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F&I Gotchas: Inventory Liabilities

Ryan Daly /
parking lot filled with cars

“Gotcha!” It’s fun to say, not so fun to hear, particularly when you’re hearing it from the Federal Trade Commission, Consumer Financial Protection Bureau, or other regulatory authority. Is your dealership about to get got with a fine, jail time, an expensive lawsuit, reputational damage, or even the closure of your business? 

KPA District Manager and F&I Team Supervisor Ryan Daly is here to help. Here’s what Ryan has to say about the FTC Buyers Guide and related inventory liabilities:

“The FTC changed their Buyers Guide in 2016. Effective January 28th, 2018, all dealers needed to have the correct information on their used vehicles. There was a lot of confusion over this change. As a result, some dealers have taken to doing things their own way. I’ve seen some dealers use the old Buyers Guide simply because they didn’t understand the new one, which is still a violation.

Recently, the FTC performed a compliance sweep of 94 dealers to make sure they were all using the correct Buyers Guide and using their own new rules. They found that only 14 of the 94 they looked at were using the correct Buyers Guide on all used vehicles. That fine is a potential $42,530—a lot of money for the wrong piece of paper. 

On top of that, there are additional inventory liabilities associated with new cars. New vehicles also have their own identification: the Monroney sticker. This has been around since 1958. It shows a variety of information, including crash trust rating, gas mileage, and importantly, the price. Not having them on the vehicle can actually result in jail time. Nonetheless Dealers routinely try to hide them just to hide the price and make extra revenue.”

For more of Ryan’s F&I “gotchas,” and to receive the latest F&I compliance insights, be sure to subscribe to the KPA blog.

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