By Myril Shaw, Chief Operating Officer, Dealer Profit
Services
Every dealer, who cares about maximizing profit, needs to be
offering complete and inviting F&I services. To protect that profit, each dealer needs a
comprehensive Compliance program. These are
tightly integrated and ultimately, while one is profit-generating and one is
profit protecting, are completely complimentary.
The F&I Services offering must begin when the customer
first makes any contact with the dealer – be that website, advertisement, marketing
campaign, or whatever that first customer contact looks like. That first contact, and continuing contact,
must broadcast the message, “Competitive Financing Available.” Every customer who comes in contact in any
way must know that the dealer offers financing.
Comprehensive compliance starts when the dealer receives
anything of value from the customer.
What does “anything of value” mean?
Following is a partial list:
·
Cash (or any equivalent – there will be a point
where banks take over)
·
Any personally identifiable information
o
Social Security Number
o
Driver’s License Information
o
Employment Details
·
Credit Card Information (depending on how it is
received/taken)
·
Anything that could be used for Identity Theft,
Identity Fraud, Money Laundering, Illegal Purposes
F&I Services have to start early to be effective. Customers have to know you can deliver and
then they have to know that you will deliver complete F&I. The first time they meet with your
salesperson, they have to be introduced to the idea that they will also meet
their Business Manager to ensure ideal delivery (the Business Manager will also
handle contracting and will present all of the available Protective Products.)
When a customer comes in, whether to buy a unit or a part,
they may start providing personal information of value, or they may provide
cash. Compliance conformance or failure starts
at that moment.
Cash purchases are reviewed by the US Office of Foreign
Asset Control (OFAC). They ensure that
cash purchases are not being made by individuals or entities who are terrorists
or other entities identified by the US Government as restricted from doing
business in the US (such as drug Cartels.)
All cash purchases regardless of amount (while certain reasonableness
guidelines should be applied) must be checked on the OFAC Database (an easy
online database that only requires basic ID information – name and address is
usually enough).
This check is easy – failure is expensive. A penalty for selling to a prohibited entity
can result in a fine of up to $1,000,000 and up to 20 years in jail. This can put a big hit on F&I profits.
For non-cash customers, the dealer will be receiving a lot
of personally identifiable information.
All of it must be verified and protected.
Obtaining this information provides the Business Manager
with the information needed to provide the best financing choices available –
and to offer all of the lifestyle protecting Protective Products that make
sense – and make money.
On the Finance side, there are two fundamental principles:
1) The Hippocratic Oath of F&I – First, Do no harm – Make sure the deal
gets done; 2) Aggressive and graceful in retreat – You never get more than
what you ask for the first time – Put it all in on your first conversation and
then be able to back down in a reasonable way.
These principles ensure maximum F&I profit.
To get to maximum profit a lot of personally identifiable
information has to be obtained, retained, and potentially destroyed. Failure to do all of these correctly could
more than wipe out the profit obtained.
Identity theft costs are almost incalculable. Failure to properly destroy personally identifiable
information could be $2,000 per incident and failure to protect it could be the
same, and these are federal penalties beyond the civil suits. These are costs that can easily reduce
F&I Profit to zero.
To maximize F&I Profit a dealer has to start at first
contact.
To minimize F&I Compliance loss potential a dealer needs
to care that the FTC and CFPB have said that they care about “good faith” (meaning
that the dealer has tried to do the
right things from a compliance perspective) will be considered in the event of
a compliance issue – and the FTC, in particular, has said that they will be
looking at dealerships. It is critical
that dealers do “good faith” compliance right.
“Good Faith” Compliance means:
·
Full Compliance Manuals with regulations
understood and enforced by a Compliance Officer
o
Red Flags
o
Disposal
o
OFAC
o
Safeguard
o
USA Patriot Act
·
Compliance Training
o
Documented for all employees at all times
·
Compliance Inspections
o
Documented on a regular (weekly) basis
·
Compliance Tools
When a dealer has the best F&I sales practices coupled with the best Compliance practices the results will always lead to the best overall profit results. Learning how to do both is critical for dealer profits.
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 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 online, 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.
