Remember “oaters,” the western movies in which the good-guy sheriff and the bad-guy gunslinger meet for a gunfight on the dusty street between the saloon and the general store? But the general store and the saloon aren’t real. They’re just fake fronts tacked on to new structures to make them seem like buildings in an old western town. The operative word here is “fake.”

Those fake fronts bring to mind a recent experience I had with a dealer.
There are a couple of federal laws that require dealers to officially name someone to carry out the dealer’s responsibilities under those laws. The federal privacy laws have such a requirement, for instance.

At a conference a couple of years ago, I suggested that dealers turn these federal requirements into an advantage. If you have to name a privacy officer, why not take the requirement one step further by naming a “compliance officer” and assigning privacy duties — and all other compliance matters — to that person? Then make a sign that identifies your compliance officer and hang it on the wall for all your customers to see. You can even go a step further and have business cards printed up and add your compliance officer’s information to your website and other advertising.

Good idea, huh? Well, maybe so, maybe no.

A couple of years later, I talked to a dealer who had heard me make this recommendation. He told me he’d taken the advice by going back to his dealership and naming his wife as the compliance officer. It’s her name on the compliance officer certificate and the business card.

“Cool,” said I. “What else does your wife do at the dealership?”

“Oh, she doesn’t work at the dealership. I just named her because turnover at my dealership is high, and I knew she’d be around for a while,” he said.

“So, if I’m understanding you, she doesn’t come to the dealership to work. You’re just using her name, correct?” I responded.

“That’s right,” he said.

OK, folks, that doesn’t work. What this dealer has is a fake front for compliance. His saloon isn’t real. If he ends up with a visit from the regulators, that sort of misdirection is not going to go down well with the consumer-protection cops.

If you’ve gone so far as to actually appoint your privacy and Red Flags officers, you can’t stop there. If you have named your spouse (or your title clerk, F&I director or sales manager) to fill these positions, you aren’t done. You need to make sure that your appointee has actually been trained to fulfill his or her responsibilities under the relevant laws.

The appointee needs to have copies of the relevant laws or regulations. Actually reading the laws or regulations would be a handy idea. Better yet, getting some actual training from a reliable training source like the Association of Finance and Insurance Professionals (AFIP) would be a really good idea. The AFIP will go even further and actually certify those who take its course. Because the laws and regulations change, they offer periodic re-certification, as well. This isn’t an AFIP commercial, though. I suspect there are other organizations out there that offer similar training.
And don’t think that doing these things will satisfy your compliance obligations. It won’t, but at least you’ll have a start.