IMAGE: Pexels/Mohammad Danish

IMAGE: Pexels/Mohammad Danish

Blank, Signed Documents

No documents are to be signed in blank with the understanding that the t e r ms will be filled in later.

Cash Back to Customer

Cash back to a customer from the dealer is generally considered to be a violation of the dealer-lender agreement and potentially bank fraud.

Completing Documents After the Fact

All documents presented to the customer for signature must be fully completed before obtaining the customer’s signature.

Credit Card Down Payments

Most dealer-lender agreements prohibit borrowed down payments, and a down payment on a credit card is considered borrowed. Some exceptions apply.

Falsifying Information to Finance Sources

Providing false or misleading information to finance sources to obtain a credit approval is a violation of the agreement executed between the dealer and the finance source.

Forging Customers’ Signatures

Forgery is a crime.

Front-End Improvement

Front-end improvement is the practice of increasing an already agreed upon vehicle sale price.

Including Undisclosed Voluntary Protection Product Price

The salespeople are to sell the vehicle only. The F&I manager is to sell ancillary Voluntary Protection Products. Salespeople are not to include ancillary Voluntary Protection Products in any price quote.

Inconsistent Product Pricing

The pricing of VPP products must be consistent on all forms. These documents comprise the paper trail and include the menu, buyer’s or lease order, the Retail Installment Sales Contract or lease agreement, and the product enrollment forms.

Kicking the Trade

This deceptive practice occurs when a customer owes more on the trade vehicle than the vehicle is worth. The salesperson does not believe they can obtain a credit approval with the amount of the prior loan balance and remove the potential trade from the deal. The customer is then encouraged to return the potential trade vehicle to the lien holder after the deal on the dealer’s vehicle is funded.

Menu Manipulation

Any manipulation of the other fees, trade allowance, cash down payment, days to first payment, or purchase price, to artificially inflate the base monthly payment is forbidden.

Missing Enrollment Forms

Customers must sign enrollment forms for every product purchased.

Payment Packing

This practice occurs when a payment quoted is more than the actual payment required to purchase the vehicle for the price agreed upon at that point in the negotiation.

Photocopy Military ID

It is a violation of a federal statute to make a photocopy of a military identification card.

Power Booking

This is the practice of showing nonexistent options to finance sources to artificially inflate the value of the vehicle.

Product Stuffing

Product stuffing occurs when a product is included in the amount financed/capitalized cost without the customer’s knowledge or consent.

Scooping Rebates

This practice occurs when the dealership does not disclose or include an available consumer rebate as a reduction to the amount financed/capitalized cost, and absorbs the rebate into profit.

Shotgunning Multiple Vehicle Purchases

Shotgunning occurs when one person signs or cosigns for multiple vehicles within a short period of time without the finance sources’ knowledge.

Signature on File

The customer’s signature is to be obtained on all applicable documents. “Signature on file” or any other such designations are not permitted.

Straw Purchases

This is a specific form of falsifying information to finance sources. It occurs when the person who is purchasing and driving the vehicle is not a party on the retail or lease agreement.

Trading Rate for Product

Once the APR has been agreed upon, it cannot be lowered to facilitate the sale of ancillary after-market or Voluntary Protection Products.

Yo-Yo Transactions

This type of transaction is one where the customer is spot-delivered on a deal structure that the dealership does not reasonably expect any financial institution to purchase, then brought back to recontract on a new transaction that they may not have accepted when first negotiating the deal.


Gil Van Over is executive director of Automotive Compliance Education, founder and president of gvo3 & Associates.