Category: F&I

Minimize Risk and Help Ensure Compliance on Every Deal

Posted on

It’s understandable that dealers do not enjoy having to think about compliance. The myriad, ever-changing laws, rules and regulations that apply to each deal can be confusing and frustrating. But non-compliance can lead to thousands of dollars in fines, class-action penalties, and damage to the dealership’s reputation – so it’s important to do everything possible to keep up.

Engaging qualified legal counsel is the most effective approach to full compliance, but here are other ways that dealers and their staff can work to protect their deals and the reputation of their dealerships.

Every pencil counts 

As you know, a pencil is the proposal that a salesperson uses with customers to outline deal scenarios as the final agreement is being reached. It’s important for your desking solution to automatically save a record of pencils in each customer’s deal jacket.

This will give you the ability to show a regulator, auditor, or plaintiff’s attorney the progression of the deal, and will help head off any claims that a consumer misunderstood the deal. This is particularly important in that the Federal Trade Commission (FTC) and the Consumer Financial Protection Bureau (CFPB) have emphasized the need for transparency in consumer financing of automobile purchases and leases. For example, The Dodd-Frank Act of 2010 has a category for “abusive” trade practices, designed to protect consumers from being taken advantage of due to their lack of understanding.

Consistency is key 

Prepare scripts, FAQs and presentations that fairly and honestly state what the aftermarket product is and how much it will cost. This helps ensure that there won’t be credit discrimination.

Create a paper trail – even if it’s digital 

Solid documentation creates an environment of transparency for the consumer and a “paper trail” for auditors and regulators.

Each customer’s deal jacket should not only contain a record of pencils, but copies of every document, including all four squares and even less formal correspondence that shows how the deal was formed. Keeping the pencils record, a signed menu, and a plain-language buyer’s order reveals the detailed steps and trade-offs made by both the customer and the dealer.

Make sure that all pertinent deal information is stored in an easily searchable and highly secure location. That will help you build a consistent and transparent sales process and also give you the ability to track pencils by deal, date, user or vehicle status for auditing purposes.

When you follow these steps, you will help protect your dealership and your customers.

For more compliance tips, download the Dealertrack 2024 Compliance Guide. It’s a handy resource for questions about sales and finance compliance all year long.  

How Operations Oversight Aids in F&I Compliance

Posted on

It seems that you can’t read the news without learning of yet another massive corporate data security breach. As much as we all hear about the importance of safeguarding customer information, studies show that a majority of data breaches are caused by employees.

In your showroom, that means your compliance is at risk from staff members leaving deal jackets, credit reports or credit applications lying around for anyone to see – or from weak passwords or “phishing” scams with untrustworthy links. Whether data is exposed through negligence, error or the deliberate acts of untrustworthy employees, it’s important to have a plan in place to protect your dealership.

Dealership management should be proactive and prepared with comprehensive data security training and real-time monitoring. It’s vital to oversee your operations via tracking of employee access to your electronic databases, including a compliance dashboard.

Protecting your dealership 

There are two key steps to keeping your dealership protected and compliant. Begin by educating your employees and giving them the tools they need to keep information secure. This includes training on data security best practices about things like strong passwords, avoiding clicking unknown links, and guarding against social engineering attempts by strangers attempting to get information.

The second step is to create a monitoring program that allows you to oversee data flow into your systems, user access, user activity, and patterns that indicate irregularities. When you closely and regularly monitor the sales process, you are better equipped to step in to head off problems and help ensure that your dealership remains compliant.

Creating your compliance process 

As you’re developing your process, make sure it includes a real-time compliance dashboard within a single screen. That will allow you to immediately identify any potential issues. You’ll also be able to observe how your employees handle and safeguard customer data they receive.

Data management is something you need to do actively, with policies in place to handle data over time as well. Beyond requiring secure passwords and authentication, consider two-factor authentication that includes a complex password and a randomly-generated number from an ID token.

Manage user permissions so that only employees with a legitimate business need can access customer information. Have a plan for purging non-public personal information once you no longer need it.

A culture of security in your dealership starts with senior management and filters through the ranks. Emphasize transparency and honesty in every customer interaction and make sure to train employees on unfair, deceptive and abusive practices to ensure that each interaction with customers complies with federal and state regulations.

If you haven’t gotten your copy of the Dealertrack 2024 Compliance Guide, download it today! 

5 Ways to Make Sure Your Compliance Program Is Effective

Posted on

Compliance can be a costly part of doing business as a dealership. A 2022 article in Auto Dealer Today estimated that the average dealership spends between $162,385 and $276,925 per year to address regulatory compliance.

Fortunately, dealers can address F&I compliance more affordably by integrating a robust program throughout the sales and F&I workflow. This starts with effective document storage and includes the ability to monitor deal activity.

Here are five questions to ask to make sure your compliance program is operating at full efficiency and effectiveness:

1. Have you created a culture of compliance and security?
It’s important to train employees on spotting unfair, deceptive, and abusive acts and practices. Training should also emphasize honesty and transparency in all customer interactions. And make sure you have a compliance dashboard that allows you to monitor activity from a single screen.

2. Is the FTC Red Flags Rule fully integrated into your workflow?
Your sales workflow should include checkpoints throughout the deal process to verify that you’re meeting FTC and OFAC requirements and mitigating fraud. Always stay audit-ready by documenting everything you do and keeping copies of all documents related to identify in the deal jacket. Finally, be sure that you follow your identity theft policies and procedures (ITPP) process with every customer.

3. Does your compliance workflow include your menu selling?
Cox Automotive research has found that customers who are aware of F&I product options before they go to the dealership are more likely to buy. As these product introductions become more prevalent online, it’s vital to make sure they are fully consistent with the in-store presentations and include the same full disclosure. Your electronic menu product should help ensure consistency and legal compliance with your state laws and regulations.

4. Do you have full visibility to all deal activity?
Your compliance program should give you the power to track, report, and audit activity as needed, and from a single screen. Today’s dealership management must be prepared and proactive, with comprehensive training and real-time monitoring. For example, electronic databases should give you the ability to track employee access, and oversight of operations should include a compliance dashboard.

5. Are you consistently managing all documentation?
Regulations demand that you store a wide range of documents, including credit applications, privacy notices, credit reports, contracts, and menus, in secure electronic deal jackets. It’s about more than just convenience. Being consistent in storage and security provides peace of mind and creates efficiencies just in case auditors do come calling.

For more compliance tips, download the Dealertrack 2024 Compliance Guide. It’s a useful resource for safeguarding your dealership. 

Disruption Today: Drive Profitability with Emerging Technology

Posted on

Based on the workshop presented at NADA 2019 by Mike Barrington, Senior VP of Retail Solutions Group Sales, Digital Retailing & Dealertrack F&I Solutions at Cox Automotive

The rate of technology change today is astounding – and the adoption rate is matching its pace. Not long ago, some of the technology we take for granted today sounded like science fiction. Today, we all carry powerful pocket computers that also happen to be phones, many of us have digital assistants that respond to spoken commands to do things like order groceries, and cars can talk and nearly drive themselves.

Consumers are already using the latest technology in every aspect of their lives. What you might think of as the “cutting edge” of technology is fast becoming the new normal.

Consumers expect their car-buying experience to be as convenient as the rest of their tech-enabled buying experiences. Unfortunately, dealers are already falling behind.

As an industry, we need to create the better, more transparent experience that consumers demand. Here are two major emerging disruptors that will impact the way dealers do business in the near future.

  1. Digital tools to enhance the consumer’s buying journey

Consumers want to be able to choose the points in which they interact with you online or in your store. Having an online presence is a given, but today you must enable the consumer to do a significant portion of their research and buying process online.

This doesn’t mean that the consumer will stop coming to your dealership.  In fact, we know that the majority of shoppers prefer to finish their transaction in the dealership.

However, we know consumers demand more digital tools than ever before. Providing those tools gives you the competitive advantage.

For example, 83% of consumers want to learn about F&I before they visit the dealer, and they are more likely to purchase products that they’ve learned about in advance.

This is a big area where dealerships are falling behind the technology curve. If you don’t have a strategy to provide digital retailing tools, you’re already at a disadvantage.

  1. Proactively communicating with customers on their devices.

Just a few years ago, consumers thought that personalization and online targeting were “creepy.” Now it’s just an expected part of business interactions.

Think about retailers like Starbucks or Amazon that not only connect online experiences to the in-store/in-person experience, but also use their consumers’ data—backed by machine learning and AI—to continually build on their previous shopping behaviors. This helps them connect shoppers with what they want, when they want it.

Essentially, marketing is now a service that efficiently helps consumers find the things they need and want. Dealers who are ahead of the curve are leveraging this technology to deliver messages to consumers with the right context:

  • The product or service that matches their needs,
  • At the time they are looking,
  • With the right information to help them make a decision about taking the next step.

They are delivering a value add, by helping the shopper find the product they need – and they will be rewarded with more traffic and sales.

What dealers can do to stay ahead

Now that you have a better understanding of some of the disrupters in our industry, let’s take another look at the some of the ways in which consumers are interacting with technology today:

  • They use an app to order their coffee.
  • They use another app to order their weekly groceries.
  • They join monthly subscription services so they can have someone shop for their clothing, makeup, pet treats, razors and more.

The trend is that consumers are using technology to save them time and get them exactly what they want. That means dealerships need to think about how they can make the current car-buying process more digital and efficient.

Here are some things we know about what your customers expect:

The role of technology

When you’re examining the technology you use in your dealership, the goal should be to make each customer’s visit shorter, more efficient and more enjoyable. Increasing internal efficiency is one way to do this, but it should be done with a focus on enabling customer relationships at each stage of the deal.

To deliver against consumer demands, you must be willing to shift your current operations, become forward-thinking about your technology stack, and build the right foundation.

You can use this period of disruption to your advantage—and remain competitive and profitable.

 

1 Surprising Way to Improve Your F&I Sales

Posted on

We all know how the traditional F&I sales process works – and how customers react when a new round of hard selling starts, just when they thought their deal was nearly complete.

According to the Cox Automotive Customer Journey research, more than half of car buyers are dissatisfied with the length of time it takes to complete a vehicle purchase. Interactions with the F&I department are a sore point, so for car dealerships, streamlining the process and making it more customer-friendly is essential to increasing profit.

The same research also found that one out of every three customers arrives at the dealership with no awareness of F&I products – and awareness of these options is crucial for sales.

An article from WardsAuto showcases the future for F&I sales: customer self-selling. In the article, Kevin Cook, general manager of Straub Automotive Group, explained how his dealerships use menu selling to introduce customers to aftermarket products in a friendlier and more comfortable way.

Before customers leave the salesperson’s desk, they receive a tablet from the F&I manager to watch a brief video presentation touching on available aftermarket options. The dealership receives data in real-time showing them which product videos the car shopper watched the longest, which helps the F&I manager determine which vehicle protection products most appeal to each customer.

Here are six reasons why this makes the aftermarket sales process more customer-friendly:

  1. It keeps customers occupied and engaged when they might otherwise be waiting idly for the F&I manager to finalize the rest of their deal documents.
  2. Many customers who started their research online will observe a seamless transition between the dealership website and the in-store introduction to the F&I options.
  3. Each product can be showcased with multimedia presentations including video – and the customer can choose to dive deeper to get additional information.
  4. The presentations include accurate, up-to-date cost information for each product.
  5. Customers get the opportunity to consider their own needs and realize the value of each aftermarket product and how it will protect their vehicle.
  6. The F&I manager can take the information gathered and complete the sale of aftermarket products knowing which ones the customer is most interested in purchasing.

Straub Automotive Group has found that menu selling positions their F&I managers as problem-solvers for their customers, which is a far cry from the hard-sell approach. And it’s been effective, with their stores reaching 80% penetration for sales of vehicle service contracts.

In today’s online, self-service world, customers expect new ways to handle their automotive purchases. In this case, technology paves the way for positive interactions with the F&I manager that make finishing the sale faster and more satisfactory for the car buyer.

Dealertrack F&I offers a seamless connection with Darwin Automotive to provide dealerships with an enhanced F&I Menu process that eliminates data re-entry and creates a more efficient contracting workflow. Learn more and request a demo.