• Skip to main content
  • Skip to secondary menu
  • Skip to primary sidebar
  • Skip to footer
Dealer Marketing Magazine

Dealer Marketing Magazine

Expert Automotive Knowledge At Your Fingertips

  • Expert Panel
  • Marketing
    • Advertising
    • Content Marketing
    • Direct Marketing
    • eCommerce
    • Internet Marketing
    • Lead Generation
    • Paid Search
    • SEO
    • Social Media
    • Websites
  • Customer Experience
    • AI
    • CRM
    • Customer Service
    • Loyalty and Retention
  • Dealership Business
    • Business Development
    • Dealership Security
    • Digital Retailing
    • Finance & Insurance
    • Fixed Ops
    • Inventory Management
    • Pre-Owned
    • Recruitment & Training
    • Sales Training
    • Technology Solutions
  • Podcasts
  • About Us

Don’t You Agree? Fundamental Questions Answered Regarding Dealership Compliance

December 8, 2020 by Tom Kline

Mind the Gap

“I don’t have to agree, but I do have to comply,” said an old employee and friend of mine named “Hank.” He said it with a wry smile whenever he didn’t agree with something I asked him to do. Then, he would do it because I asked him. And he would chuckle to himself.

So who really wants to comply? 

No one, including your dog, when you tell him/her to “sit” or “stay.” As humans, we find it distasteful to “comply” with what someone else tells us. However, lack of compliance will cost you in dollars, in publicity, and even in reputation.  

While it may not be your favorite, a lack of compliance program will put you in the crosshairs. How can you get in trouble? Good question. Let’s start with the biggest problem first.

dealership compliance

If something criminal happens in your store, and you don’t know about it, pleading “unaware” or “ignorant” of the situation is an ineffective defense. Chapter 8 of the Annotated 2018 United States Sentencing Guidelines states clearly:

“This chapter is designed so that the sanctions imposed upon organizations and their agents, taken together, will provide just punishment, adequate deterrence, and incentives for organizations to maintain internal mechanisms for preventing, detecting, and reporting criminal conduct.”

It continues:

“The two factors that mitigate the ultimate punishment of an organization are: (i) the existence of an effective compliance and ethics program; and (ii) self-reporting, cooperation, or acceptance of responsibility.”

So, if you would like to avoid serious problems, you should have a robust compliance program and, according to the Consumer Financial Protection Bureau (CFPB), a Compliance Management System.

Furthermore:

“These guidelines offer incentives to organizations to reduce and ultimately eliminate criminal conduct by providing a structural foundation from which an organization may self-police its own conduct through an effective compliance and ethics program.” 

How do you provide a structural foundation? 

First, you must decide you are committed to implementing a robust compliance program and stick with it. It’s a paradigm shift that would likely change some of the operations of the dealership. Embrace the change. 

There are seven components of a robust compliance program:

These seven (7) are clearly important. The dealer/owner(s) must participate here, or the whole program falls apart, and nothing is achieved. Alternatively, third parties can handle these functions if the dealership does not want to take on the time commitment or the responsibility. Bottom line? Someone has to do the work of compliance, or you open yourself up to liability.  

Do You Know Your Penalties?

Here are additional examples:

IRS/FinCEN Form 8300. This is the cash reporting requirement for notifying the IRS of any payments in excess of $10,000 cash (though there is tremendous nuance to this law).

The IRS website says:

“A person may be subject to criminal penalties” for –

  • Willfully failing to file a Form 8300,
  • Willfully filing a false or fraudulent Form 8300,
  • Stopping, or trying to stop, a Form 8300 from being filed, or
  • Setting up, helping to set up, or trying to set up a transaction in a way that would make it seem unnecessary to file Form 8300.”

Penalties depend on total revenue but are “not to exceed $3,339,000 per calendar year.” And criminal penalties include “imprisonment (for) up to five years, plus the costs of prosecution.”

Make sure you include various forms of cash and count it as cash: travelers checks, cashier’s checks, or bank checks with no lien recorded. These can all be considered “cash” in the eyes of the IRS.

How does the Fair Credit Reporting Act impact dealers? 

Let’s just focus on one item within this complex law. Are you sending a denial letter to every person in the dealership whose credit you pull? You are supposed to send a letter stating the dealership itself is not extending credit to the borrower and there is a third party who is providing financing. There is safe harbor language you are to use according to the code. “Safe harbor” refers to the exact phraseology that the law requires you use. Omission of this language is a serious “no no.” Penalties for willful or negligent non-compliance may include actual damages, punitive damages, and plaintiff’s attorney’s fees.  

Hank was right. You don’t have to agree, but unless you want to open your checkbook, you do have to comply.

  • About
  • Latest Posts
Tom Kline

Tom Kline

Lead Consultant & Founder at Better Vantage Point
Tom Kline is the Lead Consultant and Founder of Better Vantage Point which specializes in Dealership Dispute, Compliance, and Risk Mitigation Solutions.He has worked with publicly-held and private dealerships. We Get You Out of Trouble and Keep You Out of Trouble. He can be reached at 757-434-7656 or on the email link above.
Tom Kline

Latest posts by Tom Kline

  • Trust, Your Employees, and Lady Gaga - March 10, 2021
  • How To Handle A Customer Dispute Like a Pro: Part 2 - February 10, 2021
  • How To Handle A Customer Dispute Like a Pro: Part 1 - February 3, 2021

80

SHARES
Share on Facebook
Tweet
Follow us
Save
Share
Share
Share
Share
Share
Share
Share
Share
Custom
Custom
Custom
Custom
Custom

Filed Under: Blog, Dealership Business, Finance & Insurance, Fixed Ops Tagged With: credit report, dealership compliance, ethics, finance strategy, tax penalties

Explore

advertising AI artificial intelligence auto dealer marketing auto dealership marketing automotive automotive marketing big data CFPB compliance consumer behavior Cox Automotive CRM customer experience customer retention customer service data dealership business dealership websites digital marketing digital retailing DMS f&i facebook finance and insurance google inventory management lead generation marketing millennials mobile mobile marketing personalization pre-owned vehicles sales sales leads search engine optimization seo service department social media social media marketing technology training vendors video marketing

Primary Sidebar

Stay Informed

  • Facebook
  • LinkedIn
  • Twitter

Explore a topic

E-mail Newsletter

Webinar Starting Soon April 21st 2021

Next Webinar April 29th 2021

Join Our Vendor Community

Register Here

Share This

LINKEDIN

Recently Published

  • Auto Parts & Accessories eCommerce: Amazon and eBay
  • Let Data Be Your Guide: Navigating an Uncertain Sales Environment
  • Interview with Assurant Global Automotive: Customer Experience Tech
  • Four Steps to Banishing Burn Out
  • Get More Traffic to Your GMB Pages with User-Generated Content

Podcast: Inside Auto with Ilana Shabtay

Podcast: Carearing with Laurie Halter

TWITTER FEED

Tweets by Dealer_Mark_Mag

Footer

Quick Links

About Us
Weekly Newsletter Sign Up
Expert Panel
Industry Events
Join Our Vendor Community
Advertising

Follow us

  • Facebook
  • LinkedIn
  • Twitter

Site Search

Copyright © 2021 · Dealer Marketing Magazine