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Red Flags

Slurs, Cussing, and Misnomers

Master the F&I language by eliminating three groups of inappropriate, inaccurate, and legally explosive words from your vocabulary.

May 2018, F&I and Showroom - Feature

by Gil Van Over - Also by this author

George Carlin made a huge impact with “Seven Words You Can’t Say on Television,” a comedy routine that eventually led to a Supreme Court decision providing broadcasting guidelines for indecent material. 

Obviously, I can’t repeat the seven words here, but there are several YouTube uploads available for the curious. The correlation we can make from Carlin’s 10-minute tirade is that there are words we cannot say in the dealership, either because these words can lead to fodder for an attack from the Dark Side, or the words are misnomers that can lead to confusion.

The first two groups of words can serve as evidence to support a consumer’s discrimination lawsuit or a whistleblower’s claim of a hostile work environment.

1. Ethnic Slurs: Just about every nationality or ethnicity can be insulted with a slur. If you need an example of an ethnic slur, Google it, cause I ain’t gonna repeat any of them here. 
2. Cuss Words: After the aforementioned Supreme Court decision provided guidance, the Federal Communications Commission levied fines of more than $2.5 million to radio licensees for airing material from shock jock Howard Stern that the FCC deemed offensive.

Do not underestimate the power of smartphones. Transactions can be recorded for documentation of ethnic slurs and cuss words. Terminated employees have converted to whistleblowers to extract revenge, cash, or both from dealerships. Imagine a former employee producing an audio recording of your manager calling her a cuss word followed by an ethnic slur.

Of course, some consumers are not consumers at all. They are actually mystery shoppers or the beloved media looking for a story. We review videos of F&I closes for some dealers and have heard language that would cause grandmas everywhere to get the soap out for a good old-fashioned mouth cleaning.

3. Misnomers: The wrong word, interpreted literally, results in incorrect usage. This leads to claims like the recent case of a New York dealer who was sued for exceeding the state usury rate. Let’s review the three most common dealership misnomers: 

• Loan: The New York case involved a transaction with a subprime customer at a typical subprime rate. Like many states, New York has different usury rates for different financing instruments. The lawsuit contended that the annual percentage rate (APR) exceeded the usury rate for a loan. 

A loan is a direct transaction from a lending institution to a consumer; an installment sale is indirect from the customer to the dealer to the lending institution. In most states, the dealer enters into an installment sales agreement with the consumer, then assigns the contract to a willing finance source. 

Calling such a transaction a loan is incorrect. It is an installment sale. I know “loan” is easier to say, and many consumers understand loans in lieu of installment sales, but it is still misleading.

• Lender: Since dealers do not make loans, they do not do business with lenders. Dealers execute installment sales and do business with third-party finance sources. I understand the confusion: These finance sources do loan money, and they usually have other business units who do direct lending. But they are not lenders themselves. 

• Warranty: The esteemed Tom Hudson has been fighting this misnomer over the quarter century that I’ve known him. This is perpetuated by consumers, some finance sources, and misinformed dealership employees. Consumers ask for extended warranties, managers readily agree to sell extended warranties, and some finance sources have installment contracts or leases with “extended warranty” printed on them.

By definition, a warranty is something that is provided by the manufacturer or seller of a product that is provided at no cost to the consumer. The manufacturer’s warranty is included in the purchase price of the vehicle. The vehicle’s purchase price is not increased to pay for the warranty.

Some dealers do provide warranties. Common are 30 days, 1,000 miles, or “tires for life.” These dealer warranties are provided on most vehicles and the cost is already built into the advertised price.

The incorrect usage of “warranty” in the dealership happens when a salesperson or F&I manager refers to a service contract that extends coverages beyond the manufacturer’s or dealer’s warranty coverage. F&I managers sell these optional vehicle service contracts for an additional cost to the transaction. Calling it an “extended warranty” can be deemed misleading simply because you cannot charge for a warranty.

Being compliant and developing a defense strategy to mitigate claims against the dealership is tough enough without creating self-imposed landmines. Work to eradicate these words from your dealership vocabulary and help improve your compliance quotient.

Gil Van Over is executive director of Automotive Compliance Education (ACE), the founder and president of gvo3 & Associates, and the author of “Automotive Compliance in a Digital World.” Email him at gvo@bobit.com.

Comment

  1. 1. Rick McCormick [ June 01, 2018 @ 11:05AM ]

    Great information Gil! I encounter these regularly and it is a culture that is hard to break. Having you say it and in this format will make it easier to help others see the importance of watching what they say as well as what they do. Keep helping us!

  2. 2. Spattman [ June 07, 2018 @ 04:47PM ]

    Great information. Although I thought I have been meticulous is staying compliant, I now see I have been misusing, Loan and Lender for more than 40 years. I should have known better. I do now.

  3. 3. Christine H Farnan [ June 23, 2018 @ 09:32AM ]

    Thank you.... Well written article containing great information!! Information that needs to be addressed and abided by daily!

  4. 4. Justin Gasman [ June 30, 2018 @ 02:01PM ]

    Gil - Terrific article! Thank you for pointing out something so simple - but so important. We have to educate consumers and dealers alike, one at a time. Words do matter!

 

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