I'm sure you've heard by now about the dealer who lost a category action lawsuit and was ordered to shop for back over 1,500 vehicles from customers whose rewritten contacts were backdated. Another big win for consumer attorneys.
Not surprisingly, the news of this devastating decision has led to many Monday morning quarterbacking. Naturally, the buyer advocate contingent is broadcasting that this is often just another example of an unscrupulous dealer who got what was coming to him. On the opposite hand, most of the people who know anything about the automotive business realize that this was just another example of sleazy attorneys preying on dealerships for technical violations. I mean, let's face it, how does a dealer even enjoy backdating a contract? Why would a dealer knowingly break the law? Personally, i do not think they did. i think that these were innocent oversights.
So, what are you able to do to avoid this sort of exposure? Obviously, it is vital to not backdate any longer contracts. That's an honest start, but what about those other potential legal nightmares? you recognize those I'm talking about: advertising violations, adverse action notices, hidden finance charges, privacy policies, information safeguards, overcharging fees, deferred downpayments, prior vehicle history disclosures, falsified applications, power booking, and so on. and do not forget the new Red Flags Rule and Risk Based Pricing Notices. I bet the lawyers are licking their chops just brooding about those new opportunities.
Enforcement actions against dealers by regulators are few and much between, so you'll think that it is easy to fly under the radar. Maybe so, but it is vital to know that you simply probably have far less to fear from the FTC or an attorney general than you are doing from a consumer attorney together with your customer's deal paperwork in his hands.
So, you'll stick your head within the sand and keep the lawyers fat and happy, otherwise you are often proactive. It's really not that difficult. If, despite your best efforts, certain staff members don't take compliance seriously, replace them.
It's time to prevent the insanity and keep the cash in your own pocket - the lawyers have made quite enough.
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