Category: Sales & F&I

Data Safeguards & Identity Theft Protection: F&I Compliance Tip

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Identity theft and data breaches continue to be a serious and ongoing issue for consumers and businesses.

In fact, according to the U.S. Department of Justice, about 9% of U.S. residents age 16 or older were victims of identity theft in 2021 (the most recent year for which stats are available), leading to total monetary losses of $16.4 billion. That includes the misuse of credit card data, as well as personal identity information. Amid this environment, Small to Midsize Businesses (SMB) such as auto dealerships are perfect targets.

With the increase in remote transactions, identity verification is more important than ever. You can help protect your dealership by implementing a few commonsense steps, and by encouraging your staff to follow best practice safeguards:

Tip #1: Acceptable Use

Help control risk by adopting an “acceptable use” policy that ensures employees are not sharing their device, are adhering to strong passwords, and that any corporate-owned data is encrypted. Text messaging should also be discouraged as it is discoverable from the device in litigation and the use of acronyms or shorthand often leads to misunderstandings.

Tip #2: Have a Plan

Have a pre-established plan in place to deal with data security breaches. The FTC has said that an Information Security Program must include a detailed incident and breach response and notice plan to execute in the event of any security breach or database hack in which customer information is or may have been wrongfully accessed, whether by internal or external persons. Pre-identify a team of people to manage the breach and responses. The team should represent each department that might be affected by a breach or that has to be mobilized to interact with the public, including legal, human resources, privacy, security, IT, communications, and, if you are publicly traded, investor relations. Part of the team’s role is to analyze risks to data, data flow, and worst-case scenarios. Test your plan periodically by doing mock drills. Consult your attorney to know your state law and the laws of your customers’ states of residence about when you give notices to customers about data breaches.

Tip #3: Secure Transmission

Do not transmit customer information over insecure channels such as unencrypted email, P2P systems, or wireless access points. These are not secure media. The FTC has cited the absence of data loss prevention software and an intrusion detection system in these media as inadequate practices for an Information Security Program

To get more tips and recommended compliance practices, access the free 2024 Dealertrack Compliance Guide. 

Improving F&I Processes to Meet Changing Customer Expectations

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66% of car shoppers are more likely to buy from a dealership with their preferred experience, but less than 1% of car buyers like the current car buying process, according to Autotrader’s Car Buyer of the Future Study. To give customers their preferred experience, dealerships must meet the changing expectations of today’s car buyers.

To create a desirable customer experience, dealers need to create real value for customers while also striving to speed up the F&I process. In a recent Automotive News webinar, Jason Barrie, Vice President and General Manager of Dealertrack F&I, Dealer, teamed up with Kevin Cook, General Manager of Straub Automotive, to talk to adjust the F&I process to streamline workflow and create value for customers.

Kevin knows firsthand how improving customer experience can boost bottom line. When Straub Automotive noticed their customers’ expectations shifting, they decided to switch to a new technology solution that would enable an improved customer experience: Dealertrack eMenu for iPad®.

“Our goal was to take the fear out of F&I,” Kevin said.

Though many dealerships like Straub Automotive see customers approaching F&I with fear, customers still value making a deal in person. In fact, 89% of customers want to sign their final documents at the dealership, according to the Cox Automotive Future of Digital Retailing study. The problem is that F&I has traditionally been a very paper-based activity, which runs counter to the preferences of most internet-savvy customers.

Before switching to Dealertrack eMenu for iPad®, Straub Automotive used non-interactive video tool to aid in the F&I presentation process. With eMenu for iPad®, the dealership was able to shift to a more digital, interactive and personal F&I experience, and F&I profitability quickly increased.

“We introduced the process to the customer and immediately saw about a $150 lift in F&I profitability per car sale, and we knew we were onto something,” Kevin said.

Over the past two years, Straub Automotive has put the eMenu for iPad® mobile technology at the core of their F&I process, reaching 100% utilization by sales and F&I staff. This has resulted in up to 60% penetration on GAP Insurance and an average of $400 additional profit per deal. With one of their dealerships, Cook and his team had initially thought that a 40-50% penetration for service contracts was a good goal, but today they are seeing 75-80%.

To learn more about how to adjust your F&I processes to improve profitability, visit go.dealertrack.com/4ways, and listen to Jason and Kevin’s Automotive News webinar.

Moving F&I Online

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Car buyer preferences are shifting toward more online research, and 83% of consumers today want to complete at least one automotive purchase activity online, according to the Cox Automotive 2017 Future of Digital Retail study.

As dealers move toward a digitized customer lifecycle that encompasses advertising, purchasing, servicing and financing, customers expect a seamless transition from online to in-store.

The F&I process is ripe for digitization. When customers have the option to begin to structure their deal online, their satisfaction increases, along with the dealership’s revenue and profits.

A recent Cox Automotive and PwC survey found that 63% of dealers saw the biggest ROI from digitizing their sales and F&I process.

Learn more about bringing F&I into the digital world in this F&I and Showroom article by Cheryl Miller, Vice President and General Manager of Dealertrack F&I Solutions.

The Consultative Approach to Selling

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by Mo Zahabi

While digital retailing in automotive is on the rise, dealership staff still play an important role in customers’ car-buying experiences. Six in 10 consumers would still want help from dealership staff even if they could purchase online, according to the Cox Automotive Future of Digital Retail Study.

But the roles of the salesperson and F&I manager have changed. In the past, dealership staff were only there to make money off a customer. Oftentimes, the customer knew more the vehicle than the salesperson. Today’s dealership staff, on the other hand, have responded to customer needs and shifted to a much more product-oriented approach. According to the same Digital Retail Study, today’s car buyers prefer staff who are product specialists – people who are highly knowledgeable about features and technology who will also act as consultants and listen to their needs in a low-pressure environment.

This consultative approach is particularly important in F&I, where consumers are critical of the traditional pitch, according to the 2015 Digital F&I Experience study. To connect with your customers – and make the sale – you have to take a more personal, friendly approach to F&I selling.

Empower Independent Learning

In the old approach to selling, there was a one-way flow of product information: the salesperson would tell the customer information as they sat in front of them. It was a belly-to-belly, in-your-face approach. But today’s consumers are hungry for resources that allow them to do their own research. 71% of car shoppers would prefer to do F&I research at home prior to purchase, and 63% say they would be more likely to purchase F&I products if they had the option to learn about them before finalizing their vehicle purchase, according to the Cox Automotive Maintenance & Repair Study.

Consider offering F&I product information on your dealership website, and also give your customers opportunities to do their own research once they are in your store. Mobile menu selling solutions, like Dealertrack’s eMenu for iPad®, enable independent customer learning. These technologies allow you to load a tablet with key F&I product and payment info, giving customers the opportunity to digitally explore your F&I offerings on their own – and better understand the value of F&I products.

Sit Shoulder to Shoulder

Most people use the phrase “shoulder-to-shoulder selling” figuratively, and that imagery is important when thinking about your approach. Customers need to know you’re not selling at them, but consulting with them. But the literal sense of the phrase is important too.

Literally sitting shoulder to shoulder with your customer as you review F&I product information can change the entire mood of the presentation. Without the physical barrier of the desk, the “me vs. you” mentality that can leave customers feeling intimidated in the F&I office is removed. Consider implementing menu selling technology that is specifically developed for tablets like Dealertrack’s eMenu for iPad®, which enables you to sit shoulder-to-shoulder with your customers – figuratively and literally.

Leverage Your Network

Today’s customers know there are many options for everything they can buy, and they want to know that they’re getting the best option available. Make sure you’re familiar with the network of aftermarket providers powering your dealership’s F&I selling solution, and don’t be afraid to explain to your customers where your product offerings are coming from. They’ll appreciate the transparency, and an increased understanding of how the process works certainly won’t hurt your chances of making a sale.

A version of this post originally appeared in Digital Dealer.

Watch this video to learn more about how Dealertrack’s eMenu for iPad can help you implement a more consultative approach to F&I selling.

Mo Zahabi is the Senior Director of Product Consulting at VinSolutions and Dealertrack F&I, where he educates dealers on best practices and ensures their offerings exceed industry expectations. Mo has applied his strong foundation in technology-based applications to the automotive industry for the last 18 years. Prior to joining VinSolutions in 2008, Mo was a respected Internet Director and eCommerce Director for two different automotive groups.

Success Story: Straub Automotive

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Superior customer experience is at the core of West Virginia dealer group Straub Automotive. In fact, the four-store group boasts high CSI scores, multiple Honda President’s Awards and two Nissan Awards of Excellence. So as customer expectations began to change, Straub Automotive knew their processes had to change with them.

One area of customer experience the dealership knew could use improvements was the F&I menu presentation. Straub had been using an aftermarket product presentation video that wasn’t integrated with the menu presentation, leaving customers with a slow, unengaging experience.

To improve efficiency for the F&I team and improve customer experience, Straub Automotive turned to Dealertrack eMenu for iPad®.

Almost immediately after implementing the new mobile technology in the dealership, F&I profitability rose: an average of $150 in additional F&I profit per deal. Watch the video below to hear more about Straub’s success using this mobile menu selling technology.

Watch Straub Automotive’s success story.

Want to learn more about how to align your F&I processes with customer expectations? Join Straub Automotive’s Kevin Cook and Dealertrack’s Jason Barrie for a FREE webinar on the topic. Register here!

CBA Live: The Time for eContracting is Now

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Andy Mayers, Dealertrack Lender Solutions strategist, recently participated in a panel discussion at retail banking industry event CBA Live. The conversation focused on dealer motivations, eContracting, operational efficiencies and internal dealer issues.

From the discussion, we heard common observations about the future of dealerships and how they need to adapt to the consumer’s desire to enjoy a better experience purchasing a car. However, the common takeaway was to meet today’s customer expectations, the role and purpose of F&I needs to change. One way dealers can adapt is with digital contracting, but there are several factors a dealer should keep in mind when considering making the move.

For insights on these factors, as well as key characteristics of today’s car shoppers, read Andy’s full recap of the panel discussion in Digital Dealer.

Keeping Aftermarket Products In Line: F&I Compliance Tip

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Aftermarket products are important to dealerships’ bottom line. Recent NADA research has shown that 50 percent of profits for the average dealership come from the sale of aftermarket products.

A majority of these profits come from vehicle service contracts but, but other products driving profits also include guaranteed auto protection, credit life, and disability insurance, among others.

When selling aftermarket products, a dealership must disclose the products separately from the vehicle, indicating that the purchase is voluntary and that it is not required to obtain financing. Several states even have detailed regulations about how items need to be disclosed to the customer.

This is important to keep in mind as the FTC and CFPB continue to actively investigate and look for any unfair and deceptive practices in the sale of aftermarket products. The CFPB has made aftermarket products a priority since its inception and have the authority to bring actions against certain independent and buy-here-pay-here dealers while also referring other dealer violations to the FTC or a State Attorney General.

Best Practices

So, when selling these aftermarket products, how can dealerships protect themselves? We recommend the following to keep the FTC and CFPB away:

  1. Eliminate Excluded Customers from Your Target Direct Marketing Lists – There are consumers that opt out of all types of solicitations. If you have customers that do opt out, remove them from your lists. You can take it a step further and obtain the customer’s written consent to receive auto-dialed or prerecorded calls or texts. Cross-checking numbers with the FTC’s National Do Not Call Registry will save you headaches and potential issues.
  2. Understand Warranty Disclaimers for Each State – Service and insurance contracts can be structured in many different ways, all of which have different tax and liability issues. Dealers need to make it clear as to whether or not they have “entered into” a service contract. Both retro and reinsurance policies are subject to state insurance laws and customer claims. Dealers need to run the structure of service contracts with their lawyers and accountants.
  3. Charge the Same Price for Everything – Each product needs to be priced the same. If you surcharge a customer, that is considered part of the “finance charge” under TILA (Truth in Lending Act). As a result, that then must be calculated into the APR and disclosed in the RISC (Retail Installment Sales Contract).
  4. Be Consistent – The way you sell aftermarket products in the F&I office needs to be consistent. As a dealer, you are responsible for what is legally required in your state in terms of scripts, FAQs, and presentations that outline products and what they will cost.
  5. Adjust Your Practices to Address Customer Feedback – As laws change and consumers have positive and negative reactions, you need to adapt your selling of aftermarket products. Your employees need to be on board with this as well.
  6. Review and understand the CFPB Bulletin Incentives – When incentives concern products or services that could cause harm to consumers or not benefit them as strongly, they need to be reined in. Always have consumer interests in mind.

Start protecting your dealership from federal fines and audits: download your 2024 Compliance Guide today.  Learn more about the Dealertrack Compliance solution here.

Monitor Dealership Activity: F&I Compliance Tip

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One of the biggest threats to dealership compliance is inside the showroom. That’s right: your employees. Some studies claim that a majority of data breaches are caused by workers, a sobering statistic that may be due to negligence or mistakes – such as leaving credit applications, credit reports and deal jackets open and in plain sight – or could be caused by willful acts of disgruntled employees. Point is, 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.

Why it Matters

By providing your employees with the education and tools they need, and by monitoring activity, you can help protect the dealership and keep it compliant. That includes taking steps such as implementing basic security requirements from your Safeguards program, and teaching employees best practice actions around issues such as opening unknown links and creating appropriate passwords. Most important of all, however, is an effective monitoring program that gives oversight into critical areas such as data flow into the system, user activity, access, and even patterns of irregularities. Follow these best practice tips to better monitor the sales process and help ensure compliance.

Best Practice Compliance Tips

  • Put a robust monitoring program in place. It should include a real-time compliance dashboard that monitors activity in real-time, from a single screen.
  • Quickly identify and contain any customer information breach and make sure all employees safeguard customer information provided to them. Actively manage your data and develop policies to manage it during its lifecycle. Require secure passwords and authentication – consider two-factor authentication: something you know (a complex password) and something you have (a randomly-generated number from an ID token).
  • Manage user permission to give customer information access only to those employees having a legitimate business need. Don’t keep non-public personal information (NPI) longer than you need to do so.
  • Create a culture of security in your dealership and get senior management buy-in. Train employees on unfair, deceptive, and abusive acts and practices; emphasize honesty and transparency in all customer interactions.

Get more tips and recommended compliance practices. Download the free 2024 Dealertrack Compliance Guide.