The Industry's Leading Source For F&I, Sales And Technology


No-Look Compliance

Your F&I office should always strive to do the right thing, especially when no one is looking. The magazine’s F&I insider weighs in.

February 2014, F&I and Showroom - Feature

by John Lovin

Legendary UCLA basketball coach John Wooden once said: “The true test of a man’s character is what he does when no one is watching.” That famous quote is especially applicable to the automotive retail industry given the regulatory scrutiny it faces today. Here are a few process tips gleaned from some of the most compliant dealers groups in the country to help make your customers happy and your dealership more compliant:

LESSON 1: Sales-to-Finance
A simple rule to remember is the “math has to work.” And when an outside auditor visits your store, you need to be sure the following items are contained in every deal:

1. Consistent first pencils from the sales desk. That means quoting average interest rates and terms. Using a rate matrix is another great way to avoid allegations of credit discrimination.

2. Final terms from the sales desk need to be disclosed to customers before they are turned over to F&I.

3. Terms discussed on the sales floor must comply with the lender’s guidelines.

4. The top of the menu must match the final terms agreed to on the sales floor.

5. Follow the 300% rule: Present 100% of the products to 100% of customers 100% of the time.

Lesson 2: More Compliance Equals More Money
The large dealer groups have found that every time they add a new consumer-friendly policy, they increase their bottom lines. That’s also true when caps on interest rates and product pricing are employed.

Lesson 3: Be Transparent
Customers know when you’re not being transparent. That’s why you need to operate with a nothing-to-hide attitude. It relaxes your customer, which allows them to trust what you have to say.

Lesson 4: Be the Compliance Leader
The large dealer groups realize that the more they employ systems that drive compliance, the more likely regulators will stay away.

Lesson 5: No Process, No Profits
People perform poorly without a good process in place. That’s why large dealer groups focus on hiring the right people and what I refer to as PDF (practice, drill, rehearse). More importantly, a formalized process ensures that every customer gets the same unbiased presentation.

Lesson 6: Record the Transaction
If a regulator knows a dealership video records transactions in the finance office, they may be less likely to audit the dealership. But the dealership’s compliance officer must routinely review the transactions. The best part of recording transactions is it tends to boost production, because finance managers are more likely to make a better presentation and follow the 300% rule if they know someone is watching.

Lesson 7: Electronic Pencils
The four-square worksheet was once a great tool, but it is a little too barbaric for today’s more educated consumers. An electronic pencil is a more professional approach, as it allows for full disclosure.

Lesson 8: Protecting Consumers
The Safeguards Rule is another key focus area, as protecting your customers’ nonpublic personal information (NPI) is paramount to defending against identity theft. The following are a few process tips to help you do that:

1. Appoint a compliance officer. This individual’s sole purpose is to police the dealership by periodically walking the showroom to ensure that customer NPI isn’t left in unsecured areas.

2. Nonpublic personal information should always be stored in secure locations and never left on unattended desks.

3. Nonpublic personal information should be removed from trade-ins immediately and disposed of properly.

4. Never allow employees to have conversations with finance sources over speakerphone, as you could put customer information at risk should a would-be ID thief be within earshot.

5. Computer screens that may display customer NPI should never face windows, as people outside the dealership could catch a glimpse.

6. Computers should be set to automatically logoff. A five-minute delay is recommended.

7. There should be no group computer logins. Each user should get his or her own login so you can identify the culprit should you face a security breach.

8. Terminated employees should be removed from all systems immediately.

The final tip is this: Don’t put your dealership at risk by not having a proper compliance and safeguards process. Simply follow the tips listed here to get started. And remember to have a qualified attorney review your policies and processes to ensure they meet both state and federal requirements. These steps may not make your store bulletproof, but they will go a long way with regulators.

John Lovin serves as vice president of Chrysler Capital Consulting. Email him at

Your Comment

Please note that comments may be moderated. 
Leave this field empty:
Your Name:  
Your Email:  


So Here's the Deal

Ronald J. Reahard
Addressing F&I’s Internet Problem

By Ronald J. Reahard
A frustrated F&I manager poses an increasingly common question: How do you sell protection products to customers who demand the final price by phone and then show up with a bank check?

(Video) Selling Eight Products Without Losing the Customer

By Ronald J. Reahard
Is offering eight products a bad idea? The magazine’s resident F&I pro says it depends on the producer and the presentation.

He Had a Goal: Remembering David Ressler

By Ronald J. Reahard

[Video] Selling to Short-Term Owners

By Ronald J. Reahard

Done Deal

Gregory Arroyo
Change Is Happening

By Gregory Arroyo
Saddened by the potential loss of another piece of his childhood, the editor tries to put the pieces together when he realizes there’s a good lesson to be learned in a toy retailer’s likely demise.

Who Will Take Up the CFPB's Torch?

By Gregory Arroyo
The CFPB’s acting director tells state regulators there will no longer be ‘regulation by enforcement,” but the editor believes there’s a long list of regulators waiting to take up the torch.

Military Lending Act Guidance: The Gift That Keeps On Giving

By Gregory Arroyo

Resolution Needed

By Gregory Arroyo

Mad Marv

Marv Eleazer
Overcome Your F&I Weaknesses

By Marv Eleazer
His Madness issues a challenge to every F&I professional: Eradicate your bad work habits, diversify your lender spread, and check your God complex at the door.

Proper Deal Structure Moves Mountains

By Marv Eleazer
His Madness has a simple but powerful piece of advice for newbie F&I managers and those struggling to adapt to the way finance sources are rating credit-challenged car buyers.

Show Us Some Love

By Marv Eleazer

Chargeback Prevention

By Marv Eleazer

On the Point

Jim Ziegler
Sharpen Your Survival Skills

By Jim Ziegler
‘Da Man’ has a plan you can use to survive the collapse of the car business and remain profitable through the dealer apocalypse.

Sales Rock Stars Still Exist

By Jim Ziegler
Da Man says $40,000-a-month sales rock stars still exist. He says you’ll find them on YouTube and Facebook Live.

The New Stooges

By Jim Ziegler

Is Your Quick Lube Driving Away Business?

By Jim Ziegler