Many dealers tell me they have one main concern amid the bad press and increased scrutiny that has arisen from deceptive finance & insurance practices: “Keep me safe, but maintain gross.”
Also: “Keep me off the evening news.”
So when I ask dealers what they are doing to protect their dealerships and ensure consistent disclosure all products to all customers, the answer is usually: “I'm not worried. I have a menu.”
Just because I have a wrench doesn't make me a master technician.
Dealerships continue to be very public targets for improper F&I disclosure and inadequate documentation in the sales process.
Consequently, dealers have been lured into a false sense of security by F & I product providers and others that everything will be fine if they include an F & I menu in the sales process.
I have a screwdriver, too.
F & I menus definitely can provide a definitive summary as to the agreed-upon terms of a sales transaction. At a minimum, that should contain vehicle purchase price information including tax, title and license and other fees, base payment, interest rate, and term.
From there, each available F&I product should be clearly presented on the menu with a corresponding price for that product. The resulting effect for products purchased then should be reflected in the new terms and clearly stated and understood by the customer.
While this may sound simple, it is far from what is happening in the typical dealership business office.
When reviewing the documentation in sales files for our clients, I routinely find inconsistencies that can lead to embarrassing time on the local TV news.
Here are three things to look out for at your dealership:
Inconsistent Menus — Most stores have one of three types of menus in service: computer generated, pre-printed form provided by an F & I provider or a dealership-specific version. Problems arise when staffers use different ones.
Goal: Use only one menu type and preferably one that can be printed from the computer system.
Handwriting — While some people may actually have great handwriting, it still does not belong on any document signed by the customer. Handwriting on any document in the sales file is an automatic red flag to plaintiff's attorneys and attorneys general. The premise is quite simple: how do I know when this was written and did the customer see it?
Goal: The only handwriting on any document in the sales file should be signatures. I even prefer that credit applications are completed electronically.
Signatures — Believe it or not, even in cases where the menu is correctly printed from the system and shows all the correct products purchased and ties to the contract, the lack of a simple signature can raise doubts as to what was actually disclosed to the customer. I often see menus with customer signatures that are unclear as to what was actually purchased. Having that on file could be a detriment. I'm not sure which situation is worse.
Goal: Only have the customer sign documents (including menus) that are complete and clear as to the term agreed upon. It is advisable for a dealership agent to sign at the same time as the customer. This helps thwart unfair and deceptive trade practice claims.
Properly completed and presented F & I menus protect the dealership and even improves profitability. To accomplish this, a dealership must have in place regular testing and training for the business office.
Remember, documentation on file should clearly explain what transpired and leave no doubt as to agreements between the customer and the dealership.
Now, where's that hammer?
Brian Bentz is a consultant with Dixon Hughes PLLC. He can be reached at 817-276-4106 and [email protected].