Auto dealership compliance seems to appear in the news more often these days. From ADA compliant websites to lending regulations, it seems that the issue is becoming ever more complex. Every aspect of running a dealership, including financing customers and hiring employees, comes with compliance rules attached. Failing to comply with regulations can land a BHPH dealership in legal trouble as organizations like the CFPB and the EEOC strengthen rules and crack down on offenders. That’s why it’s important to understand auto dealership compliance and have a program in place.
Of course, navigating all of the compliance regulations can be a complex chore, leading many BHPH dealerships to view compliance as a hassle. Some even tire of hearing compliance officers say “we can’t do that” and have come to think of their auto dealership compliance department as the “office for sales force prevention.” However, studies show that compliance-rich dealerships actually earn higher profits overall compared to their non-compliant counterparts. This is because BHPH dealerships that lack focus on compliance often lose time, money, and reputation due to lawsuits, investigations, and enforcement actions.
So how can you ensure your dealership is compliant? The first step is to understand regulations, and institute written policies and procedures to ensure they are all met. It’s important to recognize auto dealership compliance as a defense, not a burden. If your BHPH dealership is compliant, then you are being proactive to prevent lawsuits, protect your reputation, and avoid paying fines. Also keep in mind that your compliance policy should be written so that it can be easily referred to at any time. Requiring employees to read and sign a copy of this written policy is also extremely important as it will protect your business if an employee chooses to ignore compliance rules. After all, management can’t possibly watch over employees all the time– nor should you need to– so it’s vital to be able to prove that your dealership management team did their part by ensuring a compliance policy was in place and understood. Otherwise, a single person’s independent bad decision could cause trouble for your entire business and everyone you employ.
The next step is to designate a compliance officer and committee. The chosen compliance officer should be dedicated to and well-versed in auto dealership compliance laws, including those regulating data storage, repossessions, and lending practices (which are under the purview of the FTC and the CFPB), and those concerning hiring practices (which is controlled by the EEOC.) It’s important that your compliance officer fully understands what steps must be taken and documented before a vehicle is repossessed, how long customer information must be stored, and what security measures are required for data storage. He or she must also know the laws concerning hiring new employees, and what qualifies as discrimination due to age, gender, disability, race, etc. Of equal importance is the involvement of your management team in overseeing the compliance committee. Your managers and your compliance team should work together to ensure everyone is on the same page and to avoid any conflict where compliance is concerned.
Once your policy and committee are in place, the third step is to train all of your employees, from your sales and finance teams to your receptionist, in compliance. Everyone should understand why this issue is important, and what is expected of them where auto dealership compliance is concerned. Just as with your compliance committee and management team, it’s vital to present compliance to your employees as a positive and protective measure that will ensure everyone at your dealership remains safe from legal ramifications. Your training process should include providing a well-publicized written compliance policy and, as mentioned before, requiring all employees to acknowledged in writing that they have read and understood the document.
However, the compliance process doesn’t stop after training your team. The forth step is ensuring that your compliance policy is working as it should. This can be done by performing regular audits to test things like data security and adherence to procedures, as well as maintaining open lines of communication. For an auto dealership compliance program to work best, employees must always feel comfortable speaking up if they are confused by a regulation or notice that something wrong. By ensuring that everyone at your dealership feels they can approach the compliance team with questions and concerns, you can encourage every employee to be vigilant about compliance issues. This will be especially useful when addressing auto dealership compliance issues with customers as you are more likely to be given the chance to rectify any issues prior to legislation becoming involved.
Auto dealership compliance may be more serious and complex than it once was, but that doesn’t mean it has to be problematic. By understanding how compliance benefits your BHPH dealership and building a compliance plan with than in mind, you can ensure your business operates within regulation guidelines. That increased profitability and peace of mind alone makes adhering to auto dealership compliance rules well worth the effort.