At Charapp & Weiss, we help auto dealers build compliance programs that hold up when the FTC, a state regulator, or a plaintiff’s attorney comes looking. In our experience, the weak point is rarely the written policy. It is whether anyone in the store has actually been trained on it. Employees may resist mandated training, but ignoring the need for consistent effort—especially on compliance—can be costly.
How Often Is Often Enough?
Many dealerships train every six months and consider the box checked. Depending on your processes, that may not be close to enough. Take a hard look at your cadence.
- New hires: train within the first month of hire so employees know what is expected of them from the start.
- Ongoing topics: train every month or every other month on specific subjects, rather than dumping every topic into one overwhelming session.
- Daily: training by example from management should happen every day. When bad habits or behavior are recognized, correct them immediately.
If you notice a problem occurring, fix it right away. Waiting until the next six-month session tells your staff the rule was not that important.
F&I Compliance Depends on Trained Personnel
Training your personnel is the key to keeping your F&I department compliant. Several areas deserve repeated attention.
Forgeries
Forgeries are a cardinal sin against consumers. Dealership personnel should never sign anything on behalf of a customer, including checking a box stating that a document was electronically signed. The consumer is the only person who should be signing, checking, or attesting to his or her signature, whether electronic or original. Sending documents to a lending institution that the consumer did not actually sign could be considered bank and wire fraud under federal law, in particular 18 U.S.C. §§ 1343 and 1344, which carry penalties of up to 30 years in prison and a $1 million fine.
Product Knowledge and Accurate Representations
Sales and F&I personnel should know the products they are selling rather than simply following a script. Not knowing the product is what leads to misrepresentation. If a consumer is paying cash, your personnel should not be selling a GAP waiver, and the products offered should provide real value to the buyer.
Representations also have to be accurate. Do not represent to a consumer that they will pay less per service by purchasing a maintenance plan at the time of sale instead of paying for the maintenance individually. There should be no misrepresentation as to the products being offered or the benefits they provide.
Uniform Pricing and Menus
An F&I compliance program that constantly trains employees has to actually be adhered to. Use the NADA policy on voluntary protection products to establish uniformity in offering prices on VPPs to all consumers, and the NADA fair lending policy to establish uniformity in credit rates offered to customers.
Make sure your menus list the VPPs and their pricing, along with the required disclosures. As a best practice, the buyer should sign a copy of the menu showing the products chosen and declined, and that copy belongs in the deal file. Importantly, the prices on your menu must match the prices on the customer’s purchase contract.
Cash Reporting
Your personnel know that cash over $10,000 must be reported, but a lack of training lets the nuances slip by. If you are paid thousands of dollars in cash and have to return the amount paid, the returned monies should be in the same tender as provided—cash for cash, check for check. When returning thousands of dollars in cash, write down the bill numbers, take pictures of the monies returned, and provide the person with a receipt. If you know the money is not from legal earnings, do not do the deal and do not take the money. And three transactions in a row from the same person, paid by check for $8,000, then $5,000, then $8,000, is a reportable transaction. Train your personnel on the nuances of cash reporting, not just the headline number.
Deal Completion Checklists
F&I and the comptroller are often at odds: F&I wants the deal booked so they are paid on it, and the comptroller cannot book the deal because documents are missing. Train F&I personnel on the documents that are needed and give them a deal checklist so they have everything required in the deal file.
Discrimination and Harassment Training Has a Legal Payoff
Your dealership should regularly train employees about the company’s policies prohibiting discrimination and harassment, and this training does more than set expectations. Under law established by the United States Supreme Court, an employee’s failure to report wrongful behavior can give the employer a defense to a legal action, but only if the dealership can show that the employee knew of the policy, knew of the importance of complaining, and knew to whom a complaint should be reported. Training, and a record of it, is how you make that showing.
What Employees Need to Know
Employees need training on the policy itself and on the procedures for reporting behavior they believe violates it. Nothing can be done for an employee until the matter is reported. The report should preferably go to the employee’s supervisor, but an employee who feels uncomfortable doing that needs a route to senior management. Preferably the dealer should provide a hotline number or a line directly to the dealer, so there is no mistake about the importance of reporting these matters.
What Managers Need to Know
Managers require their own training, on these four points:
- The importance of action: if a manager observes a problem or a complaint comes to their attention, they must take action immediately. All complaints of discrimination and harassment are important and must be properly handled.
- Method of response: a manager must not brush off alleged wrongful behavior, but must also understand the importance of remaining neutral and not overreacting. “We know that Joe has a tendency to touch young women,” is never the appropriate response to a complaint about Joe. A manager must remain neutral whether the behavior was witnessed personally or reported by someone else.
- Investigation: there are specific steps to conducting an investigation, and managers must know how to effectively investigate alleged violations of company policy.
- Resolution: every investigation must have a conclusion, whether the decision is that nothing improper occurred or that the offending employee must be terminated. The person who claimed to be the subject of the wrongful behavior must be made aware of that resolution.
Final Thoughts
Training needs to routinely occur. Written policies and procedures are a great start, but they are irrelevant if they are not consistently trained on and enforced. Training can be time consuming, but so are the lawsuits and government investigations that follow a lack of training.
At Charapp & Weiss, we know that a dealership’s exposure usually comes down to what happens on the floor rather than what sits in the policy binder. If your training program has drifted into a twice-a-year formality, or you are not sure your policies would hold up under scrutiny, our team can help you build, audit, and document a program that actually protects the store. Stay proactive, stay compliant, and do not wait for a lawsuit or a state inquiry to act.