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COMPLIANCE ISSUES/WAYS TO PROTECT YOUR OPERATION NABD EAST COAST

ORLANDO, FL THOMAS B. HUDSON, PARTNER

ERIC L. JOHNSON, PARTNER NOVEMBER 3, 2016

SIXTEEN WAYS TO PROTECT YOUR OPERATION –

How does your dealership stack up?

Step #1

Prepare a written Compliance Management System, and appoint a

Compliance Officer.

Step #2

Prepare a written Privacy Policy, and

appoint a Privacy Officer.

Step #3

Prepare a written

Red Flags Policy,

and appoint a

Red Flags Officer.

Step #4

Know the federal and state rules that apply to your advertising, and know

what ads they regulate.

Step #5

Eliminate the difference in prices between cars you finance and those

you sell for cash.

Put your prices on your cars and don’t change the prices based on cash or

financed sales.

Step #6

Know the rules that apply when you sell your contracts to finance sources that charge an acquisition fee or buy your contracts at a discount – do not increase the cost of the car to cover

the fee or discount.

Step #7

Know the rules that apply to financing

repairs for your customers. Have a written policy for financing repairs,

and document the transaction correctly.

Step #8

Don’t create hidden finance charges. For example, don’t tell buyers that you “can’t get them financed” unless they

buy a service contract.

Step #9

Learn who your “federal cop” is.

Stay on top of that enforcement agency’s activities.

Step #10

Read the retail installment contract you require your buyers to sign.

Step #11

Read the Truth in Lending Act, Regulation Z, the Equal Credit Opportunity Act and Regulation B, and the other federal and state laws and regulations that apply to

your business.

Step #12

Get compliance training for your dealership people who are responsible

for sales and financing.

Step #13

Regularly visit the websites of the Consumer Financial Protection Bureau, the Federal Trade Commission and your

state regulatory agencies.

www.consumerfinance.gov/

www.ftc.gov/

Step #14

Join your state’s IADA.

Join a twenty group.

Subscribe to industry publications that cover compliance developments.

Go shopping for free or nearly free compliance resources.

Step #15

Know what business you are in. If you think that you sell cars, and that you arrange for “lenders” to finance those cars by making “loans” to your customers, guess again!

Step #16

Set up a compliance budget.

No money allocated for compliance means “no compliance.”

Resources Go to www.ftc.gov/ Click on “Tips and Advice,” then on “Business

Center,” then on “Advertising and Marketing” You will find these publications: Advertising and Marketing Basics Online Advertising and Marketing Telemarketing Read Them!!!!!

More Resources

• State Auto Dealer Associations • State Independent Auto Dealer Associations • NADA • NIADA • State ADAs and IADAs • Vendors (but be very careful) • Spot Delivery • F&I Legal Desk Book

Questions?

Contact Information: Thomas B. Hudson, Partner

Hudson Cook, LLP 7037 Ridge Road, Suite 300

Hanover, MD 21076 410.865.5411

thudson@hudco.com

Eric L. Johnson, Partner Hudson Cook, LLP

8524 South Western Avenue, Suite 114 Oklahoma City, OK 73139

405-602-3812 ejohnson@hudco.com