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.