Pub. 18 2019-2020 Issue 1

N E W J E R S E Y C O A L I T I O N O F A U T O M O T I V E R E T A I L E R S I S S U E N O . 2 , 2 0 1 9 20 new jersey auto retailer I believe all dealerships understand that compliance is important, but some take it more seriously than others. Whether com- pliance is front of mind or an afterthought, there is always room for improvement. The list of obligations can be mind-numbing. The commitment typically boils down to a bal- ance between the owners’ appetite for risk, the amount of effort required to achieve and maintain compliance and, of course, cost. At the end of the day this must be balanced with the fact that compliance is not optional! I often get asked how did something as simple as selling cars and taking care of customers become so complicated? That is a topic that will take far more words than this article will allow so, for now, let’s start with the basics of compliance. The minimum acceptable Compliance Management System ( CMS ) for the auto retail industry includes the following: • Document policies and procedures. • Train staff in accordance with these policies and procedures. • Periodically review behavior against these policies. • Make any necessary modifications, and retrain. • Finally, identify a “Compliance Officer.” The most important goal is to establish and maintain consistent patterns and practices with these policies. It’s worth repeating – compliance is not optional. It’s just for when it’s convenient, not just for the first couple weeks after training, and not for ev- eryone “except” the handful of salespeople who sell the most! The potential liabilities for non-compliance can be staggering. Why Is Compliance Important? Let’s start with the obvious. Dealerships have a legal obligation to demonstrate a successful Compliance Management System. The second obvious reason is common sense. Dealerships are dealing with consumers personal information every day and it needs to be protected. But the importance of compliance goes well beyond the regulatory liabilities, pen- alties, and common sense. The potential collateral damage to a dealership’s brand from a violation or breach will likely outweigh the financial sting of a fine for non-compliance. Additionally, undue stress and overhead on the business are also a possibility. In one case, an innocent mistake led to a consent decree for 3rd party independent audits every other year for 20 years. In another recent case, a deal- er settled for six figures with a plaintiff’s attorney over one dead deal jacket. Other recent trends support the need for a renewed focus on compliance. The FTC has raised the stakes recently in filing suit against dealers in California, New Mexi- co, and Arizona for compliance violations. Experts predict 2019 will see greater focus through mystery shoppers in markets, on-the-ground enforcement activities, and new proposed FTC rules that will make it easier for plaintiff’s attorneys to success- fully sue dealers in class actions. Why Is Compliance So Difficult To Sustain? The auto retail industry is constantly go- ing through change, which creates forces pulling dealerships in several directions at once. Maintaining consistent patterns and practices, in light of these multiple forces, is not easy. Dealers have manufacturers, consumers, the media, and their own sales staff all pushing to make the purchase process faster. Cus- tomers are also pushing for transparency. Dealers struggle with how to provide trans- parency, while also moving the customer further down the path towards buying before they arrive in the dealership showroom. Added to this daily pressure, are regu- latory agencies and plaintiff’s attorneys with their attention focused squarely on dealerships, ready to pounce if compli- ance slips. Dealers must be consistent with their paperwork, people, and processes, but how do they balance the speed and transparency expected with the consistency and precision required when faced with a myriad of documents and processes needed to complete the sale of a vehicle? BY DOUG FUSCO Compliance & Sales: How To Win Wi th The Hand You’re Dea l t