At Dealerships, Preventing Employee Fraud Is More Important Than Ever

Federal law enforcement is cracking down on deception and fraud in car dealership operations

Birmingham, AL — Federal law enforcement is cracking down on deception and fraud in car dealership operations. An Alabama lawyer who represents auto dealers says they should take preemptive action to protect themselves from rogue employees, who could expose the dealership to significant liability.

W. Scott Simpson, managing partner of Simpson, McMahan, Glick & Burford PLLC, says the Federal Trade Commission, as well as other law enforcement agencies, are going out of their way to penalize those who are caught being deceptive or fraudulent in automotive sales, financing, and leasing.

Simpson cites a recent example in his home state. “Eight former managers or salesman of a Birmingham Nissan dealership were recently charged and plead guilty to a conspiracy to boost loan approvals and car sales by creating and submitting falsified loan documents to lenders,” he said. “Two other employees were charged in a conspiracy to falsify sales reports submitted by wire to the manufacturer in order for the dealership to receive sales incentive payments it did not earn.”

In addition to the negative publicity this generated, the Nissan dealership has been sued in a class action lawsuit as a result of the actions of its rogue employees.

“All dealerships are vulnerable to employee fraud, regardless of size. The most cost-effective way to deal with fraud is to prevent it,” Simpson said. “Dealerships must take proactive measures to detect, mitigate and prevent employee fraud. Developing a fraud risk management program is key to accomplishing this goal. The program may include many types of internal controls; for instance, implementing and enforcing a ‘zero-tolerance’ fraud policy is one deterrence strategy.”

About Simpson, McMahan, Glick and Burford

Founded in 2007, Simpson, McMahan, Glick and Burford is one of the largest and most well-known law firms in the Birmingham area, representing clients in Alabama and throughout the United States.

Media Contact

Dean Turcol, Public & Media Relations Director, Benedict Advertising & Marketing, 407-405-0097

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