Auto dealerships that are not compliant feel the impact directly in terms of their loss of profits and reputation. Without a comprehensive compliance training program, car dealers’ bottom lines are affected.
Studies show that more than 73% of consumers prefer dealing with dealership staff that has completed compliance training and has certificates of completion on display. And more than 80% of dealers think compliance training and implementation will improve their dealership’s reputation in the community and relationships with customers.
The average dealer is probably more afraid of consumer lawsuits than the compliance violations that lead to these lawsuits. Risks related to noncompliance affect the entire dealership, however, yet less than 25% of dealers employ a compliance officer. Dealers should understand that a partial solution to total dealership compliance is not the answer. Federal regulations apply to all departments of a dealership, meaning that a comprehensive approach to compliance is the only way to improve the reputation of the dealership and change its organizational culture. A compliance program should contain written policy, training, and activity requirements. These requirements should be easily identified and enforced because they involve regulations that, if not followed, can result in significant fines.
Dealerships should provide employees with online classes to better understand compliance rules, as well as compliance-related factors that affect their career growth. Training instills a culture of compliance and keeps employees accountable. These online courses should be designed to provide comprehensive education on federal compliance regulations, best practices, and corresponding policies and procedures.
Every dealership should have an employee handbook that sets forth its internal policies and procedures. A dealership may even have specialized, job-specific policy manuals (F&I, sales, etc.). Having these materials available on the dealership intranet is a great way to help employees stay current with policy. Also, when consumers know that dealerships have formal employee training policies, they feel more confident about the dealership.
An example of operational procedures is having an identity theft prevention program (ITPP). It is imperative for a car dealership to implement an ITPP, because by the time an identity thief walks onto the showroom floor, the theft has already occurred. Dealers should be prepared in advance if an investigator or plaintiff’s lawyer asks to see a copy of their ITPP.
Dealers must train employees on the dealership’s operational policy, which must detail the dealership’s processes to detect and mitigate identity theft. Online training programs are particularly valuable in helping employees understand identity theft. Also, dealerships that can provide an electronic paper trail regarding identity theft issues and have a current ITPP report available help customers feel safer when handing over their confidential financial information.
The Safeguards Rule requires dealerships to develop a written information security program (ISP) that includes a risk assessment, oversight of service providers, and regular reviews of the ISP’s effectiveness. Having a compliant ISP provides a paper trail should your dealership get audited. In addition, hiring a third-party audit company is extremely beneficial to assess dealership needs, and no compliance program is complete without it. For a dealership to remain competitive and be a top choice for consumers, it must be 100% compliant. By instilling a culture of compliance, a dealership will enjoy greater productivity and sales, and earn a more positive reputation. Dealerships that remain non-compliant or only partially compliant remain at risk of incurring huge losses. Addressing the categories mentioned here will play a major role in reducing that risk.
Max Zanan is a seasoned automotive industry expert with nearly 15 years of experience in sales, F&I, and dealership consulting. Max started Total Dealer Compliance (TDC) to help car dealers mitigate the risks and exposure through compliant practices. TDC conducts Compliance Audits and provides an E-Learning platform for dealer personnel to take courses in order to instill the culture of compliance. As the company’s president and CEO, Zananutilizes all of the skills he has picked up over the years in order to cohesively mentor dealerships on how to increase revenue and profitability in all departments.
Max Zanan is a seasoned automotive industry expert with 20 years of experience in sales, F&I and dealership consulting. Zanan started Total Dealer Compliance to enhance sales and promote best practices with automotive dealers across the United States. As Founder of Total Dealer Compliance and MAZ Dealer Services, Zanan utilizes all of the skills he has picked up over the years in order to cohesively mentor dealerships on how to increase revenue and profitability, and eliminate non-compliant practices in all departments. Zanan is a thought leader and frequently quoted in trade publications such as Automotive News, Fixed Ops Journal, and Auto Dealer Today.
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