CallSource^® Aim Higher

The World Of Compliance

by Terry Dortch, March 15 2010

Compliance is a vague and all encompassing term that is somewhat scary when we hear it. "Compliance," what does it mean and how do we deal with it? Many people describe compliance as a maze and it's true, compliance is a maze, but like any maze there is always a way out. 

Over the years compliance issues for the automobile dealerships have become so complex that most have no control of it or are barely scratching the surface of what is actually required. Failure to comply with all State, Federal and regulatory laws presents problems not only in the form of significant fines for each and every violation, but also consent orders that will result in required reporting to the government at a cost you do not want to include in your budget. Then there are the plaintiffs' lawyers who are actively seeking opportunities for large settlements and compliance issues have always been their playground. Unfortunately, with each additional regulation that gets added to the dealership's compliance burden, automobile dealerships are increasingly the target of trial attorneys.

Compliance is not restricted to the F&I department. Dealerships need to have compliance programs in place for OSHA/EPA in the shop, EEOC procedures to deal with employment claims, strict enforcement of GLB and the Safeguard Rules to lock down and protect customer information in all areas of the store, adverse action letters, Regulation Z and proper disclosure, advertising under Reg M, all of the state specific laws and most recently identity theft mitigation through the Red Flags Rule.

Compliance in all areas is not an easy fix and cannot be done by buying a book or turning on a computer program. Real compliance requires the right attitude from all your employees from the president to the car porter. Compliance done properly is beneficial to the dealership and its customers. Customers who see your compliance programs are more than a privacy statement on a piece of paper, and understand the financial disclosures you are making to them, appreciate and like doing business with you. Plus, you separate yourself from the herd. Think about what your promise to protect a customer's information means when they see five other deal jackets on your desk while you disappear into the manager's office for fifteen minutes to finalize the deal. I know it always gives me a warm and fuzzy feeling when I go into a dealership and see customer material spread out from office to office and at the service counter. Creating processes and procedures that force dealership personnel to comply with these regulations will make the dealership function more efficiently and profitably, not to mention the benefits derived by being consumer friendly. Good compliance avoids problems, penalties and embarrassment caused by noncompliance.

Over the past few years we have read about numerous law suits, dealership personnel going to prison, fines from the FTC and state regulatory agencies and, most important, unwanted publicity for dealerships with questionable compliance policies. It is imperative in today's climate for dealerships to pay attention to all of these regulations. Right now everyone is looking for cash, consumers and government entities alike. Failure to comply can result in writing those searching for money some checks. Most dealers cannot afford to pay for lawsuits and fines levied by regulatory agencies or defend jury cases filed by disgruntled consumers and an over stock of lawyers happy to file cases. With business off by as much as 40% across the country who can afford the negative publicity that wreaks havoc on the ultimate goal of selling cars, parts and service. Today's environment is such that good business demands attention to every detail to survive the current storm and stay poised to grow when the market turns. Good compliance is definitely a piece of that puzzle, and without it you may lose your boat in the storm.

There are several ways a dealer can deal with the compliance issues. Hiring an attorney is one option, but most are unaware of the compliance issues that affect your dealership, let alone more technical issues like OSHA. You could hire a person specifically to develop the programs and processes internally, retain third party companies (there are very few that are specific to our industry nor many that address all regulatory concerns), or like every other compliance issue, dump it in the finance manager's lap (not a good idea in today's world).

It may take a bit to find the right solution, but once in place the trail to compliance is well marked. Those dealerships that fully implemented GLB and Safeguard rules had little difficulty fine tuning their compliance program to accommodate Red Flag. Sometimes being in business is not what it is all cracked up to be, but the reality is that if a dealer addresses compliance concerns properly he will be able to sleep better, have a better run store and gain some customer satisfaction that can only help the bottom line.

Terry Dortch is the president /CEO of Automotive compliance Consultants Inc. located in Crystal Lake Illinois and has 28 years automotive experience. He can be reached at 866-301-0593, tdortch@compliantnow.com This e-mail address is being protected from spambots. You need JavaScript enabled to view it or www.compliantnow.com