Dealerships operate in a complex environment, subject to numerous legal and regulatory compliance requirements. From consumer data privacy and security laws to aftermarket pricing and transparency disclosures, creating a culture of compliance at the dealership is essential for staying compliant, maintaining a strong reputation and avoiding costly penalties. In this ever-changing regulatory landscape, dealerships must keep their customers’ interest and privacy top-of-mind. Three key steps will help dealerships prioritize compliance and protect their business and the consumer.

Make Consumer Data Privacy Paramount

As of November 2024, 20 U.S. states have enacted comprehensive consumer data privacy laws, making data protection a top priority for dealerships. With more and more customers engaging online – whether for purchasing or financing – the volume of digital data being exchanged has grown substantially. Failing to comply with state- and federal-level data privacy regulations can lead to lawsuits, hefty fines and a loss of customer trust.

To mitigate risk, dealerships must create and adopt robust data privacy policies and practices that protect sensitive customer information. A study from Stanford University and Tessian found that 88% of data breach incidents originate with employees, so it’s important to have training to ensure staff are equipped to protect the customer data collected during the car-buying transaction.

This includes securely handling emails, texts and PII (personally identifiable information) gathered throughout the deal process. Partnering with software vendors that adhere to data security requirements for capturing, transmitting and storing customer data helps implement and augment those practices. Dealers must ensure that these systems not only comply with current regulations but also adapt to future changes in privacy laws. Implementing measures such as data encryption, secure storage, and permission-based access can help ensure customer data is managed responsibly. With strong data protection policies and strategies, dealerships can create a safer digital environment, fostering trust and confidence among customers.

Ensure Pricing Transparency

Transparency in pricing, particularly for aftermarket products, is critical to building trust between dealerships and customers. Many consumer protection regulations focus on ensuring consistency in pricing and proper disclosure of fees and terms, especially for finance and insurance aftermarket sales.

Laws such as the Truth in Lending Act (TILA) and regulations on Unfair and Deceptive Acts and Practices (UDAP) require dealerships to be transparent about all costs associated with a vehicle purchase. Dealerships must disclose every fee, charge, and term related to the purchase, financing or leasing of a vehicle, ensuring there are no hidden costs. Offering every customer the same price for the same vehicle and F&I products ensures fair dealings and helps avoid regulatory scrutiny. It’s important to note that these policies apply to all forms of advertising, so from ads in the local paper to online on the dealership’s website, the offer and fine print must be the same everywhere. This not only protects dealerships from potential legal challenges but also strengthens relationships and trust with buyers.

Consistency in pricing can be achieved by implementing tools that automate disclosure processes, as well as by conducting regular staff training. These measures ensure all sales team members understand and uphold the dealership’s commitment to fair and transparent pricing.

Plan for Compliant Customer Communication

Dealerships must be mindful of when and how they communicate with customers. Just because a salesperson has a customer’s phone number doesn’t mean they have free rein to call or text at any time. The Telephone Consumer Protection Act (TCPA) regulates telemarketing practices and establishes specific “quiet hours”  – before 8:00 a.m. and after 9:00 p.m. – during which unsolicited calls or texts are prohibited without written consent.

Violations of the TCPA can result in significant fines, ranging from $500 to $1,500 per illegal call or text message. To avoid costly penalties, dealerships should establish strict policies among staff when it comes to customer communications. This includes obtaining proper consent for phone or text outreach, ensuring compliance with quiet hours and frequently updating do-not-call lists. Respecting customers’ time and boundaries is not only a legal requirement, but also a key part of building trust and a positive customer experience.

In a market where customer loyalty is priceless, following these key compliance steps will help dealerships build a strong reputation and avoid costly legal pitfalls. In order to gain repeat business, dealers must follow the latest compliance guidelines and prioritize ethical business practices. One great way to stay informed about the latest compliance rules, regulations, and best practices, is by downloading the free 2024 Dealertrack Compliance Guide. By adhering to data privacy laws, ensuring transparency in pricing, and following communications rules, dealerships can maintain compliance while creating a customer-first experience.

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