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33 COMPLIANCE HOT SPOTS AND WHAT TO DO ABOUT THEM
NABD, LAS VEGAS, NV TOM HUDSON, ERIC JOHNSON, ALLEN DENSON
MAY 23-25, 2017
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COMPLIANCE HOT SPOTS AND WHAT TO DO
ABOUT THEM
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HOT SPOT #1 - ADVERTISING
Know the federal and state rules that apply to your advertising, and know
what ads they regulate.
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HOT SPOT #2 – PRICING YOUR CARS
Eliminate the difference in prices between cars you finance and those
you sell for cash. Put your prices on your cars and don’t
change the prices based on cash or financed sales.
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HOT SPOT #3 – ACQUISITION FEES AND DISCOUNTS
Know the rules that apply when you sell your contracts to finance sources that charge an acquisition fee or buy your contracts at a discount – do not increase the cost of the car to cover
the fee or discount.
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HOT SPOT #4 – HIDDEN FINANCE CHARGES
Don’t create other “hidden” finance
charges. For example, don’t tell buyers that you “can’t get them
financed” unless they buy a service contract.
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HOT SPOT #5 – FINANCING REPAIRS
Know the rules that apply to financing repairs for your customers. Have a written policy for financing repairs, and document the transaction correctly.
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HOT SPOT #6 –SID/GPS Devices
Know the rules that apply to the use of a starter interrupt device (SID) or GPS device with your customers. Provide written disclosure, don’t charge for installation or use, have a written policy and objective credit criteria re: installation and use of device.
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HOT SPOT #7 –Convenience Fees
Know the rules that apply to charging a convenience fee. Can you charge a convenience fee? What does the law say? What does the contract say? Document the transaction correctly and apply to the contract.
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HOT SPOT #8 –NSF Fees on Electronic Payments
Know the rules that apply to charging an NSF fee. Can you charge an NSF fee for electronic payments? What does the law say? Document the transaction correctly and apply to the contract.
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HOT SPOT #9 – Fees to Reclaim Personal Property Post-Repo
Do you know the state rules that apply to maintaining buyer’s property post-repo? What does your contact say? Do you charge the buyer(s) a fee to store the property?
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HOT SPOT #10 – Dual Language Materials
Ensure that your contracts, advertisements, and other consumer-facing materials are in the same language for the entire document. Do not promote features in Spanish only to provide limitations and disclaimers in English.
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WHAT TO DO TO
ELIMINATE HOT SPOTS
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ELIMINATING HOT SPOTS
Prepare a written Compliance Management System, and appoint a
Compliance Officer.
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ELIMINATING HOT SPOTS
Prepare a written Privacy Policy, and
appoint a Privacy Officer.
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ELIMINATING HOT SPOTS
Prepare a written
Red Flags Policy, and appoint a
Red Flags Officer.
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ELIMINATING HOT SPOTS
Prepare a written
SID/GPS Policy re: installation and use,
and appoint an Officer to oversee.
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ELIMINATING HOT SPOTS
Learn who your “federal cop” is. Stay on top of that enforcement
agency’s activities.
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ELIMINATING HOT SPOTS Read the retail installment contract
you require your buyers to sign.
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ELIMINATING HOT SPOTS
Read the Truth in Lending Act, Regulation
Z, the Equal Credit Opportunity Act and Regulation B, and the other federal and
state laws and regulations that
apply to your your business.
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ELIMINATING HOT SPOTS
Get compliance training for your dealership people who are responsible
for sales and financing.
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ELIMINATING HOT SPOTS
Created a standard process for creating and approving all advertising and marketing content. Should involve designated compliance officer
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ELIMINATING HOT SPOTS
Regularly visit the websites of the
Consumer Financial Protection Bureau, the Federal Trade Commission and your
state regulatory agencies. www.consumerfinance.gov/
www.ftc.gov/
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ELIMINATING HOT SPOTS
Join your state’s IADA.
Join a twenty group.
Subscribe to industry publications that cover compliance developments.
Go shopping for free or nearly free compliance resources.
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ELIMINATING HOT SPOTS
Know what business you are in. If you think that you sell cars, and that you arrange for “lenders” to finance those cars by making “loans” to your customers, guess again!
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ELIMINATING HOT SPOTS
Set up a compliance budget. No money allocated for compliance
means “no compliance.”
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Resources Go to www.ftc.gov/ Click on “Tips and Advice,” then on “Business
Center,” then on “Advertising and Marketing” You will find these publications: Advertising and Marketing Basics Online Advertising and Marketing Telemarketing Read Them!!!!!
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More Resources
• State Auto Dealer Associations • State Independent Auto Dealer Associations • NADA • NIADA • Vendors (but be very careful) • Spot Delivery • F&I Legal Desk Book • Compliance Certification
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Questions?
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Contact Information: Thomas B. Hudson, Of Counsel
Hudson Cook, LLP 7037 Ridge Road, Suite 300
Hanover, MD 21076 410.865.5411
Eric L. Johnson, Partner Hudson Cook, LLP
8524 South Western Avenue, Suite 114 Oklahoma City, OK 73139
405-602-3812 [email protected]
Allen H. Denson, Partner
Hudson Cook, LLP 1909 K Street, NW, 4th Floor
Washington, D.C. 20006 202-327-9718