Sometimes I think I should’ve become a lawyer! How hard can it really be? I’m pretty sure I could write blatantly 1-sided legal documents. Moreover, I think I could figure out ways to drag my feet to dissuade anyone from ever requesting changes to any documents. Most importantly, with a little practice, I think I could do a great job assigning billable hours for every letter, phone call or e-mail I send!
Thankfully, we have some great legal minds, such as Keith Whann, Tom Hudson and Emily Beck (among others) working diligently on behalf of dealers. We also are fortunate to have the excellent lobbying and advocacy efforts conducted by the national associations, as well as by many of the state associations. Those are the experts every concerned dealer should be tapped into when analyzing their compliance risks, From a dealer’s perspective, here is a far-from-exhaustive sampling of the laws with which we wrestle on a regular basis.
Patriot Act/OFAC List – One of the provisions requires us to check all of our customers’ names against the “Bad Guy” list that OFAC maintains before selling a vehicle. Depending on the size of your operation, you may attempt to do this manually, but it is a very cumbersome process. Alternatively, there are companies available that can quickly and affordably scrub the name against the OFAC list, and provide you with printable confirmation that there is not a match (or steps to take in the rare event there is).
Truth-in-Lending Act – Most dealers are familiar with the “triggering terms” that require further disclosure in an ad. For example, if you say in an ad that the payment is only $59 per week, you also need to include the amount or percentage of down payment, the terms of repayment and the APR. Interestingly, this is not limited to just print ads! So if you like to mark up your windshields with payments (or any other triggering terms), you might want to invest in some extra markers.
FACT Act – Did you know that among the many provisions of this act is one stating that we need to notify each customer for whom we provide financing of the possibility that we may report negative information about their credit history to the credit bureau? We notify our customers on this with a quick sentence in the welcome letters we send, but it is difficult to resist the urge to end that sentence with “DUH!”
GLB Act – If you are a BHPH dealer with a separate finance company, the experts advise that you need to provide a copy of the privacy notice from the dealership. You also need to provide them with a copy of the privacy notice from the finance company, which needs to be resent annually.
Do Not Call Registry – This would have to fall into the category of a good concept that spun horribly out of control. I understand why people don’t want telemarketers calling them all the time, but I just don’t agree that car dealers should be considered telemarketers (not that they asked for my opinion). Giving an 18-month window after purchase really doesn’t allow for proper follow-up with most car loans running 24 to 48 months in BHPH. However, with $11,000 per call fines involved, it is in our best interest to get it right!
Fair Credit Reporting Act – In regards to the credit modification letters this act requires, I still meet some BHPH dealers who think they don’t need to send turn-down letters because they finance anybody.” However, these letters need to be provided anytime you complete a credit application and pull a credit bureau, but the application is denied OR a counteroffer is presented. In a nutshell, unless they are “Approved as Submitted”, it would be safest to send the letter.
Obviously, there is a lot more involved in each of these areas than the quick blurb I listed after each one. And space doesn’t even allow us to cover many others that are just as important including “Red Flag Rules” (which is the next bundle of joy that we get to deal with)!
So, although I’m not a lawyer, and certainly nothing I say or write should ever be considered actual legal advice, I do want to stress the importance of keeping abreast of all of the legal changes than affect our industry on an ongoing basis. We subscribe to every magazine, e-mail service, association update and Google Alert possible in order to try to stay ahead of the curve in regards to keeping our business compliant in all areas. It can be a daunting task at times to spend your valuable time staying on top of these areas, but as some of these examples above show, ignorance can be far more costly!
Vol 5, Issue 6
