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Contributing Author: Steve Roennau Vice President Compliance EFG Companies

Contributing Author:
Steve Roennau
Vice President
Compliance
EFG Companies

Barely one year after the devastation that went along with Hurricanes Harvey and Maria, the U.S. is once again reeling from the effects of Hurricane Florence. As of Monday, September 24, 2018, as many as 8,000 people were still on alert for possible evacuations. According to the National Weather Service, five river gauges are still at major flood stage in North Carolina, and five others are at moderate flood stage. Parts of Interstate 40 are expected to remain underwater for at least another week. According to a recent estimate from an economic research firm, Hurricane Florence has caused approximately $44 billion in damage and lost output, which would make it one of the top 10 costliest U.S. hurricanes.

So, what does this mean for the retail automotive industry in the affected areas? Once the flood-waters recede and consumers have the opportunity to assess the damage to their homes and vehicles, we can expect those consumers to begin the process of replacing their vehicles. This will most likely coincide with the holiday car buying surge for which dealerships across the nation are already preparing.

Dealerships on the Eastern Seaboard will be hard pressed to ensure they have enough inventory to meet demand. In addition, when people flock to the stores in large groups, we can always expect identity crimes to rise. Whether that means stealing private, confidential information to use at a later date, or trying to buy products using false identification, dealers need to be prepared for every possibility.

In any natural disaster, dealers need to do a self-inspection to ensure they have the right processes in place to protect their dealerships, as well as their customers, from identity fraud. While flooded vehicles are cleared off the lots, take a look at the measures you take to physically secure private consumer data in the dealership.

  • Are all F&I offices locked?
  • Are both your sales and F&I teams trained to never leave private information, like a copy of a driver’s license, in an unsecure location, like on a sales desk or on the copy machine?

Aside from physically securing private consumer data, it’s also important not to rush the finance process. When everyone is in a rush to close as many transactions as possible in a day, it’s all too easy to skip or move too fast during those important compliance steps that identify potential fraud risks. Train your team to slow down and pay extra attention to those details when checking Red Flags and the Specially Designated Nationals List (SDNL). Take a look at your identity theft prevention process to ensure it has these four elements:

Identification: Aside from using credit reports and loan applications to run Red Flags checks, train your team to pay attention to behavioral cues. Is the customer anxious? Are they trying to rush the process? Are they trying to use large amounts of cash?

Evaluation: Remember, not everyone updates their driver’s license after every move. And, it’s not uncommon for a name change from a marriage or divorce to take time. When those Red Flags do pop up in the system, don’t treat everyone like a criminal. Train your team to be considerate while trying to clear Red Flags, while also paying attention to those behavioral cues. If a customer gets very nervous or antagonistic when asked to provide a utility bill, there is cause for concern.

Response: Does your team know what to do when Red Flags can’t be cleared? The best course of action is to involve the F&I director or general manager. Upper management can notify the proper authorities, and explain to the customer that they simply could not make the deal work.

Update: Identity theft is probably one of the most common crimes in the U.S. As all retail establishments utilize more digital solutions for processing payments, storing private consumer data, and conducting business, it’s becoming easier for identity theft to occur. In addition, people are constantly developing new ways to commit identity fraud. For this reason, it’s important that dealers update their compliance processes on a regular basis. If you haven’t updated your process in a year or more, take the time now, before the car-buying surge to come, to update that process and prepare your team. Then, make it a point for your compliance manager to meet with your F&I Director on at least a quarterly basis to update the process based on the trends the F&I Director is seeing.

Compliance processes aren’t required just to make your life more difficult. Many of them are actually meant to protect your business from fraud. By regularly updating your processes and reinforcing your training, especially during times of peak business, your team will be better able to protect your dealership while also effectively processing legitimate deals. The more you train and reinforce your processes, the more they will become second nature. And, your team will be able to work through them more diligently and efficiently, reducing business disruption while enhancing your dealership’s ability to detect fraud.

With more than 40 years of helping dealerships achieve compliant profitability, EFG Companies knows how to foster team accountability for both compliance processes and PRU. Contact us today to find out how.

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