Once upon a time, while working for an auto maker’s captive finance company, an accident left my right hand in a cast. I couldn’t write or sign my name.
As a branch-office supervisor, I was responsible for completing a checklist on repossessed accounts to ensure all the required steps, from repossession to disposal, had been completed.
I was supposed to initial a box by each completed task. But because I couldn’t write, I assumed my boss would understand if I marked a simple check in each box. I didn’t know my boss very well.
“Shortcuts are not acceptable!” he bellowed.
Some of the shortcuts I witness in dealerships create compliance concerns. Here are some of them.
Product pricing. In a perfect world, the customer signs various documents disclosing the acceptance and pricing of finance and insurance products: the menu, buyer’s order, contract and registration form.
Sometimes the product price does not print on the registration form. Instead it is either left blank or prints as N/A. Other times, the dealer-management system picks up the wrong price, perhaps printing the price of the vehicle service contract on a maintenance-agreement form.
If that happens, the form in the file either shows a free price (blank or N/A), wrong price or correct price that has been handwritten in. Often, when the price belatedly is corrected, the customer has not initialed the change.
This begs the question: Exactly what does the customer’s copy show? Let’s hope it is consistent with the dealer’s copy. Otherwise, there could be some “’splainin’” to do if the customer ever decides to file a complaint or suit, and the file is requested in discovery.
Not having the DMS properly programmed to accurately load a deal is risking the validity of the transaction.
Used-car buyer’s guide disclosure. The Federal Trade Commission’s used-car rule is very specific about the language that must be used to properly disclose any remaining warranty.
Most dealers have a solid process to properly make this disclosure. For example, the used-car rule says shorthand terms such as “factory warranty remaining” are insufficient disclosures. The vendors who manage the buyer’s guide process for dealers generally have the correct, safe-harbor language.
The process falls apart when a used vehicle is sold before the vendor has had an opportunity to put a correct buyer’s guide on the vehicle. Or it breaks down when the salesperson gets lazy and handwrites a buyer’s guide instead of taking the actual guide off of the vehicle.
Thinking you are saving time by taking a shortcut leads to non-compliance of federal law.
Signing customer’s name. People get busy. Salespeople can fail to get the customer’s signature on the privacy notice. F&I managers can forget to have the customer sign the gap-insurance enrollment form.
Still, you are forging a signature.
Not reading buyer’s order/RISC.During your next management meeting, ask how many of your managers have read and understand each section of the buyer’s order, the retail installment sales contract and the lease agreement. After all, they are likely signing these documents on behalf of the dealership.
Isn’t it reasonable to expect them to know what they ask customers to agree to?
Sometimes a shortcut is just being lazy instead of understanding the basics of your job. Don’t let shortcuts short-circuit your work.
Gil Van Over is the President of gvo3 & Associates, a nationally recognized compliance consulting firm that specializes in F&I, Sales, Safeguards and Red Flags compliance. Gvo3’s website is www.gvo3.com.