Dealerships have faced multiple new industry regulations with more strict compliance requirements since the passing of the Dodd-Frank Act and the formation of the Consumer Finance Protection Bureau in 2018.
With growing concern about the ability to keep up with the regulations, and understanding them, being unprepared leaves dealerships open to being fined, closed down until compliance can be met or even career-ending in some cases. While agencies will not accept that non-compliance is an accident, having proper preparedness and maintaining an effort to keep in compliance could mean the difference between regulations met and going out of business.
“The Dodd-Frank Act, officially called the Dodd-Frank Wall Street Reform and Consumer Protection Act, is legislation signed into law by President Barack Obama in 2010 in response to the financial crisis that became known as the Great Recession,” according to History.com. “Dodd-Frank put regulations on the financial industry and created programs to stop mortgage companies and lenders from taking advantage of consumers."
Regulation compliance for a dealership may be as easy as three words: Awareness, training and prevention. A proper program that reviews and explains regulations required per agency is important to implement as part of training for employees so they can help the company remain compliant.
AutoRaptor states that hiring a legal consultant to review a dealership may benefit dealerships in terms of a first-time large audit for compliance and an annual update. According to the article, dealerships are also required by law to either hire or assign an employee, as a "compliance officer" who is responsible for developing a dealership's strategy for compliance, protecting the dealership from exposure to non-compliance and answering questions about compliance if audited.
According to AutoRaptor, a dealership should also be reviewing its Identity Theft Prevention Plan (ITPP) annually to be compliant with the Red Flag Rules regulation. Dealerships should also train employees on how to identify such threats, what the dealerships plan or process is if faced with a threat and how a potential or actual threat should be handled for someone of their position.
A suggested process to put in place includes steps listed as follows: Adverse action notices, credit score disclosure notices, OFAC checks on customers gaining permissible purpose for credit reports and following all steps under the Red Flags Rule.
While processes of handling regulation compliance may vary from dealership to dealership, ensuring a procedure is in place, no matter the instance, could be the thing that ultimately saves a dealership.
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