Steve Roennau | Powersports Switchback

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.

Powersports 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 dealership management pays 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. 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 salesperson 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.

Contributing Author:
Steve Roennau
Vice President
Compliance
EFG Companies

Compliance is often considered a “dirty word” in the powersports F&I world. But let’s think about compliance in a different light. Let’s think about compliance as a business opportunity rather than a business hindrance. Let’s think about compliance as a way to generate more business – both from lenders and consumers.

2016 has brought a flurry of activity from new and current lenders in the powersports market. In some instances, these participants are traditional automotive lenders entering the powersports business to expand their business. In other cases, current lenders who were already servicing the powersports industry have seen their book expand significantly – both in terms of originations and total value. And powersports dealers have supported that growth by attaching valuable F&I products to these deals, boosting lender confidence.

For those lenders who are expanding from the automotive space into the powersports market, compliance has been a way of life for some time. New lenders consider compliance as a solid safety check. A savvy powersports dealer should consider consider compliance as table stakes. If we want more auto lenders to branch into the space, then we need to begin demonstrating compliance within the dealership. Having a compliance process will impress your lending partners and up your “good partner’ quotient.