Understanding and properly following dealer compliance is an important part of keeping your business running. But with all the different compliance rules and guidelines, it’s not always easy to keep everything straight. Here are five ways you can help keep your dealer compliance on the right track.
The revised Federal Trade Commission (FTC) standards for safeguarding customer information took effect on June 9, 2023. Any business that engages in financial activity and has the financial information of more than 5,000 consumers needs to comply with these standards or they could face enforcement action from the FTC. The Safeguards Rule was created to protect sensitive customer information from virtual threats.
Be sure you understand these new regulations and that you’re adhering to them correctly. Following these safeguard standards not only helps protect your clients’ sensitive information but also your business from unnecessary headaches and unhappy customers. Check out our article providing tips to help you stay compliant.
Even with regulations in place to eliminate discriminatory practices, unintentional biases can lead to discrimination. For example, during an audit, you could discover a car dealership GPS tracking device was required in more cases for loans to people of color, even when it was not based on their credit or finances.
Discrimination on who is provided auto financing or who you require to have a vehicle monitoring device can violate federal and state anti-discrimination laws. To avoid unintended bias, develop written policies and procedures to note when a car dealership GPS tracking device is required. Enforce these policies across the board to ensure that all customers are treated equally.
You also want to be upfront with customers regarding any dealership tracking. Be sure to:
Having written rules and policies and requiring disclosures to the customer will help eliminate issues down the line.
There are both state and federal dealer compliance regulations. Get to know these different regulating bodies, understand what they do and find out how they can affect your business.
On the federal level, there are two major regulating groups:
On the state level, you may deal with three different regulatory agencies:
Understanding who oversees dealer compliance on both the state and federal level, how to work with them and who to contact when you have questions makes it easier to follow dealer compliance regulations.
Ensure that your staff is aware of the compliance regulations and how to follow them. As we mentioned, clear written policies will help everyone stay on the same page. Provide regular trainings so your team is aware of these rules. Keep track of who is attending trainings and what’s being taught with a training software platform or an Excel spreadsheet. Have your employees sign off on training so they understand their part in staying compliant.
As compliance and standards change, so should your policies. Regularly review your policies to ensure they are working and that outlier situations aren’t cropping up. If you notice several outliers slipping through the cracks, there may be a flaw in the policy that needs to be corrected. Doing a regular audit of how the policy works in practice can help you discover exceptions and adjust accordingly.
Proper dealer compliance is integral to your business. You can stay on top of it by following safeguard standards, reviewing your lending practices, knowing your state and federal regulators, running compliance training regularly and reviewing your policies to see if there are outliers.
PassTime is here to help. Check out the PassTime blog to find even more articles and info to learn how to keep your business running smoothly.