The best way to protect your dealership and yourself is to have an effective compliance program in place.

In a hit movie from my youth, two bandits are being pursued across the Old West and Mexico by the Federales. At one point, just before going down in a blaze of glory, one bandit looks at the other and asks, “Who are those guys?”

I can imagine the same conversation going on at the meetings where dealers commonly get together to chat about the state of the industry ... “Who are those guys?”

I affectionately, collectively call this group the Dark Side. These are the entities that are pursuing car dealers with an overabundance of regulations, exposure, and oversight to further their own agendas.

One of the members of the Dark Side is the Federales.

The Federales – by far the most active member of the Dark Side. The two primary Federales are the Federal Trade Commission (FTC) and the Consumer Financial Protection Bureau (CFPB), but also include the Department of Justice, state attorneys general, and state Division of Motor Vehicles.

As backdrop, the CFPB was created as the primary consumer watchdog by the Dodd Frank Act (DFA) a decade or so ago. Franchised Dealers and the NADA were successful in gaining an exemption from regulatory oversight by the CFBP, but as a result, the FTC’s powers were expanded to essentially grant the similar oversight vision that the DFA has for the CFPB.

Dealers have recently settled with the FTC in such areas as deceptive advertising, discriminatory pricing, and failure to adequately safeguard consumers’ personal, non-financial information.

As of this writing, there are two separate actions being undertaken by the FTC. The first is the revision to the Safeguards Rule which takes today’s Safeguards requirements and injects a huge dose of steroids. This revision is in effect and had an original enforcement date of December 9, 2022. The FTC announced an extension of the enforcement date of many of the compliance requirements to June 9, 2023, but some requirements still have the original enforcement date. Dealers and agents should not view the enforcement date extension as a vacation but should stay on course to implement all the requirements as soon as possible.

The second action is a proposed rule ominously named Motor Vehicle Dealers Trade Regulation Rule. The comment period has expired without the typical extension period granted under the FTC rule making process. We are awaiting the final rule which could be published before this article is. As written, I estimate there will be at least another ten to twenty documents added to the deal or digital file to demonstrate compliance.


With so many moving parts, unless you want to erect the Great Wall around your dealership, you must focus on the process. The best way to protect your dealership and yourself from the Dark Side is to have an effective compliance program in place.

An effective compliance program has a set of basic components and works well for both variable and fixed ops. These components are:

Have someone in authority in charge of the overall program. Call this person the Compliance Officer. Make sure everyone knows who your dealership’s Compliance Officer is.

You will need a separate Qualified Individual to oversee the Safeguards Rule.

  • Conduct a risk assessment of your process using federal and state requirements or best practices as your benchmark.
  • Develop and implement a policy and procedure manual to outline how your employees are expected to execute each part of the process.
  • Train your employees on your policy and procedure manual. Then train them again in six to nine months. Then update your policy and procedure manual and train them again. Then do it again.
  • Regularly audit the output of the process to confirm that it follows your policy and procedure manual.
  • Document continuous monitoring of the output of the processes and retain corrective actions when same are necessary.

With a compliance program in place, you will be less likely to look over your shoulder and mutter “Who are those guys?”

Continued Good Health, Good Luck, and Good Selling.