F&I Compliance Fear Mongering Is Bad – Except When It Is Justified

 

By – Myril Shaw, COO, Dealer Profit Services

 

An even worse thing to do is to ignore your risks when it comes to F&I Compliance.

F&I Compliance is always a topic that draws momentary attention and then quickly drops out of view.  Compliance issues are rare – especially compliance issues that actually result in anything happening to your store.  That is not the issue though.  Being compliant and demonstrating “good faith” is actually easy.  On the other side, one single compliance issue can close your store forever.  You can try and balance that equation.  Do what is right and easy and keep your store – take the risk and ignore compliance and potentially lose everything.

Identity fraud is up over 100% over the last 18 months.  The types of identity fraud are becoming increasingly sophisticated.  The CFPB (Consumer Financial Protection Bureau) has teeth again and now Rohit Chopra has been named as its head by Congress – they are back to being aggressive.  OFAC has taken on new meaning with enforcement being up.  Class Action Lawsuits are intensely profitable for aggressive attorneys – and it is easy to caught up in one that you don’t even suspect.

Fines and penalties from violations of the Red Flags, Disposal, OFAC, Safeguards, and USA Patriot Act can range from a few hundred dollars to over a million dollars and jail time.  Selling a unit to a fraudulent buyer can cost you the full price of the unit.  Getting caught in a class action (or a directed) lawsuit can cost you countless hours, hundreds of thousands of dollars, and endless headaches.

Let’s look a little deeper at the class action suit.  An individual or couple goes to their attorney and says, “ We are the victims of identity theft and we did in the last nine months was buy a boat/RV and now we are here.”  The lawyer says (thinking of profit and opportunity for success), “Well just give me the names of all the dealerships you visited – I’ll serve them all.”  Now, you are into legal proceeding and if you have not been diligent, you have no easy off-ramp.

With Synthetic Identity Fraud the fraudster builds a credit profile around a fictitious name and identity, build it over time and then make a big purchase.  They buy from you and your unit is gone – they are gone – and you get paid nothing.  That is the definition of a bad day.

So, what do you do?  Care!  Care about being compliant and being able to document that caring.  Care about the warning signs for identity fraud.  

When you know what to look for – you protect yourself.  When you know that you can demonstrate the you are doing all the right things relative to compliance you protect yourself.  

Just do it!  Protect yourself when it comes to F&I compliance.  You are protecting yourself, your store, your employees, and your livelihood.

Just do it!  It is not fear mongering any more than insisting on insurance is fear mongering.

Don’t worry – be happy – be compliant.

About Dealer Profit Services

As a premier F&I Services Provider, Trainer, Consultant, and Comprehensive Compliance Program supplier, Dealer Profit Services is about improving a dealer’s F&I profit and then providing the tools to ensure that profit is protected.  As a Service Provider, Dealer Profit Services provides complete F&I services and delivers the industry leading F&I Profit Results.  As Trainers and Consultants, we help dealers improve their in-house F&I departments.  Through the Comprehensive Compliance Program, Dealer Profit Services provides an on-line, on-demand, Compliance Program with documents, training and tools to make F&I Compliance a process that helps protect the dealer against potential risks from compliance issues.  Get your Comprehensive Compliance Program here - just click. Learn more by visiting dealerprofit.com, email info@dealerprofit.com, or call (470) 326-0966.

Compliance Matters - A Lot

                                               By – Myril Shaw, COO, Dealer Profit Services
 

Like it or not, this is NOT a political statement – it is a reality statement about today’s real climate.  As a dealer who handles personally identifiable information and who could be responsible or accountable for identity theft or identity fraud, you need to be aware that the government is now VERY actively involved in looking at all potential compliance issues.  Even without the government concern you should care about an area that has seen a dramatic increase over the last couple of years – identity fraud is a real problem.

Now, let’s go a step beyond that.  We know a dealer who, had they not been diligent in their OFAC processing (cash deals less than $10,00), would have suffered potentially crippling fines and penalties.  The rules about checking for OFAC includes, even for cash purchases less than $10,000 are no joke.

Now, with an active CFPB, an incremental increase of both actual and synthetic identity fraud, and an increase in OFAC named individuals/entities (especially in the area of drug cartels), the risk of falling afoul of compliance standards is VERY high.  You can ignore this or you can protect yourself.

Do you have the full set of Compliance documents (Red Flags, Disposal, OFAC, Safeguards, and USA Patriot Act)?  Do you have a trained Compliance Officer?  Are you physically compliant?  Do you do regular inspections to make sure that compliance standards are being followed and that compliance is top of mind among your team?

Compliance is not just important to prevent legal issues and huge fines, compliance is customer service.  You should have signs around your store saying that “We care about you and your privacy”, “We protect your identity”, “You are safe doing business with us”, and more.  You need to let customers know that you care about them and their identity.  This is one of the critical ways that you treat your customers correctly

Caring about compliance, and being able to demonstrate and document that compliance caring can save you millions and potential jail time, it can also add customers who know you care. 

                     Compliance is not a head-nod.  It is not an “Yeah, I know”. Compliance is customer service                         that saves you money!

About Dealer Profit Services

As a premier F&I Services Provider, Trainer, Consultant, and Comprehensive Compliance Program supplier, Dealer Profit Services is about improving a dealer’s F&I profit and then providing the tools to ensure that profit is protected.  As a Service Provider, Dealer Profit Services provides complete F&I services and delivers the industry leading F&I Profit Results.  As Trainers and Consultants, we help dealers improve their in-house F&I departments.  Through the Comprehensive Compliance Program, Dealer Profit Services provides an on-line, on-demand, Compliance Program with documents, training and tools to make F&I Compliance a process that helps protect the dealer against potential risks from compliance issues.  Learn more by visiting dealerprofit.com, email info@dealerprofit.com, or call (470) 326-0966.

Make F&I A Star In Your Dealership

 

By – Myril Shaw, COO, Dealer Profit Services

F&I should be an equal, or, perhaps, a leading contributor to your Net Profit.  If it is not, then you can do better – even if it is, there may well be room to grow your F&I results.

Generally speaking, if your F&I Net Profit is not 3.5% to 4.0% of your unit sales, there is probably a process issue.  Rarely, it could be a people problem – but if the process is strong, consistent, and enforced, most people can make F&I a star.

The F&I success process starts far earlier than many think and it ends only after the customer no longer owns your unit.

F&I Profit and selling success begins when your customer first makes contact with you and your store.  Whether that is online, in print/TV/radio ads, or just driving past your location.  Every ad and every view needs to tell the story that you offer “Competitive Financing and the convenience of One Stop Shopping.”  There also need to be visible signs that you offer the Protective Products that add value to their purchase and help ensure that all they need to do is enjoy their lifestyle without worrying about damage or repairs.  Plant the seed – that is the first step.

The next step is to think about the messaging.  The Finance Office and the title F&I Manager have clearly been tarred by the auto industry.  In A car dealership, the Finance Office is where you are sent to be punished for having actually selected a vehicle.  So, the name is critical.  Don’t refer to F&I or a Finance Manager.  You should be introducing your Business Manager and the Business Office or Delivery Coordinator and Delivery Office.

Once your customer hits the store, make F&I welcoming and visible without calling it F&I.  Big, highly visible signs advertising “Competitive F&I” must be all around the store and lot.  There must be brochures and samples for your Protective Products everywhere – in your units, scattered around the walkways, and on signs.  Don’t be shy about what you offer – and why – “We care about your lifestyle.”

Once a customer engages in your store in any way, you must do a couple of things.  First, have the receptionist, or the salesperson capture their name, address, and phone number so that you can do a soft credit pull and determine their eligibility for financing.  Soft pulls can be run, and they have no impact on the credit score.  The customer never even needs to know that this was done unless you decide not to offer financing based on the results.  You will know that you can be aggressive on your F&I offerings with a strong result.

After your customer meets the salesperson, they should be introduced to the Business Manager – “Once you have picked the unit you love, you’ll be seeing Tom (Business Manager) to ensure that we have everything right and that your delivery is perfect.”  If possible, there should be face-to-face introduction – if that is not possible, every customer needs to know that they will visit the Business Manager to conclude the transaction.  This tees up the ability to meet even the Cash buyers (remember, only 15% or less of cash buyers are paying with liquid cash – meaning that they are borrowing on home-equity, drawing down savings, selling stocks or bonds, or using some other non-liquid cash – financing can help them conserve cash) and allows for potential conversions to finance and the sale of protective products.

Now your customer engages with the salesperson.  They explore the units and see the brochures and samples of protective products throughout the store.  They fall in love and now the Business Manager reengages.

“Fantastic,”, the salesperson says, “Let’s get you with Tom (Business Manager) so that we can be sure your experience is perfect.”

This part of the conversation happens 100% of the time.  Every customer, cash or finance goes to the Business Manager.  This was set up at the outset and it is followed through at the end.  100% Turnover is ALWAYS the rule.

Now the Business Manager takes over with this mantra in mind, “Aggressive and graceful in retreat – you never get more than you ask for first.”  What this means is that for finance customers maximum reserve and maximum Protective Product Profit is asked for initially – every time.  For Cash buyers there is always a request to convert to finance (“Gee, if plan to pay with cash you must have great credit – wouldn’t you like to at least explore your finance options and maybe conserve your cash?” – remember, only 15% of cash buyers are paying with liquid cash.). With cash buyers, the maximum potential Protective Product Profit.

Graceful in retreat means being able to talk back from the maximum without seeming like your customers were being over sold in the first place.  On Reserve that means, “Well, that was just lender return, let’s see what we can do.”  On Protective Products, there are many options for “graceful in retreat”.  Shortening the term of some protection may be a possibility.  Just dropping some coverage may be another.  Being creative is the critical factor.

So, now you have maximized profit – it is time to make sure that you have protected it.

How is your Compliance Program?  Do you have a Compliance Officer?  Do you have a full set of Compliance Manuals signed by the Compliance Officer and that your team is trained on?  Do you have a Compliance Training Program?  Do you regular, documented Compliance inspections?  With the newly invigorated CFPB (Consumer Financial Protection Bureau), claims regarding Compliance violations (identity fraud in particular) will be skyrocketing.

Follow these steps and you’ll make more and protect more.  Add profit to your dealership today.

About Dealer Profit Services

As a premier F&I Services Provider, Trainer, Consultant, and Comprehensive Compliance Program supplier, Dealer Profit Services is about improving a dealer’s F&I profit and then providing the tools to ensure that profit is protected.  As a Service Provider, Dealer Profit Services provides complete F&I services and delivers the industry leading F&I Profit Results.  As Trainers and Consultants, we help dealers improve their in-house F&I departments.  Through the Comprehensive Compliance Program, Dealer Profit Services provides an on-line, on-demand, Compliance Program with documents, training and tools to make F&I Compliance a process that helps protect the dealer against potential risks from compliance issues.  Learn more by visiting dealerprofit.com, email info@dealerprofit.com, or call (470) 326-0966.

 

 

Settling or Excelling – F&I Performance Can’t Be “Just Okay”

By – Myril Shaw, COO, Dealer Profit Services

Settling or Excelling – F&I Performance Can’t Be “Just Okay”

For way too long, F&I performance has been a kind of afterthought, a bonus, if you will.  Especially among Marine and RV dealers where the unit margins are so high, F&I has often been feared as potentially costing a deal rather than sought as a major Profit Center at the store – perhaps contributing 50% of the store’s Net Profit.

It is time for that to change.

F&I performance must shift from “Okay” to “Outstanding”.

Now, F&I is NOT just an F&I Manager and an office.  Driving F&I excellence is an ongoing, all encompassing, store wide effort with three major components:

- A comprehensive, defined process from the moment the customer hits your website till they leave with their new unit

- The tools and knowledge to maximize F&I Profit

- Complete F&I Compliance processes to help ensure that not only F&I profits, but also other store profits, are protected in the event of some type of Compliance issue

Let’s start with the storewide, end-to-end process.

- Advertise your F&I capabilities on your website – offer a “Get Pre-Qualified” option on each piece of inventory so that people believe that they can come in and buy

- Advertise F&I with signs in your store

- When a customer walks in, very early in the process, have the salesperson introduce them to the Business Manager/Finance Manager with the phrase, “Once you have the unit you have fallen in love with, you’ll be getting with Bob to ensure that everything works to deliver a delightful experience”

- Place Warranty and other Protective Product brochures and samples throughout the store so that customers are prepped to purchase these products

- Make it a rule, and enforce it, that 100% of customers meet your Business/Finance Manager 100% of the time whether Cash or Finance – and that has to happen at the time they make a decision, not when they come in for delivery, or just a couple of days before that

This complete process maximizes the opportunity for F&I success.

Once every customer has been prepped and every customer is being turned over to F&I, the F&I team must be equipped for success.

- The process for receiving and processing Credit Applications must be as automated as possible – applications should be electronic, the process for submitting to lenders should be easy and virtually automatic (AppOne)

- The people should trained and scripted

o Cash Buyers

         Obviously, you must have great credit, wouldn’t you at least like to explore your finance options?

         Let’s talk about ways to ensure your enjoyment and improve the future value of the unit, since you will be wanting to move up in 4 – 6 years, through these protective products

o Finance Buyers

         Aggressive and graceful in retreat – you never make more than what you ask for the first time – start with full reserve and maximize protective products and then walk back gracefully

         Objective is to maximize F&I profit on EVERY deal – not just get the unit out the door

Once the dealer is seeing at least 25% - 30% sales of protective product to Cash Buyers and F%I Profit of 7.5% or better on the amount financed, they have achieved the starting line.  It is time for continuous improvement after that.

Finally, it is up to everyone to ensure that F&I and, actually, all profit is protected.  Identity theft and other fraudulent transactions are at an all time high.  You may think that “you are on the lookout” or that “we just aren’t part of that” or that “that just won’t happen to us”.  Well, it could.  It could even if you are not involved because a Class Action Attorney could drag you in because of a dealer down the street.

The good news is that the CFPB (Consumer Finance Protection Bureau) has said that when there are violations or claims, they will absolutely look at “good-faith” efforts to to be in compliance and to be doing the right things.  They will potentially reduce or even eliminate penalties.  In local proceedings, the ability to demonstrate “good-faith” may well change any conversation.

So in that light, there are steps to follow:

- Ensure that Compliance is a process and not an event – not just a Red Flags Manual

- Have complete and up to date Compliance Manuals: Red Flags; Disposal; OFAC; Safeguards; Patriot Act

- Document staff training

- Inspect and record inspection of premises for compliance

- Document regular inspections of compliance

- Have all training and documentation available for updates on-demand

Once you have accomplished this you will see a transition from “mediocre” F&I results to a place where F&I is a substantial contributor to you Net Profit.

Just okay is not okay – it is time to excel in F&I.

About Dealer Profit Services

As a premier F&I Services Provider, Trainer, Consultant, and Comprehensive Compliance Program supplier, Dealer Profit Services is about improving a dealer’s F&I profit and then providing the tools to ensure that profit is protected.  As a Service Provider, Dealer Profit Services provides complete F&I services and delivers the industry leading F&I Profit Results.  As Trainers and Consultants, we help dealers improve their in-house F&I departments.  Through the Comprehensive Compliance Program, Dealer Profit Services provides an on-line, on-demand, Compliance Program with documents, training and tools to make F&I Compliance a process that helps protect the dealer against potential risks from compliance issues.  Learn more by visiting dealerprofit.com, email info@dealerprofit.com, or call (470) 326-0966.

F&I Profit and Risk – Maximize One and Minimize the Other – Fabulous or Fatalist

 

          By: Myril Shaw - Dealer Profit Services 

F&I really does not stand for funny and irrelevant – or flinching and imploding.  F&I really does stand for fabulous and incremental.  Making it so on your bottom line is up to you.

The other side of F&I is protecting yourself and your customers from fraud, identity theft, and other forms of compliance failure.  These can cost both your customers and you far more than you could ever make…they could cost you your dealership.

So, let’s start with making F&I fabulous.  The attitude has to be “aggressive and graceful in retreat”.  You will never get more than what you ask for the first time.  You must always look for the maximum reserve.  You must always offer all potential products.  You must always be able to walk that back.

Set clear targets for your team.  Not every deal will be the same, but you should be averaging over 7.5% F&I Profit on the amount financed.  You MUST be hitting 100% Turnover on all deals – which means that cash or finance, all your deals go to your finance office.  They may not be able to convert to finance, although 10% of the time they can, they can always sell protective products.

Look, you are not taking value, you are offering value in F&I.  Your team needs to know this, or you need a team that does.

Your F&I Sales should, in the end, represent about 50% of your overall net profit.  If you are missing that it is time t take another look.

Then there is the other side.

Fraud is a huge issue today and you have to be on the lookout.  There are two sides that could significantly impact your dealership.  One side is people’s identities being stolen so that the people buying your stuff are not really them – a pretty big problem – and then there is the other way where people with stolen identities from your dealership (through stolen identities- copied IDs, copied Apps, or other copied info)  are buying things.  Neither of these cases are good for you.

It is good to Fraud Proof your store by taking the steps needed to at least give yourself the “best practices” protection from the CFPB.

Make money, protect your money – that is what we are all about.

That is what we do!

Dealer Profit Services  - Come Visit - Upcoming Schedule

National Marine Lenders Association - Platinum Sponsor - Attending - Sept. 19 - 21, 2021 

IBEX - Attending - Sept. 28 - 30, 2021

Boating Industry Elevate Summit - 2021 Leadership Council Member - Top 100 Sponsor - Table - Nov. 8 - 10, 2021 

RVDA Conference and Exhibition - Associate Member - Speaker - Nov. 8 - 11, 2021 

MRAA Dealer Week - Education Champion Sponsor - Booth - Hospitality Events (all nights) - Dec. 6 - 9, 2021

Dealer Profit Services - Driving Profit Through Fun and Inspiration  

Dealer Profit Services, LLC can help you achieve F&I excellence - no matter where you are in the development and/or maturity of your store or stores F&I success model.  As the industry's best Finance Solutions Provider and the only one to take your customer to Fun and Inspiration with a Free and Idyllic lifestyle through F&I, thus driving industry-leading levels of F&I profit, Dealer Profit Services can and will equip you with what you need to take that next step in your F&I success - regardless of what that next step might be.  Whether you want someone to help you take over take over your F&I and with our experienced personnel just help you drive profit to your store, provide help to you some of the time, need some quick advice, or just provide F&I Training/Consulting, we are here to help you.  If you are not fully equipped with all of your Compliance Manuals and Training, Dealer Profit Services can do that too.  Contact us anytime at info@dealerprofit.com or give us a call at (470) 326-0966.   

Establishing Strong Compliance Practices Has Never Been More Important – Synthetic Fraud Is On The Rise

 

                     By: Myril Shaw - Dealer Profit Services 

Of course, Compliance includes the manuals, the locked cabinets, the cross-cut shredders, the regular inspections to prevent allowing identity theft, etc.  The other side of compliance is preventing yourself (the dealer) from becoming a victim.

"Easy"," you say.  "Run the OFAC, check the credit bureau, confirm the Driver's License – I'm good."  Well, sadly, it is not that easy.

A new form of Identity Theft known as Synthetic Fraud is on the rise.  It is estimated that last year auto dealers saw 2.7% of their credit buyers actually be synthetic and that synthetic fraud presented a potential loss of between $500M and $1B.

Synthetic Fraud is only a matter of time – and you won't like it.

The difference between "normal" Identity Theft and Synthetic Fraud is that, while with traditional Identity Theft someone will normally notice something on their credit report, credit card statement, or bank statement, with Synthetic Fraud there is no someone to notice.

Synthetic fraudsters take their time.  They will generally buy a social security number or numbers on the dark web.  These will be from people who are deceased, a minor, or in some other way are no longer associated with active account individuals.  They will create a name.  They will apply for credit and get declined – but by so doing establish a file in the bureau.  They will apply again for a low limit account and they will gradually build up a full credit profile for a non-existent individual and they will pay the bills along the way – so they end up with good credit.

When they are ready, they do the "bust-out".  They purchase the $75,000 car or boat and then, poof, they are gone.  The lender is going to ask for a buy-back.  The unit is gone.  There is no trace and there is no recovery – only loss.

The fraudsters will typically mange 10's to 100's of these synthetic identities at one time.  After their "bust-outs", they will sell their purchased units for discounted cash to unsuspecting individuals and simply disappear with the money.

So…the other side of compliance is being diligent about who is receiving credit – and it is not necessarily easy.  Synthetic fraudsters are VERY good at what they do.  It is up to you to do you best to detect these and to document your efforts along the way.

What can you do to give you at least a chance of identifying Synthetic Fraud efforts:

• Verify what you know about an individual based on their Social Security Number – The first three digits of the SSN show where a person was born – have a chat with them about their birthplace
• Be immediately suspicious about limited credit profiles – Synthetic fraudsters typically have credit profiles that show strong credit but few accounts. When you see a limited credit profile from an individual who, by age, should have had the opportunity to establish a larger profile and investigate why
• Confirm addresses and residences in multiple ways – Remember that payroll statements and records have their own black market – and getting fake proof of income is not hard, so don't rely on income statements to prove addresses
• Train your team – if you see something, say something – anything odd on a credit application, bureau, or supporting documents needs to have a light shined on it – no matter how important a sale may be, if it is a "bust-out" purchase it will cost way more than a lost sale

Just the "standard" compliance elements are all critical.  Protecting against Synthetic Fraud and being proactive against all forms of fraud will save potentially millions of dollars – and documenting those efforts will help in supporting your claims if needed.

Protect others – protect yourself – make Compliance a Priority and not an afterthought!

                    Dealer Profit Services - Driving Profit Through Fun and Inspiration  

Dealer Profit Services, LLC can help you achieve F&I excellence - no matter where you are in the development and/or maturity of your store or stores F&I success model.  As the industry's best Finance Solutions Provider and the only one to take your customer to Fun and Inspiration with a Free and Idyllic lifestyle through F&I, thus driving industry-leading levels of F&I profit, Dealer Profit Services can and will equip you with what you need to take that next step in your F&I success - regardless of what that next step might be.  Whether you want someone to help you take over take over your F&I and with our experienced personnel just help you drive profit to your store, provide help to you some of the time, need some quick advice, or just provide F&I Training/Consulting, we are here to help you.  If you are not fully equipped with all of your Compliance Manuals and Training, Dealer Profit Services can do that too.  Contact us anytime at info@dealerprofit.com or give us a call at (470) 326-0966.   

 

The Power of 20 – Continual Improvement – 20 Groups Aren't The Only Way – They Are A Great Way

  

By: Myril Shaw - Dealer Profit Services 

 Full disclosure, we do not facilitate 20 Groups.  Also, full disclosure, 20 Group dealers make up a large percentage of the Boating Industry Top 100.  We do enjoy working with 20 Group dealers.

David Parker Founder/Owner/Director of Parker Business Planning does, among other things, facilitate 20 Groups.  He likes to talk about the four modes that dealerships can be in:

• Growth Mode – always looking for improvement

• Trouble Mode – not succeeding like they would like, and knowing it

• Steady State – content

• Know It All – To smart to learn anything new

The key to these four modes is that Growth Mode is healthy and will continue to improve.  Trouble Mode recognizes that they have issues and is actively seeking improvement.  Steady State and Know It All are both in Trouble and just don't know it.

20 Groups are a great way to move out of Trouble and maintain Growth.  20 Group dealers share best practices.  Learn from each other.  20 Group dealers are focused on Continual Improvement.

It is certainly possible to grow and improve without being in a 20 Group.  It is possible to lose weight and get the best shape of your life entirely on your own.  It is easier in a group.  Getting motivation from others and providing motivation is a great way to improve. 

Dealers learning from dealers drives improvement.  How many ways can dealers share and learn from each other:

• Service bay tips, techniques, and profits

• Personnel management and staffing levels

• Sales, signage and advertising

• Revenue targets

• Profit targets

• F&I profit levels and targets

• Compliance approaches and focus

• Industry trends

• Manufacturer issues

• Insurance and protection topics

• And on and on and on

As a provider of F&I and Compliance excellence, we are always looking to make the best and those seeking to improve better.  We are always excited to find dealers who are hungry for growth.  We find them most often in 20 Groups.

Are you in a 20 Group today?  Stay there.  If not, why not?

There is power in 20 – 20 Groups are not the only way to drive continual improvement.  They are a fantastic way!

Dealer Profit Services - Driving Profit Through Fun and Inspiration  

Dealer Profit Services, LLC can help you achieve F&I excellence - no matter where you are in the development and/or maturity of your store or stores F&I success model.  As the industry's best Finance Solutions Provider and the only one to take your customer to Fun and Inspiration with a Free and Idyllic lifestyle through F&I, thus driving industry-leading levels of F&I profit, Dealer Profit Services can and will equip you with what you need to take that next step in your F&I success - regardless of what that next step might be.  Whether you want someone to help you take over take over your F&I and with our experienced personnel just help you drive profit to your store, provide help to you some of the time, need some quick advice, or just provide F&I Training/Consulting, we are here to help you.  If you are not fully equipped with all of your Compliance Manuals and Training, Dealer Profit Services can do that too.  Contact us anytime at info@dealerprofit.com or give us a call at (470) 326-0966.   

 

A Revitalized Consumer Financial Protection Bureau (CFPB) Makes Good-Faith In Compliance – Including 100% Turnover – Vital

 

 By: Myril Shaw - Dealer Profit Services 

 

You can read the full statement from the CFPB here (https://www.consumerfinance.gov/about-us/newsroom/consumer-financial-protection-bureau-rescinds-abusiveness-policy-statement-to-better-protect-consumers/).

This increased investigative and enforcement activity makes it more important than ever that dealers commit to and can document their "good-faith" efforts to meet all compliance standards and guidelines.  The CFPB will be making themselves more visible to consumers and so the odds of a compliance investigation will be increasing.

This will also capture the attention of class-action attorneys.  CFPB actions are a matter of public record.  These lawyers will be watching for an opportunity to "pile-on" and bring actions not just on behalf of the named consumer but will also be reaching out to other consumers who may be potentially similarly aggrieved at other stores.  This brings into play not just federal fines, but also the cost of legal proceedings and settlements.

If there is any sentence in the CFPB Statement that should get everyone's attention, it is this: "Going forward, the CFPB intends to consider good faith, company size, and all other

factors it typically considers as it uses its prosecutorial discretion."

Also of consequence is what the CFPB looks for.  In order to determine good faith, they will be looking for the "usual suspects":

• Up to date, accurately executed Compliance Documents

• Demonstration of a trained Compliance Officer

• Evidence of up-to-date Staff Training

• Appropriate environment: Cross-Cut Shredders; locking filing cabinets; locked Finance office; etc.

• Proof that regular site inspections are occurring – looking for sloppy compliance behavior and continually bringing compliance importance to the forefront

• Best practices in the handling of non-public, personally identifying information

• Active procedures for identifying Identity Theft

The CFPB is also hyper-focused on differential treatment of consumer classes.

This makes a well-enforced 100% Turnover policy absolutely critical.  Every customer MUST receive the same presentation regarding their ability to obtain all relevant Protective Products.

What constitutes "classes" when it comes to Protective Products?  

• Cash versus Finance

• New versus Used

• One Make/Model versus another

• Age

• Income level

• Unit price

• …

It cannot be up to a salesperson to make a situational determination about who talks to a Finance/Business Manager – this is a conversation that needs to take place 100% of the time – no matter what.  It must be a store policy enforced from the top down and documented with the customer executing a document that they have received the sale treatment as all others.

This may seem like a nuisance.  It may seem like overkill.

How much of a nuisance will federal fines and lawsuits be?  It may only be a once in a lifetime event – but that event could cripple you and your store for years to come.

Good faith matters.  

Close only counts in horse shoes, hand grenades,  and compliance!

Dealer Profit Services - Driving Profit Through Fun and Inspiration  

Dealer Profit Services, LLC can help you achieve F&I excellence - no matter where you are in the development and/or maturity of your store or stores F&I success model.  As the industry's best Finance Solutions Provider and the only one to take your customer to Fun and Inspiration with a Free and Idyllic lifestyle through F&I, thus driving industry-leading levels of F&I profit, Dealer Profit Services can and will equip you with what you need to take that next step in your F&I success - regardless of what that next step might be.  Whether you want someone to help you take over take over your F&I and with our experienced personnel just help you drive profit to your store, provide help to you some of the time, need some quick advice, or just provide F&I Training/Consulting, we are here to help you.  If you are not fully equipped with all of your Compliance Manuals and Training, Dealer Profit Services can do that too.  Contact us anytime at info@dealerprofit.com or give us a call at (470) 326-0966.   

 

Compliance Is Not A Manual – Not Even A Red Flags Manual

 

          By: Myril Shaw - Dealer Profit Services 

A sadly, not uncommon comment is some variation of, "We need to make sure our store meets compliance standards, we need a Red Flags Manual."  Well, unfortunately, having a Red Flags Manual does NOT make a store compliant.  It doesn't even, by itself, demonstrate a "good-faith" effort to address compliance issues.

Why does any of this matter?  33% of Americans are victims of Identity Theft.  25% of those found out when they were notified of unpaid bills.  30% saw money missing from accounts or unknown credit card charges.

Some Identity Theft is actually related to terrorism.  Some Identity Theft is simply a crime of greed or convenience.  Your store can be involved on the "receiving" side – someone used Identity Theft to buy a boat, RV or other Powersport or recreational vehicle.  It could be involved on the enabling side by allowing an identity to be stolen through inappropriate handling of personally identifiable non-public information.  There could be money laundering activities associated with any of these – or independent of these.

Let's start at the beginning.  The Red Flags Manual does discuss Identity Theft, its recognition and prevention, but there is more.  The Disposal Manual and the Safeguards Manual discuss the appropriate protection, storage, and disposal of personally identifiable non-public information in the form of credit applications, pictures of social security cards and driver's licenses, etc.  There are needed as well.  The OFAC Manual addresses prevention of selling to or engaging with terrorists, terrorist organizations and their affiliates.  Finally, the USA Patriot Act Manual lays out issues around money laundering.  All of these are required.

Simply having the full set of manuals doesn't even come close to demonstrating "good-faith".  These all must be read, understood, and signed by the dealership's designated Compliance Officer.  The Compliance Officer bears the responsibility for training and enforcing compliance policies and practices.  Every employee who handles or has access to personally identifiable non-public information must be trained and that training must be demonstrable and regularly reinforced.

With all of that, demonstrating a "good-faith" effort at meeting good compliance practices is closer – but still not complete.

There is the issue of physical equipment placement, protection, and control.  It is easy to leave copies of documents that need to be protected on copiers, fax machines and scanners.  Is all this equipment in controlled locations accessible ONLY by trained personnel who require access to personally identifiable non-public information?  Are these documents, when destroyed, destroyed with a cross-cut shredder?  Straight-line shredders are not acceptable for compliance purposes.

Are documents stored in locked filing cabinets?  Is the Finance office locked/lockable?

Finally, does the Compliance Officer and/or other management do regular "walk-arounds"?  On at least a weekly basis, but at unpredictable time, the Compliance Officer, or someone designated by the Compliance Officer should just do a "casual" office walk-around.  They need to be checking on the following:

• Are locked cabinets locked if there is no one around?

• Are there personally identifiable non-public documents unattended on copiers, fax machines, or scanners?

• Are there personally identifiable non-public documents lying unattended on desks or in unlocked desk drawers?

• Is the Finance Office locked if vacant?

All of this should be documented showing the date and time of the walk-around and the compliance or non-compliance in each area.  If there is non-compliance, there should be notes showing the action taken.  This documentation should be included with the compliance documents.

When everything mentioned above is being doe, you are demonstrating a "good faith" effort to meet good compliance standards.  To be clear, doing all of this and everything cannot and does not ensure that you still won't run into a compliance issue or lawsuit.  Mistakes do happen.  In this case, when things do happen, having this evidence of a "good faith" effort will help as evidence that anything that has happened is not a result of negligence and will aid in the argument for lenience in any penalties.

Compliance is not a manual.  Compliance is a totality of manuals, processes, practices, and training – and even then, bad things may happen – but at least, the "good faith" effort argument will probably help!  (And it is just reassuring for both you and your customer, no matter what!)

Dealer Profit Services - Driving Profit Through Fun and Inspiration  

Dealer Profit Services, LLC can help you achieve F&I excellence - no matter where you are in the development and/or maturity of your store or stores F&I success model.  As the industry's best Finance Solutions Provider and the only one to take your customer to Fun and Inspiration with a Free and Idyllic lifestyle through F&I, thus driving industry-leading levels of F&I profit, Dealer Profit Services can and will equip you with what you need to take that next step in your F&I success - regardless of what that next step might be.  Whether you want someone to help you take over take over your F&I and with our experienced personnel just help you drive profit to your store, provide help to you some of the time, need some quick advice, or just provide F&I Training/Consulting, we are here to help you.  If you are not fully equipped with all of your Compliance Manuals and Training, Dealer Profit Services can do that too.  Contact us anytime at info@dealerprofit.com or give us a call at (470) 326-0966.   

What Stands Between You and a Major Penalty for Identity Theft – or other Compliance Failures

 

          By: Myril Shaw - Dealer Profit Services 

Compliance is often mentioned and known to be important.  No one ever questions that compliance in the areas of identity theft, protection against accidental engagement with terrorists in any form, or entanglement in money laundering transactions is important, perhaps critical, to a dealership.  Yet, action on this is often neglected or deferred.

Yes, this part of compliance involves five areas:

• Red Flags

• Disposal

• OFAC

• Safeguards

• USA Patriot Act

Yes, each carries its own rules and penalties and this is exactly the reason why, after talking and thinking about them, so many dealers just put them in the closet.

Why?  There are several reasons:

1. It seems complicated – who even knows exactly what is required?

2. It is time-consuming – there are documents and there is training and who has the time or the knowledge?

3. It is distracting – compliance is not the core business and most dealerships are probably doing most of the things right – it can be ignored, or at least delayed.

4. It is expensive – getting the documentation and the training will take hours, which is an expense in terms of time lost and they will cost thousands of dollars.

There are just a couple of problems with this way of thinking.  

First, and perhaps most importantly, the cost of failure can add up to hundreds of thousands or even millions of dollars in fines and legal fees, and perhaps even jail time.  The real issue here is that even if a single dealer is doing things 80% correctly and they get caught up in a class-action lawsuit because of a dealer up the street if they have not everything that could reasonably do, a failure that is not even theirs could cost more time and money than any compliance effort could possibly have cost.

Second, while it does require some research and some investigation to address the issues and the requirements, it is possible.  It is also possible to find an organization that can support your efforts.  Is the cost worth the possible negative consequences?  That is a calculation that only the dealer can make.

Third, doing these "compliance things" is valuable to your customer, your country, and your company.  Protecting your customer should make sense even there were no potential penalties.  Protecting your country from terrorists should make sense.  Protecting your company from potential penalties should make sense.

There is a bottom line here, and it is this.  Doing the right thing for your customer, your country and your company should be a natural instinct and a natural response regardless of cost or convenience.  

Now, there is an added benefit.  The government has said that a "good faith" effort to address these compliance issues can, and probably will, result in leniency in the event of an issue.  Close counts – giving best effort matters and can have a huge impact on the outcome of a negative compliance event.

Doing things right, is the right thing to do – compliance is not just a legal issue, it is a customer service issue, country respect, and company honor matter.

When you make a "good faith" effort to satisfy compliance requirements you win in uncountable ways!

Just do it!

Dealer Profit Services - Driving Profit Through Fun and Inspiration  

Dealer Profit Services, LLC can help you achieve F&I excellence - no matter where you are in the development and/or maturity of your store or stores F&I success model.  As the industry's best Finance Solutions Provider and the only one to take your customer to Fun and Inspiration with a Free and Idyllic lifestyle through F&I, thus driving industry-leading levels of F&I profit, Dealer Profit Services can and will equip you with what you need to take that next step in your F&I success - regardless of what that next step might be.  Whether you want someone to help you take over take over your F&I and with our experienced personnel just help you drive profit to your store, provide help to you some of the time, need some quick advice, or just provide F&I Training/Consulting, we are here to help you.  If you are not fully equipped with all of your Compliance Manuals and Training, Dealer Profit Services can do that too.  Contact us anytime at info@dealerprofit.com or give us a call at (470) 326-0966.