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The courtroom is no place...


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  • NOTE FROM THE FTC WEBSITE: The Commission issues an administrative complaint when it has "reason to believe" that the law has been or is being violated, and it appears to the Commission that a proceeding is in the public interest. The complaint is not a finding or ruling that the respondent has actually violated the law. A consent agreement is for settlement purposes only and does not constitute an admission by the respondent that the law has been violated. When the Commission issues a consent order on a final basis, it carries the force of law with respect to future actions. Each violation of such an order may result in a civil penalty of up to $16,000.
  • MIGIndustry Leader Since 1918 with a Rock-Solid Network Of Over 650 Independent AgentsProvides Comprehensive, Umbrella Solution for Protection of Dealership Assets, Employees and CustomersConstantly Analyzes Market Condition To Proactively Support Dealer Client NeedsUDS/ExemplarDealership Underwriting Pioneer in Specialized Dealership Protection Since 1968Dedicated to Total Client ProtectionProactive Risk Management & PreventionASD, LLCComprehensive Solutions For Retail Automotive DealershipsSmart Compliance Analysis TrainingLeadership & Communication ExpertsRetail Operations AnalysisSales/F&I/Parts & Service/Paint & Collision
  • Today’s Special Guest is Mr. Jim Radogna, the leading dealership compliance expert in the business today! He serves as the Founder and President of Dealer Compliance Consultants, a national firm dedicated to the education, awareness and improvement of dealer protection through heightened awareness of compliance requirements and the associated laws.Before founding Dealer Compliance Consultants, Jim developed a strong background in dealership operations.Having spent over 15 years in dealership management. His experience includes working in diversified roles including sales manager, F&I director, general manager, and training director. In addition, he served as chief compliance officer for a large auto group, where he developed and integrated a comprehensive compliance program. Being well-versed in all aspects of dealership operations, Jim has used his knowledge and industry experience to develop unique, no-nonsense compliance and reputation management solutions for automobile dealerships of all sizes. These programs are designed to not only protect dealerships from liability, but also greatly enhance the company’s reputation, increase profitability through consistent processes, and increase customer satisfaction and retention. Jim is a sought-after speaker and frequent contributor to several automotive industry publications including Dealer Magazine, Wards Auto, Auto Dealer Monthly and F&I Magazine.In your view Jim, what are the 3 most significant compliance concerns for dealerships over the last three (3) years? (You can address specifics or simply discuss the concerns in a general nature)2.What are the things that you see as obstacles or road blocks to effective compliance in most dealerships? Is it time, turnover, etc.?Most dealers and General Managers instantly equate compliance with lost revenue or higher expenses, in your professional opinion, how does effectively addressing compliance actually lead to higher profitability through expense reduction and increased profit opportunities? (i.e. insurance carrier credits for structured, regularly scheduled annual training or compliant menu selling in F&I)3. What is the single biggest challenge dealerships face in developing a culture of higher standards of compliance in 2013? How do we most effectively address it? (Let’s take the opportunity to shamelessly promote the annual online compliance certification training program that we will co-brand and promote. Feel free to discuss in detail how it works and how it solves the issue of plausible accountability in the event of an action or litigation event, as well as addressing the effect it will have even when turnover occurs!)
  • Our BiggestChallenges: TIME – PEOPLE - DOCUMENTATION OVERLOAD – LEGISLATION & LITIGATION PROLIFERATIONCHALLENGE #1 TIME CRUNCH!!#1 “Reason” for non-compliance, as well as missing and/or erroneous or incomplete documentationIf we have a responsibility to get it right…when will we find time to do it over if we can do it the first time around?CHALLENGE #2 DOCUMENTATION OVERLOAD!!More oversight, more documents, more pressure to performPre-sort and pack deal jackets, airtight check lists (THAT ACTUALLY GET USED AND SIGNED OFF BY BUSINESS MANAGER, SALES PROFESSIONAL AND OFFICE MANAGER/BOOKKEEPERCHALLENGE #3 MORE LEGISLATION!!New, Updated, Revised…It will not stop, so embrace a path to awareness. BE PROACTIVE.Certification processes and programs are available that solve this problem.Go online and simply read MORE!CHALLENGE #4 NEW EMPLOYEES/LACK OF DOCUMENTED ORIENTATION PROCESS
  • An epidemic challenge seems to be the ability to maintain compliance with respect to the proper display of the Used Vehicle FTC Window Label. We find them on the FloorSeatsTrunkGlove boxCenter consoleThe fine per occurrence is $16,000…Why wouldn’t we inspect what we expect?
  • Arbitrary and capricious is a giant RED FLAG with respect to product presentation in the F&I Department.F&I MENU CONSISTENCY MATTERS…IT IS THE SINGLE SMARTEST WAY TO DRIVE HIGHER PROFITABILITY AND COMPLIANCE PAINLESSLY!
  • Enacted in 1968 in order to provide increased lender transparency and protect consumers from hidden fees and potentially deceptive terminology and practices by all “lenders” including new and used vehicle dealerships.It begins with advertising…ALL FORMS: Print, Electronic, Radio, TV, POS, Social Media and Direct Mail – WE STRONGLY RECOMMEND YOU CAREFULLY REVIEW ALL MESSAGING!! THIS INCLUDES ALL Terminology, Statements and Overall MessagingCLEAR and EASILY interpreted ad language and messaging. Not what we think, but what the regulatory agencies believe it to be! THE”TYPO” LETTERS OR RELY ON WEB CONTENT PROVIDERS AS A SHIELD.Your ads can be considered to be in violation of TILA if they have a “tendency or capacity to mislead the public”, so take care not to be too “creative”! A great example under significant scrutiny is the phrase often used by dealers regarding paying off a customer trade-in. While the dealership is making an accurate statement of action, there exists a “hidden” potential that negative equity will still be paid for by the consumer and is considered deceptive in nature…THIS IS REALITY TODAY AND WE NEED TO TAKE NOTE!Disclaimers – Not the bullet-proof vest or Teflon™ defense!! They cannot contradict messaging, appear intentionally misleading or confusing, alter the meaning of any principle messaging or materially change the meaning of any statements contained within the accompanying advertisement in any way. We recommend that all disclaimers be clearly displayed and not “hidden” in fine print, 800 numbers or obscure hyperlinks or web pages.NOTE: No actual consumer complaint needs to occur in order for a regulatory action to be initiated! Simply an ad’s tendency to deceive a consumer is grounds enough for a violation under the law.
  • Five car dealers around the country have agreed to Federal Trade Commission settlement orders that require them to stop running ads in which they promise to pay off a consumer's trade-in no matter what the consumer owes on the vehicle.The FTC charged that the ads, which ran on the dealers' websites and on sites such as, deceived consumers into thinking they would no longer be responsible for paying off the loan balance on their trade-in, even if it exceeded the trade-in's value (i.e., the trade-in had "negative equity"). Instead, the dealers rolled the negative equity into the consumer's new vehicle loan or, in the case of one dealer, required consumers to pay it out of pocket. The proposed settlements, reached as part of the FTC's ongoing efforts to protect consumers in financial distress, bar all of the dealers from making similar deceptive representations in the future. The cases are the first of their kind brought by the FTC. The Commission also issued a new consumer education publication titled "Negative Equity Ads and Auto-Trade-ins" to help consumers understand these types of ads."Buying a new car or truck is a major financial commitment, and the last thing consumers need is to be tricked into thinking that a dealer will 'pay off' what they owe on their current vehicle, when they really won't," said David Vladeck, Director of the FTC's Bureau of Consumer Protection. "The Federal Trade Commission is constantly on the lookout for potentially deceptive ads, and brings actions to stop them when appropriate."The dealers named in the FTC's complaints are: 1) Billion Auto, Inc., in Sioux Falls, South Dakota; 2) Frank Myers AutoMaxx, LLC, in Winston-Salem, North Carolina; 3) Key Hyundai of Manchester, LLC and Hyundai of Milford LLC, in Vernon and Milford, Connecticut, respectively, and which advertise jointly; 4) and Ramey Motors, Inc., in Princeton, West Virginia.The FTC's complaints allege that despite the dealers' claims, consumers still end up being responsible for paying the difference between the trade-in loan balance and the vehicle's value. The complaints charge that the dealers' representations that they will "pay off" what the consumers owe are false and misleading, and violate the FTC Act. Examples of the allegedly deceptive advertisements include:"Credit upside down? Need a new car? Go to We want to pay off your car." The advertisement depicts a car moving, inverts the video to depict it upside down, and then turns it right-side up again. (Billion Auto) "Uncle Frank wants to pay [your trade] off in full, no matter how much you owe." (Frank Myers AutoMaxx) "I want your trade no matter how much you owe or what you're driving. In fact I'll pay off your trade when you upgrade to a nicer, newer vehicle." (Key Hyundai and Hyundai of Milford) "Ramey will pay off your trade no matter what you owe . . . even if you're upside down, Ramey will pay off your trade." (Ramey Motors) In addition, the complaints in three of the cases allege violations of the Truth in Lending Act (TILA) and its implementing Regulation Z for failing to disclose certain credit-related terms, and the complaints in two of the cases allege violations of the Consumer Leasing Act (CLA) and its implementing Regulation M for failing to disclose certain lease related terms.The proposed orders settling the FTC's charges against the dealers are designed to prevent them from engaging in similar deceptive advertising practices in the future. First, each order prohibits the dealer from misrepresenting that it will pay the remaining loan balance on a consumer's trade-in, so the consumer will have no further obligation for any amount of that loan. It also prohibits the dealer from misrepresenting any other facts related to leasing or financing a vehicle.The proposed orders against Billion Auto, Key Hyundai, Hyundai of Milford, and Ramey Motors require these dealers to comply with TILA and Regulation Z, and to make clear and conspicuous disclosures when advertising certain terms related to issuing consumer credit. It also requires that if any finance charge is advertised, the rate must be stated as an "annual percentage rate" or as the "APR." In addition, the proposed orders against Billion Auto, Key Hyundai, and Hyundai of Milford require these dealers to clearly and conspicuously make all lease related disclosures required by the CLA and Regulation M, including the monthly lease payment. The proposed orders also require each of the dealers to keep copies of relevant advertisements and materials substantiating claims made in their advertisements, and to provide copies of the order to certain employees. Finally, the dealers are required to file compliance reports with the FTC to show they are meeting the terms of the orders, which will expire in 20 years.The Commission vote to issue the administrative complaints and accept the consent agreement packages containing the proposed consent orders for public comment was 4-0. The FTC will publish a description of the consent agreement packages in the Federal Register shortly. The agreements will be subject to public comment for 30 days, beginning today and continuing through April 16, 2012, after which the Commission will decide whether to make the proposed consent orders final. The FTC acknowledges the valuable assistance of the Iowa Attorney General's Office in the investigation of this matter. Interested parties can submit written comments electronically or in paper form by following the instructions in the "Invitation To Comment" part of the "Supplementary Information" section. Comments in electronic form should be submitted using the following web links and following the instructions on the web-based form:
  • It is not simply traditional mediums, we must be aware and review all advertising content for potential violations!
  • As we close out today’s webinar presentation, I would like to acknowledge the efforts of Bill Orsborn or Merchants, Randy Winston of United Dealer Services and of course I would like to thank Jim Radogna for his insight and his collaboration today.If we have impressed upon you today one sustaining philosophy as it relates to protecting your dealership from compliance exposure, it should be that exposure is preventable and that the courtroom is no place to lose your time or money. Thank you for participating and please feel free to contact me personally should you have any questions or concerns. Have a great day and our sincere wishes for a safe and healthy holiday season from us all!
  • Transcript

    • 1. The Courtroom Is No Place To Lose Your Time Or Money… Brought to you by Merchants Insurance Group United Dealer Services Sandy Cerami’s Applied Selling Dynamics, LLC© Copyright 2012 & 2013. All rights reserved. Cannot be duplicated, re-printed, re-distributed or copied in any way without expressedwritten consent and licensing authorization by Applied Selling Dynamics, LLC.
    • 2. Merchants Insurance – United Dealer Services – Applied Selling Dynamics
    • 3. Our Special Guest…Jim Radogna!
    • 5. Incomplete ormissing FTC UsedVehicle WarrantyForms…UP TO$16,000 FINE PEROCCURRENCE!
    • 7. A Compliant MenuDo make sure that the menu you use enhances compliance. A properly constructed menumust do some specific things to help protect your dealership.Do show the monthly payment for the vehicle alone to show that the customer understoodthe monthly payment without additional products and services.Do show the a la carte price of each product in addition to package prices to avoid a claimthat the customer purchased a package unaware that products could be bought individually.Many dealerships use menus offering packages of products and services. This can be avaluable sales tool to make a presentation about the benefits of packages to customers. Theproblem is that somewhere on the menu the customer must be aware of the pricing of eachproduct or service on an a la carte basis. The dealership does not want to face a claim from acustomer that he or she purchased GAP and road hazard coverage along with the extendedservice contract because that was the only way the customer thought the service contractwas available.Do get the menu signed and the choices initialed. When choices are initialed and the menu issigned, there is clear evidence that the customer saw the menu and made his or her ownchoices of products and services to buy.Do disclose prominently in the menu that purchases of additional products and services arenot required for finance approval. If they are required, then they must be a part of the APRcalculation; if they are not required and they are adequately disclosed, they can be soldwithout impact on the APR.
    • 8. Vehicle History Reports (VHR) Exposure Solution Missing/Unsigned VHR’S! Commit to a 3-Step Process A total of 65.3% of dealerships 1. Run/Print/Post a VHR on every used retail unit prior to lacked a comprehensive VHR displaying for retail sale. documentation and reporting 2. Provide for customer review process which includes a and signedcustomer signed and filed copy of acknowledgement a VHR on every used retail 3. Maintain original with delivery signature in the deal jacket
    • 9. TILA – Truth In Lending Act “We will pay off your loan balance regardless of how much you owe on it!”
    • 10. How does the FTC operate?
    • 11. TILA – Truth in Lending Act
    • 12. Got a question…Sandy CeramiApplied Selling Dynamics, LLC79 N. Franklin TurnpikeSuite 101Ramsey, NJ