Experts Weigh Pros, Cons of Video-Recording F&I Business

Proponents say surveillance cameras in finance and insurance offices protect dealers, but others aren’t so sure.

Steve Finlay, Senior Editor

January 24, 2014

6 Min Read
ldquoMake sure processes followedrdquo Veldkamp says
“Make sure processes followed,” Veldkamp says.

The camera doesn’t blink.

That reality is cited by both proponents and opponents of video-recording customer transactions and interactions in dealership finance and insurance offices.

Pros include using the recordings for training and for potentially refuting inaccurate legal allegations by customers.

The con list includes the possibility of giving a plaintiff’s attorney just what’s needed for evidence in successfully suing a dealership.

Video-recording F&I business has been debated since the issue surfaced more than a decade ago. It remains a lively and divided topic within the auto-retailing industry. Among backers and detractors are people offering provisos.

“If you are not afraid of your dealership’s F&I process, you shouldn’t be afraid of video recording,” says trainer Steve Veldkamp of the Great Lakes Companies.

His dealership clientele monthly record about 4,000 F&I manager-customer transactions involving financing, aftermarket products, regulatory disclosures and document signings.

He randomly reviews a sampling of the recordings. “I can’t view all of them, but I look at them to make sure processes are followed and presentations are done right and ethically,” he says.

Video recordings also are used as a training tool to show F&I managers what they do right, wrong and so-so in their product presentations. The goal is to improve performances and increase per-transaction sales of add-ons such as extended-service contracts, maintenance plans and wheel-and-tire protection.

“Do you want $200 more or not?” Veldkamp says, referring to increased profits. “That’s what the cameras mean.”

He and other industry trainers discuss the issue’s pros and cons at a recent F&I Management and Technology Conference.    

“Videotaping of F&I transactions is huge,” says another proponent, John Lovin of Warrantech. “It increases compliance. It results in better selling and better presentations. It’s a big change.”

But it is not a particularly widespread practice.

Veldkamp says only 10% of his dealer clients use it. Lovin speculates the national average is about half that.

The advent of video-recording F&I transactions came after law enforcement authorities in 2000 raided a California dealership, Gunderson Chevrolet, and charged several staffers with bilking customers.

“After that, everyone thought use of cameras in F&I would become big, but it didn’t become as prevalent as some thought it would,” trainer Peter Chafetz, Allstate Dealer Services, tells WardsAuto.  

Some F&I managers come across well on the surveillance cameras. Others don’t.

“I’ve seen videos and what’s being said,” and in some cases it’s an eye-opener, says GSFSGroup’s Ray Jennings.

His conclusion: Store management should make sure F&I staffers are following processes and complying with all regulations.

“I’ve seen videos that put the dealership in awkward positions,” Jennings says. “If you’re confident your F&I managers will truly follow full disclosure and full compliance, do videos in the F&I office.”

Otherwise don’t. “Videos are a great training tool,” he says. “They should be done in the training room only.”

Jennings’ fear is that an F&I manager may slip up, prompting a customer’s lawyer to later go after the video recording to use as evidence in a civil case against the dealership. “All it takes is someone filing a complaint to put a dealership in a tough situation. That’s my reservation.”

But such occurrences seem rare. IAS, a provider of dealership video services, has recorded 5 million F&I transactions, Veldkamp says. “In only 50 times has a lawyer asked for one of those videos. In all 50 times, the dealership was exonerated.”

The Phoenix-based, 72-store Van Tuyl Group video-records F&I doings and “has paid out nothing in (legal) damages,” Lovin says. “It has saved a lot. They can go back and look at the video if a customer says ‘I was promised this,’ and in fact no such promise was made.”    

Consumer legal action against a dealer typically includes the elements of alleged injury and perceived anger, Veldkamp says. “If you didn’t injure but did anger, we can look at the video and see if we made a mistake. We can go back and look at what we did to create the anger.”

Lovin adds: “It opens the process for improvements. Using video assumes the F&I person is doing the process correctly.”

Video-recording is particularly effective for improving sales of F&I products and services, he adds. “If someone is not selling enough, you can go back to the video and see what part of the process they are shortcutting.”

Videos as training tools are the best way to increase per-vehicle F&I profits “all day long,” Jennings says. “We use video in training, and see vast improvements of $250, $350 and more. We use it in true scenarios and in role-playing.”

He stops short of backing the use of cameras to record transactions for compliance purposes. “I’m not anti-video there, but just cautious. A dealership can become susceptible to someone who wants something for nothing. Most people aren’t like that, but all it takes is one.”

Calling himself a middle-of-the-roader on the issue is Bart Carpenter of Cal-Tex Protective Coatings, an F&I product provider.

“Football teams watch videos of their games because they know it helps them execute better,” he says. “However, dealers need to understand that a video can become evidence.”

He neither encourages nor discourages dealer clients to install video equipment. “It’s a dealer decision.” But for dealers mulling the matter, Carpenter asks: “How close are you to 100% compliance?”

Many dealerships have cleaned up their F&I practices. What once was standard practice, no longer is permitted, or legal, in many cases. But auto retailing hasn’t completely eradicated wrongdoing.

“Some people might not want to use video because they think their dealerships might be doing something wrong,” Lovin says.

Most F&I transgressions today are unintentional, Carpenter says. “I don’t think someone is saying, ‘I’m breaking the law, and I don’t want it on video.’”

If a dealership uses videos, Chafetz advises against permanently keeping them in order to reduce legal liability. “Have a record-retention policy.”         

Industry veteran Jim Dirks calls himself a “selective advocate” of recording equipment in the F&I office.

“If your F&I shop is straight up in total compliance, then by all means do it” because, among other things, it can discourage a litigator if the recording disproves a client’s allegation against a dealership.

“However, if you are not absolutely certain your shop is 100% compliant, all you will do is give evidence to a plaintiff’s attorney,” he adds.

Most litigators don’t want dealerships recording F&I business, Tony Dupaquier director-training for American Financial tells WardsAuto.

“Ethical business managers who do it right have no fear of recording the transaction,” he says, adding that it’s also an effective training aid when used to improve rather than punish performance. “The one thing I tell every dealer before putting in cameras is not to use them as weapons.”

F&I manager Dina Gilbert Wilson agrees. She has worked at dealerships where her dealings with customers were video-recorded.

“It didn’t bother me because I was doing everything the right way,” says Wilson, who currently works for Timbrook Automotive in Cumberland, MD. “It cut down on the ‘he said, she said.’”

Lovin says he wouldn’t confine cameras to the F&I office. “If I could record the (vehicle) sales process, I would.”

Video-surveillance cameras have become a part of society, except at most dealerships, Veldkamp says.

“It is mind-boggling to me that just about every transaction we make is video-recorded, from buying gas to buying a pack of gum, but a car transaction involving $25,000, $30,000 is not.”

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