style="font-family: Verdana,sans-serif;">
</span></span><div class="MsoNormal" style="line-height: 115%;">
<span style="font-size: small;"><span style="font-family: Verdana,sans-serif;"><span style="line-height: 115%;">If someone is
assisting you with your online reputation management, make sure you fully
understand exactly how they are gathering the reviews, posting them and
distributing them. <span>This goes for your
staff as well.</span></span></span></span></div>
<span style="font-size: small;"><span style="font-family: Verdana,sans-serif;">
</span></span><div style="line-height: 115%; margin: 0in 0in 0.0001pt;">
<br /></div>
<span style="font-size: small;"><span style="font-family: Verdana,sans-serif;">
</span></span><div class="MsoNormal" style="line-height: 115%;">
<span style="font-size: small;"><span style="font-family: Verdana,sans-serif;"><span style="line-height: 115%;">It’s never been more
important to be <span>100% authentic in your
review-gathering</span> and Online Reputation Management – the penalties can be
very large and </span><span style="line-height: 115%;">are not worth the risk. Questionable
reputation management tactics can destroy a dealership’s credibility, lead to
legal headaches, and do far more harm than good. </span></span></span><span style="font-family: "Verdana","sans-serif"; font-size: 12.0pt; line-height: 115%; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman";"></span></div>
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<![endif]-->Anonymoushttp://www.blogger.com/profile/03663210774947932184noreply@blogger.com0tag:blogger.com,1999:blog-4267117031967630712.post-82075388325422433842013-02-12T15:50:00.000-08:002013-02-12T15:50:02.685-08:00Pay Plan Pitfalls<div class="separator" style="clear: both; text-align: center;">
<a href="http://4.bp.blogspot.com/-T7cyOp9S0hA/URrUmLiO-WI/AAAAAAAAAK0/RNkwxibeymw/s1600/payplan.jpg" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" height="137" src="http://4.bp.blogspot.com/-T7cyOp9S0hA/URrUmLiO-WI/AAAAAAAAAK0/RNkwxibeymw/s200/payplan.jpg" width="200" /></a></div>
California recently joined New York in requiring that all sales
commission pay plans be in writing. This may seem like common sense
since many dealers realize that from a legal and practical standpoint, all commission agreements <em>should</em> be in writing whether it’s required or not.<br />
<br />
Even
if you already utilize written pay plans, the questions are how well
are they drafted and do they offer the dealership adequate protection?
Verbal commission payment agreements or poorly drafted pay plans can
lead to legal trouble and employee dissatisfaction. Complaints from
commissioned employees often include the dealership failing to disclose
the proper cost of the vehicles and various products sold, failing to
reveal the method and manner in which the pay is calculated, failing to
properly justify chargebacks, and failing to comply with pay plans.<br />
<br />
Not
surprisingly, aggressive plaintiff’s attorneys smell blood in the water
and actively encourage lawsuits by employees (and former employees) who
claim that they were improperly compensated or charged back. These
lawsuits allege dealers are intentionally violating pay plans to reduce
commissions paid to the employees.<br />
<br />
A number of recent cases
involve claims that the terms of the pay plans were unclear and
manipulated by dealers to cheat employees. Since judges typically have
little understanding of the auto industry, they may feel that the
agreement is ambiguous and find for the plaintiff. For instance, a pay
plan that simply states that the salesperson will be paid "25% of
front-end gross" or which fails to itemize each of the items that are
not included in the commission calculation can be a ticket to
disaster. It’s likely that a judge’s opinion of what constitutes
commissionable gross profit will differ greatly from the dealer’s.
Without proper disclosures, he or she may decide that “gross profit”
simply means the difference between the sale price and the price
originally paid for the vehicle.<br />
<br />
The absence of written pay
plans, or poorly-written plans that create confusion or ambiguity, makes
it extremely difficult for a dealer to defend against legal challenges. To
avoid these issues, it’s vital that your pay plans explain exactly how
commissions are calculated, when they are “earned”, and how they can be
charged back.<br />
<div style="margin-left: 120px; text-align: center;">
<br /></div>
<div style="margin-left: 120px; text-align: left;">
<strong>Best Practices for Bulletproof Pay Plans</strong></div>
<div style="margin-left: 120px;">
<br /></div>
<strong>Clearly Define Commissionable Amounts</strong>
- Comprehensive pay plans are important for every commissioned employee
in every department of the dealership, but for illustration purposes
I’ll use a vehicle salesperson’s pay plan as an example. When a
commission agreement provides compensation based on a percentage of
profit, the formula for calculating the cost of the vehicle for
commission purposes should be clearly defined and any costs or
adjustments that may be added to the original cost of the vehicle should
be carefully itemized. These items may include:<br />
<ul>
<li>Reconditioning (at retail rates, not dealer cost)</li>
<li>Lot damage</li>
<li>Dealer trade fees</li>
<li>Transportation fees</li>
<li>Lender fees</li>
<li>CPO fees</li>
<li>Trade-in over-allowances</li>
<li>Goodwill adjustments</li>
<li>Pack (non-commissionable reserve)</li>
<li>Uncollected fees or payments from the customer</li>
<li>Market condition adjustments</li>
</ul>
In addition, it should be clearly stated if items like holdback or dealer cash are included in the commission calculation.<br />
<br />
<strong>Chargebacks - </strong>Laws
in many states prohibit employers from taking back any portion of an
employee’s wages previously paid to the employee. In order for
chargebacks to be allowable, a commission agreement may need to delay
the time when a commission is “earned” to allow for cancellations or
refund requests. In this case, commissions paid to employees are an
"advance" and are not actually earned until a deal is complete and a
specified time period expires. The pay plan should define clearly when
the deal is closed and when the employee is deemed to have earned the
commission.<br />
<br />
<strong>Pay Plan Development</strong> - In many
industries, commission calculations are very straightforward. For
instance, a commission that is simply a percentage of the selling price
of a product or service is easy to define and calculate. Of course,
dealership pay plans tend to be much more complicated than that.
Ideally, commissioned pay plans should be drafted, or at least reviewed,
by qualified labor law attorneys familiar with the auto industry. Input
from the dealership staff is vital in order to ensure that the
attorneys are aware of all of the elements involved in the commission
and chargeback calculations.<br />
<br />
<strong>Distribution </strong>- A
system should be put in place to ensure proper distribution and updates
of pay plans. The pay plans should be signed by the employee and the
dealership.<br />
<br />
<strong>Language</strong> - Pay plans should be
drafted in plain language and be as easy to understand as possible. If
an employee is confused by it, chances are a judge or juror will be too.
Management should take the time to carefully explain all elements of
the agreement to employees and answer any questions completely and
honestly.<br />
<br />
<strong>Transparency</strong> - Full transparency is
essential to avoid employee concerns and misunderstandings. Managers
should not avoid questions about how pay is calculated or chargebacks
determined. If a staff member questions a commission calculation or
chargeback, management should share any and all documentation. The worst
thing that can happen is that the information is not shared until a
plaintiff’s attorney subpoenas it.<br />
<br />
<strong>Terminated Employees</strong>
- Be sure to carefully determine and promptly pay any commissions due
to terminated employees. Plaintiff’s attorneys love disgruntled former
employees and frequently try to springboard their complaints into class
action lawsuits.Anonymoushttp://www.blogger.com/profile/03663210774947932184noreply@blogger.com1tag:blogger.com,1999:blog-4267117031967630712.post-90549394919627207102013-01-27T10:20:00.002-08:002013-01-27T10:20:57.810-08:00Doing Mailers and Staffed Events? Look Out For These Red Flags<div class="separator" style="clear: both; text-align: center;">
<a href="http://2.bp.blogspot.com/-Gj_MVPhoGvE/UQVvhLVvcqI/AAAAAAAAAKE/M7PZed8_RIo/s1600/AdvertisingRed+Flags.jpg" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" height="132" src="http://2.bp.blogspot.com/-Gj_MVPhoGvE/UQVvhLVvcqI/AAAAAAAAAKE/M7PZed8_RIo/s320/AdvertisingRed+Flags.jpg" width="320" /></a></div>
Since my post last week, <a href="http://dealercomplianceconsultants.blogspot.com/2013/01/trust-me-im-your-vendor.html" rel="nofollow" target="_blank">Trust Me, I’m Your Vendor</a>,
I’m happy to say that some automotive marketing companies have reached
out for advice on how to protect their dealer clients from advertising
violations. This is a very positive step and I applaud them.<br />
<br />
That’s all well and good, but dealers need to keep in mind that not
all vendors are quite so diligent about protecting their clients from
legal exposure. Regulators have made it abundantly clear that they
simply don’t like overly-aggressive dealer marketing campaigns. They’ve
also indicated that they feel the primary responsibility for advertising
compliance lies with the dealership, not the vendor. <br />
<br />
Unfortunately, I don’t see that there’s much we can do about it in
today’s consumer-centric environment. The reality is that there’s plenty
of political capital in chasing car dealers.<br />
<br />
The bottom line is that dealerships need to be proactive in
protecting themselves. In a perfect world, all vendors would go out of
their way to ensure complete compliance with all state and federal
regulations - but we’re simply not there yet.<br />
<br />
So here’s my contribution to the cause. I’ve compiled a list, from
actual enforcement actions, of mailer and staffed event violations cited
by regulators. There may be more, but you definitely want to keep an
eye out for these Red Flags:<br />
<ul>
<li>Falsely representing that vehicles are from sources such as rental
car company bankruptcies, bank repossessions, or fleet liquidations when
the vehicles sold came from the dealers’ usual inventories.</li>
<li>Falsely representing that a sale is being sponsored or conducted by a
bank, lending institution, fleet, repossession, or liquidation company.</li>
<li>Using deceptive promotions, including mailers that state “Urgent
Recall-Official Notice” or otherwise imply it is from a government
agency.</li>
<li>Misrepresenting the number of vehicles offered at an advertised price.</li>
<li>Ads that create a false sense of urgency.</li>
<li>Ads that guarantee credit approval.</li>
<li>Ads that guarantee a minimum trade-in value.</li>
<li>Using words, phases or initials in ads that aren’t easily understood by consumers or using a font size that’s difficult to read.</li>
<li>Staffed Event personnel raising vehicle prices to enable them to offer "better" deals.</li>
<li>Staffed Event personnel using very aggressive sales tactics designed
to maximize profit, not to offer lower-than-usual prices to consumers.</li>
<li>Staffed Event salespeople and managers illegally selling automobiles
without proper state licensure or without state licenses to handle
insurance sales.</li>
<li>Hiding the costs of extra products in payment quotes, an illegal practice called “packing.”</li>
<li>Adding charges for extra products and services that were not authorized or desired by consumers.</li>
<li>Negotiating a verbal or informal sales or lease agreement then
changing the contract terms without a customer’s knowledge or consent.</li>
<li>Advertising with the intent to not sell the vehicles as advertised.</li>
<li>Misrepresenting the amount of and reasons for price reductions.</li>
<li>Misrepresenting the selling price of vehicles.</li>
<li>Failing to state the odds of a winning a prize, the value of that prize, and all material conditions required to obtain a prize.</li>
<li>Advertising “free” merchandise and prizes without adequately
disclosing that consumers would need to pay shipping, handling or other
fees.</li>
<li>Failing to properly disclose dealer documentary or other fees.</li>
<li>Making statements that the dealer could not substantiate through its business records.</li>
<li>Failing to provide disclosures required by the federal Truth in Lending Act.</li>
<li>Offering a rebate that is not associated with a manufacturer or
failing to disclose material terms in conjunction with a rebate offer.</li>
<li>Use of simulated checks where prohibited or failing to include voiding language on the simulated checks.</li>
<li>Failing to disclose limitations related to ability to obtain credit or related to the condition of a trade-in vehicle.</li>
<li>Advertising “free” merchandise with the purchase of a vehicle.</li>
<li>Failing to include state-required disclosures.</li>
<li>Selling vehicles above the advertised price.</li>
<li>Advertising vehicles that had already been sold, resulting in a “bait and switch” scheme.</li>
<li>Advertising false savings such as 75 percent off the MSRP on a used
vehicle or that vehicles would be sold at 95 percent off the original
price without defining the “original price.”</li>
<li>Statements such as “Your current loan will be paid off NO MATTER WHAT YOU OWE”.</li>
<li>Making misleading statements about the availability of financing such as “$0 DOWN DELIVERS!</li>
<li>Failing to disclose conditions or restrictions related to sales offers.</li>
</ul>
While regulations and “hot buttons” vary by state, keep in mind that
attorneys general frequently compare notes with their peers, so you
never know when your state’s AG is going to get a bee in his or her
bonnet about a new issue. If you see any of the above Red Flags or
you’re not completely certain that all statements made are true and not
potentially misleading, it’s time to slow down and have the campaign
reviewed by a qualified professional.<br />
<br />
Remember, if you’re writing the check, you’re responsible. Good luck and good selling!Anonymoushttp://www.blogger.com/profile/03663210774947932184noreply@blogger.com1