— Total Dealer Compliance (TDC), a car dealership compliance-auditing firm, today announced key findings from its latest consumer survey which found almost 90% of consumers believe that car dealers should be held more accountable for their combative sales techniques. The survey also revealed that nearly 85% of consumers said that they believe US car dealers are given unrealistic sales goals and in turn conduct aggressive sales tactics.

The survey results confirm the notion that consumers have become the victims of aggressive sales tactics and explores the lasting effects of car manufacturers unrealistic sales goals have on consumers, shareholders, and car dealerships. The sales expectations set by car manufacturers can force car dealers to engage in deceptive trade practices and aggressive sales tactics.  

“The industry is ripe with deceptive sales strategies that consumers and dealers alike must recognize and be more aware of. The expectations set by OEMs (original equipment manufacturer) is the primary variable in this vicious sales sequence,” said Max Zanan, President of TDC. “Requiring car dealers to report sales monthly leaves room for high failure rates, pressures to sell, high fines, and non-compliant accusations that will cost the dealership thousands of dollars.”

Highlights from the consumer survey include:

• Nearly 80% of consumers believe aggressive car sales are avoidable
• Over half of consumers surveyed believe unrealistic sales goals set by OEMs cause car dealerships to conduct aggressive sales tactics
• Nearly 90% of consumers feel car dealers should be held accountable for their aggressive sales tactics
• More than 80% of consumers believe car dealers are put under too much pressure by OEMs to increase sales numbers
• Half of the consumers surveyed believe eliminating monthly reporting cycles will reduce pressure from car makers and decrease aggressive sales tactics by dealers

“The automotive industry has a reputation of aggressive and deceptive sales practices,” said Zanan. “In reaction to the constant coverage of ‘dirty dealerships’, and consumers’ desire for transparency throughout the car sales process; car dealers should execute regular audits, provide online courses to employees and conduct their business ethically. TDC’s survey further highlights the need for a strong compliance training program – as compliance results in transparency and a transparent dealership by definition will not engage in aggressive sales tactics.”

While auto sales increased in 2016, so did the penalties dealers potentially face for violating government regulations.

The Department of Labor upped penalties levied by its agencies, including the Occupational Safety and Health Admin., which implemented inflation-adjusted increases.

The maximum fine for non-compliance jumped from $70,000 to $124,709, a 78% increase.

The Federal Trade Commission has increased penalties from $16,000 to $40,000, a 150% increase.

What does this mean for dealers? Federal regulators are on the prowl even more so to catch car dealerships that fail to run compliant operations. Car dealers often are viewed as easy targets.

The reality of these increases is alarming considering OSHA typically cites a business with more than one violation. 

The fine increases alone should be enough to make compliance a dealership priority in 2017. But there’s also this: Customers also feel more comfortable doing business with a dealership that adheres to all federal regulations.

Survey results indicate 60% of consumers are more likely to buy a car if there is clearly stated complaint resolution process, while nearly 80% of consumers will refer friends and family to the dealership that makes compliance a priority.

An online public-perception survey says nearly 65% of consumers believe dealership business practices are not ethical. More than 50% of those polled say they more likely would shop at a dealership with a code of ethics clearly displayed.

But less than 25% of dealers employ a compliance officer and 65% of dealers have not had a comprehensive audit in the last 12 months.

Compliance is straightforward, but it starts at the top. Steps taken by the dealer’s leadership team can ensure that the entire operation is fully compliant across all departments.

The first of those steps is to adopt a well-designed compliance program that applies equally to all departments so everyone knows they are held accountable to the same standards. It sends a message to junior staff that the entire organization is fully committed.

Non-compliance costs car dealers an average of $792,000 a year in lost profit. That shows how critical it is to run a reputable and trustworthy business.

Total Dealer Compliance shows the impact of offering a clear complaint resolution has on sales and reputation

Total Dealer Compliance (TDC), a car dealership compliance-auditing firm, today announced key findings from its latest auto dealership survey conducted online in September among 200 U.S. adults age 18+. With over thirty percent of respondents revealing that they have submitted a complaint to a dealership, the survey sets out to illustrate the importance of offering a clear complaint resolution process to consumers. Such importance further illustrated when sixty percent of consumers admitted that they were more likely to buy a car from a dealer if that process is apparent.

Unsurprisingly, among the survey’s key findings are results indicating that over fifty-five percent of consumers who have submitted a complaint were dissatisfied with the resolution provided. When asked what the biggest pain point was when submitting a complaint to a car dealership, over fifty percent said it was the car dealerships’ obvious lack of desire to resolve the issue. With the industry recognized for unfair, deceptive, and abusive practices, nearly eighty percent of respondents believe that customer satisfaction is of utmost importance to the dealership when they have a clearly stated complaint resolution process.

“Compliance and customer satisfaction go hand in hand. A clear complaint resolution process that is overseen by a compliance officer is the most effective approach to resolving customer complaints,” said Max Zanan, President of TDC. “Sheds a spotlight on why TDC audits and compliance training can help improve policies and procedures and positively impact customer satisfaction.”

Highlights from the consumer survey include:

• Over 30% of consumers have submitted a complaint to a dealership.
• Of those who have submitted a complaint, over 55% of consumers were dissatisfied with the resolution provided.
• Nearly 60% of consumers are more likely to buy a car if there is a clearly stated Complaint Resolution process.
• Nearly 80% of respondents think that customer satisfaction is of utmost importance to the dealership if they have a clearly stated Complaint Resolution process.
• Over 50% of consumers said that the biggest pain point when submitting a complaint to a car dealership is the dealerships’ obvious lack of desire to resolve issue.
• Nearly 75% of consumers submit complaints by calling their dealership over submitting a complaint online.

“Currently either a General Manager or a General Sales Manager handles customer complaints, which is counter-productive as it is hard to be objective especially when your salary depends on commissions from sales. A Compliance Officer is better equipped to handle complaints because their main objective is to protect the dealership,” said Zanan. “State and Federal agencies do not start investigating a car dealership for no reason, and we are delighted to offer a solution that will help dealerships avoid unnecessary headaches and expenses.”

As the car-shopping landscape continues to change and compliance issues continue to dog dealers, investing in training and professional development remains essential.

Offering employees career-development opportunities creates loyalty and fosters a team environment as the dealership grows. As the saying goes, “You are the company you keep,” and it’s imperative to hire great people, retain them to create a solid company culture and manage a car dealer’s positive reputation.

Currently, most of those who work inside an auto dealership function primarily as sales staff, with their main focus on moving cars, parts and labor to the consumer. And with good reason. Car dealers are under tremendous pressure due to sales cycles and quotas set by the manufacturers.

Consequently, training not always is treated as a priority and often is set aside to focus on hitting aggressive monthly sales targets.

With government regulators increasing pressure to adhere strictly to federal regulations across all departments, including Sales, the Business-Development Center, F&I, Fixed Ops, Human Resources and IT, it is imperative auto dealers focus on job training and create educational opportunities to retain quality talent.

Auto dealers themselves typically receive little training in compliance. And they may find themselves with a sales staff that has risen through the ranks with increased salaries but very little professional education.

Strategies for professional development and compliance training include:

• Hire a third-party compliance consultant to conduct an audit to either offer suggestions for the current training department or assist in building a compliance program/training with online courses.
• Invest in pre-employment screening to be sure the dealership is adding the right people to the team and avoiding headaches associated with past criminal or fraudulent activity in the workplace. Screening is a proactive and preventive tool in finding great people at the onset.
• Schedule regular employee-performance reviews and set benchmarks for promotions and pay increases.
• Coordinate internal quarterly audits to ensure employees are working well together. Identify issues and optimize online course development and implementation.
• Require online classes, which are a great tool for existing staff and new employees who don’t have time to attend classes in a traditional academic environment. Dealers should ensure the online education program provides certification upon successful completion.
• Make compliance training a dealership requirement. A recent survey indicated 73% of consumers are more comfortable dealing with dealership staff that has completed compliance training and has certificates of completion on display.

Hiring and retaining talent ultimately affects a dealership’s bottom line. Owners and dealers need to focus on ridding the “everyone-can-be-replaced” culture. Shift to positive development of each employee, celebrating success and longevity.

Retaining solid talent will help foster repeat business. Customers appreciate a relationship with their dealer. Working with familiar sales staff help create a pleasant car-buying experience.

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.

To improve dealership compliance, three areas should be addressed:

1. Employee training
2. Operational procedures
3. Audits and paper trails

1. Employee training

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.

2. Operational procedures

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.

3. Audits and paper trails

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 noncompliant 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.

Auto dealerships that are not compliant tend to feel the impact directly in their profit, loss and reputation. Without a comprehensive compliance training program, car dealers’ bottom line is truly affected. More than 73% of consumers are more comfortable dealing with dealership staff that has completed compliance training and has certificates of completion on display.

Dealers need to understand that a partial solution is not the answer.  The average dealer is more likely attuned to consumer lawsuits than compliance violations that lead to these lawsuits. However, risk surrounds the entire dealership and less than 25% of dealers employ a Compliance Officer. A complete program will ensure better sales and overall performance as a company.

There are Federal regulations that apply to all departments of the dealership and having a comprehensive approach to compliance is the only way to improve the reputation of the dealership and change organizational culture. Compliance Program should contain written policy, training and activity requirements. These requirements are easily identified and enforced regulations that, if not followed, can result in tremendous fines.

Improving compliance should address the following categories: environmental, health & safety, operational procedures, deployment verification and audits with a solid online paper trail.

Compliance is becoming an increasingly important issue. More than 80% of dealers think that compliance training and implementation will improve their dealership’s reputation in the community and relationships with customers. Below are suggestions on what dealers need to do to get up to speed.

Employee Training

Dealerships should provide employees with online classes to better understand compliance rules and key factors that affect their career growth. These online courses are designed to educate those on Federal Compliance Regulations, Best practices, as well as corresponding policies and procedure. Training instills a culture of compliance and keeps employees accountable.

Operational Procedures 
One example of Operational Procedures is the Identity Theft Prevention Program. It is imperative for a car dealership to implement an Identity Theft Prevention Program (ITPP). By the time an identity thief walks onto the showroom floor, the identity theft has already occurred. A dealer should be prepared in advance if an investigator or plaintiff’s lawyer asks to see a copy of your ITPP. Dealers must train employees on the dealership’s operational policy, which must cover the dealership’s processes to detect and mitigate identity theft.

With online training programs, dealers are able to identify which employees are trained and their understanding of identity theft. Having an electronic paper trail regarding identity theft and updated ITPP report will not only showcase a high level of operational procedure but will help customers feel safe when handing over their confidential financial information.

Deployment Verification 
Every dealership should have an employee handbook setting forth the dealership’s 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 and again, helps consumers feel confident about their dealership

Audits and Paper Trails
Another example is the The Safeguards Rule, which requires that dealerships develop a written Information Security Program (ISP) requires a risk assessment, oversight of service providers, and regular reviews of the ISP’s effectiveness. This provides a paper trail should your dealership get audited. Hiring a third-party audit company is extremely beneficial to assess dealership needs and no compliance program is complete without it.

In conclusion, for a dealership to remain competitive and remain a top choice for consumers, they must be 100% compliant. By instilling a culture of compliance there is increased production, sales and promotes a positive reputation. By remaining non-compliant or only partially compliant, dealers will remain risk for huge profit or loss.

Total Dealer Compliance (TDC), a car dealership compliance-auditing firm, launched with a comprehensive solution that will help dealers mitigate risk faced from proactive regulators and create a compliance culture that will reduce exposure.  The solution includes on-site compliance audits and an E-Learning Platform offering more than 20 online courses.  Dealership staff completing courses and passing required tests receive TDC certification.  By working with TDC, car dealers can be fully compliant with Federal regulations across Sales, BDC, F&I, Fixed Ops, HR, and IT departments.  

TDC’s Advisory Board includes seasoned professional auditors, attorneys, and automotive industry veterans whose sole mission is to protect car dealers’ interest and improve operations. TDC works closely with its Board to help car dealerships of all sizes by providing a variety of packages including:

• Best in Class – TDC’s most comprehensive offering and guaranteed to make a positive impact on a dealership with quarterly audits, unlimited access to the company’s E-Learning platform, testing and certification, policies and procedures, and best practices.
• Stand Alone Audit – Uncovers problems, reduces risk, improves internal controls with on-site audits, schedules interviews with department heads, and creates action plans for success.
• Individual Online Courses – Dealership employees can choose from a range of topics pertaining to their day-to-day job responsibilities.
• Online Course Bundles – Dealerships looking for additional savings can package together online courses by departments.

Compliance is essential in today’s car dealership environment. TDC offers a unique and simple comprehensive approach that generates fast results and stands above competitive offerings.

“Federal regulators see car dealers as low hanging fruit, and every dealership is having internal meetings about regulations across all departments,” said Max Zanan, President of Total Dealer Compliance. “TDC will improve the industry, benefit both dealerships and consumers, and weed out all the bad apples.”

About Total Dealer Compliance

Total Dealer Compliance is an auditing firm that provides a comprehensive solution to ensure car dealers are fully compliant with Federal regulations within Sales, BDC, F&I, Fixed Ops, HR and IT departments. For more information, please visit www.totaldealercompliance.com or call 1-888-243-5204.