Contributing Author: Jason Hash Training Manager EFG Companies
One of the biggest compliance concerns discussed at this year’s F&I Industry Summit was bank fraud. Just this past summer, two auto groups made headlines for falsifying loan documents. So, how do you keep your dealership out of the headlines?
Start by understanding what bank fraud entails. In a traditional retail installment contract, bank fraud can occur in a number of ways:
misrepresentation on the credit application, such as with consumer income, down payment information, or stability;
misidentification of the buyer as someone else;
falsification of vehicle information with options the vehicle doesn’t have to augment the size of the loan; and,
failing to report to the IRS cash receivables of more than $10,000 for a single transaction.
Contributing Author: Eric Fifield Chief Sales Officer EFG Companies
Did you know that Baby Boomers are no longer the largest generation in the U.S. workforce? As of this year, Millennials (or Generation Y) have taken that spot according to the Center for Generational Kinetics. This also means that Millennials are now the largest generation of consumers.
If you remember the headlines from a couple years ago, everyone in the auto industry was concerned with Millennials simply not wanting to buy vehicles. Headlines abounded with articles discussing the migration to urban centers with walkable commutes, the rise of ride sharing, and the “inevitable” doom of personal ownership. All these fears turned out to be unfounded when it turned out that the reason Millennials weren’t purchasing vehicles was not because they weren’t interested in owning their own vehicle, but rather because they simply couldn’t afford the purchase.
Now, however, times are changing. This demographic is getting older and settling into careers. Their debt-to-income ratio is becoming more balanced. However, that’s not to say that this demographic is as well off as their Baby Boomer parents were at the same age. According to Northwestern Mutual’s 2018 Planning & Progress Study, those Millennials between the ages of 25 and 34 have an average of $42,000 in debt. In addition, more than 44 million Americans are saddled with student loan debt averaging $33,000.
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.
