- Regularly update legal documents and have a compliance officer to stay informed of industry regulations.
- Investing in digital credit compliance solutions can aid in tracking and maintaining the dealership’s law adherence.
- Sales and finance teams should be well-trained in FTC regulations, customer data protection, and proper document retention.
- Regular auditing and monitoring of operations can help identify and address legal issues proactively.
As an auto dealer, it’s your responsibility to keep a tab on the changing laws and regulations in the industry. Ignoring legalities can result in hefty penalties, legal complications, and even loss of your dealership license. Staying informed, updated, and compliant with the legalities is crucial. But with so much information around, it can be challenging to keep up. Don’t worry. This blog will share essential tips for auto dealers to stay on top of legalities.
- Regularly Review and Update your Documents
- Have a Compliance Officer on Board
- Invest in Digital Credit Compliance Solutions
- Follow Industry Magazines and Publications
- Keep your Sales and Finance Teams Trained
- Consistently Audit and Monitor Operations
Regularly Review and Update your Documents
Every auto dealer should have a list of documents that they need to maintain legally. It includes wholesale dealer licenses, DMV licenses, insurance, and federal certifications such as OSHA training certificates. Keep track of expiration dates, renewals, and updates; otherwise, you may be subject to fines and legal complications. You can also review your documents with your legal team to ensure everything is up-to-date and compliant with the latest laws and regulations.
Have a Compliance Officer on Board
It’s always a good idea to have a designated compliance officer on board, responsible for staying informed and ensuring compliance with industry laws and regulations. This person should attend industry seminars, stay updated with new laws, and regularly validate your dealership’s compliance level. Choose someone with a legal background or train an employee for this role.
Invest in Digital Credit Compliance Solutions
Besides having a compliance officer on board, investing in digital auto dealer credit compliance solutions is another way to ease the burden of staying compliant. These solutions help you track and maintain your dealership’s compliance with relevant laws and regulations. They provide credit reports that contain essential information about your customer’s credit history, helping you adhere to guidelines while financing.
Follow Industry Magazines and Publications
Staying up-to-date on the latest industry trends, news, and regulations is essential. One great way to do that is by subscribing to automotive industry magazines. Follow reputable automotive news publications, such as “Automotive News” or “Wards Auto” to stay informed. You can also attend industry conferences, seminars, and webinars to gain valuable knowledge.
Keep your Sales and Finance Teams Trained
A significant factor that can result in legal issues is the lack of knowledge and training among your sales and finance team. Ensure that your dealership trains employees on the best practices for:
Handling car deals
Handling car deals can be complicated and is an essential aspect of staying compliant. Ensure your team knows how to handle different types of deals, such as cash transactions, trade-ins, and financing. You can also consider hiring a compliance consulting firm to train your team.
Following FTC regulations
The Federal Trade Commission (FTC) regulates the automotive industry with laws such as the Truth in Lending Act and the Used Car Rule. Ensure that your sales and finance teams are trained on these regulations to avoid any legal issues.
Adhering to customer data protection laws
With data breaches becoming more common, it’s essential to protect your customers’ data. Ensure that your dealership adheres to customer data protection laws such as the Gramm-Leach-Bliley Act and the California Consumer Privacy Act.
Proper document retention
Your sales and finance team should know how long they need to retain specific documents for legal purposes. For instance, certain records have to be retained for a minimum of seven years, while others must be kept indefinitely.
Training your team on these essential aspects of compliance can help prevent legal complications and ensure your dealership’s smooth functioning.
Consistently Audit and Monitor Operations
Take proactive steps to identify and address legal issues before auditors or regulators catch them. Regularly audit your dealership for compliance and detect problems like finance fraud, sales misrepresentations, and shredded documents. You can also consider hiring a third-party audit firm to ensure an unbiased and thorough review of your operations.
Staying on top of legalities and regulations as an auto dealer is not just a responsibility but a necessity for your dealership’s smooth running and long-term success. By incorporating these strategies – regularly reviewing documents, having a compliance officer, using digital compliance solutions, keeping up with industry news, training your teams, and conducting regular audits – you can ensure your dealership remains compliant, avoiding potential pitfalls and costly legal complications.