Category: Compliance

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Compliance

Documenting Processes: More than Just Compliance

Contributing Author: Steve Roennau Vice President Compliance EFG Companies
Contributing Author:
Steve Roennau
Vice President
Compliance
EFG Companies

Over the past few years, you’ve probably heard a lot about the importance of documenting your processes. Even with the changes at the CFPB, this importance is not diminished. Remember, the CFPB does not have jurisdiction over most dealerships (except Buy Here Pay Here). State Attorney Generals, the DOJ, and the FTC do. And, these government bodies haven’t undergone significant changes.

Therefore, if you haven’t already begun the process of documenting your processes, it’s time to get that project started. I’ve spoken with a lot of dealers who thought documenting processes would take an investment of thousands of dollars and a legal team. This does not have to be the case. It simply starts with taking a process that your team completes every day and writing down the steps.

Of course, with the numerous, ongoing processes in a dealership, not everyone knows where to begin. This is especially true for those processes that are simply just part of the routine. Many dealers haven’t even conceptualized how to define them beyond, “just do it”.

Just like with any big project, think about tackling this project one bite at a time. Start with the checklist on your deal jackets. Define and write down the process behind each item on the list. Each process should consist of three components:

  • What you do
  • Why you do it
  • How you do it
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Compliance

The Other Side of the Domino Effect

Contributing Author: Steve Roennau Vice President Compliance EFG Companies
Contributing Author:
Steve Roennau
Vice President
Compliance
EFG Companies

In July 2015, BB&T Dealer Financial Services announced the launch of flat fees as the Consumer Financial Protection Bureau (CFPB) announced the expansion of oversight to larger non-bank auto finance companies. BB&T became the third auto finance lender to change their dealer participation practices, after Chrysler Capital and Santander USA. A domino effect quickly took place, with American Honda Finance Corporation, Fifth Third Bank, and Toyota Motor Credit joined the growing number of lending institutions either reducing their cap on dealer participation, or implementing flat fees.

In February, BB&T became the first auto finance company to reverse the trend, stating in an interview with Subprime Auto Finance News that the bank would be abandoning its flat-fee dealer compensation program and introduce a more traditional auto pricing program mid-March.

While BB&T plans to eliminate flat fees, we can still expect them to be more circumspect on the dealer participation cap than in previous years. In fact, Brian Davis, BB&T’s director of corporate communications stated, “BB&T remains firmly committed to the auto finance industry and to the fair and equal treatment of all consumers.”

The fact of the matter is that it is highly unlikely that the auto finance industry as a whole will raise their dealer participation caps back to pre-CFPB levels. After all, the concept of treating customers fairly isn’t go away.

Continue reading “The Other Side of the Domino Effect”
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Compliance

Consumer Privacy in Retail Automotive

Contributing Author: Steve Roennau Vice President Compliance EFG Companies
Contributing Author:
Steve Roennau
Vice President
Compliance
EFG Companies

Do you know someone who was affected by the Equifax data breach? How about the Verifone hack or, the breach within the Internal Revenue Service (IRS)? According to the Identity Theft Resource Center® (ITRC) and CyberScout®, 1,579 data breaches occurred in 2017, representing a 44.7 percent year-over-year increase.

A study of more than 10,000 consumers by Gemalto, a data security firm, stated 70 percent of consumers would stop doing business with a company if it experienced a data breach. And, 69 percent feel businesses don’t take security of consumer data very seriously.

In retail automotive, dealers have been regulated on consumer privacy ever since the Gramm Leach Bliley Act was passed in 1999. Under Gramm-Leach Bliley, dealers are required to implement, and regularly audit, a written “Information Security Program,” to protect information about its customers. This is called the Safeguard Rule. However, in 1999, digital data breaches were not even a feasible consideration for most dealers.

To date, these “Information Security Programs” detailed how to physically secure private consumer data. It’s because of these programs that most F&I offices are locked, and F&I managers pay very close attention to make sure no private consumer information can be displayed on a desk or computer screen for anyone to see.

While these procedures are important, they now need to be augmented to incorporate every possible way a consumer data breach could occur. From a physical standpoint, this includes training the sales team on how to properly manage private consumer information, and holding them to the same standards as F&I professionals. For example, let’s say a salesperson made a copy of a driver’s license for a test drive and the consumer ended up leaving the dealership without purchasing. What does the sales person do with that photocopy? Do they just put it in their desk trash bin, or do they put it in a secure shredding bin? If they just put it in their desk trash bin, that data is not secure. Anyone could come and take that photocopy out of the trash.

Continue reading “Consumer Privacy in Retail Automotive”