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Florida: (850) 878-6404
North Carolina: (919) 847-8632

Your Dealership Needs a Compliance Audit

By Robert C. Byerts

They are out there. Regulatory agencies, plaintiffs’ attorneys and others who will gladly accept an opportunity to investigate your dealership and any complaint a consumer brings about their experience there. They are waiting. Waiting for a salesperson to slip up or an F&I Manager to lapse, or a service advisor to forget. Then they will pounce.

As of August 1, 2016, the Federal Trade Commission’s maximum civil penalty amount increased from $16,000 to $40,000 per occurrence for a number of violations of the FTC Act, including unfair or deceptive acts or practices (UDAP).

The FTC’s broad UDAP regulations cover virtually every aspect of a dealer’s sales and finance operations. UDAP claims can be founded on oral misrepresentations, the failure to disclose, or technically accurate ambiguous statements that are deceptive as understood by the consumer. The FTC has targeted auto dealers for enforcement actions including:

  • Falsifying credit information
  • Failure to safeguard customer information
  • Used Car Rule (buyer’s guide) violations
  • false or misleading advertising
  • Making false statements or incomplete disclosure of material facts
  • Oral unfulfilled “promises” to the customer
  • Incomplete vehicle history disclosures
  • Lack of consumer consent for an added F&I product
  • Payment Packing or “jamming” F&I products
  • “Yo-yo” financing

We suspect the FTC will not assess the maximum penalties available. But, because these amounts have more than doubled we also suspect the forthcoming fines will substantially increase. These penalties can be assessed per violation, per day. So they can add up, quickly

If you have not evaluated your dealership’s compliance in the past five years, or since you have implemented changes in management or processes, you need to do so, now, before the regulators and plaintiffs’ attorneys do it for you. An experienced dealer lawyer can help you evaluate your processes and audit your dealership, so you can avoid the per violation per day consequences.