1,000 dealers share their thoughts about chat, text and messaging in general...and how these communications pay off. SEE HOW
As most everyone knows, ignorance of the law is no excuse. Yet, it’s clear that some dealers really have no idea if their staff is knowledgeable enough to follow the maze of rules and regulations that govern their organizations. Indeed, there sometimes seems to be a tendency for folks to bury their heads in the sand and hope for the best. If this is the case in your dealership, you may want to ask yourself if it really makes sense to put the business and reputation that you have worked years to build at risk by acting like an ostrich.
It should come as no surprise that government watchdogs and consumer attorneys have clearly been ratcheting up their assault on the auto industry. Dealers are more and more frequently the targets of lawsuits, enforcement actions, and of course, the associated negative publicity. Even inadvertent violations of the rules can be shockingly costly.
Are you truly comfortable with the level of compliance in your dealership? Do you feel that your staff is properly trained and accountable for their business practices? Are you comfortable with the last set of eyes you have reviewing your paperwork? What do you think the result would be if you were forced to defend yourself in court?
As they say, “You don’t know what you don’t know”. So, why not take the time to find out by performing a risk assessment? Compliance audits are a vital step in protecting dealerships from legal claims. They can be performed by either knowledgeable dealership staff or by an outside party. At worst, we’re talking about an investment of a few thousand dollars that can potentially save millions. Kind of a no-brainer, isn’t it? Here are some benefits of compliance audits:
Identify training needs – Many dealers, general managers and finance directors are well-versed in automotive legal issues. On the other hand, many other dealer employees have little or no background or training in compliance. They may simply rely on doing things “the way they’ve always been done”. There’s a lot to know about dealership compliance nowadays and a lot of people who must know it. Staff members that negotiate with customers, present prices and payments, make representations and promises or create advertisements may represent the greatest risk of noncompliance in the dealership. Think about all the people involved in those activities on a daily basis – sales managers, closers, used car managers, sales consultants, service advisors, internet department and BDC personnel – you name it. And, of course, there is always employee turnover to contend with. Audit results will help minimize confusion about potential legal issues and identify areas where more training is needed.
Accountability – Employers often don’t know the intimate details of every transaction that takes place in their dealership. It’s possible that some employees believe that “questionable behavior” may benefit the dealership (or themselves) financially or that the behavior is the industry standard and therefore acceptable. Employees may be hesitant to break old habits that have served them well in the past. Trusting that all staff members do the right thing every time can be very risky. Regular audits will help to ensure that employees are following proper procedures, and will reinforce the message that the company policies are the real deal and the organization will not tolerate noncompliance.
Protection from liability – Compliance audits, along with formal policies and training, are vital parts of a good faith attempt at operating a compliant organization. The FTC has specifically stated that this may limit potential liability and will be considered in any prosecution. According to FTC commentary, “The Commission agrees that the establishment of appropriate procedures would warrant consideration in its decision as to whether law enforcement action would be an appropriate use of agency resources. The Commission is not aware of any instance in which an enforcement action was brought against a company for the actions of a single ‘rogue’ employee who violated established company policy that adequately covered the conduct in question.”
Here are some examples of violations that are frequently uncovered during compliance audits:
Burying your head in the sand and hoping for the best is simply not a sensible business strategy in this day and age. With every customer interaction, with every car sold or serviced, your dealership and its long-term growth are at risk without absolute adherence to state and federal laws. An investment in compliance programs and training will help protect your assets, your employees, your customers and your good name.