Dealers go back and forth on whether to video record customers going through the F&I process. The debate has often turned on one consideration: liability.
Video recording F&I conversations with customers is a double-edged sword. On the positive side, video documents the F&I process and may provide a compelling defense beyond the much more muddled your-word-against-theirs testimony. On the other hand, video provides a record that may be used in litigation proceedings to prove wrongdoing during the presentation of F&I terms by a dealer employee.
So which is the better path to take? That answer depends on a number of other factors. The liability concern is obviously greater for a dealer who is playing fast and loose with the law and who prefers to “chance it.” Video recording the F&I office also isn’t a good idea for dealers who don’t offer adequate training for employees about proper F&I procedure, or who don’t want to bear the costs of forming adequate compliance procedures and creating viable option menus.
For the compliant dealer, video recording the F&I process can provide a degree of protection against liability, and not only in the unfortunate event of a trial. Frivolous lawsuits may be discouraged by concrete evidence. If an employee forgets a procedure or misunderstands a contract provision, a manager can address the problem before several customer transactions are affected. Video also compels employees to follow the standardized F&I process and stay on script. It also incentivizes professional behavior and fair dealing with all customers.
Video may even improve your bottom line. Employees are more likely to cover the menu and sell more of the available options when they know each transaction can (and should) be reviewed by a manager. Customers who might otherwise try to fraudulently finance a new vehicle through identity theft may also be deterred by a video recording. If you’re still not sure whether to go forward with your video-recording program, consider this checklist and review it with your attorney: 1. Record All F&I Transactions: If any F&I process is to be recorded, a dealer program should ensure that all processes are recorded. This will avoid uncomfortable questions in a proceeding with a judge or regulator regarding why some transactions were recorded and some were not.
2. Establish Consent: A dealer should review the applicable state and federal laws and establish a compliant process to obtain customer consent. As a best practice, consider disclosure to the customer both verbally and in writing, and have the customer sign an acknowledgement even if your state’s law does not require it.
3. Review Recordings for Compliance: If missteps are made in the F&I process, the dealer should work to correct the issue promptly. Without a review of the recordings, you can’t know if anything is wrong. A formalized, good-faith compliance process established to prevent wrongdoing may also go a long way with a judge or a regulator.
4. Determine Storage Requirements: You may need to store all recordings for a period of years. Fortunately, digital recording has made this an easy and inexpensive task.
5. Review Recordings for Performance Evaluation: Incorporate the recordings into a performance review process to improve sales.
6. Let Experience be a Training Tool: Demonstrate the proper use of dealer procedures to new employees and share effective sales practices.
Technological advancements have made it easy for dealers who decide to establish a recording program. A number of third-party servicers offering solutions for data management, forms processing, and other services, now offer solutions for recording your F&I department. As usual, we express no preferences for particular vendors, but many offerings are worth a look.
A thoughtfully implemented F&I recording program can provide protection from litigation and boost your bottom line. For those reasons alone, a video recording program merits a closer look.
Michael Benoit is a partner in the Washington, D.C., office of Hudson Cook LLP. He is a frequent speaker and writer on a variety of consumer credit topics. He can be reached at michael.benoit@bobit.com. Nothing in this article is legal advice and should not be taken as such. Please address all legal questions to your counsel.
