Never Assume: Make Sure You and Your People Are Doing It Right

Recent­ly, my deal­er­ship added a man­ag­er to our team. Part of my dealership’s stan­dard ori­en­ta­tion process includes our pol­i­cy as it per­tains to the Fed­er­al Trade Com­mis­sion reg­u­la­tions. Imag­ine my sur­prise to learn that in spite of this accom­plished manager’s many years of expe­ri­ence in var­i­ous new car fran­chise deal­er­ships, he was some­what unfa­mil­iar with the basic com­pli­ance require­ments.

CandaceBMcRaeToo often, oth­er­wise law-abid­ing deal­ers naive­ly assume that their deal­er­ship is fol­low­ing all required rules and reg­u­la­tions. Deal­ers hire good peo­ple who they assume are famil­iar with all of the reg­u­la­tions asso­ci­at­ed with our indus­try and who pos­sess no crim­i­nal intent of iden­ti­ty theft or decep­tive prac­tices. No mat­ter, the best inten­tions and most naïve assump­tions will not pro­tect you from FTC fines and penal­ties. Igno­rance of the law and reg­u­la­tions will be no excuse.

Do not dis­miss FTC reg­u­la­tions. Invest your time to read the actu­al reg­u­la­tions post­ed at The FTC Web site con­tains an abun­dance of impor­tant infor­ma­tion. In fair­ness, we must acknowl­edge that the FTC serves a valid role in reg­u­lat­ing com­merce. The deal­er is best served when con­sumers are pro­tect­ed from decep­tive and unfair trade prac­tices, and busi­ness is con­duct­ed on an even play­ing field. As deal­ers, we need and want con­sumers to feel con­fi­dent when doing busi­ness with our deal­er­ships. Prof­it poten­tial increas­es when con­sumers feel con­fi­dent.

To get start­ed, deal­ers must make a firm com­mit­ment to deal­er­ship com­pli­ance and come to terms with the fact that these reg­u­la­tions are most like­ly per­ma­nent. Trust me, I know how the aver­age dealer’s thought process works — ignor­ing the Fed­er­al Trade Com­mis­sion will not make it go away.

So, des­ig­nate a trust­ed deal­er­ship employ­ee as a com­pli­ance offi­cer to coor­di­nate the safe­guards, iden­ti­fy and assess risk, cre­ate and imple­ment a com­pli­ance pro­gram. Edu­cate all of your staff on the com­pli­ance pro­gram. Have your com­pli­ance pro­gram and doc­u­men­ta­tion reviewed by your cor­po­rate attor­ney or an attor­ney famil­iar with com­pli­ance law.

I encour­age every deal­er, yep that means “do not del­e­gate this task,” start with a sim­ple yet obser­vant walk through the deal­er­ship. Pass by each sales advi­sors desk. Is their desk clut­tered with fold­ers con­tain­ing com­pro­mised cus­tomer infor­ma­tion? Trip through your sales tow­er. Can you spot com­pro­mised cus­tomer data? Be brave and ask who and how many employ­ees have pass­words to access cus­tomer data. Do any for­mer employ­ees still have access to cur­rent pass­words? Go ahead and quiz your sales man­age­ment team on terms like the Used Car Rule and Red Flag com­pli­ance. Do they ver­i­fy iden­ti­ty or do they just roll with any­one fog­ging a mir­ror? Take your cof­fee in the Finance & Insur­ance office. Note how many of the fold­ers stacked up on your manager’s cre­den­za could eas­i­ly be com­pro­mised if the man­ag­er excused him­self from his office dur­ing a loan clos­ing. You should sit, enjoy that cup of cof­fee while you query the F&I man­ag­er on the store’s menu pric­ing sys­tem, Reg­u­la­tion Z, Truth in Lend­ing reg­u­la­tions, arbi­tra­tion, and Equal Cred­it Oppor­tu­ni­ty Act. Ask him for his assess­ment of “dis­parate impact.” Swing through your BDC and make sure those guys are up to date on the FTC’s lat­est rul­ings such as mar­ket­ing via text mes­sages. Grab anoth­er cup of cof­fee and by this time you may want to add a lit­tle “some­thing” extra to help you quell your nau­sea.

Go vis­it with your comp­trol­ler and ask about doc­u­ment stor­age and dis­pos­al process­es. Ask which com­pli­ance ven­dor your deal­er­ship uti­lizes. While you are at it go ahead and ask for a demon­stra­tion of that vendor’s appli­ca­tions. Are you still ver­ti­cal? Great! Next, bring in your mar­ket­ing guru. I bet your con­ven­tion­al ads are just fine but what about your Dot Com dis­clo­sure and online adver­tis­ing? Is your Web site com­pli­ant? Mobile mar­ket­ing com­pli­ant? Is your mar­ket­ing guru up to speed on the FTC reg­u­la­tions? Wow! What an eye open­er! Bet you just real­ized that your 2 pm tee time may need to be resched­uled!

What deal­ers may see as “that’s just how we oper­ate” is what an iden­ti­ty thief may see as “oppor­tu­ni­ty” and/or what the FTC may see as an “egre­gious vio­la­tion.” Your best plan is mit­i­ga­tion and pre­ven­tion of poten­tial prob­lems.


This arti­cle orig­i­nal­ly appeared in Deal­er Busi­ness Jour­nal  June 2013 — vol­ume 10 

Can­dace Ben­nett McRae is a co-own­er of Wheel­Mart Auto Super­center in Leesville, La. Can­dace has over 23 years’ expe­ri­ence in deal­er own­er­ship and man­age­ment with spe­cif­ic empha­sis in sales oper­a­tions. In addi­tion to numer­ous cer­ti­fi­ca­tions and recog­ni­tions through Ford Motor Com­pa­ny and Toy­ota Sales USA, Can­dace received the nation­al des­ig­na­tion of Cer­ti­fied Mas­ter Deal­er in 2006 through North­wood Uni­ver­si­ty in con­junc­tion with NIADA.