How to Stay Compliant When Offering Add-On Products

Add-ons of value keep customers happy, and improve satisfaction scores and lifetime values

Largely because of technological advances, many of which were on display at this month’s NADA Convention, there have never been more opportunities for your dealership to present and sell add-on products to your customers.



Whether in the showroom, on the lot, or even on a mobile device in the comfort of a customer’s family room, you can present and sell add-on products to your customers at any time, in any place, and on any device. This opportunity does not, however, eliminate your responsibility to provide a compliant sales process.

At a time when laws, regulations, and even regulatory agencies appear to be multiplying, here’s a simple best practice to start your dealership down the road to compliance when presenting and selling add-on products to your customers:

Design and practice all of your sales processes to ensure that your customers receive value and are well-informed when making decisions about add-on products.

Cause for concern

In July 2015, as part of a larger operation called Operation Ruse Control, the Federal Trade Commission (FTC) prohibited two auto dealers from “representing that any payment program or add-on product or service will save a consumer money, including interest, unless the savings is greater than the amount of fees and costs charged in connection with the program, or any qualifying information related to savings is clearly and conspicuously disclosed.”

In the action, it was determined that two dealerships will have to pay $184,000 to the FTC as part of the settlement. In the complaint corresponding to this action, the FTC alleged that the dealerships “failed to disclose or to disclose adequately to consumers that in many instances: [c]onsumers are charged fees . . . that amount to hundreds of dollars.”

Informed customers are happy customers

By ensuring that your dealership clearly and conspicuously informs its customers of specific payment information, exact coverages, exclusions, limitations, and other material information related to add-on products, you can mitigate the risk that your dealership failed to adequately disclose product information.

The FTC’s message here is fairly straightforward: Your customers need product information fairly presented in order to make an informed decision regarding add-on products. More importantly, informed customers make intelligent decisions that will keep them happy for years to come, potentially growing your CSI scores in the short term, and customer lifetime values in the long term.

Offer add-ons of value

In the complaint, the FTC also alleged that the dealerships “failed to disclose or to disclose adequately to consumers that in many instances; [c]onsumers either do not achieve savings overall or end up paying more money than they would under a traditional monthly payment program.”

Simply stated, the FTC found the biweekly payment plan offered by the dealerships provided no value that the customer could receive. To avoid situations like these, take inventory of your dealership’s add-on products, and ensure each provides your customers with value, and that this value is adequately communicated to your customers. Add-on products of value will keep customers happy, improving customer satisfaction scores in the short term, and customer lifetime values for years to come.

Your dealership now has the opportunity present and sell add-on products to your customers at any time, in any place, and on any device. This month, regardless of your preferred sales channel, be sure to focus on ensuring that your dealership is presenting and selling products that provide value to informed consumers when they make decisions about add-ons.

Dan Doman is the chief legal and privacy officer (CLPO) of RouteOne LLC, a joint venture created by Ally Financial, Ford Motor Credit Company, TD Auto Finance, and Toyota Financial Services. Dan is responsible for managing the legal, governmental, privacy, and security affairs of RouteOne LLC.

Dan Doman

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