F&I and Showroom

NADA 2014

F&I and Showroom, the industry's leading source for F&I, sales and technology

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Compliance The "Father of the F&I Menu" offers his list of 10 regulatory hot spots for 2014, several of which fall outside of the F&I manager's jurisdiction. By George Angus T here's no doubt compliance will once again be a big topic in 2014, especially with the Federal Trade Commission, attorneys general, motor vehicle departments and state insurance commissioners targeting dealers at an unprecedented level. There's also the indirect effect of the Consumer Financial Protection Bureau (CFPB). It doesn't have authority over most dealers, but its regulatory activities can still impact how dealers operate. Keep in mind that the Dodd-Frank Wall Street Reform and Consumer Protection Act did more than create the CFPB. It also gave the FTC enforcement authority over the auto dealer business, as well as new rulemaking powers. So what's a dealer to do? Well, one thing my frm does to assist our clients is monitor media outlets to see which areas regulators are focused on. It's something your store should do as well. 6 F&I and Showroom NADA 2014 Well, from what we've seen and read, many of the legal actions taken against dealers in 2013 could have been prevented by the F&I department. So, to help steer your compliance efforts in the right direction, we've identifed 10 regulatory hot spots your operation needs to be keyed in on this year. This list certainly doesn't cover every state and federal regulation governing your business, but it will point out areas targeted by regulators. This list, by the way, should not be taken as legal advice, so please address all legal questions to your attorney. No. 1: Deceptive Practices The FTC kept a close eye on deceptive acts and practices last year, and I expect it to continue doing so in 2014. But this shouldn't just be an F&I concern, as the issues that put dealers on the radars of state regulators can arise before the customer enters the F&I offce. What your store needs to pay attention to is how payments are quoted during sales negotiations. Not only is the FTC looking for deception, it's also keeping an eye on quotes that have payments for F&I products packed in. And both issues are easy for the FTC spot. No. 2: Payment Packing The FTC has determined that the Truth in Lending Act (TILA) requires that customers be given a written disclosure of certain terms of the agreement during negotiations and before they agree to the a fnal payment (consummation of the deal, as regulators refer to it). These disclosures include the customer's annual percentage rate, monthly payment amount and loan term. Car buyers must also be handed a full, written disclosure of any addons that were included in the payment calculation, as attorneys general have determined that not doing so equates to a deceptive practice.

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