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.
Too 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 www.ftc.gov. 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. firstname.lastname@example.org