Salespeople get a lot of the glory, but much of the real credit (pun intended) should go to finance and insurance. A customer’s trust in an automotive dealership often stems from their interaction with the F&I department. Indeed, F&I team members are the ones who ensure customers leave happy, the business maximizes its profit, and relationships with lending sources remain mutually beneficial.

Welcome to our series on the numerous federal rules and regulations that impact automotive dealerships. In this and upcoming articles, we’ll be taking a look at the roles employees at each department play in keeping your dealership compliant.

If you missed Part 1, which provides a bird’s eye view of regulations across your dealership, click here.

• The Fair Credit Reporting Act (FCRA) obligates lenders to follow certain procedures to ensure fairness and protect individuals’ privacy when collecting, using, and sharing consumer credit information.
• The Fair and Accurate Credit Transactions Act of 2003 gives consumers tools to access the credit scores and protect themselves against identity theft. Under the FACT Act, auto dealerships and other lenders must, among other things, take reasonable and appropriate steps to verify individuals’ identities when certain “red flags” are present, and to adequately dispose of sensitive consumer information.
• To comply with the Federal Trade Commission’s Credit Practices Rule, dealerships must provide cosigners with liability disclosure statements, and must not engage in late fee “pyramiding” or other acts and practices considered abusive.
• The FTC’s Holder in Due Course Rule, also known as Preservation of Consumers’ Claims and Defenses, enables consumers to raise legal actions against anyone who may own their credit contracts—not just the original seller.
• The Gramm–Leach–Bliley Act obligates auto dealerships to develop written policies to protect consumers’ information (and ensure the same protection on the part of any vendors or third parties who have access to the information); allow consumers to opt out of processes that use, collect, and share this information; and provide consumers with privacy notices.
• Dealerships that make use of producer-owned reinsurance companies should ensure that they fully understand their tax obligations, follow the rules, and file the correct annual forms. The Internal Revenue Service, seeking to reduce rates of offshore tax evasion, frequently applies heavy scrutiny to PORCs.
• The Federal Reserve Board’s Regulation M (Consumer Leasing) and Regulation Z (Truth in Lending) regulate the disclosure of credit information to consumers. For an overview of Reg M and Reg Z, click here.

Next: The Service Department

In the next installment in this series, we’ll explore what rules your service department needs to know. But you don’t have to wait until then to overhaul your workforce compliance program. See how easy it is to manage workforce compliance initiatives across your dealership using our automated compliance platform.