F&I and Showroom, June 2016

www fi magazine com 23 F I and Showroom June 2016 erships general manager there was no way in hell he could get financed because he had no money down and no proof of income she said the customer was able to secure vehicle financing at a dealership down the street No credit was pulled and no Adverse Action Notice was sent You cant do that Robertson said Discouragement is as bad as discrimination F I trainer Gerry Gould said his concern regarding Adverse Action lies with sales managers getting involved in credit decisions particularly when they fail to retain the documents used to qualify the customer ARMDs Tuno said the same is happening in situations involving the Federal Trade Commission FTC s Red Flags Rule He said the culprit is compliance software Dealers feel empowered as if they theyre being compliant But thats only the tip of it The panel made quick work of the compliance myth that says F I offices are operating outside the law if they dont use a menu that displays the base payment So theres no law that says you have to use a menu There are states like California which say you have to have a disclosure for base payment prior to consummation EFGs Roennau said describing the consistent use of a menubased process as a very good best practice because it documents the F I sales process The 300 Rule required a bit more discussion The panel agreed the supposed rule originated as a sales strategy to get F I managers to sell all products but they noted that some state laws have made it more than a best practice A law in Louisiana one attendee pointed out requires that dealers present GAP as an option to all customers She said that became a requirement following Hurricane Katrina in 2005 The panel also addressed how some F I managers use the rule to build trust with customers Justin Gasman an F I Think Tank participant and the magazines 2014 F Idol winner said he tells buyers putting down a sizable down payment that he is legally bound to present a product like GAP He then adds Ethically I dont think you need it and I dont want to encourage you to purchase it because youre at 30 loanto value Tuno liked everything he heard except for the word legally As an alternative he suggested I want to give you the full benefit of what we have to offer Ganther put agents in the room at ease when he rejected the notion that F I product providers and field reps might be violating privacy laws when they audit their clients deal jackets I would say not because theyre a service provider thats connected to the service being reviewed Its a good practice but its not enough Citing Page Two of the CFPBs updated Supervision and Examination Manual he said the guide calls for independent audits performed on at least an annual basis VYING FOR TOUGHEST COP Hudson capped off the session with a message he has delivered many times If were talking about the part of the business you folks are in where youre selling cars off random dealerships using the retail installment sales contract there is no such thing as a loan The distinction is critical given the CFPBs fair lending concerns he said as using the term loan to describe a finance source buying a retail installment contract from a dealer backs an argument the CFPB has made for the elimination of the dealer exemption So the CFPB intentionally conflates those two terms And Ive been in a war of words with their staffers for quite a while now about how they are intentionally doing that in order to try to make the dealer be a direct agent of the auto lender he said So they call these things loans too Its an incorrect use of the term Surprisingly Hudson declined to With moderator Robert Harkins looking on Mosaic Compliance Services Jim Ganther offered his take on what the November elections could mean to the men and women manning the F I office If a Democrat is elected president he said the Consumer Financial Protection Bureaus fair lending crackdown could intensify He encouraged dealership personnel in the room to adopt the National Automobile Dealers Associations Fair Credit Compliance Policy Program which is based on a fair credit risk mitigation model developed by the U S Department of Justice F I trainer Gerry Gould however questioned whether the solution which the CFPB has yet to recognize is doing more harm than good He said some dealerships are using the program wrong or to mask questionable ratequoting practices He called on the NADA to include better instructions on the correct use of its program PHOTOS COURTESY OF ERICTILLOTSON COM