Are You Compliant? Part 3

A Review of Recent Developments Part 3


Document Preparation Fees

Many dealerships charge various fees when a vehicle is delivered, including a document preparation fee. However, the so-called “doc fee” frequently comes under fire. Recently, consumer attorneys have developed a new attack on the doc fee. They are now arguing that a dealership is essentially practicing law without a licence by charging a fee to prepare documents. And as you know, that’s illegal. Just like you need to be a doctor to practice medicine, you need to be a licensed attorney to practice law. I don’t buy the argument that charging a doc fee equates to the unauthorized practice of law, but several courts have. This is why many states regulate the fees dealers charge. While dealers need to be familiar with these laws, they may not always help defend against this new attack on doc fees. If you’re charging a document preparation fee, it may be a good idea to contact your legal counsel to discuss the matter.

Credit Card Truncation

Under the FACT Act, credit card numbers on receipts have to be truncated so only the last five digits are shown. However, did you know the rule also requires that receipts not show expiration dates? Unfortunately, many people miss that part of the rule.

There was a lot of litigation about the expiration date after the rule went into effect at the end of 2006, especially in California. The good news is that this is an easy matter to handle. You just need to check every credit card machine in the dealership and make sure they’re all printing out receipts with the card numbers properly truncated — and without the expiration date.

Privacy Rules

Most dealerships know about their general responsibilities for safeguarding their customers’ personal, non-public information under the Gramm-Leach-Bliley Act. But do they know all the details? For instance, the Safeguards Rule requires a dealership name a specific employee to oversee safeguard activities.

The rule also requires a written information security plan that is periodically reviewed. Do you have a written plan? Has your dealership designated someone to oversee the program? Have you yet to fill the position after the person you designated left the dealership? Have you done the required periodic evaluations?

Now, you may be doing your best to comply with the rule, but you aren’t compliant if you aren’t meeting the detailed requirements of the Safeguards Rule.

Just remember that many of these rules governing how we operate our business act like moving targets. This is why periodic reviews of your compliance efforts is required. Just remember, even the best compliance programs can get better. Thankfully, there are plenty of resources available to help. So take advantage and don’t get caught with an outdated policy.

Todd Clarke is an associate counsel for JM&A. For more information, visit www.jmagroup.com.

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