Pub. 1 2019 Issue 5

EXTRA EXTRA READ ALL ABOUT IT! Car dealer and former finance manager face 300-500 years in prison for bank fraud Chevrolet dealership slapped with $2M fine for loan fraud Car dealer sues former GM and finance manager for the bank fraud that closed down his dealership Now I don’t know about you, but when I see these head- lines I immediately think, “Thanks a lot for perpetuating negative car-business stereotypes and making it harder for honest dealerships to do their jobs.” Then I think, “Wow, what did they do that could lead to fac- ing 500 years in prison, millions of dollars in fines, or even dealership closure?” In both cases, there were accusations of falsifying customer information when submitting vehicle loan applications. Really? Are people still changing ones to fours and threes to eights, creating jobs, and falsifying information on an application? Sadly, the answer may be yes. Could this be possible in your store? Of course not, but are you sure? Maybe these cases are just examples of rogue members of the automotive indus- try. Regardless, taking the following steps can help protect your dealership. 1. Recognize ALL the stakeholders. Generally, we think of violations that can occur during the sales process, however, compliance is not limited to one department or position. It is a dealership-wide responsibility to follow rules and regulations. When was the last time your service team discussed the Safeguards Rule and protecting confidential infor- mation? Are your salespeople compliance certi- fied? If your sales managers call deals in, are they responsible for Adverse Action Notices? Finance managers, sales managers, salespeople, hybrid salespeople, service advisors, and service manag- ers should all be training on compliance. 2. Appoint a compliance manager and empower them to develop an internal code of ethics and guidelines for the team to follow. Both the Red Flags Rule and Safeguards Rule require a compliance manager, so expand their scope. a. What is the proper expectation/culture of the dealership? b. What behaviors will not be tolerated? c. What are the consequences when the guide- lines are not followed? d. Educate everyone on the common-sense details that are often taken for granted. e. Leave nothing to chance. For example, tell the team that overstating income is never acceptable and that only the facts must be listed on a credit application. 3. Have all departments obtain compliance certifica- tion and document their training in their employ- ment files. All stakeholders should be educated and certified to ensure that they understand and are committed to following the rules. This training will need to be comprehensive and target their specific areas in the dealership. Send your sales managers to F&I school. Often, only finance managers receive formal F&I/compli- ance training, but with today’s blended approach, sales managers may perform some F&I duties. Hav- ing sales managers attend a recognized F&I class provides you a built-in backup that can help with scheduling and overflow plus help protect against that rogue employee. Select an F&I school that: • Provides a digital recording of the student exe- cuting a compliant process • Has class content reviewed by nationally rec- ognized attorneys • Incorporates compliance certification as part of the class Educate your team, document the results, and implement procedures to protect your dealership. It all comes back to the age old saying of, “It’s not how much money you make, it’s how much you keep that matters” and compliance rule violations are a fast way to lose it! Dwayne Wiggins F&I University Development Manager American Financial & Automotive Services, Inc. COMPLIANCE SENSE IS NOT SO COMMON N E W H A M P S H I R E 17