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: 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.
Contributing Author: Steve Roennau Vice President Compliance EFG Companies
The Consumer Financial Protection Bureau (CFPB) has been in the news a lot lately.
From Acting Director Mick Mulvany’s decommissioning of the Advisory Committee, to a federal district judge ruling its structure is unconstitutional, some might think that the CFPB’s days are numbered.
But history has a lesson to offer, compliments of the Federal Trade Commission (FTC). The FTC was created on September 26, 1914, when President Woodrow Wilson signed the Federal Trade Commission Act into law. The regulatory agency opened its doors in 1915, with a mission to protect consumers and promote competition. The FTC building was finished in 1938, with President Franklin D. Roosevelt stating, “May this permanent home of the Federal Trade Commission stand for all time as a symbol of the purpose of the government to insist on a greater application of the golden rule to conduct the corporation and business enterprises in their relationship to the body politic.”
Currently, the FTC houses three bureaus:
the Bureau of Consumer Protection
the Bureau of Competition
the Bureau of Economics
Each bureau has a set of mandates to guide its work. In the early 1970s, the agency became more aggressive in its prosecutions and sanctions. The business community and Congress criticized the FTC’s activism, claiming it had become too powerful, was insensitive to the needs of the public and business, and operated with little oversight from Congress or the president. During President Ronald Reagan’s first term, control of the FTC was moved under the president. Its direction was modified to become more cooperative with business interests, while continuing its consumer protective functions.
