Tag Archives: compliance

Backdating Deals: A Costly Mistake

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For years, backdating sales contracts was a common practice for dealerships across the country. They used to backdate to get in on time-sensitive manufacturer incentives or because they wanted to hit a sales target.

Almost three years ago, a California appeals court ruled against a San Diego dealership for backdating contracts and ordered that the dealership pay $50 to every member of the class action lawsuit. Additionally, they had to pay around $400,000 in legal fees.  The court ruled that backdating violated the Truth In Lending Act since the buyer will have to pay additional interest, and if the APR changed as a result of backdating, the dealership will be violating the law unless it falls within one-eighth of 1 percent of the calculated rate.

According to Gil Van Over, writer for Wards Auto, the auto industry has not taken the proper steps so that dealerships will not be tempted to backdate a deal. Automakers have charged back on incentives when a contract date is just outside of the incentive deadline. Some dealerships have just argued that the court was wrong in its ruling and that if a car buyer is driving the car already, they should be paying interest. Fortunately, automakers are starting to catch up, and if the dealership reaches out to factory auditors and provides proper documentation, the dealership will not be charged back on incentives. As to arguing that the court ruled incorrectly, the law is the law. The court’s job is to interpret the law. Just because you disagree with the court’s interpretation of the law doesn’t mean that your dealership will not be subject to that same law and its interpretation.

Backdating is tempting, but it is a costly mistake made by too many dealerships. Be vigilant, and make sure your dealership isn’t making this mistake!

Special Finance Group is ready to help your dealership bring in more customers and close more quality deals. Find out more about our Complete Special Finance Solution here or go to http://www.specialfinancegroup.com. You can also connect with Special Finance Group on Facebook, Twitter, and LinkedIn.

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CFPB to Oversee Car Dealerships In New Year

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It has been 3 years since the Dodd-Frank Wall Street Reform and Consumer Protection Act was signed into law. Now in 2013, the Consumer Financial Protection Bureau (CFPB) is taking a more active role in overseeing auto loans and car dealerships.

In a few short years, the CFPB has taken on credit card companies, the big 3 credit bureaus, and predatory lenders. They have informed the public of consumer protection laws and issued rules to protect homeowners from foreclosure. As they turn their focus to the auto industry, though, some people in the industry are jumping to conclusions, imagining regulators breathing down their necks and slapping dealerships with fines every time someone forgets to dot an “i” or cross a “t.”

In response to these concerns, the CFPB has reached out to dealership groups and even sent out a representative Richard Hackett to the National Automobile Dealers Assn. convention in Orlando, Fl. At the convention, Hackett explained that the CFPB expects some human error in dealerships, but their main goal is to spot patterns of non-compliance in dealerships. The CFPB is trying to strike the right balance of alleviating fears while also letting dealerships know that they aren’t going anywhere. Dealerships will need to learn to work with the CFPB and stay current on consumer laws and regulations. As long as they are willing to take those steps, there is no need to worry.

As part of the Complete Special Finance Solution, Special Finance Group works with their associated dealerships to keep the special finance reps current on all new consumer protection laws. Compliance is more important than ever, and having the Complete Special Finance Solution gives your special finance department yet another advantage over the competition.

Want to learn more about how Special Finance Group can work for you? Go to http://www.specialfinancegroup.com today, and connect with Special Finance Group on Facebook, Twitter, and LinkedIn!

3 Big Steps to a Fully Compliant Dealership

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Is your dealership following strict compliance? Many dealerships might think they have nothing to worry about complying with federal and state consumer protection laws, but with the new Consumer Financial Protection Bureau, full compliance is more important than ever.

There are three steps that you can take to review your dealership and catch any potential problems or missteps before they become a bigger problem. First, review your employee training procedures. If this information is not written down and streamlined, take the time to do so now. It will make training easier and clearer in the future, and you will also ensure that nothing important gets missed.

Second, go through your dealership’s written policies and procedures with a fine tooth comb, and ask a compliance lawyer to also take a look over it. Also, be sure to have a copy of the most recent relevant consumer laws on hand. You can find the most recent regulations enforced by the Consumer Financial Protection Bureau here. If there is anything that could be potentially problematic in any way with your current policies or procedures, make the change now in writing, and keep a new copy of your policies and procedures on file.

Third, review your new policies and procedures with all employees, especially anyone who thinks they already know what they are doing. Ignorance can keep a dealership non-compliant, but complacency is far worse for a dealership.

At Special Finance Group, we are constantly working to maintain full compliance with consumer financial regulations. We see compliance as a job that is never done in every part of our business from our first contact with a customer to handing over the keys to a new or used vehicle. Our hard work has led to hundreds of happy customers who have had a positive experience and driven off with a car.

Special Finance Group’s Complete Special Finance Solution can help your dealership too! Click here to learn more, and connect with Special Finance Group on Facebook, Twitter, and LinkedIn!

Image courtesy of Jeroen van Oostrom / FreeDigitalPhotos.net