‘I Don’t Remember that Deal’

Another fantastic article
by : Gil Van Over

One of the lawsuits I helped a dealer defend against had a memorable exchange between the dark side attorney and the salesperson on the deal.

Attorney: Tell me, Mr. Salesperson, do you remember selling my client his car?
SP: Yes, I do. And I know I did everything right.
Attorney: How many cars do you sell a month?
SP: Fifteen to 20. And we always do things legally.
Attorney: And you sold this car three years ago?
SP: Yes.
Attorney: So, in the three years since you sold my client his car, you’ve sold maybe 500 or 600 cars?
SP: Sounds right.
Attorney: And you remember selling my client his car?
SP: I sure do. And we did everything legally.
Attorney: What color shirt was my client wearing?
SP: I don’t know.
Attorney: Was it raining or was the sun shining?
SP: I don’t remember.
Attorney: Was there anyone with my client when he bought the car?
SP: Ummmmmmmm.
Attorney: How can you really sit there and tell me you remember this deal when you can’t even remember anything else about that day?

Case closed

As soon as the salesperson admitted that he could not recall any other details about a day three years back, the rest of his testimony was tainted. He thought he was helping the dealership defend itself in the lawsuit, but instead created a headache for the dealer’s attorney.

Admit you don’t know

You must admit you don’t remember the deal, but you do know your processes and testify to how you do things.

The paper trail

If you want the deal jacket to be your defense witness instead of an employee who may or may not still be employed with your dealership three or four years down the road, you must believe in and require a paper trail.

This paper trail must show definitively that you sold the vehicle and ancillary F&I products in a transparent fashion.

A typical paper trail (except in California), will include the four square or selling document, a preliminary buyer’s order, a menu, a final buyer’s order, a retail installment sales contract and certificates for every F&I product sold.

Not only do these forms need to be in the deal jacket, but also they must flow. It must be readily apparent to the six jurors in the box, whose math skills vary from guzintas to statistics, whose reading pleasures range from comic books to Shakespeare, whose musical tastes may include rap and classical, that you didn’t hide anything when you sold the vehicle.

Selling document

It doesn’t matter whether you use a manual four square or a desking system or whether you work the trade difference instead of payments. Most dealers use some sort of selling document to start the deal. The agreed upon transactional details are normally transferred to a preliminary buyer’s order.

Preliminary buyer’s order

This form is used to affirm the customer’s purchase intention and to provide F&I with the agreed upon deal.

The vehicle purchase price, down payment, trade-in information and payment amount and term are some of the transactional details contained on the PBO.

Menu

This is the form that helps F&I to memorialize the sale. The cash sales price, the down payment and trade-in information must match the PBO. If payment and term were quoted, they must match the base payment information on the menu.

Final buyer’s order

The terms on the final buyer’s order, including optional F&I products purchased and the premiums for these products, must be consistent with the menu.

Retail installment sales contract

The amount financed on the RISC must match the amount due on the buyer’s order. The final term, payment and APR on the menu must match the term, payment and APR on the RISC. The F&I product premiums must match on all three documents.

Product certificates

The premium for each of the products as disclosed on the certificates must match the menu, final buyer’s order and RISC.

Common sense

I know this sounds like common sense, but don’t fool yourself. Either through operator error or inadequate computer programming, these simple paper trail elements may be missing from your deals.

Call to action

Go ask your F&I manager to print a test deal for each lender that requires a separate RISC (normally your captive and the generic contract the rest of the lenders accept). Review each of the documents discussed above and see if the paper trail passes the common sense test. If not, you know where to start your corrective actions.

Gil Van Over is the president of gvo3 & Associates, a nationally recognized dealer compliance consulting firm. He assists dealers with F&I and sales compliance.

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Waving the Caution Flag at Red Flag Solutions

Article by : JR Wilson

This entire Red Flag issue has started to consume, and confuse, many in the industry. I myself have been scratching my head wondering “what are these guys thinking” when reading about some of the so-called solutions that are now available. It really is amazing the number of red flag/compliance “experts” that have, all of a sudden, appeared out of no where touting their knowledge and promoting their wares to dealerships. But that’s a discussion for another time; let’s dissect the topic at hand.

The Red Flag Rule is 256 pages long but the portion that governs a dealership’s Identity Theft Prevention Program can be summarized in six words. Yes, six simple words. These are the requirements of the program and deciding on your compliance initiative is very simple. You either have all six of these included or you do not have a compliant program.

The six required areas for a Red Flag compliance program are:

1. Policy
2. Training
3. Detection
4. Prevention
5. Mitigation
6. Audit

Policy: The rule requires you to design and implement an Identity Theft Prevention Program that encompasses the other five areas.

Training: You must train your employees on the policy.

Detection/prevention: You must implement a process to detect and prevent identity fraud during your transaction processing. For dealerships, this means vehicle deliveries and parts/service purchases.

Mitigation: Within the policy, you must have measures that reduce the chance of 1) internal identity fraud via employee involvement and/or a customer information breach; 2) lessen the risk of fraud on any existing customer accounts (not really applicable to dealerships); and 3) minimize the possible impact on your current customers in the event of future identity fraud exposure.

Audit: You must perform a policy review, at least annually, to determine the results and make the necessary adjustments to ensure the ongoing effectiveness of the policy.

Currently, the majority of the noise about the Red Flag Rule deals with the detection and prevention requirements. A lot of people think: 1) the 26 ‘red flags’ are steadfast and written in stone, and 2) if they check these 26 ‘red flags’ they are a) compliant; b) protected; and c) have satisfied the regulation’s requirement. Neither of these could be further from the truth. Dealers that implement such programs are not to blame (except in their lack of research) as they trust solution providers to implement protective solutions. The problem lies with misinformed people designing compliance programs through either an abbreviated understanding of the law or, worse, a tainted interpretation that allows them to promote their product through the fear factor. Listening to the wrong people and implementing an incomplete program could be devastating for a dealership!

As far as detection and prevention there will be four different possibilities that arise during the vehicle delivery: 1) No red flags and the deal is not fraudulent; 2) red flags and the deal is fraudulent; 3) Red flags and the deal is not fraudulent; or 4) No red flags and the deal is fraudulent. The last two should be of the most concern when designing the detection and prevention portion of your program. How do you account for all of the possibilities (policy design) and educate (train) your employees to detect, decipher, escalate and resolve these variables while maintaining a customer friendly and expedient delivery process? The answer is you can’t. Relying on statistical analysis of imprecise indicators will result in varying levels of results. Does this sound like something you want governing your program? Words like variance, statistically, probability and imprecise should never be the underpinning structure of a compliance program.

There was a recent fraudulent vehicle purchase in Cincinnati, which is a glaring example of why the red flags will not detect identity fraud. A couple enters a dealership and the female purchases a Jaguar.

The female used a stolen identity but let’s take a closer look and see what red flags appeared on this deal:

• She looked like the picture on the driver’s license

• She filled out the credit application with the:
- Current address (matched with the bureau)
- Current phone number
- Current employer (matched with the bureau)
- Correct SSN (matched with the bureau)

• There was no fraud alert on the bureau

The real “customer” called the dealership several weeks later “in a panic,” as stated by the newspaper story. Also in the story, the dealership owner was quoted as saying, “What more could we have done?” Unfortunately, four things transpired in this transaction: 1) a car was stolen; 2) there is now a new identity fraud victim; 3) the dealership received negative press and expressed ignorance in protecting their customers; and 4) it’s been made evident that a policy of checking the ‘red flags’ would not have prevented any of the above. The only bright spot for the dealer is this deal happened before November 1, 2008 (deadline for RFR compliance). Otherwise, we would be adding 5) the dealership was found to be in violation of federal law because of its lack of effort in implementing a program to “detect, prevent and mitigate identity fraud” and has been sued by the identity victim for the damages the fraud has caused.

Carefully reviewing every possible offering that is being touted as a ‘red flag solution’ is the diligence you must take to protect your dealership. Before you decide on a solution, make sure it includes all six...and there is no deviation here...of the requirements and truly has a detection and prevention aspect that is not reliant on statistics or possibilities. You are putting your dealership’s name and reputation on the line with every delivery. You deserve definitive results, not possibilities.

J.R. Wilson is an expert on identity fraud and the president of PatriotDealer.com, which provides identity verification and compliance services to dealerships.


Excellent article. This is a way to measure a well-run automotive F&I department.
AFI

http://www.AutoFinanceInsider.com

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Controller for Toyota dealership arrested on theft charges

Some simple precautions can prevent problems like this

LEBANON TOWNSHIP — A five-year employee at a local car dealership has been arrested on charges of stealing almost a half-million dollars from the business, according to a statement from county officials.

Elizabeth L. Pearson, 33, of 28 Dennis Road, Bloomsbury, was arrested after a five-month investigation into money missing from Muller Toyota, 2019 State Highway 31 South, the Hunterdon County Prosecutor's Office said in a news release Friday.



"We're not making any commment on that," said Jim Pesce, general sales manager of Muller Toyota. (of course not).

The dealership had a forensic audit done and contacted the prosecutor's office's Major Crime Unit after receiving the results of it, authorities said. Police found that from June 2002 through September 2007, Pearson diverted more than $400,000 from accounts maintained by Muller Toyota to herself, authorities said.

Pearson, charged with second-degree theft by deception, second-degree misapplication of entrusted property, and third-degree forgery, surrendered to detectives today and was put in Hunterdon County Jail on $75,000 bail with a 10 percent option, police said. She had worked for the dealership for five years.

Anyone with information about the case can call Dan Hurley, deputy chief of
Investigations, at (908) 788-1492.

Let Justice be served.
AFI

Chrysler dealer, ad agency sign consent decree over deceptive ads

Customers will each get $550 settlement!.

A New Orleans-based marketing company and a Maine Chrysler, Dodge, Jeep dealership have signed a consent decree to prohibit ads that the state attorney general called "unfair and deceptive," according to a report in the Portland Press Herald.

Level 10 Marketing of New Orleans and the dealership did not admit wrongdoing in signing the agreement.

According to the Maine Attorney General, ads for a November 2006 car sale offered "vouchers" that suggested buyers could receive "$4,000 Instant Savings," but those savings were never realized. (any wonder?)

The agreement also said that the marketing company and dealership can't use other promises of savings without documenting those savings. Those promises, including offering cars for sale for "pennies on the dollar," savings of "up to 90 percent off original M.S.R.P," prices "slashed for immediate liquidation” or "wholesale pricing direct to the public.”

Twenty-two customers who purchased vehicles at the Chrysler Dodge Jeep sale will receive refunds of $550 each. The two companies also must pay a civil penalty of $6,250.

Level 10 designed the advertising flyer for the sale and provided a team of salespeople at the dealership to attempt to sell the cars.


INSIDERS ADVICE:

*If you are in the market for a vehicle and hear of a current sale such as the one above, call the dealership and make contact with a salesperson (if you are interested in that particular brand of automobile).

*Set an appointment away from the "festivities".

*Do research online and negotiate a fair deal with a DEALERSHIP EMPLOYEE ONLY.

*You should think twice about buying a car from a dealership that hires a promotional company who brings in it's own salespeople for the "event". It just sounds shady to me. How compliant do you think their F&I practices are?

AFI

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Why Background Checks are a Good Idea

Why background checks are a good idea: Dealership employee the subject of identity theft investigation

More than 200 customers could be at risk. A little pre-employment checking could have avoided trouble

A woman working at a Sanford, Florida, car dealership is accused of trying to steal the identities of customers. Authorities said more than 200 customers of the dealership could have been targeted, according to a report on WESH-TV.

The woman was pulled over by police for speeding last Sunday. Investigators said they found more than 200 Social Security numbers that were jotted on pieces of paper, in notebooks and on sales contracts for cars.

According to the woman’s family, she used to work for Drive Time Auto Sales. Police claimed she used her job at the dealership to steal identities.

The accused woman’s sister said she was surprised to learn of the investigation. She shouldn’t have been. It turns out the woman had an outstanding warrant in Georgia for similar identity theft and fraud charges.

Investigators said they spent all day May 5 running the 200 Social Security numbers through a national database to alert potential victims.

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