You can create a simple test deal file and pop quiz to administer during the interview process that will tell you how compliant the applicant really is, vis-a-vis your compliance standards. - IMAGE: Pixabay

You can create a simple test deal file and pop quiz to administer during the interview process that will tell you how compliant the applicant really is, vis-a-vis your compliance standards.

IMAGE: Pixabay

A set of recent psychological experiments assert that people may give socially acceptable answers instead of honest answers when they are under time constraints. And although applicants for sales and F&I manager positions are not necessarily under time constraints, many will claim during the interview process that they believe in compliance, because they think it is what you want to hear.

Another issue when trying to determine an applicant’s compliance quotient is the wide range of industry beliefs of what compliance is or is not. Often when auditing a dealership or a manager for the first time, many of the violations are  frequently a knowing issue. The dealer or manager simply was not aware of the compliance requirement.

A good example is when a manager will accept a down payment from a third party (not a straw purchaser) and does not run an OFAC check on the third party. OFAC requires a check on anyone you do business with, not only the parties on the contract. Many newer managers or dealerships to a compliance process are unaware of that requirement.

If you want to determine the applicant’s compliance quotient, give them a test. You can create a simple test deal file and pop quiz to administer during the interview process that will tell you how compliant the applicant really is, vis-a-vis your compliance standards. 

Step One

The first step is to figure out which potentially deceptive practices, best practices, state, or federal laws you want to test the applicant on. At a minimum, you should consider:

  • Desking process, including payment packing
  • Power booking
  • Credit application fraud
  • FACT Act
  • Truth in Lending Act
  • Used Car Rule
  • Red Flag Rule 
  • OFAC
  • Menu execution 
  • State requirements such as California Car Buyer’s Bill of Rights or Michigan Repeat Offender

Step Two

Create a test deal file which includes examples of documents that a plaintiff’s attorney or the attorney general could use as a smoking gun. Use generic names such as Ellen Example and Tommy Test. Examples should include the critical paper trail documents (desking worksheets, menus, retail installment sales contracts, and voluntary protection document registration forms), used car buyer’s guides, credit applications, Red Flags and OFAC reports, and book-out sheets. 

Be sure to redact the dealership’s information if you create the test documents at one of your dealerships.

Step Three

Have a little fun with a pop quiz. Regardless of the psychological study, a pop quiz with simple answers and time constraints may shed light on the level of compliance understanding the interviewee has. Here are some sample questions:

  • Warranty or vehicle service contract?
  • What do you do with a dead deal?
  • What’s the best way to structure a straw purchase?
  • What contract date is used on a recontract?
  • Is it OK to accept a Matricula card for identity?
  • When is it acceptable to use “Signature on File”?
  • How do you handle housing expense for a joint mortgage?
  • Is the owner of a small business the same as the manager of the company?
  • Some state specific examples:
    • Vehicle history disclosure
    • NMVTIS (CA)
    • Child support liens (ND)
  • Manufacturer specific examples:
    • Non-OEM VSC disclosures (GM, Chrysler)
    • Export

Step Four 

Have your attorney and/or human resources expert review the test deal file and pop quiz, and provide the appropriate disclosures before you start administering it. 

Step Five 

Determine what is required to achieve a passing grade. It might not be reasonable to expect that your applicant is going to catch every compliance issue you throw at him. Conversely, it might not be reasonable to expect to hire an applicant that cannot catch any compliance issue by looking at examples or failing the pop quiz.

Final Step 

Scan your examples into a PDF file so that the test can be printed for each applicant instead of making copies of copies of copies.

Stay safe, good luck, and good selling!

Gil Van Over is the executive director of Automotive Compliance Education (ACE). He is also the founder and president of gvo3 & Associates. 

Originally posted on Agent Entrepreneur

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