The Compliance Guide Blog, presented by DealerTrack

The costs of non-compliance for auto dealers

Wed, 15 Feb 2012 00:00:00 -0700

DealerTrack's Regulatory and Compliance Counsel, Randy Henrick, talks about the FTC's streamlined rule-making authority and it's impact on auto dealers. valu...

NEW: Manage Auto Financing in Real Time with DealerTrack Mobile!

Fri, 03 Feb 2012 00:00:00 -0700

Take your deal workflow to the next level by adding new intuitive mobile apps from DealerTrack. Securely track the pulse of your deals within finance and vehicle inventory workflows whether you are on the go outside of the dealership, on the lot, or in your showroom. Secure and real-time access for your dealership’s management, F&I and sales teams Check app and contract status, along with credit bureau and Red Flag activity Available on Apple iPhone...

Prospective Creep of CFPB into Auto Finance

Wed, 01 Feb 2012 00:00:00 -0700

The Consumer Financial Protection Bureau’s (“CFPB”) newly-appointed Director, Richard Cordray, is no friend of auto dealers. When he was Attorney General of Ohio, Mr. Cordray brought numerous actions against dealers for alleged violations of Ohio’s tough Consumer Sales Practices Act. "Many consumers today are struggling to save for big purchases," said Cordray in bringing an action against an Ohio dealer group. "When they are finally able to make the purch...

Going to NADA 2012? Stop by DealerTrack booth #1751 for your chance to win a Harley!

Wed, 18 Jan 2012 00:00:00 -0700

Win the V-Rod® 10th anniversary limited edition Harley Davidson! Yes, one lucky dealer will win this exclusive edition anniversary model, a shining homage to the original V-Rod. Click here to reserve a demo now to ensure a spot to take an onsite test drive of one of our solutions! *No purchase nec...

Free Webinar: Compliance 2012: New Year. New Priorities

Thu, 12 Jan 2012 00:00:00 -0700

On Tuesday, January 17th, at 2:00PM ET/11:00AM PT, DealerTrack will discuss the changing landscape of compliance regulations in 2012 that can cause financial devastation if not properly managed. This webinar, hosted by DealerTrack Compliance Counsel Randy Henrick, will conclude with a live Q&A that gives attendees an opportunity to leverage Randy's expertise on auto finance compliance matters. Don’t let your dealership be a target! Attend this session to learn about t...

Compliance Definition of the Week

Tue, 27 Dec 2011 00:00:00 -0700

UDAPs - (Unfair and Deceptive Acts and Practices laws) – Includes FTC Act Section 5 and similar state laws used frequently by the FTC and state Attorneys General to correct and obtain damages for consumer abuses by automobile dealers and other entities. Penalties under FTC Act Section 5 can total $16,000 per violation, per day. The FTC takes the position that inadequate data security practices are a violation of Section 5.

CFPB Begins Taking Tips from Whistleblowers

Wed, 21 Dec 2011 00:00:00 -0700

The Consumer Financial Protection Bureau is soliciting information from whistleblowers and other knowledgeable sources about potential violators of federal consumer financial laws. The CFPB is welcoming information from current or former employees, contractors, vendors, and competitor companies. The Dodd-Frank Act provides certain anti-retaliation protections for whistleblowers. They may not be terminated or discriminated agains...

The Threat Within: Internal Data Breaches and ID Theft

Fri, 16 Dec 2011 00:00:00 -0700

Automotive News recently reported that an Arizona dealer’s F&I Manager was involved in a fraud ring stealing the identities of dealership customers and sharing them with a criminal enterprise. At least a dozen identity thefts were tied directly to the F&I Manager’s theft of non-public personal information from the dealership with more to come. In a plea deal and in exchange for cooperating against the other fraudsters, he was sentenced to ten years in jail. ...

DealerTrack Webinar Recording: Risk-Based Pricing and Adverse Action Requirements

Thu, 01 Dec 2011 00:00:00 -0700

Randy Henrick, DealerTrack Compliance and Regulatory Counsel, presents the myths, realities and facts about when dealers must issue Risk-Based Pricing and Adverse Action Notices to consumers. Webinar duration: Approx. 13 minutes application/x-shockwave-fla...

The Costs of Non-Compliance

Mon, 21 Nov 2011 00:00:00 -0700

DealerTrack Compliance Counsel Randy Henrick explains why the costs of non-compliance exceed the cost of compliance by a 3 to 1 margin. ...

Compliance Definition - Consumer Financial Protection Bureau ("CFPB")

Thu, 10 Nov 2011 00:00:00 -0700

An independent federal agency established by the Dodd-Frank Act to enforce consumer protection regulations and issue new regulations prohibiting unfair, deceptive, or abusive acts and practices, among other things. Auto dealers that sell, lease and also service vehicles and do not obtain customer financing from Affiliates are generally not subject to the CFPB’s direct regulatory authority. Buy-here-pay-here and many independent dealers will be subject to direct CFPB regulation. However a...

Compliance Definition: "Synthetic Identity Theft"

Tue, 01 Nov 2011 00:00:00 -0700

Identity theft in which the criminal creates a fake identity using real personal data elements of different people to do so. For example, a synthetic identity theft may use a valid Social Security number with a different name, date of birth or address to establish credit. A 2010 study found that at least 20 million people unknowingly share their Social Security number with a synthetic identity thief. 88% of new identity theft is believed to be synthetic identity theft and it is frequently how ...

Compliance Definition: "Credit Card Bust Out"

Wed, 26 Oct 2011 00:00:00 -0700

A means of identity theft in which the criminal makes repeated use of a stolen credit card to make down payments on vehicles while delivering frequent checks written on non-existent checking accounts to the credit card company to keep the credit card line open to make more down payments. The criminal uses the “float time” of the check clearance process to commit additional identity theft using the stolen credit card.

Hudson Offers Advice as Attorney General Actions Against Dealers Heat Up

Thu, 29 Sep 2011 00:00:00 -0700

After seeing the penalty the Washington attorney general levied on an independent dealer last week, attorney Tom Hudson said he's seen an uptick in these cases recently and that the operation “got off relatively lightly.” Hudson stressed dealers can avoid what happened to RGH Marketing and its owner Robert Hubbard Jr., a former manager of Interstate Auto Liquidators in Vancouver, Washington. Washington attorney general Rob McKenna originally filed a lawsuit in 2009 ...

The Importance of Electronically Storing Risk Based Pricing Notices

Tue, 13 Sep 2011 00:00:00 -0700

DealerTrack's Regulatory and Compliance Counsel, Randy Henrick, explains the safeguards of electronic storage of Risk-Based Pricing notices and other documents. ...

FTC Warns Small Businesses: Don’t Open Email Falsely Claiming to be From FTC

Fri, 02 Sep 2011 00:00:00 -0700

The FTC is warning small businesses that an email with a subject line “URGENT: Pending Consumer Complaint” is not from the FTC. The email says that a complaint has been filed with the agency against their company. The FTC advises not to click on any of the links or attachments with the email. Clicking on the links may install a virus on the computer. Click here to read the full article....

Dealer Advertising Compliance Tips

Mon, 22 Aug 2011 00:00:00 -0700

DealerTrack's Regulatory and Compliance Counsel, Randy Henrick, provides tips to help dealers avoid enforcement penalties and fines associated with advertising: v...

New 2011 Compliance Initiatives May Signal Auto Dealer Scrutiny

Mon, 22 Aug 2011 00:00:00 -0700

The summer of 2011 has brought a dramatic increase in compliance enforcement proceedings against banks and financial institutions. Many of the issues apply to auto dealers as well and dealers will be likely candidates as the regulators continue to drill down. The American Banker reported on August 1 that the Obama Administration Justice Department has been making an “aggressive push” on bringing enforcement proceedings involving credit discrimination and fair lending....

What OFAC Means to You (Part 2)

Mon, 08 Aug 2011 00:00:00 -0700

Randy Henrick, associate general counsel and lead regulatory and compliance Counsel for DealerTrack, discusses what OFAC means to dealers as the featured blogger for Dealer-magazine.com: In my last blog, we discussed what an OFAC is and why you must run an OFAC ...

Auto Compliance after July 21, 2011: New Rules. New Players. New Risks

Mon, 08 Aug 2011 00:00:00 -0700

July 21, 2011 marked an important date for auto dealers and consumer creditors generally. It was the one-year anniversary of the signing of the Dodd-Frank Act as well as the “designated transfer date” for consumer protection law regulatory authority to be transferred to the new Consumer Financial Protection Bureau (“CFPB”). 18 different laws, including the Truth in Lending Act, Equal Credit Opportunity Act, the Fair Debt Collection Practices Act, and most of...

DealerTrack 2011 Compliance Guide - Free to Auto Dealers

Tue, 02 Aug 2011 00:00:00 -0700

The 2011 DealerTrack Compliance Guide is a free resource of compliance information affecting an auto dealers day-to-day compliance activities.

DealerTrack offers FREE support to help dealers comply with the Dodd-Frank Act

Thu, 21 Jul 2011 00:00:00 -0700

DealerTrack is offering new free functionality to help dealers comply with Dodd-Frank Act requirement. This free functionality was available to dealers as of July 20, 2011. The Dodd-Frank Act, which went into effect on July 21, 2011, requires additional information to be included in adverse action notices. This required information is similar to the credit score disclosure notice used to comply with the Risk Based Pricing rule. ALL d...

Compliance Definition: Fair Credit Reporting Act

Tue, 05 Jul 2011 00:00:00 -0700

FCRA - (Fair Credit Reporting Act) – Governs the permissible uses of credit reports and requires disclosures to consumers when a credit report is used in making a credit decision. Also requires giving consumers opt-out rights with respect to sharing of consumer report information with affiliates or sharing any information with affiliates for marketing purposes. Contains requirements for credit bureaus and reporting creditors to make consumer reports more accurate and to ...

Luxury Cars Bought from Maryland Dealership on Stolen Identity

Mon, 27 Jun 2011 00:00:00 -0700

Originally posted on May 10, 2010 on marylandduilawyersblog.com: New developments in technology allow people to make purchases from miles away with their social security number and credit card information. However, while this makes buying products simpler, it also provides easy access for hackers to steal private data. Practicing law in a metropolitan city where many individuals store confidential information on their computer, it is common for an experienced Maryland criminal law...

The Impact of OFAC on Dealers

Fri, 24 Jun 2011 00:00:00 -0700

Hopefully you know that you must “run an OFAC” on every customer you do business with, both cash and credit customers. But what exactly is OFAC and what does “running an OFAC” mean? What are the penalties for failing to run an OFAC on your customer or customers? Running an OFAC OFAC is the Office of Foreign Asset Controls, an agency of the U.S. Treasury Department that has been around since the...

Free Compliance Webinar Tomorrow, 6/21/11. Register Now!!

Mon, 20 Jun 2011 00:00:00 -0700

Compliance Changes Coming July 21, 2011 On Tuesday, June 21st, 2011 at 2:00PM ET/11:00AM PT, DealerTrack Compliance Counsel Randy Henrick will discuss the steps your dealership needs to take to comply with the new Risk-Based Pricing and Adverse Action requirements that take effect on July 21, 2011 as part of the Dodd-Frank Act reforms. Topics will include: • Background and purpose of the Dodd-Frank Act • Wh...

Prevent Dealership Fraud with Continuous Monitoring

Fri, 10 Jun 2011 00:00:00 -0700

The 2010 Association of Certified Fraud Examiners (ACFE) Report to the Nations noted that the median length of time to discover fraud is 18 months. During that time, respondents of the survey estimated an average loss of five percent of their annual revenue. External auditing was the control used by most of those surveyed; however, it was determined that external audits weren’t overly effective at detecting fraud (less than five percent of the schemes were uncovered by the external audit...

DealerTrack Introduces a $25,000 Red Flags Guarantee

Tue, 07 Jun 2011 00:00:00 -0700

DealerTrack is excited to announce the rollout of an unprecedented $25,000 Red Flags Guarantee to current and new subscribers of the DealerTrack Compliance Solution. The new Red Flags Guarantee will cover associated government-issued fines up to $25,000, should a dealership be cited for non-compliance with the Red Flags Rule while using the DealerTrack Compliance Solution. “With auto identity theft on the rise, a new era of regulatory requirements has emer...

New Study Finds that Compliance Saves Money

Mon, 06 Jun 2011 00:00:00 -0700

A new study by the identity-theft think tank, Ponemon Institute, finds that data security compliance actually reduces long-term expenses. This conclusion may be particularly appropriate in the auto industry since another study (the Javelin Group’s annual identity theft study) found that new account fraud (like auto credit identity fraud) showed longer periods of misuse and higher losses to victims like auto dealers than in past years. The Ponemon study was not directed specifical...

New Credit Card Scam Making the Rounds

Thu, 02 Jun 2011 00:00:00 -0700

A new credit card scam is making the rounds and has already victimized auto dealers in the Southeaest. Here’s the way it works: A customer comes in to your store to buy a vehicle and wants to put a substantial downpayment, or perhaps the whole vehicle price, on their credit card. They will wave a fancy high-end card at you. You agree. At first, the credit card gets declined. Then the customer says there must be some mistake. Call the bank’s n...

Dealer Slammed with Numerous Compliance Violations

Tue, 24 May 2011 00:00:00 -0700

A Michigan consumer had a sordid story to tell the Court. Count the compliance violations and then read on to see how real life compliance violations can cost you in a big way. The plaintiff signed a RISC to purchase a used vehicle for $8,000, but the dealer did not give her a copy of the RISC either before or at the time of the sale. She didn’t take delivery because the dealer kept the car to install a GPS device. When she called five days later to inquire about the ...

Class action lawsuit issued against dealership for rate markups and document fees

Mon, 25 Apr 2011 00:00:00 -0700

The Arkansas Supreme Court has not been a friend of auto dealers recently and a decision handed down on April 14, 2011 against a dealership group confirmed very clearly that Arkansas is not where you want to be sued. In reversing parts of a well-reasoned lower court decision, the Arkansas Supreme Court issued its latest rulings in a case that had previously certified a class in relation to document fees charged by dealers. Prior rulings in the case held that charging a customer a...

Interest Rates, Dealer Reserves, and Markups: FTC Roundtable Panel Replay

Mon, 18 Apr 2011 00:00:00 -0700

The following is a broadcast of the FTC's roundtable panel on "Interest Rates, Dealer Reserves, and Markups". The panel was held on April 12, 2011 in Detroit, MI and featured DealerTrack's regulatory and compliance counsel, Randy Henrick. Other panel members included Andy Koblenz, NADA's VP of Legal and Regulatory Affairs and General Counsel; Peter Sheptak, VP and General Counsel of World Omni Finance Co.; John Van Alst, an attorney with the National Consumer Law Center; an...

DealerTrack’s Randy Henrick to participate in FTC Roundtable Discussion. Watch live today, April 12, 2011 at 10:15 AM ET!

Tue, 12 Apr 2011 00:00:00 -0700

Randy Henrick, DealerTrack’s Associate General Counsel, has been handpicked by the FTC to participate in a roundtable discussion that takes place today, April 12, 2011 at Wayne State University Law School in Detroit. The roundtable wll focus on consumer protection issues related to sales and financing of consumer vehicles – cars, SUVs, and light trucks. The event will be broadcast live via the Internet at 10:15 AM ET / 7:15 AM PT. ...

Compliance Definition - Fair Credit Reporting Act (FCRA)

Fri, 08 Apr 2011 00:00:00 -0700

Randy Henrick, DealerTrack’s Regulatory and Compliance Counsel, defines the Fair Credit Reporting Act and it's impact on auto dealers. ...

Child ID Theft on the Rise

Thu, 07 Apr 2011 00:00:00 -0700

Originally published April 1, 2011 on msnbc.com: Child ID theft, among the more tragic and vexing 21st Century crimes, is much more common than previously thought, suggests a report being published Friday by a Carnegie Mellon University fellow. Data examined by Richard Power, a distinguished fellow at the school’s CyLab research center, offers hints that identity thieves are specially targeting children when pi...

Compliance Definition - Fraud Alerts

Thu, 31 Mar 2011 00:00:00 -0700

Randy Henrick, DealerTrack’s Regulatory and Compliance Counsel, explains why fraud alerts require a high level of due diligence in verifying a customer's identity. allowScriptAccess...

Coming Soon!: New Adverse Action Notice Requirements

Fri, 25 Mar 2011 00:00:00 -0700

An important change to dealer adverse action notices is coming on July 21, 2011. As you know, dealers are required by the Equal Credit Opportunity Act and Fed Regulation B (“ECOA”) and the Fair Credit Reporting Act (“FCRA”) to send adverse action notices to their customers within 30 days of taking a credit application in three situations: When they take a credit application from the customer but do not send it to any financing source; Wh...

Compliance Definition - Security Freeze

Thu, 24 Mar 2011 00:00:00 -0700

Randy Henrick, DealerTrack’s Regulatory and Compliance Counsel, defines what a security freeze is as it relates to auto dealers.

Compliance in 2011 – More Regulations on the Horizon

Sun, 13 Mar 2011 00:00:00 -0700

Join DealerTrack for an exclusive speaking engagement at the 2011 Innovative Dealer Summit, held on Wednesday, March 30th in Denver, Colorado. Randy Henrick, DealerTrack Compliance Counsel, will speak about the new compliance regulations due to take effect on July 21, 2011, along with tips and best practices for maintaining compliance at your dealership . Topics include: Changes to Adverse Action Notice Requirements Tips for Safeguarding your Dealers...

The Compliance Foxtrot

Fri, 11 Mar 2011 00:00:00 -0700

Old dance studios used to put on the floor large oil cloths which had arrangements of footprints to demonstrate various dance steps. Follow the steps in time to the music with a little flair and, voilà, you're dancing. The last several years have seen a slew of new compliance requirements for auto dealers — the Information Safeguards Rule, the Red Flags Rule, the Risk Based Pricing Rule, to name a few. ...

Adverse Action Requirements Differ for Dealers and Lenders

Mon, 07 Mar 2011 00:00:00 -0700

Randy Henrick, DealerTrack’s Regulatory and Compliance Counsel, explains why dealers cannot rely on lenders to provide Adverse Action Notices to customers. value=...

Consumer Financial Protection Bureau

Fri, 04 Mar 2011 00:00:00 -0700

Randy Henrick, DealerTrack's regulatory and compliance counsel, discusses the newly formed Consumer Financial Protection Bureau and the impact its activities will have on auto dealers. value=...

Holy chargeback, Batman! Ford dealer has to unwind 1,500 car deals

Thu, 24 Feb 2011 00:00:00 -0700

Originally published February 22, 2011 on Dealersedge.com: Unwinding car deals is a painful, if infrequent, fact of life for car dealers. When a customer is seriously dissatisfied, sometimes taking the vehicle back and refunding the customer's money is the easiest solution. But reversing the paperwork and the myriad accountin...

Compliance Definition: Arbitration Clauses

Thu, 24 Feb 2011 00:00:00 -0700

DealerTrack compliance counsel, Randy Henrick, speaks about the consequences for dealer arbitration clauses that don't give consumers choices

Free Risk-Based Pricing Notice fulfillment available on DealerTrack

Wed, 09 Feb 2011 00:00:00 -0700

Strati Papageorge, Director of Product Management for DealerTrack, discusses free Risk-Based Pricing functionality available for dealers to help comply with the FTC regulation. http://www.yout...

Compliance Definition: Adverse Action Notice

Thu, 03 Feb 2011 00:00:00 -0700

DealerTrack compliance counsel, Randy Henrick, discusses the 3 situations in which dealers need to send an adverse action notice. v...

Be cautious about tacking fees to repair orders

Wed, 02 Feb 2011 00:00:00 -0700

Originally published December 28, 2010 on Autonews.com: We’ve taken a look at how dealers must be careful about adding fees to the vehicle price because these processing fees are often regulated by the state. However, the fees dealers commonly charge in the shop to recover the cost of supplies or compliance with environmental rules often aren’t regulated. The “regulatory calm,” though, might not last, says McLean, Va., deale...

Dealers Must Have Data Safeguard Measures in Place to Protect Customer Information

Fri, 21 Jan 2011 00:00:00 -0700

DealerTrack compliance counsel, Randy Henrick, discusses data security measures dealers must have in place to avoid violations with the FTC. alway...

Customer Education Isn't a Bad Thing

Wed, 12 Jan 2011 00:00:00 -0700

It might seem like just another regulation targeting dealer-arranged financing, but Greg Arroyo, Executive Editor at F&I and Showroom magazine, believes the Risk-Based Pricing Rule might be the kind of icebreaker F&I managers have been seeking all along. Click here to view the article.

Red Flags Enforcement began 01/01/11!

Tue, 04 Jan 2011 00:00:00 -0700

DealerTrack compliance counsel, Randy Henrick, defines the FTC's Red Flags Rule. Enforcement of the Red Flags Rule began January 1, 2011. http://www.youtube.com/v/QQDH9cgGSSE?vers...

The New Car With Mystery Add-Ons

Thu, 30 Dec 2010 00:00:00 -0700

You can’t make this stuff up. A story that appeared recently in the New York Times chronicled a customer’s dealings with a local dealership. Click here to view the article: http://www.nytimes.com/2010/12/26/your-money/26haggler.html thecomplianceguide.com is intended for information purposes only and does not constitute the giving of legal or compliance advice...

New “Safe Harbor” Privacy Notice Takes Effect January 1, 2011

Mon, 13 Dec 2010 00:00:00 -0700

The FTC and Federal Reserve Board have published a new form of privacy notice that, if properly completed and followed, will give dealers a “safe harbor” (protection) from liability. It is a simple form that can be printed on both sides of a single 8.5 x 11 inch piece of paper. The agencies have also established a privacy notice form builder website that lets you create your privacy notice online and print it out to give to your customers. The webp...

Retailers' Need for Compliance Intensifies

Wed, 01 Dec 2010 00:00:00 -0700

Published in the November 29th issue of Automotive News, Amy Wilson discusses how vigilance and technology can prevent fraudulent activity from occurring in your dealership. Within the article, Robert Granados, vice president and general manager of finance solutions at DealerTrack, discusses dealership vulnerabilities to fraud and what can be done to mitigate it. Click her...

Colorado Court Rules in Favor of Car Buyer Using Fake SSN

Wed, 24 Nov 2010 00:00:00 -0700

Colorado Supreme Court rules in favor of alleged ID thief because some of the information on the credit app was correct. Click Here to view the full article.

Adverse Action Tip

Fri, 19 Nov 2010 00:00:00 -0700

DealerTrack compliance counsel, Randy Henrick, discusses when a dealer is required to send an adverse action notice. src...

FTC Risk-based Pricing Rule Alert for Auto Dealers

Thu, 04 Nov 2010 00:00:00 -0700

Effective January 1, 2011, dealers will be subject to the FTC's Risk-Based Pricing Rule. The idea behind this Rule is that certain customers get worse deals because of bad credit and they should know that. So a creditor who uses a consumer report and "grants, extends, or otherwise provides credit to that consumer on material terms that are materially less favorable than the most favorable terms available to a substantial proportion of consumers from or through that person" either has to ...

Risk-based Pricing Rule

Thu, 28 Oct 2010 00:00:00 -0700

DealerTrack compliance counsel, Randy Henrick, defines the FTC's Risk-based Pricing Rule. Enforcement of the Risk-based Pricing Rule begins January 1, 2011. allowSc...

Definition of the Week: Red Flags Rule

Thu, 28 Oct 2010 00:00:00 -0700

Red Flags Rule - An FTC Rule that requires auto dealers to develop and implement a written Identity Theft Prevention Program (ITPP) designed to detect, prevent and mitigate identity theft in connection with establishing or maintaining consumer credit accounts and business accounts that present identity theft risks. The Red Flags Rule became effective as of November 1, 2008, and is scheduled to be enforced by the FTC on January 1, 2011.

Definition of the Week: Phishing

Thu, 21 Oct 2010 00:00:00 -0700

Phishing - Techniques used by identity thieves to fish for personal information on the Internet. Generally done by creating fake emails and websites that appear legitimate but are designed to attempt to get users to disclose their personal information or by clicking on a weblink which puts a keylogger virus on your PC that tracks your keystrokes on a banking or personal information website. “Vishing” involves sending an email to get the consumer to call a fra...

Identity Verification - OFAC Tip

Tue, 12 Oct 2010 00:00:00 -0700

DealerTrack compliance counsel, Randy Henrick, discusses the importance of implementing an OFAC check as part of your identity verification process. ...

DealerTrack Compliance Tablet

Tue, 05 Oct 2010 00:00:00 -0700

DealerTrack compliance counsel, Randy Henrick, explains how the DealerTrack Compliance Tablet can help keep dealership documents safe and secure. ...

Adverse Action Tip

Wed, 29 Sep 2010 00:00:00 -0700

DealerTrack Compliance Counsel, Randy Henrick explains three scenarios when your dealership is required to send adverse action notices to customers. View the video now for important information your dealership can’t afford to ignore. allowFullScreen...

The Importance of Internal Security Safeguards

Thu, 26 Aug 2010 00:00:00 -0700

DATA BREACH STUDY SHOWS THE IMPORTANCE OF INTERNAL SECURITY SAFEGUARDSA recent 2009 data breach study conducted by Verizon's Risk Management Business in association with the U.S. Secret Service contains some important information for auto dealers in managing your Safeguards program.One of the study's most important findings was a substantial increas...

Payment Card ABC's for Auto Dealers

Fri, 06 Aug 2010 00:00:00 -0700

Most dealers accept payment cards (debit and credit cards) for purchases in sales, service, and parts. You pay a price (called the "merchant discount") for accepting cards but do so as a convenience to your customers. Here are some things you should know about payment cards and ways to cut your effective merchant discount. MasterCard and Visa operate through bank issuers and acquirers. The card is "issued" to the customer and you have an "acquirer,&qu...

A Simple Solution for Adverse Action Notices

Mon, 21 Jun 2010 00:00:00 -0700

Recently, a federal court in Ohio certified a class action against a dealership for failing to send adverse action notices to customers whose spot deals were unwound. Several hundred customers will be able to participate as class plaintiffs, a dealer's worst nightmare. There is a lot of confusion about a dealer's obligation to send adverse action notices. Many dealers believe that they can rely on a lender's adverse action notice to the customer. But they can'...

Blotter Chatter - Identity Theft at Car Dealership

Wed, 14 Apr 2010 00:00:00 -0700

...According to the police blotter, a car dealership reported that a man using a stolen identity purchased a new car worth over $51,365 with no money down...Click here to read Click here to read the entire articl...

A Dealer's Worst Nightmare in Real Life

Wed, 14 Apr 2010 00:00:00 -0700

Compliance experts frequently talk about class action liability and other risks from everyday dealer compliance failures like Truth in Lending violations, deceptive spot delivery processes, and failing to send adverse action notices. If you don't think these nightmares can happen to you, let me tell you about a dealer in Ohio. A federal class action was filed against an Ohio dealer for doing what many dealers do every day--spot deliver a vehicle to a customer using a Spot Agree...

Bank of New York Mellon Employee Charged with ID Theft

Mon, 23 Nov 2009 00:00:00 -0700

Computer Technician Alleged to Have Used ID's to Steal $1.1 MillionA computer technician has been indicted in New York Supreme Court, charged with stealing the identities of more than 150 Bank of New York Mellon employees and using them to steal more than $1.1 million from charities, non-profit groups and other entities. Adeniyi Adeyemi, a 27-year-old man from Brooklyn, was charged with grand larceny and identity theft in a http://www.bankinf...

ID Theft Red Flags Rule: What Have Exams Uncovered?

Mon, 23 Nov 2009 00:00:00 -0700

Most Institutions Compliant; Minority Challenged to Formalize Prevention ProgramsIt's been one year since federal regulators started examining banks and credit unions for compliance with the Identity Theft Red Flags Rule. How have institutions fared? ID Theft Red Flags Rule: What Ha...

FTC Extends Enforcement Deadline for Identity Theft Red Flags Rule

Mon, 02 Nov 2009 00:00:00 -0700

At the request of Members of Congress, the Federal Trade Commission is delayingenforcement of the "Red Flags" Rule until June 1, 2010, for financial institutions and creditors subject to enforcement by the FTC.The Rule was promulgated under the Fair and Accurate Credit Transactions Act, inwhich Congress directed the Commission and other agencies to develop regulations requiring "creditors" and "financial institutions" to address the risk of iden...

FTC Announces Expanded Business Education Campaign on "Red Flags" Rule

Thu, 30 Jul 2009 00:00:00 -0700

To assist small businesses and other entities, the Federal Trade Commission staff will redouble its efforts to educate them about compliance with the "Red Flags" Rule and ease compliance by providing additional resources and guidance to clarify whether businesses are covered by the Rule and what they must do to comply. To give creditors and financial institutions more time to review this guidance and develop and implement written Identity Theft Prevention Programs, the FTC will furth...

Back-end Lender Repurchase Demands: The Hidden Land Mine in the Red Flags Rule for Auto Dealers

Thu, 30 Jul 2009 00:00:00 -0700

By now, most dealers are aware of the FTC's Red Flags Rule and the potential liability they face if they do not adopt and implement an Identity Theft Prevention Program required by the Rule. Countless mailings, webinars and other communications from compliance gurus have certainly raised the awareness level. But there is a very real back-end risk that dealers face in the Red Flags Rule that few, if anybody, is talking about. That is the risk of lenders evaluating charged-...

Unearned Insurance Premium Rebates Class Action ShowsDanger of Ambiguous Writing In The Passive Voice

Mon, 29 Jun 2009 00:00:00 -0700

It is generally understood that when a consumer pays off vehicle financing prior to the end of the scheduled term, the consumer has overpaid for credit insurance because the initial charge assumed insurance coverage for the full term. In these circumstances, a consumer is entitled to a "rebate" of the "unearned premiums" that were paid in full up front. Certain auto finance contracts (precomputed interest contracts that are not simple interest contracts) work th...

Recent Case Involving Fraud Alerts On Credit Files Shows How Broadly State UDAP Laws Can Be Interpreted

Mon, 29 Jun 2009 00:00:00 -0700

We've all seen the commercials for LifeLock, a so-called identity protection service. The company's founder posts his Social Security number on a big truck and drives around daring anyone to try to steal his identity. No matter that about 20 people have done so. It's a good marketing gimmick and LifeLock has signed up millions of U.S. consumers hoping to protect the privacy of their personal information using LifeLock. But a recent court decision in California ...

Cash For Clunkers Fraud Begins

Mon, 29 Jun 2009 00:00:00 -0700

TTAC just got a call from the Department of Transportation (DOT). The agency in charge of implementing the Cash for Clunkers program gave us a heads-up that the Car Allowance Rebate System is already attracting "unauthorized identity appropriation." To wit: cashforclunkersheadquarters.com and cashforguzzlers...

N.J. Car Dealerships Settle Consumer Fraud Act Violations‏

Mon, 11 May 2009 00:00:00 -0700

NEWARK, N.J. (Legal Newsline) - A group of New Jersey car dealerships has agreed to pay $750,000 to settle claims that it made false claims over trade-ins and credit qualifications."Dealers who do not deal honestly with the public will be held accountable," Attorney General Anne Milgram said. "We had been in court on this matter several times, and were ready to move forward to trial, if this settlement had not been reached."http://www.legalnewsli...

FTC Will Grant Three-Month Delay of Enforcement of ‘Red Flags’ Rule

Mon, 04 May 2009 00:00:00 -0700

FTC Will Grant Three-Month Delay of Enforcement of ‘Red Flags' Rule Requiring Creditors and Financial Institutions to Adopt Identity Theft Prevention ProgramsThe Federal Trade Commission will delay enforcement of the new "Red Flags Rule" until August 1, 2009, to give creditors and financial institutions more time to develop and implement written identity theft prevention programs. For entities that have a low risk of identity theft, such as bu...

Dealers Risk Substantial Losses from Vehicle Finances to an Identity Thief

Fri, 27 Feb 2009 00:00:00 -0700

I've always said that only dealers are the losers when an identity thief finances a vehicle at a dealership and a recent case in Georgia shows just how bad the loss can be. In February 2006, a dealer sold a BMW to an individual who financed the $50,239 purchase using an incorrect Social Security number and a clean credit file to obtain credit. The dealer sold the RISC to a large national bank. By September, the buyer had made no payments and the bank learned the vehicle had be...

Choosing Your Lead Provider

Fri, 06 Feb 2009 00:00:00 -0700

In these tough economic times, many dealers are looking for ways to cut expenses and protect cash flow. Some will feel the need to cut back on advertising, while others will recognize that in a down market advertising can be a lifeline. The trick is to focus advertising dollars on those things that produce the best results in relation to the dollars spent. Purchasing quality leads and direct mail programs can be a good use of advertising dollars. If genera...

Dealer Group Sued by Attorney General

Thu, 29 Jan 2009 00:00:00 -0700

WATERTOWN, N.Y. -- A Watertown based car dealership chain says it will fully cooperate with the New York State Attorney General's Office after the A.G. filed a lawsuit against it earlier this week... CLICK HERE FOR THE FULL STORY. thecomplianceguide.com is intended for information purposes only and does not constitute the giving o...

New Federal Bailout Program Offers Hope

Fri, 23 Jan 2009 00:00:00 -0700

I don't need to tell you that credit markets critical to auto dealers have been seemingly stalled for months despite the distribution of over $350 billion to banks under the federal Troubled Assets Relief Program ("TARP"). That may be about to change.In November, the Federal Reserve Board announced a new program, the Term Asset-Backed Securities Loan Facility ("TALF"). TALF is intended to revive the secondary market for consumer auto lend...

When Dealers Have Permissible Purpose to Pull a Credit Report

Wed, 14 Jan 2009 00:00:00 -0700

Re: Section 604 of the Fair Credit Reporting ActDear Ms. Coffey:This responds to your letter dated August 29, 1997, asking the views of the Commission staff on a number of issues concerning application of the amended Fair Credit Reporting Act ("FCRA"), including (1) the propriety of an auto dealership obtaining a consumer report from a consumer reporting agency ("CRA") on an individual who visits ...

Not Just 6 Lines, 65 Characters

Thu, 04 Dec 2008 00:00:00 -0700

If you've placed advertising in an ezine, you've no doubt beenadvised by the publisher of his or her advertising guidelines.Typically these guidelines go something like this: "Six lines,65 characters per line plus URL/email. No adult, hate,race." Unfortunately, the publisher's guidelines typically don't go on to require that the ad conform with the U.S. Federal TradeCommission ("FTC") guidelines for adver...

New Rules for Using Your Customer Information for Marketing Solicitation Purposes

Mon, 08 Sep 2008 00:00:00 -0700

July, 2008 Effective October 1, 2008, a new FTC regulation takes effect concerning the use of customer information received from affiliated companies for marketing solicitation purposes. This is one of last set of regulations that are required by the 2003 FACT Act. It requires you to give your customers a notice and opt-out right if you share their information with an affiliated company--such as sister dealerships within a dealer group--and the affiliate w...

Deceptive Trade Practices Case Study: Hidden Fees

Fri, 15 Aug 2008 00:00:00 -0700

Recently, plaintiffs' lawyers have brought deceptive trade practices suits in several states against dealers for allegedly overcharging consumers on "doc fees," or fees itemized on retail installment sales contracts for preparing and filing title documents and other papers. These suits accuse dealers of charging amounts well in excess of their actual costs to prepare and file the paperwork, allege that this "hidden profit" is unfair and deceptive to the consumer, and may v...

Identity Theft Case Study: Data Security Breaches

Mon, 04 Aug 2008 00:00:00 -0700

A recent U.S. Secret Service study concerning criminal identity theft from 2002-2006 revealed that 34% of the time, data used in the ID theft crime was stolen by a company employee, most often from a retail company. Like it or not, your employees are a prime source for prospective identity theft. And like it or not, if one of your employees is involved in stealing customer information, you will face possible liability. When data security breaches have been linked to specific instances of ident...

Record Keeping & Destruction Case Study: Litigation

Mon, 28 Jul 2008 00:00:00 -0700

Electronic recordkeeping presents new challenges, especially in litigation. When you learn of the threat or commencement of litigation, you should impose a "litigation hold" on the destruction of documents. Failing to do so, or attempting to manipulate files, can have disastrous consequences in a courtroom.In one recent case, an employee sued for wrongful termination. The employer defended on grounds the employee was discharged for a pattern of wrongful conduct in...

Marketing and Advertising Case Study: Deceptive Advertising

Mon, 21 Jul 2008 00:00:00 -0700

About 10,000 owners of General Motors vehicles received what appeared to be an official notice from GM in the fall of 2006. "URGENT POTENTIAL RECALL NOTIFICATION" the mailing announced in bold type directly above the recipient's name and address. The notices were even postmarked out-of-state from a "Program Headquarters" and bore the logos of the GM brands as well as General Motors' brand logo. As it turned out, the notices were not from GM but allegedly from a loca...

Aftermarket Selling Case Study: Know Your State Laws

Fri, 11 Jul 2008 00:00:00 -0700

In selling aftermarket products, it is critical to know how your state characterizes certain protection products such as GAP or extended service plans. In some states, they are considered "insurance" which requires licenses and disclosures in the Itemization of Amount Financed box of the retail installment sales contract. In other states, they are not and may need to be itemized in the "Amounts Paid to Third Parties" with a notation that the dealer may retain a portion of t...

NY Attorney General Cuomo Penalizes Four Hudson Valley Car Dealers for False Advertising

Tue, 10 Jun 2008 00:00:00 -0700

Department of Law120 BroadwayNew York, NY 10271212-416-8060 For Immediate Release:New York City Press Office / 212-416-8060 Albany Press Office / 518-473-5525nyag.pressoffice@oag.state.ny.usDepartment of Law

New Challenges to Arbitration and Class Action Waiver Clauses

Tue, 10 Jun 2008 00:00:00 -0700

Plaintiffs' lawyers hate arbitration. Absolutely hate it. They especially hate arbitration clauses that waive the right of their clients to bring class actions. Class actions are their bread and butter and the winners in class actions are always the attorneys who receive large awards of fees from a settlement or judgment, with the aggrieved consumers generally getting coupons, vouchers, and maybe a small amount of cash under the new Class Action Fairness Act.

More Greedies than Stupids — Tips to help detect identity thieves

Tue, 10 Jun 2008 00:00:00 -0700

Originally published on dealer-magazine.com, May, 2008In a land where chewing tobacco outsells chewing gum, where the tea is already sweetened and where pickles are fried, resides a general manager at a domestic store. Let's call him Sammy Joe.Sammy Joe's commercials on the local TV station feature a dog that belongs to someone else. He'll gladly charge you a commission for referring his jeweler. SJ has more parables than Yogi Berra has malapropos.<...

The "A-B-Cs" of Taking Credit Cards for Payment - 2008 Update

Thu, 17 Apr 2008 00:00:00 -0700

About three years ago, we published an article about taking credit and debit cards for payment. A lot has changed since then. Both the risks and obligations for merchants like auto dealers are different. This article updates the earlier one. Again, most of this information relates to MasterCard and Visa but American Express and Discover have similar rules and policies. ...

I Don't Remember that Deal

Thu, 17 Apr 2008 00:00:00 -0700

One of the lawsuits I helped a dealer defend against had a memorable exchange between the dark side attorney and the salesperson on the deal.Attorney: Tell me, Mr. Salesperson, do you remember selling my client his car?SP: Yes, I do. And I know I did everything rightAttorney: How many cars do you sell a month?SP: Fifteen to 20. And we always do things legally.Attorney: And you sold this car three years ago?...

Breaking News - April 2008

Tue, 15 Apr 2008 00:00:00 -0700

A bill has been introduced in the U.S. House of Representatives that would prohibit arbitration clauses in automobile sales or lease agreements. The bill, H.R. 5312, titled "The Automobile Arbitration Fairness Act of 2008" provides that any controversy arising out of a motor vehicle consumer sales or lease contract may not be settled by arbitration unless after the controversy arises all parties agree in writing to arbitrate it. Any agreement to arbitrate prio...

Top Compliance Concerns for 2008

Thu, 20 Mar 2008 00:00:00 -0700

There are risks, and there are risks. If you are late to an important appointment, meeting or date, you balance the risk of exceeding the speed limit and making the meeting on time versus the risk of obeying the law and potentially losing face if you are late.If you are trying to reduce your belt size, you balance the risk of adding pounds versus the pleasure of a Reuben sandwich with cottage fries at lunch.If you are a movie star or a recording artist, you...

Red Flags Rule: Mandatory Compliance Is Coming. Are You Prepared?

Fri, 15 Feb 2008 00:00:00 -0700

Red Flags Rule: Manadatory Compliance Is Coming. Are You Prepared?

Fri, 15 Feb 2008 00:00:00 -0700

Back to the Future: Credit Sales vs. Loans and Why the Difference Is Important to You

Sat, 19 Jan 2008 00:00:00 -0700

You probably know that most American consumer auto finance is done as "three party financing" (customer, dealer, financial institution) and not "two party financing" (customer and financial institution). You may also know that three-party financing is not a "loan" as is two-party financing. Only banks and entities that are licensed and regulated as lenders by the federal or state government can make loans. Dealers sell cars, banks make loans....

The Essentials of a Compliance Process

Fri, 18 Jan 2008 00:00:00 -0700

Signs are everywhere. Some give directions, others provide insights. Some warn, some warm. Some greet, some forbid. Bumper stickers are signs that are usually enlightening. I saw one on a minivan the other day that warned, "My other car is a broom." The lady driver certainly looked the part, with curlers in her hair, a cigarette lodged between two front teeth, a cup of coffee in one hand and a cell phone ear bud beeping blue. Her bumper sticker came to life with her non-verbal sign l...

FTC Issues Final "Red Flags" Rules: A Short Guide To Compliance

Mon, 07 Jan 2008 00:00:00 -0700

After 15 months of deliberation, the federal banking regulators and the FTC have issued the final "red flags" identity theft prevention rule required by the 2003 FACT Act. The rule contains the requirements for written Identity Theft Prevention Programs that auto dealers and other "financial institutions" must develop and implement by the mandatory compliance date of November 1, 2008.More specifically, the final rule requires each financial institution th...

Consumer Credit File Security Freezes Present New Challenges to Auto Dealers

Fri, 04 Jan 2008 00:00:00 -0700

Data security breaches compromising consumers' personal information continued at a fast and furious pace in 2007. TJX Corporation (the parent of discount retailers such as Marshall ' s and TJ Maxx) learned of a security breach that had been going on for several years. Up to 100 million card accounts and the personal identifying information of approximately 455,000 customers in the U.S. and Canada were compromised by a hacker using primitive equipment from the parking lot of a Marshall&...

Compliance 2007: The Year in Review

Mon, 31 Dec 2007 00:00:00 -0700

2007 was a year that presented new compliance challenges to dealers and posed important new ones for 2008, most notably the FTC Red Flags Rule that requires dealers to develop and implement an Identity Theft Prevention Program by November 1, 2008. But other issues emerged that will continue to challenge dealers in the New Year. The regulators and plaintiffs' lawyers are always out there. Let's review some of the key compliance developments of 2007 and look ahead to 20...

The Do’s and Don’ts of Spot Deliveries

Sat, 01 Dec 2007 00:00:00 -0700

Myths and Realities of Dealer Advertising and Marketing

Sat, 01 Dec 2007 00:00:00 -0700

Myths and Realities of Credit Reports and Adverse Action Notices

Sat, 01 Dec 2007 00:00:00 -0700

The Do's and Don'ts of Spot Deliveries

Sun, 18 Nov 2007 00:00:00 -0700

Myths and Realities of Credit Reports and Adverse Action Notices

Sun, 18 Nov 2007 00:00:00 -0700

Myths and Realities of Dealer Advertising and Marketing

Sun, 18 Nov 2007 00:00:00 -0700

Can You Speak DealerSpeak?

Mon, 01 Oct 2007 00:00:00 -0700

Riding on the rental car shuttle to the airport the other day, I overheard a Bavarian family of four chatting about something in their native language. I understood a few words.On that same shuttle was a couple schmoozing each other in that romantic language normally reserved for the Rhone. I understood a few words.Amongst this melting pot of human communications, I receive a text from my son. "Yo pops i dont gottawrk that wknd of the b...

Mickey's, Straws, and SARs

Sat, 01 Sep 2007 00:00:00 -0700

Growing up as a military brat, I always looked forward to our annual monthly vacation spent with my grandparents and 60 cousins in a relaxed rural setting.This serene rural setting had a rambling crick instead of a public swimming pool. This remote rural setting did not have little league baseball, but rather sandlot pickup games. In this calm rural setting, people-watching at the Greyhound bus stop replaced city movie theaters. Us cousins were usually left to our own devic...

Auto Dealer Compliance: “Knowing's Not Enough”

Sat, 01 Sep 2007 00:00:00 -0700

When I was a kid, my dad worked for a cement company. The company gave its employees pencils that had the phrase "Knowing's Not Enough" imprinted on them. I still remember my dad explaining to me that knowledge is only a starting point. You need to make sure that knowledge translates into consistent behavior whether in designing cement plants (my dad's occupation) or running an auto dealership sales or F&I practice (your occupation). A rec...

The Right Way to Use Menus

Wed, 01 Aug 2007 00:00:00 -0700

Sometimes when I am just pondering the universe, I wonder who the first person to eat certain foods was. Why, for example, would someone think that digging a root out of the ground and baking or frying or scalloping or boiling that root would taste good?Do you suppose that person also tried the same thing with a pine cone?My best theory is that the foods we eat have evolved through trial and error. Someone tried it and errored it to death, o...

New Lawyer Attacks on Dealers: Filling in Contract Forms as Constituting “The Unauthorized Practice of Law”

Wed, 01 Aug 2007 00:00:00 -0700

Plaintiffs' lawyers are always looking for new or regurgitated legal theories to use to sue auto dealers, preferably on a class action basis. One argument gaining a foothold in a number of states these days goes as follows: Since a completed retail installment sales contract or lease is a legal document, the acts of the dealer's employees who fill in the blanks on a preprinted contract or lease form constitute the "unauthorized practice of law." Practicing law wi...

Subprime: The Hidden Profit Center You Can Bank On

Wed, 01 Aug 2007 00:00:00 -0700

Subprime has come a long way in the last five years. There was a time when many dealerships looked skeptically upon this segment of vehicle sales and wondered aloud whether it was worth the trouble.Fast forward to 2007 and many successful dealers have learned that yes, the subprime is indeed worth the trouble, and what’s more, these segments help innovative dealers grab increased revenue month after month. There has never been a better time to rethink your views on subprime busine...

Spot Deliveries: A Refresher on Pitfalls and Practices

Sun, 15 Jul 2007 00:00:00 -0700

Spot deliveries refer to the practice of a dealer placing a consumer in a car "on the spot" to make a sale. However, the sale is made contingent (condition precedent or condition subsequent in lawyer-speak) on obtaining financing for the purchase, typically by a lender buying the retail installment sales contract the customer has signed with the dealer. You've been doing spot deals for as long as you've been in the auto business and, for many ...

Stuff I Read in Depositions

Sun, 01 Jul 2007 00:00:00 -0700

I read somewhere (how appropriate) that I can live longer if I continue to stretch my mind. Now, I'm not the kind of guy who buys Playboy for the articles. But I like to read as one of the exercises to stretch my mind to stave off feebleness.Some of my reading materials are the periodic depositions and complaints I read as part of helping to defend dealers in litigation.Here are some of the lessons to be learned from recent cases I've wo...

New Data Security Risk: Paying Bank Costs to Reissue Credit Cards and Cover Unauthorized Charges

Fri, 01 Jun 2007 00:00:00 -0700

No doubt your dealership takes credit cards from customers to pay for goods and services. For things like vehicle service, parts, auto rentals, maybe even downpayments on vehicle purchases. It is likely that you process some of these credit card payments without the customer being present, like for vehicle owners who pick up their serviced vehicles after hours or parts customers whose orders you fulfill by mail. If you do process card payments without swiping the card, you need to use not only...

Illegal Immigration: Some Risk for Auto Dealers

Sun, 15 Apr 2007 00:00:00 -0700

The illegal immigration issue in the United States is probably familiar in general terms to almost all of you. Estimates of the number of illegal immigrants here generally range from 12 million to 20 million people with new illegal immigrants arriving daily along our borders. The issue has received much attention in politics and media. But you should know that illegal immigration presents risks for your dealership as well. When an illegal immigrant enters the U...

Soothsaying Like the Frenchmen

Sun, 01 Apr 2007 00:00:00 -0700

Up until a year ago, the only French things I liked were fries, toast, kisses and that funny man on Family Affair. Then I spent some time in Paris and gained a new perspective, using my actual experience instead of listening to all those ugly stories about the ugly French.Now I plan to spend more time there and intend to chat with the sidewalk café waiter in his language.Another French thing I've taken a liking to is the eerie pre...

Oh No! I Just Got OFAC'd

Thu, 01 Mar 2007 00:00:00 -0700

On the TV show, 24, Jack Bauer is a super terrorist defeater extraordinaire. This season, he was released from a Chinese prison after being held captive for two years and immediately returned to prime form in ferreting out and destroying terrorists. While we mere mortal viewers are asked to suspend reality to follow Jack's exploits and the plot (ever notice Jack's cell phone never drops calls or runs out of juice?) the moral of the story remains true to form. American citizens must rem...

Doc Fees: The Next Attack Against Auto Dealers?

Thu, 01 Mar 2007 00:00:00 -0700

Plaintiffs' lawyers are always looking for new ways to attack auto dealers. Their creativity is limited only by their imagination and once a bad decision comes down against a dealer, the vultures are waiting to plaster courts around the country with similar lawsuits. An area that recently has been getting their attention is a dealer's ability to impose "doc fees" or document preparation fees in connection with a vehicle purchase or financing. ...

Bad Times for Bad Dealers: Recent Cases Award Punitive Damages and Legal Penalties to Customers in Dealer Litigation

Sun, 04 Feb 2007 00:00:00 -0700

Ohio is beginning to develop a reputation as a place where you don't want to be on the wrong side of a disgruntled consumer suit. We reported in December about a recent Ohio case, Whitaker v. M.T. Automotive, Inc., that awarded an aggrieved consumer damages for "emotional distress" caused by a dealer's conduct in unwinding a spot deal. The end result was that a $16,400 truck purchased by the customer wound up netting a $470,000 jury verdict, all but a frac...

Schedule Recurring Compliance Tasks

Mon, 01 Jan 2007 00:00:00 -0700

I take a little bit of pride in being a relatively organized person. My wife laughs at my closet, with suits and shirts arranged in the order I intend to wear them. It takes me four hours to cut the grass because the edges have to be perfect. I used to carry my old Franklin planner because it wouldn't fit in my briefcase.Thank goodness for Outlook.Outlook has greatly streamlined my time management. No more erasers to change people's ...

You Can and Should Sell More Lease Finance

Fri, 01 Dec 2006 00:00:00 -0700

Are we on the verge of a new renaissance in vehicle leasing? We definitely are. Not since 2002 has vehicle leasing activity been as attractive as it is now.Today’s resurgence of leasing is being driven by three important conditions:More accurate residual values. Lease terms that are more understandable by consumers and easier to present by dealers. Consumer sticker shock over monthly retail fi nance payments… which is offset by more reasonable ...

Compliance 2006: The Year in Review

Fri, 01 Dec 2006 00:00:00 -0700

As 2006 draws to a close, let's examine some of the key dealer compliance developments over the past 12 months. 2006 was a year in which new challenges emerged to traditional ways dealers do business, driven largely by technology and consumer experiences that made front-page news throughout the year. Safeguards and Data Security - 2006 set a record for security breaches and wrongful access to nonpublic personal information. The U.S. Veteran's Admini...

E-Contracting is Not a Turkey

Wed, 01 Nov 2006 00:00:00 -0700

Back when I worked for others for a living, I toiled on the next iteration of the proprietary credit system that linked dealers to the sales finance company.This was back when Shaq recently graduated from LSU to Magic Land, and blue suits, white shirts and red ties were the accepted office wear. We were converting from a DOS-based system to something called GUI, or gooey, as some dealers in our early market research referred to it.One of my ...

Using a Checklist Can Promote Compliance

Wed, 01 Nov 2006 00:00:00 -0700

"A dream goes on forever." ~ Todd Rundgren I know more guys who dream about owning a private pilot's license than guys who fulfilled their dream of owning one. I still dream. So I spend some time talking about flying with these guys with a glint of envy in my eye and in my voice.Just last week, such a conversation really hit home with what I do for a living.A pilot friend told me that he uses three checklists when he flies: ...

Attorneys General Crack Down on Used Car "Staffed Sales Events"

Sun, 01 Oct 2006 00:00:00 -0700

It has been a busy year for state Attorneys General, at least ten of whom have taken legal action against so-called "staffed event" companies that conduct short term (generally three to five days) used car sales events for local dealers in locations away from the dealerships. These companies publicize and run the sales events using their own salespeople and are paid on commission. The complaints have charged these companies with a variety of unfair and deceptive trade practices direc...

Update on Dealer Adverse Action Cases

Fri, 01 Sep 2006 00:00:00 -0700

A year ago, in our August 2005 Compliance Corner column, we reported on an adverse action case where the court held that an auto dealer's marking up a "buy rate" on financing offered to a consumer required the dealer to send the consumer an adverse action notice. Since that time, more cases have come down making it even less certain when dealers do and do not have to send adverse action notices to consumers. To make matters even more confusing, the FTC is close to issuing "r...

The Risks of Spot Delivery

Tue, 01 Aug 2006 00:00:00 -0700

I am sitting in Germany getting ready to head to France and am reminded of a childhood story.Dad was in the Air Force. While in the upper stages of elementary school, we lived in Okinawa. One of my chores was to cut the grass. With an old-school lawn mower. The kind that had two wheels connected to three blades. The blades rotated as the wheels turned and cut the grass. The wheels only turned when I pushed the machine forward.If the grass go...

Some Practical Tips for Avoiding Identity Theft at Your Dealership

Tue, 01 Aug 2006 00:00:00 -0700

The FTC, along with the federal banking regulators, recently published draft regulations on Identity Theft "Red Flags," these being facts predictive of identity theft. The regulations would apply to auto dealers and require dealers to adopt a written Identity Theft Prevention Program to assess risks of identity theft to the dealership and employ dynamic processes to detect, identify, and mitigate identity theft risks, including consideration of 31 listed "red flags" which a...

What Should Your Product Penetration Tell You?

Sat, 01 Jul 2006 00:00:00 -0700

We all live by the numbers. You could reach Jenny at 867-5309. 14 - 0 represents the pinnacle of single season victories posted by a college football team (OSU, 2002). The steroids-free home run king hit 756 homers.Dealerships run by numbers...PVR, CIT and profit, to name a few. Your F&I penetrations is another set of telltale numbers that can speak volumes about your processes.Average is one step away from "sucks"Ve...

Keeping Legal Exposure Local in an Internet-Based Selling World

Sat, 01 Jul 2006 00:00:00 -0700

The Internet is changing many of the ways auto dealers do business. Through the click of a mouse, a consumer from far away can search a dealer's inventory, obtain price and aftermarket information, and sometimes even conclude a sales transaction from their home. There are even firms that sell autos exclusively over the Web from "virtual" showrooms. Since a vehicle can be delivered to almost any continental U.S. address for several hundred dollars, the auto sales world is truly be...

The Poetry of Creating Payments

Thu, 01 Jun 2006 00:00:00 -0700

I admit I'm not a Renaissance man. I hate cats, so I know I ain't that sensitive. My manicure frequency does not qualify me for metro sexual of the month.I don't get poetry.Why try to enjoy something that many college students flunk? I mean, if it takes 30 brains and a professor 10 weeks to figure out why e.e. cummings had an aversion to capital letters...and then arrive at 10 different answers, what's the thrill?I spe...

The Great Debate: To Video or Not to Video

Mon, 01 May 2006 00:00:00 -0700

If you are married, as I am, you know there are two versions of the world. The way the world is and the world according to your spouse...My world is a hectic one. I have a wonderful wife who insists on working when she should be enjoying life; two grown kids and a 17-year-old who thinks he is grown. Almost every week, I'm traveling to a client's brick and mortar store, a courtroom to testify on a dealer's behalf or an industry group to make a presen...

The California Car Buyer's Bill of Rights

Mon, 01 May 2006 00:00:00 -0700

On July 1, an important new law will take effect in California. Called the Car Buyer's Bill of Rights, the law imposes new duties on California dealers, principally in connection with used car sales. This law applies only to consumer transactions and does not apply to small business or other commercial vehicle purchases. Except for the contract cancellation option, the law generally applies to RV sales as well. Massachusetts is close to passing a similar law, so let's take a look at th...

Security Breach

Sat, 01 Apr 2006 00:00:00 -0700

In 2003, California became the first state to enact a law requiring businesses to notify consumers if their personal, non-public information is wrongfully accessed from an unencrypted computer file or database. The law was passed to address customer concerns about identity theft. By the end of 2005, at least 22 additional states enacted similar laws (see sidebar), with more states and possibly the U.S. Congress planning to follow suit in 2006. As an auto dealer, these laws obligate you ...

Preparing Privacy Notices: New Model Forms in Simple Languages

Sat, 01 Apr 2006 00:00:00 -0700

The Federal Trade Commission and five banking regulators have just completed a major study on written privacy notices. Not surprisingly, the study found that most privacy notices are loaded with legalese and written in a style that the average consumer can barely understand. As a result, most consumers just ignore them or throw them away.The agencies said that it is their goal to simplify privacy notices and they provided a way to construct a model “plain language” privacy n...

Can You be Subject to a RICO Claim?

Wed, 01 Mar 2006 00:00:00 -0700

A recent class action lawsuit filed against a dealer group in the Eastern Time Zone alleges many of the same issues that car dealers have seen before: deceptive trade practices, falsifying income, falsifying down payments and straw purchases.But this lawsuit added a new wrinkle: a RICO claim. This is the first time I've seen this claim in litigation against car dealers.What is RICO and why is this emerging legal trend important to dealers?

Good Deeds Get Rewarded: Negligence Cases for Data Security Breaches

Wed, 01 Mar 2006 00:00:00 -0700

Doing the right thing by your customers is not only good policy. Sometimes it can keep you out of trouble even when everything else seems to be going wrong.How else to explain three recent negligence cases involving data security breaches where the data owners’ radically different security practices and consumer notification policies may have caused the courts to reach completely different decisions on similar facts?You know that if customer information is wrongfully access...

Customer List Sharing Rules in the Electronic Age

Wed, 01 Feb 2006 00:00:00 -0700

A leads vendor recently told me that “cash is King, but information is God.” In this age of data mining and target marketing, getting and sharing customer lists for marketing purposes can be profitable exercises. But, as with nearly everything else, there are rules you need to know and guidelines you need to follow. A number of federal and state laws restrict sharing of customer information and marketing to customers by certain means. Let’s first consider your use of y...

Data Security Incident Response Plans: A Necessary Part of Your Safeguards Data Security Program

Wed, 04 Jan 2006 00:00:00 -0700

2006 was another record year for data security breaches. By the middle of December, the Identity Theft Resources Center had tracked 306 incidents involving access to personal information on over 45 million people at companies, universities, and government. 158 such incidents were tracked in all of 2005. There is a good possibility that your dealership may suffer a breach of security in which the personal information of your customers is wrongfully accessed or u...

A Ha Moments: Why Full Compliance May Require a Culture Change

Sun, 01 Jan 2006 00:00:00 -0700

You would normally think that a 50 percent increase is a good thing. I always thought so, at least until my wife dragged me, kicking and screaming, to the doctor's office. My blood pressure had increased 50 percent year over year, both the bottom and top numbers. I guess that's a sign of too many good steaks and butter-laden baked potatoes. I suppose that my $750 annual membership to Gator's Fitness Center, which ended up costing me $250 per visit, hasn't he...

When Dealers Go Bad: How One Dealer's Compliance Failures Led to a Bitter Fall

Sun, 01 Jan 2006 00:00:00 -0700

Compliance mavens often use scare stories to convince auto dealers that the legal risks of shady F&I practices don’t justify taking the chance for a quick buck. Sometimes you wonder if it could happen to you. Yes it can. The following is a true account of what happened last year to a multi-state, multi-store dealer whose principal, Daniel A. Nelson, was a very prominent member of his community and a close personal friend of South Dakota U.S. Senator John Thune.The Dan Nelson A...

Identity Theft: Dealing with America’s Fastest-Growing Crime

Thu, 01 Dec 2005 00:00:00 -0700

Identity theft has been described as America’s fastest-growing crime. Over 9 million Americans were affected last year alone. If your dealership has not been involved in an identity theft claim then, for now, consider yourself lucky. Spending 10 minutes reading this article may ease the pain of a serious problem your dealership may experience in the near future.Identity theft is the illegal use of someone’s means of identifi cation: it can be someone’s name, Social Sec...

Aggressive FTC Enforcement of Consumer Regulations Puts Pressure on Auto Dealerships

Thu, 01 Dec 2005 00:00:00 -0700

In case you haven’t noticed (and you probably haven’t), the Federal Trade Commission (FTC) has been very aggressive lately in enforcing consumer protection laws that apply to auto dealers. While some of the recent activity has been focused on other industries, it’s a trend worth noting. According to insiders, there is an army of people at the FTC doing things like reviewing on-line privacy policies and then cold-calling the relevant companies to see if reality matches up with...

Data Security Breach Consumer Notification Laws Put New Obligations on Auto Dealers

Tue, 01 Nov 2005 00:00:00 -0700

In 2003, California became the first state to enact a law requiring notices to consumers if their personal information is wrongfully accessed from a computerized database. The law was passed in response to growing concerns about identity theft and it indirectly led to public disclosure of large-scale corporate database hacks that might otherwise have gone unreported at companies like Bank of America, Choicepoint, and LEXIS/NEXIS.Now, 22 other states have followed California’s lead...

The Seven Year Itch (Negative Equity)

Thu, 01 Sep 2005 00:00:00 -0700

I have always been intrigued by The Seven Year Itch. Not the movie, the title. The movie was released before I was released from my mom's womb. The title, however, has frequently made me think about the things in life that make you go hmmmmm.What happens after seven years that makes one itch? In the movie, people start to feel the need to look outside their marriage for pleasure. In the superstition, people can start having good luck after breaking a mirror. In the real...

The Pros and Cons of Videotaping F&I Presentations

Thu, 01 Sep 2005 00:00:00 -0700

A hot issue in auto dealer compliance these days is whether or not to videotape aftermarket presentations to customers in the F&I office. Videotaping started several years ago when the Alabama Supreme Court was packed with former trial lawyers. The Court issued a series of off-the-wall decisions unfavorable to auto dealers. In an effort to produce credible evidence to rebut plaintiffs’ testimony that Alabama courts were taking as gospel, the practice of videotaping in the F&...

The ABCs of Identity Theft Compliance

Wed, 01 Jun 2005 00:00:00 -0700

Identity theft has been described as America’s fastest growing crime. According to the Federal Trade Commission, identity theft affects approximately 10 million Americans per year. Perhaps you have had your identity stolen or know someone who has. It is a time-consuming and stressful process to clear your name. Thanks to some recent changes in federal law, help to identity theft victims is on the way from credit bureaus, reporters of credit information, and possibly even auto dealers.

The Importance of Allowing a Customer to Read Deal Documents

Sun, 01 May 2005 00:00:00 -0700

Plaintiffs’ lawyers can be quite creative in characterizing what takes place in an F&I office. That’s why a good menu product and a consistent compliance process are very important. Some compliance officers even favor videotaping, which can cut both ways in either validating or invalidating a lawsuit defense.Consider a case decided in July, 2004 by the Supreme Court of Alabama. In November 2000, the plaintiff, Ms. Norris, purchased a 2000 Chevy Tahoe SUV from the defenda...

Is Your Dealership At Risk?

Fri, 01 Apr 2005 00:00:00 -0700

Take steps now to be in compliance and protect your profitsLarge or small, today’s dealer is duty-bound to comply with a whole alphabet soup of acronyms. They’re shorthand for a complex web of federal and state laws aimed at regulating consumer finance and protecting customer financial information.“The last two years have felt like we’ve been running through a meteor shower of legislation,” says Kevin Reilly, a one-time attorney who&...