…With the FTC and the CFPB?
I’ve written before about the various regulations auto dealers are required to comply with, the wave of new regulations expected now that the CFPB is up and running at full strength and the growing threat of increased enforcement action on the horizon as these agencies flex their new muscles. Today I want to look at the 3 top reasons dealers are not prepared.
1. They just don’t know
Now, you would have to have been living in a cave for the last 20 years not to know that new laws have changed the way car dealerships do business over the past 20 years but different dealers have different levels of comprehension about what that means to their particular situation. Few dealers understand the full complexity and what exactly is expected of them.
Many dealers also know that there are a myriad of regulations they must comply with but they don’t know how or exactly what it is they are supposed to do. Some of them also are aware of the regulations but just aren’t sure which ones apply to them. They know they should be doing something but they just don’t know what that is.
2. They just don’t care
Some of those who understand that this myriad of regulations they are being asked to comply with exists have chosen to just ignore the situation. Their arguments typically claim that they are too small and the Federal agencies will be going after the ‘big guys’. They feel that they are small enough that their non-compliance will go unnoticed.
Others feel the cost of being compliant with all of these regulations is just too expensive. They have made the decision that their operation cannot afford to be compliant and still be profitable.
3. They think they are
These dealers have heard about the issue, read an article or 2, and instituted a few changes. They think their dealership is now in compliance. They think they have solved the problem without doing any more research about the various regulations and how each effects their operation. They think they have solved the whole problem by being compliant on a fraction of the many issues.
The problem here arises because they then typically stop paying any attention to compliance. Because they think they are compliant, they stop reading those articles or going to those sessions at industry trade shows because they feel they have nothing more to learn. They do no research to make sure there are not other areas where they need to make changes in order to be compliant.
Now let me tell you the 3 things you need to know about compliance:
- Compliance is real and it affects every dealership in this country no matter their size,
- Compliance is here to stay. The number of regulations and the amount of enforcement activity are only going to continue to grow.
- Someone at your dealership needs to be monitoring your compliance on a regular base. That means keeping abreast of changes in compliance regulations, studying the processes at your dealership to ensure they are in compliance and documenting all compliance activity.
For those who have ignored or given half-hearted efforts to compliance up to this point, now is the time to get serious. Never before has such an emphasis been place on compliance issues at both the state and federal level. There has been more compliance enforcement activity in the last 90 days than in the last 3 years. Now is not the time to believe this will not affect you and your dealership and bury your head in the sand.
Now is the time to read everything you can find on this issue to determine what regulations affect you. Learn everything you can on the subject. Think about hiring a consultant to assist you. Review all parts of your operation in the light of this new knowledge to determine what you need to change to be in compliance. Create policies and procedures to maintain compliance. Put compliance plans in writing, documenting your new policies and procedures. Train your staff on the importance of remaining in compliance and the danger in slipping back into the old way of doing things. Review your policies periodically to make sure you stay up-to-date on compliance.
There will be dealers who do not heed this advice. I believe we will see dealers shut down or facing major fines over compliance issues in 2013. Don’t be one of them.