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F&I’s Compliance Driver

An electronic menu can do more than drive the F&I process. Compliance expert offers standards and practices you can use to unlock an emenu’s true potential.

September 2017, F&I and Showroom - Feature

by Gil Van Over - Also by this author

It is difficult to find a document in the paper trail that helps a dealership with its compliance story more than the menu. When a menu is properly executed, it affirms the agreement in the sales department, clearly sets out that the products selected in F&I are optional, fully discloses the payment walk, and closes the F&I sale — in two pages, one process.

Unfortunately, either through kinkiness or naivety, an improperly completed menu, usually a paper one with Sharpie assistance, can document a litany of declared deceptive practices. These can include payment packing or confirming the packed payment from sales, stuffing products, and trading rate for product.

"Through the years of evolving menus and menu presentations, a few best practices have evolved as industry standard. Industry standard is a coveted standard to apply to a process when I provide litigation support for a dealer. It tells the judge or the regulator that the dealer has adopted a business practice that is considered by his or her peers as the preferred practice."

California and Minnesota require a pre-contract disclosure on retail deals that is the closest statutory requirement we have for anything resembling a menu. The pre-contract disclosure does not disclose the APR and is only required on retail financing, leaving leasing, outside lien deals, and cash deals without a requirement to provide the disclosure.

The pre-contract disclosure does require the base and final payment, the products selected, and prices for each product. One of our clients successfully petitioned Minnesota to accept the “accept/declination” page from its menu process as a substitute for the pre-contract disclosure.

In the other 48 states, there is not a statutory requirement for a menu. Most retailers have adapted the use of a menu as a best practice, both as a sales tool and a compliance tool.

Through the years of evolving menus and menu presentations, a few best practices have evolved as industry standard. Industry standard is a coveted standard to apply to a process when I provide litigation support for a dealer. It tells the judge or the regulator that the dealer has adopted a business practice that is considered by his or her peers as the preferred practice.

If I had to testify tomorrow, here is my list of industry standards as it applies to menus:

  • The preferred process is a two-step process. The sale is closed, and the F&I product’s features and benefits are completed on the first page, or presentation page.
  • The second page is the accept/decline page, which should consist of two columns. One column lists the products the customer accepted, while the second lists the products declined.
  • The base payment on the presentation page is initialed by the customer. This affirms that the customer knew what he or she could take delivery of the vehicle for with approved credit, making every product purchased optional.
  • The products selected on the accept/decline page each have a price. Those prices should match all the other documents in the paper trail.
  • The base and final payments are on the accept/decline page, confirming the payment walk.
  • Disclosures made regarding products being optional, can be purchased separately, not required to obtain financing, and does not affect the interest rate.

An edealership uses an electronic menu in the F&I process to document customer decisions and sell products. But just like edesking software, the kinks can still manipulate an emenu, either through the setup or other nefarious methods.

For example, one emenu provider uses a kiosk-type setup to share the menu story. In one of my visits, I discovered that an F&I manager (who I documented in the file review process as a bad apple) had a sticky note on the screen of his kiosk. The note said, “Call your wife,” and had an illegible signature.

Turns out the guy wasn’t married. Turns out the sticky note was strategically placed on the screen where the base payment disclosure sits. Turns out he was spinning a lot of deals without properly disclosing the base payment. Kinks will be kinks.

Another risk to be wary of is the menu setup. Some systems permit a user an unlimited number of days to first payment — a feature a kink can use to pack the base payment.

Other systems will allow a user to pick and choose which accept/decline page to print, sometimes suppressing the product price, the base payment, or the final payment terms. Turn those options off so a user does not accidently print the wrong version.

Even with these potential risks, using an emenu is a superior approach to using a paper menu with a Sharpie. Good luck and good selling.

Gil Van Over is the executive director of Automotive Compliance Education (ACE) and the founder and president of gvo3 & Associates. Email him at gvo@bobit.com.

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