Digital F&I Brings New Compliance Challenges

It’s no surprise that dealers are setting their sights on the future by adopting new digital technology. Today’s customers seek the “Amazon phenomenon,” where all it takes is a touch of a screen or a voice command to summon goods to their doorsteps in two days or less. The car-buying experience is no different, and dealers are transforming to ensure they meet customer needs and expectations while staying ahead of the competition.

However, as dealers and F&I professionals move toward a fully digital car-buying experience, it becomes much easier to overlook or underestimate rules and regulations. While the speed of a digital sale can result in faster and potentially more profitable sales, one expensive fine or penalty could easily erase your gains — and permanently damage your reputation.

The marketplace is full of conflicting speculation on regulatory change, with everything from federal regulatory rollbacks to increased state-level scrutiny seemingly on the table. It’s important to stay up to date on the latest changes, but in the rush to anticipate change, you should still remember the fundamentals. Here are three important compliance issues digital F&I raises:

1. Marketing

Dealers must understand their responsibility to the customer when creating advertising and marketing. Monitor your advertisements to be sure your offers are accurate and available. You should be aware of claims made by vendors on your behalf and pay attention to your reputation from organic advertising such as reviews, social media posts, and employee comments.

For example, you might be running a digital advertisement which includes details on an ongoing sale or offer. If that offer expires, but your ad implies that it is still available, your advertising is inaccurate. Perhaps the ad links to a page about the sale on your website, which you took down once the sale ended. Does your ad now point to a broken link? Keep a close eye on where your digital sales tools operate. It’s not often as plain to see as a sign or billboard.

2. Discrimination

You are undoubtedly aware that your store can’t discriminate on the basis of legally protected categories such as race, gender, age, or religious affiliation. But have you thought about how those standards apply to your digital sales tools?

Many platforms allow you to microtarget current or potential customers by a range of categories. But when does targeting turn into discrimination? Your sales teams should be clear on the definitions of discrimination, how the digital sales tools work, and where the line between targeting and discrimination lies.

3. Unfair or Deceptive Acts or Practices

UDAP is covered by laws at both the federal and state level. They are enacted and enforced to protect consumers from unfair or deceptive acts by businesses. While the best dealers have their customers’ interests at heart, they should still be careful that their digital sales practices don’t trip them into an accidental violation.

As an example, disclaimer language that lets customers know of fees or conditions associated with offers should be uniformly disclosed across all of your channels — even if it’s difficult to fit on a small online ad or a brief email to a prospect.

Digital technology can be helpful in identifying your customers’ pain points to avoid a claim of unfairness or deception. As difficult as it might be, read your negative Facebook comments and Yelp reviews to make sure you aren’t missing a common complaint that could lead to a future UDAP claim.

As dealerships continue to go digital, taking the time to invest in legal and compliance training will protect your staff, your customers and your bottom line. And, as always, you should refer to your legal counsel as an essential resource. When it comes to digital compliance, knowledge is the first line of defense.

Jim Whiteford is the executive director of learning and development at Ally and leads Ally Academy, which provides comprehensive training and development programs for dealers nationwide.