{"id":236,"date":"2013-08-09T13:07:58","date_gmt":"2013-08-09T18:07:58","guid":{"rendered":"http:\/\/efgintelligence.com\/dealershipcorridor\/?p=236"},"modified":"2013-11-04T16:36:47","modified_gmt":"2013-11-04T22:36:47","slug":"increase-profit-and-remain-cfpb-compliant","status":"publish","type":"post","link":"https:\/\/efgintelligence.com\/dealershipcorridor\/increase-profit-and-remain-cfpb-compliant\/","title":{"rendered":"Increase Profit and Remain CFPB Compliant"},"content":{"rendered":"

\"Contributing<\/a>With the Consumer Financial Protection Bureau (CFPB) threatening to crackdown on what they deem as predatory auto loan practices, everyone is scrambling to make sure they are compliant with the fair lending requirements of the Dodd-Frank Wall Street Reform and Consumer Protection Act.<\/p>\n

The CFPB was created in July 2010 in an effort to consolidate most Federal consumer financial protection authority in one place.\u00a0 To-date, the thrust of the CFPB\u2019s oversight has been on rooting out deceptive advertising and sales practices, including misrepresentation of products or product costs, and enrolling customers in products or programs without their consent.\u00a0\u00a0 In general, the laws prohibiting these practices are not new; however, the CFPB has also stepped up efforts to eliminate discriminatory practices.\u00a0 Take the following example:<\/p>\n

Sally, a subprime borrower, walks into a dealership to purchase a car. Her F&I manager submits the paperwork to several lending institutions, who then decide to extend a rate on the loan. The interest rate offered by the lender to Sally reflects the higher risk in a loan to an individual of Sally\u2019s credit worthiness.\u00a0 The F&I manager presents Bank ABC\u2019s rate to Sally, but what she doesn\u2019t know is that, after getting the bank\u2019s rate, her F&I manager increased it with the intention of the dealership participating in the lending profit.\u00a0 No problem so far.<\/p>\n

However, a discriminatory practice occurs if the F&I manager marks up Sally\u2019s interest rate by a greater amount than the dealership typically marks up the bank\u2019s \u201cbuy rate\u201d for other customers, even if Sally has few other options to finance her vehicle purchase and is willing to accept the interest rate presented by the dealership.\u00a0 The fact is that the bank\u2019s buy rate already appropriately reflects the risk in a loan to Sally and the cost to the dealership associated with financing Sally\u2019s purchase is no different than that associated with every other customer.\u00a0\u00a0 If the F&I manager increased the rate more for Sally than he would have for another customer because of her race, gender, ethnicity, or any other protected class, then his actions could be deemed discriminatory and the dealership could be held liable.<\/p><\/blockquote>\n

In addition to discriminatory F&I practices, dealers are concerned as to whether the sale of F&I products, such as extended vehicle service contracts, could increase their liability.\u00a0 As the CFPB is expected to eventually monitor dealership practices more closely, it makes sense for dealers to double check every process and procedure to ensure compliance.<\/p>\n

With respect to F&I products, dealers who partner with third party administrators that understand the depths of their business and the regulation that goes with it<\/strong> don\u2019t have to worry.\u00a0 Organizations like EFG Companies (EFG), that hold administrative licenses in every state for the sale of F&I products, have made compliance a core facet of their business<\/strong>, influencing everything from product development to claims and client support.<\/p>\n

For example, the sale of vehicle service contracts and GAP policies are some of the most highly regulated products by the states.\u00a0 However, dealers who abide by sound advertising and sales practices cannot be held liable<\/strong>. Rather, the contract administrator becomes liable for any issues relating to the VSC. For this reason, dealerships already had significant reason to abide by discrimination laws before CFPB decided to crack down.<\/p>\n

Dealerships found that when partnering with organizations like EFG, their training<\/a> prepared the F&I managers to remain in compliance<\/strong> with all laws surrounding the sales of F&I products. Companies like EFG take liability very seriously, and, as extensions of the dealership, they verse themselves in the entire F&I process and the laws surrounding it to adequately train dealership personnel.<\/p>\n

With engagement from F&I product providers that embody dependability and integrity<\/strong>, dealers can rest assured that their F&I department is sufficiently trained to remain in compliance with all laws surrounding the F&I process.<\/p>\n

EFG<\/a> goes above and beyond to mitigate liability by developing customized go-to-market execution plans<\/strong> for each client.\u00a0 This effort begins with a comprehensive review of the dealership\u2019s existing processes and leads to joint agreement with the dealer with respect to a well-defined blueprint for compliant \u2013 and profitable \u2013 implementation.\u00a0 EFG then creates customized training curriculum and conducts interactive training<\/strong> with dealership personnel, supported by ongoing monthly audits, to ensure that compliance pitfalls are avoided.<\/p>\n

Dealerships have an excellent opportunity of increasing profit with F&I products. However, they should keep these considerations top of mind when selecting their product administrative partners:\u00a0 their operating history and customer service brand recognition in the marketplace, their compliance focus and capabilities, and their liability structure.\u00a0 Whomever they choose as their partner must be strong in all three areas to provide the level of service and compliance expected from a trusted partner.<\/p>\n","protected":false},"excerpt":{"rendered":"

With the Consumer Financial Protection Bureau (CFPB) threatening to crackdown on what they deem as predatory auto loan practices, everyone is scrambling to make sure they are compliant with the […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"om_disable_all_campaigns":false,"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"_uf_show_specific_survey":0,"_uf_disable_surveys":false,"jetpack_post_was_ever_published":false,"footnotes":""},"categories":[5,2,7],"tags":[87,317,90,89,88,313,315,91],"class_list":["post-236","post","type-post","status-publish","format-standard","hentry","category-dealership-training","category-efg-companies","category-fi","tag-cfpb","tag-compliance","tag-consumer-financial-protection-bureau","tag-consumer-protection-act","tag-dodd-frank-wall-street-reform","tag-efg-companies","tag-fi","tag-finance-and-insurance"],"aioseo_notices":[],"jetpack_featured_media_url":"","jetpack_sharing_enabled":true,"jetpack_shortlink":"https:\/\/wp.me\/p7hsqu-3O","jetpack-related-posts":[],"jetpack_likes_enabled":true,"_links":{"self":[{"href":"https:\/\/efgintelligence.com\/dealershipcorridor\/wp-json\/wp\/v2\/posts\/236","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/efgintelligence.com\/dealershipcorridor\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/efgintelligence.com\/dealershipcorridor\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/efgintelligence.com\/dealershipcorridor\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/efgintelligence.com\/dealershipcorridor\/wp-json\/wp\/v2\/comments?post=236"}],"version-history":[{"count":8,"href":"https:\/\/efgintelligence.com\/dealershipcorridor\/wp-json\/wp\/v2\/posts\/236\/revisions"}],"predecessor-version":[{"id":367,"href":"https:\/\/efgintelligence.com\/dealershipcorridor\/wp-json\/wp\/v2\/posts\/236\/revisions\/367"}],"wp:attachment":[{"href":"https:\/\/efgintelligence.com\/dealershipcorridor\/wp-json\/wp\/v2\/media?parent=236"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/efgintelligence.com\/dealershipcorridor\/wp-json\/wp\/v2\/categories?post=236"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/efgintelligence.com\/dealershipcorridor\/wp-json\/wp\/v2\/tags?post=236"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}