Besides federal and state regulatory agencies, consumer law firms that specialize in  auto dealer-related legal issues continue to flourish nationwide.  Automobile dealerships are a prime target for these type of firms due to very complicated consumer-based laws. Most legal action against dealers these days is the result of mistakes or omissions in the sales and finance process, the way vehicles are advertised, or the statements made by dealership staff.  Of course, that's not even taking into account harassment and discrimination claims. Claims and lawsuits alleging harassment or discrimination are increasing at an alarming rate. Three out of five companies face a suit each year, and the costs are staggering. 

Federal and state watchdogs have clearly been ratcheting up their regulatory actions. Even inadvertent violations of the maze of rules can be shockingly costly. Penalties can come in the form of fines (the FTC can seek fines of $16,000 a day for every violation), lawsuits, and in some instances, even imprisonment. 

Even more disturbing is the fact that many lawsuits by plaintiff's attorneys frequently have the ability to be rolled into a class action, and may prove very costly to the defending dealer. Attorneys are generating massive settlements and legal fees from class action lawsuits for seemingly minor issues. Recent class actions lawsuits against dealerships include false advertising claims, alleged yo-yo financing, backdating of re-written contracts, overcharging fees, undisclosed deferred downpayments and failure to provide prior vehicle history disclosures. Can you imagine being sued in a class action lawsuit because someone on your staff mistakenly charged an $8.75 tire fee? It's happening right now!

Dealers can also expect increased scrutiny from lending institutions who have suffered massive losses due to questionable deals. Issues such as falsified credit information and power-booking are on every banker's radar screen.

Who Taught Your Staff The Rules?

Unfortunately, in many cases the old-timers have taught the new hires the “old school” way of doing business and the problem goes on and on.  A number of long-standing dealership practices are not necessarily legal or ethical any longer. Many dealership employees have never been properly trained in compliance matters, so they simply rely on doing business the way it’s always been done. Some of the practices which have evolved in the automotive industry are now considered to be unethical or illegal.  As a result, the government has increased it's regulation of retail transactions in order to help protect consumers and law firms have found a tremendous opportunity to rake in massive judgments against dealerships. To them, it’s like shooting fish in a barrel. Education is the first and most vital step towards employee accountability. After all, if employees don’t know or understand the rules, how can they be expected to follow them? Ignorance is not an excuse for breaking the law and it certainly won’t mitigate potential damages. Dealers are entirely responsible for making certain that these laws and regulations are followed.

The automotive industry is changing dramatically and will become even more heavily regulated in the future. Dealerships who continue to operate without being compliant will invariably struggle. Lack of legal compliance is not an option for dealers who want to stay in business and prosper. Today’s dealers need to be proactive and creative enough to change their processes so they can be more profitable as well as compliant.  It just makes good business sense.

Does your staff have sufficient knowledge to avoid potential lawsuits?

To protect themselves, dealerships should follow defined processes and employ a consistent training program.  The most successful dealers use compliance as a way to ensure consistency and transparency in their sales process, thus increasing both sales and profitability. Well-trained people not only portray a more desirable image, but they will produce better results for their organization. In addition to shielding your company from liability, training can also reduce exposure to punitive damages. The Supreme Court held in 1999 that companies can be protected against an award of punitive damages if they make good faith efforts to comply with laws.  If a dealership can prove that it took appropriate steps to educate, audit and supervise employees, it will have a much stronger defense against any claims.

Don’t put the business and the reputation that you have worked years to build at risk. Take compliance seriously, put a comprehensive compliance plan in place, and act quickly to address failures and deficiencies. An investment in compliance programs and training will protect your assets, your employees, your customers and your good name.

Finally, there is a solution - At Dealer Compliance Consultants, it is our mission to help auto dealers attain compliance with federal and state laws and regulations while avoiding penalties, fines, civil actions and media exposure. More importantly, our solutions are designed to maintain compliance in your dealership, while keeping staff members accountable for their own behavior. We offer comprehensive compliance solutions, developed by car people for car people, that are both easy to administer and incredibly affordable. The Dealer Compliance Consultants' leadership team has decades of experience working in dealership operations.

Ensuring Dealership legal compliance has never been easier or more economical.  here are some features of our on-Line training programs: