Categories
Compliance

Say Goodbye to Disparate Impact Theory

Author: Dave Gibbs
Contributing Author:
Dave Gibbs
Training Manager
EFG Companies

On Monday, President Donald J. Trump signed into law the Congressional S.J. 57 resolution repealing the Consumer Financial Protection Bureau’s (CFPB) guidance on dealer markup. Originally issued in March, 2013, the auto lending guidance quickly received negative feedback. In fact, the ruling caused several finance sources to either switch to a flat-fee compensation model or enforce lower caps on dealer markups. The ruling also prompted the CFPB to impose consent orders with several institutions resulting in millions of dollars in fines.

The retail automotive industry is cheering this move, which began five months ago when the Government Accountability Office said Congress had the power under the Congressional Review Act (CRA) to overturn the CFPB guidance. But, before you start thinking the good old days are back, consider what started the industry on this path.

The CFPB’s original guidance was designed to inform lenders that it would begin enforcing the fair lending requirements of the Equal Credit Opportunity Act (ECOA) using a theory on disparate impact. This theory refers to practices that adversely affect protected classes of individuals, even though employer rules and practices are meant to be neutral. The CFPB used this theory to make the argument that dealer markup practices could result in unintentional discrimination during the credit process, and must therefore be reined in.

While the CFPB can no longer use disparate impact theory to force lenders to reduce dealer markup, the ECOA and its fair lending requirements remain in full effect. Other federal, state and local compliance regulations also remain, which prompts me to remind our clients that remaining in compliance is still in the dealership’s best interest. And, it’s highly unlikely that lenders who invested millions of dollars into comprehensive compliance platforms will suddenly reverse all those process changes.

Categories
Business Growth

eLeads = Opportunity!

Glenice Wilder Vice President EFG Companies
Contributing Author:
Glenice Wilder
Vice President
EFG Companies

EFG Companies recently completed its second national consumer research study regarding consumer buying habits. The data from 1,457 respondents clearly showed the importance of an online presence when it comes to selling powersports. Specifically,

  • 50 percent of customers check a dealer’s online customer reviews prior to considering them for a potential vehicle purchase.
  • 71 percent compare dealership website prices before deciding which dealership to visit.
  • 83 percent expect a response from the dealership within 24 hours of sending an online inquiry, and 16 percent want information immediately or within the hour.
  • 43 percent say the more information you can provide online, the more apt they are to visit the dealership.
  • 45 percent rank poor spelling, grammar and punctuation as a top three reason to eliminate a dealership from consideration.

These data points should come as no surprise, especially if you consider your own online shopping habits. But one question should arise. Do you have the right team with the right skills to convert these eLeads into sales?

Selling in a Digital World

We’ve all been coached on email etiquette and hopefully have mastered professional online communication. But, converting a basic inquiry to a dealership visit, and a sale, involves more than an automated email response.

Categories
Featured Powersports Market

Training Pre-empts a 911 Call

Glenice Wilder Vice President EFG Companies
Contributing Author:
Glenice Wilder
Vice President
EFG Companies

I don’t know if you are a fan of the 9-1-1 television series on the FOX network, staring Angela Bassett, Peter Krause, and Connie Brighton. If you DVR-it like me, the 10th episode which aired March 21 should give every powersports dealer pause. The storyline included a scenario where a man purchases a new motorcycle, and rides off without the dealer checking for a license or training. In mere TV minutes, the actor is involved in a horrific crash, prompting a call to 911.  The lesson for powersports dealers is clear. Always check to ensure the buyer is licensed for a motorcycle before delivering the bike! And always be sure the buyer is trained to ride the bike they just purchased!

Internal Training First

It’s easy for the sales team to “assume” the customer is fully prepared to enjoy that new bike. They asked all of the right questions and even mentioned several previous motorcycle experiences. But customers are often unwilling to admit their shortcomings or lack of knowledge. Therefore, your entire dealership team must be responsible for ensuring the buyer is fully prepared.

Take the opportunity to check the driver’s license early in the sales process. Confirm they are actually licensed to ride a bike. “Oh, I’ve ridden a bike for years!” is not sufficient. Almost every state notes a motorcycle on the license itself. Also, a quick check to the DMV database will flag the appropriate certifications.