Three Ways to Protect Your Deals and Defend Your Dealership
Bring up the topic of compliance and many dealers feel a headache coming on. And for good reason. With so many laws, regulations, and rules to contend with it’s easy for dealers to feel frustrated and confused. The trouble is that non-compliance can lead to thousands of dollars in fines, class-action penalties, and reputation damage. And while enlisting the help of qualified legal counsel is the best approach, there are a number of specific and proactive steps that dealers and their employees can take to protect their deals — and defend the dealership.
- Save your “pencils.” A pencil is the proposal that a salesperson uses with customers to outline deal scenarios – on the way to the final agreement. Make sure your desking solution automatically saves a record of pencils in every customer’s deal jacket. This is an effective way to show an auditor, regulator, or plaintiff’s attorney how the deal progressed, and helps guard against claims of misunderstanding. It’s essential since the Federal Trade Commission (FTC) and the Consumer Financial Protection Bureau (CFPB) emphasized the need for transparency in consumer financing of automobile purchases and leases. Case in point: The Dodd-Frank Act of 2010 added a new category of “abusive” trade practices which are practices that take advantage of a customer’s lack of understanding, or reliance upon a creditor to act in their best interests.
- Be consistent. Make sure your sales team always uses a first pencil with each customer, as it may provide evidence negating an inference of credit discrimination. When a dealership starts all customers with the same first pencil there is no discrimination at the start of the deal discussion.
- Create a habit of transparency. Making sure a customer’s deal jacket contains a record of pencils – along with a copy of every document, including all four squares and informal correspondence showing how the deal was formed – creates a transparent environment, one valued by the consumer and crucial for dealerships to keep for auditors and regulators to examine. A pencils record, a signed menu, and a plain-language buyer’s order will show the detailed steps and trade-offs made by the customer and the dealer.
Ensuring that all pertinent deal information is stored in an easily searchable and highly secure location is an important step toward building a consistent and transparent sales routine, along with advanced audit reporting that helps to track pencils by deal, date, user or vehicle status. By following these steps, you will help to protect your dealership, provide peace of mind and create a satisfying sales experience for all parties.
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