In this case, the dealerships were accused of “having advertisements online and in print publications that misrepresented the actual prices of automobiles”, “dealership employees asking consumers to sign incomplete documents with the understanding that they would be completed using the negotiated vehicle price, but later entering a higher price”, and “allegedly charging consumers fees for unwanted or undisclosed warranties and services”. According to the article, the auto group denied any wrongdoing but agreed to the settlement.

But I digress. The above story really isn’t the point of this post, nor is it my intention to try to warn you of the legal dangers of non-compliance with the laws of the land. I, and my peers, write enough about that. Sure, I’m now a compliance consultant, but my ramblings here are based on the things I learned during my 20 plus years in automotive retail – and the realization that I probably had it all wrong.

This post is about Transparency. It’s about the Big Picture. It’s about opening your mind and stopping to think about the absurdity of old school tactics. Not from a legal or ethical mindset, but from a common-sense business perspective.

I realize that “Transparency” is the latest, and perhaps most over-used, buzzword in the car business. But please bear with me for a few moments while I pose a few questions. Hopefully, it will stimulate some “outside the box” thinking.

First, what is the upside of hiding information from your customers?

Sure, you have to do whatever it takes to stay ahead of the competition. Sure, that’s what the legendary automotive sales trainers taught us. Sure, the chances of getting into a legal bind are pretty slim. Sure, everybody else is doing it. Sure, if you give customers too much information they’ll just use it to shop you. Sure, there are ways to “manage” your online reputation, even if you have some unhappy customers. I get all that.

But – Big Picture Time – is the “anything it takes to make a deal” mentality really a sensible way to do business in today’s world? Do you really think this will lead to customer satisfaction and retention? Do you really believe that customers will continue to put up with this type of behavior forever?

Here’s how I look at it: Every time you…

-Post a misleading ad, or

-Charge a customer more than the advertised price, or

-Lie to a customer about a vehicle being in stock, or

-Present a foursquare with inaccurate numbers in order to confuse a customer, or

-Present “packed” payments, or

-Fail to truthfully disclose a vehicle’s history, or

-You’re not completely honest and upfront with your customers

…there are some things you might want to consider:

1. You may be breaking the law – but it’s only illegal if you get caught, right?
2. What you’re doing may be an unethical business practice – but customers have no loyalty and you’re just trying to make a buck in a fiercely competitive marketplace, right?
3. You may be pissing off customers (or potential customers) – but “ya gotta have haters, right”?
4. You’re gambling with your future – this is an unsustainable way of doing business in the modern world and your continued success is greatly at risk.

Now you may be perfectly comfortable rolling the dice on number 1 and not care a lick about numbers 2 or 3, but what’s your answer for number 4?

I challenge you to think about it. Just think about it. Unfortunately, I didn’t when I worked in dealerships – I was a faithful practitioner of the old school ways.

Now, I realize that you may feel that this post is just more nonsense from an ex-car-guy-turned-consultant who doesn’t get it – and you may be right. Only time, and customer sentiment, will tell. But you may still want to ask yourself just how long are customers going to put up with business as usual?

Let’s face it; consumers have access to much more information, and choices, than they ever did. You can hate the internet and all its information. You can hate the idea of “transparency”. You can hate all the regulations that dealers have to contend with. You can hate the consumer advocates. You can hate the media and all of its anti-dealer sensationalism. But guess what? None of it is going away. The “But We’ve Always Done It This Way” mentality just doesn’t hold water anymore.

Now, I’m not a believer that the internet is going to somehow take over car buying. I totally agree that dealerships are, and will continue to be, the primary way that customers will purchase vehicles for a long time to come. But remember this; while customers may always choose to do business with dealerships, they don’t have to choose to do business with your dealership.

One final question: Are you a true professional who is ready, willing and able to succeed in the new world or are you hoping that things will never change?

In my book, transparency is not a dirty word, but complacency is.

Good luck and good selling.

An important part of reducing the risk of workplace violence it to train employee and supervisors on how to recognize and respond to the five signs of escalating behavior:

1. Confusion
2. Frustration
3. Blame
4. Anger
5. Hostility

This chart describes the emotional and physical behaviors of each sign and how to appropriately respond.

*Bureau of Labor Statistics

There are three things you need to get started using social media effectively to hire great employees

1)      Website page specifically for hiring

2)      Process for Social Hiring

3)      Social Media Policy (Who, What, Where, When)

Your “career page” should be very visible on your website, don’t bury it as a link within another page or at the bottom of your home page.   Make sure the content on the career page is just as engaging (include photos and video clips) as the content on your inventory pages.  You need to be able to convince the applicant you are the best place for them to work.  The “apply now” button should be prominent and link to an easy to complete online employment application.

Define a process for social hiring.  Who is responsible and how will they post job openings to Facebook and tweet job opening?  Will you allow your employee to do the same? Employee referrals are frequently the best source of high quality applicants and using employee’s social networks exponentially expands the available candidate pool.   Do you have a unique page on Facebook for recruiting? You are missing opportunities to connect with possible applicants if you don’t.

Confirm your expectation for use of social media with your employee via a written policy. The policy should provide guidance not just on social hiring but overall usage of appropriate use of social media.   At minimum you should include the following information and guidelines:

The policy applies to multi-media, social networking websites, blogs and wikis for both professional and personal use.

Internet postings should not disclose any information that is confidential or proprietary to the company or to any third party that has disclosed information to the company.

If an employee comments on any aspect of the company’s business they must clearly identify themselves as an employee and include a disclaimer as required by law.

A disclaimer such as “the views expressed are mine alone and do not necessarily reflect the views of (your companies name).”

Internet postings should not include company logos or trademarks unless permission is asked for and granted.

Internet postings must respect copyright, privacy, fair use, financial disclosure, and other applicable laws.

Employees should neither claim nor imply that they are speaking on the company’s behalf.

Corporate blogs, Facebook pages, Twitter accounts, etc., should require approval when the employee is posting about the company and the industry.

That the company reserves the right to request the certain subjects are avoided, withdraw certain posts, and remove inappropriate comments.

If you are not using social media for recruiting then you are missing out on the largest talent pool of the most qualified applicants.

Email me at kcarlson@dealer-communications.com and I will send you a sample social media policy to help you get started.

It should come as no surprise that government watchdogs and consumer attorneys have clearly been ratcheting up their assault on the auto industry. Dealers are more and more frequently the targets of lawsuits, enforcement actions, and of course, the associated negative publicity. Even inadvertent violations of the rules can be shockingly costly.

Are you truly comfortable with the level of compliance in your dealership? Do you feel that your staff is properly trained and accountable for their business practices? Are you comfortable with the last set of eyes you have reviewing your paperwork? What do you think the result would be if you were forced to defend yourself in court?

As they say, “You don’t know what you don’t know”. So, why not take the time to find out by performing a risk assessment? Compliance audits are a vital step in protecting dealerships from legal claims. They can be performed by either knowledgeable dealership staff or by an outside party. At worst, we’re talking about an investment of a few thousand dollars that can potentially save millions. Kind of a no-brainer, isn’t it? Here are some benefits of compliance audits:

Identify training needs – Many dealers, general managers and finance directors are well-versed in automotive legal issues. On the other hand, many other dealer employees have little or no background or training in compliance. They may simply rely on doing things “the way they’ve always been done”. There’s a lot to know about dealership compliance nowadays and a lot of people who must know it. Staff members that negotiate with customers, present prices and payments, make representations and promises or create advertisements may represent the greatest risk of noncompliance in the dealership. Think about all the people involved in those activities on a daily basis – sales managers, closers, used car managers, sales consultants, service advisors, internet department and BDC personnel – you name it. And, of course, there is always employee turnover to contend with. Audit results will help minimize confusion about potential legal issues and identify areas where more training is needed.

Accountability – Employers often don’t know the intimate details of every transaction that takes place in their dealership. It’s possible that some employees believe that “questionable behavior” may benefit the dealership (or themselves) financially or that the behavior is the industry standard and therefore acceptable. Employees may be hesitant to break old habits that have served them well in the past. Trusting that all staff members do the right thing every time can be very risky. Regular audits will help to ensure that employees are following proper procedures, and will reinforce the message that the company policies are the real deal and the organization will not tolerate noncompliance.

Protection from liability – Compliance audits, along with formal policies and training, are vital parts of a good faith attempt at operating a compliant organization. The FTC has specifically stated that this may limit potential liability and will be considered in any prosecution. According to FTC commentary, “The Commission agrees that the establishment of appropriate procedures would warrant consideration in its decision as to whether law enforcement action would be an appropriate use of agency resources. The Commission is not aware of any instance in which an enforcement action was brought against a company for the actions of a single ‘rogue’ employee who violated established company policy that adequately covered the conduct in question.”

Here are some examples of violations that are frequently uncovered during compliance audits:

• Forms and documents that are out-of-date or missing
• Contracts and leases that are improperly completed
• Evidence of potential unfair and deceptive acts and practices (UDAP) claims such as payment packing, price-gouging, “yo-yo” financing, undisclosed vehicle history, or hidden finance charges
• Deferred down payments or negative equity not properly disclosed
• Backdated re-written contracts
• Missing Risk Based Pricing notices (or credit score disclosure), Adverse Action notices, OFAC reports, privacy policies or cash reporting forms
• Fees or additions not properly disclosed on contracts or leases
• Evidence of falsified information on credit applications, power booking, straw purchases, or forged documents
• Information Safeguards and Red Flag policies not in place or not followed properly
•  Advertising regulations not being adhered to

Burying your head in the sand and hoping for the best is simply not a sensible business strategy in this day and age. With every customer interaction, with every car sold or serviced, your dealership and its long-term growth are at risk without absolute adherence to state and federal laws. An investment in compliance programs and training will help protect your assets, your employees, your customers and your good name.

The response was heartening. Most of you believe you have the appropriate processes in place, some of you submitted relevant questions, a few of you requested we help you further.

The article did not address the high level view of what a compliance program looks like, one that we endorse and install.

This compliance program is structured along the lines of the one the Federales require in some of the laws regulating our industry, namely the Safeguards Rule and the Red Flags Rule.

Overview of the rules

Both of these rules, designed to help stem the tide of identity theft, require car dealers to have a documented compliance program that consists of five critical elements:

1. Name a compliance officer
2. Conduct a risk assessment
3. Develop policies and procedures
4. Train employees on the policies and procedures
5. Audit regularly

You can implement this compliance program for any department in your dealership that has to abide by regulations in any area.

One at a time

Let’s look at each of the required components and how you can translate it into action.

Name a compliance officer

Very simply, someone is in charge of your compliance efforts. This person must have some juice in your organization, so that the rest of your employees will take this effort seriously. This person, however, does not need to handle every aspect of compliance, rather should be encouraged to delegate most of the compliance tasks and follow-up.

Conduct a risk assessment

After selecting a regulation to become compliant with, say the FACT Act for example, you need to figure out how well your processes stack up against your requirements. This means first you need to know what you are required to do, then conduct an assessment to see if you are doing it correctly.

Develop policies and procedures

Now that you know what you need to do, and have corrected the reality of what you were doing, you must reduce your new processes to writing in the form of a policy and procedure manual.

Train your employees

No good book goes unread! Be proud of your new policy and procedure manual. Make it required reading for all affected employees, giving them a reasonable amount of time to review the material. Shortly afterward, conduct a training session to review the material again. You will also want to incorporate the policy and procedure manual in your new hire orientation material. Finally, obtain an acknowledgement statement from the employee affirming that the employee read, understands and agrees to abide by the policy manual.

Audit regularly

“Trust, but verify,” Mr. Reagan said about the Russians and their nuclear disarmament intentions. You must take the same approach. Trust that your employees will conduct business and transactions in accordance with your policies. However, you must also periodically check to make sure they are. Consider a three-pronged approach:

• Develop a checklist for the billing clerk to use on every transaction to ensure the required pieces of paper are there.
• Require a ten percent review of deals on a monthly basis by your office manager, controller, general sales manager and/or F&I director.
• Engage a third-party to periodically conduct independent reviews of your transactions to see how they will stand up to regulatory oversight or judicial scrutiny.

It is not necessarily easy to implement this compliance program in your dealership, but it does develop a process mentality. And with sales seeming to pick up, the busier you get, the better your processes have to be.

Continued good luck and good selling.

Preparing yourself beforehand can help you achieve a solid career or employment. Bad Boss’s are a nightmare within its own category!

You get the call from the company you have had your hopes up for! You go through the routine of fantasizing how the work place is, putting your game face on, pulling out the finest clothes, double checking your resume for any grammatical errors! YOU’RE READY TO WIN THIS INTERVIEW…..! Until you walk out that door!

But……………! Take a moment and review the 5 Tall Tale Signs of a Bad Boss!

EYE CONTACT: Hello I am over here! This reminds me of speaking with a child and trying to get them to lock eyes with you so you can explain something to them. Having eye contact ensures that the child got the point when told or explained the first time.  Having an adult not make eye contact creates a non-interest in his position, insecure of his/her position, lack of confidence or guilty. You need to ask yourself “If my future employer can’t make eye contact how does his client(s) react to this?” This Tall Tale sign is a red flag for when an issue happens, someone will be hiding in that office and it surely is not going to be you!

FIRE HAPPY: Uh…. Interview please! If the interviewer is Fire Happy this is a major warning sign of how he/she is going to talk about you. I personally experienced this myself.  I walk into the interview and everything is going well, too darn well however I should have noticed the warning sign of the individual getting amped up about “Firing this person” “Firing that person”………! This person was not shy about diminishing their character. I soon realized that anger can take over someone’s judgment; this is why these unfortunate characters including myself, fell victim to a Fire Happy Boss! If they are proud to shout about it, you are not clarified as a value to the company!

DESK EXPLOSION: Is there a body in there? Remember the saying “A first impression is always the best impression”. Yes I know that bosses get busy and caught up with so many things causing an unorganized desk and/or office. If you watch your boss getting caught up with the paperwork on this desk, can’t find anything which causes frustration…. Think “If I need something how will they find it?” This is very scary! Just imagine you sending in a vacation request and it was lost in the pile? Guess you will have to work through your vacation!

PROCRASTINATOR: This was to be done a week ago! I highly doubt you are going to be able to get the honest answer from the interviewer / owner to give you the answer however you can do this: call any of their existing clients and just tell them you are searching the company & you would like to discuss further on their current customer service experience. If they have negative feedback, something can be seriously wrong internally that you may not want to get involved with.  If you constantly hear them say “They always say it will get done but never does”, “We’ve been waiting for weeks”, “There are still a bunch of glitches”, “They never answer their phone”, “Over promised under delivered” etc.  If you have a company that cannot keep up with the clients’ needs, technical issues and such; why in the world would you want to push that product on to future clients or even your clients that follow you? YIKES….! Bad Boss’s love to procrastinate over their company to make it look good, which is how they get their hooks into you! Pushing a bad product is pushing a bad business.

CLIENTS! CLIENTS! Are you done asking? If you repeatedly hear from the interviewer, future boss or manager constantly ask you about your clients…… BEWARE! This is a major red flag! They are more interested in getting their hot fingers on your client list and your contacts. Be cautious on uploading your information as these are clients you worked hard on to build relationships with for your future growth. You know them better than anyone else and you know when to approach them with the product if you take on the position you are interviewing for.  I consider this “Old dogs up to their old tricks again!” I still see this happen more than I would like to see.  For instance I was on an interview with a very well known company recently, once we get further into the call they started getting in their comfort zone and started asking me several times of my connections within the auto industry & dealer groups. After the 3^rd time, I had to get them back on track of my experience and what I can do for them. It never stopped! Just be careful on supplying your customer relationships from the past into future employments as this can place you in a tuff spot when choosing your clients best interest over your Bad Boss’s Bad Habits!

I surely hoped you can take these Tall Tale Signs for Bad Boss’s to your advantage. All that is listed above is from past personal experiences.  Be sure you are educated before you educate them!

All views & opinions are solely based upon the author only: Jennifer Schrader

Brokering – TrueCar has been accused of operating as an illegal broker in some states due to their method of compensation (i.e. charging a fee for the sale of a vehicle). What has also come to light is that some states may also consider other common lead-provider compensation arrangements to be illegal as well. For instance, the Virginia Motor Vehicle Dealer Board has indicated that “motor vehicle dealers may only compensate an unlicensed third party vendor by flat payment structure (e.g., per month) rather than per sale, per referral or any other transactional basis.”  As an example, they stated that “a monthly fee tied to the number of consumers who submit their contact information to the dealership via a vendor’s website…would appear to be in violation of Virginia law in that any search that resulted in a sale would mean that the dealer has compensated an unlicensed individual in connection with the sale of a motor vehicle.” Does this mean that paying a lead provider a fixed amount per lead (a common arrangement) is not allowed in Virginia or some other states? Maybe.

The lesson to be learned here is that is important for dealers to have their legal counsel scrutinize vendor contracts and ensure that they are compliant. It’s conceivable that some vendors are either not aware of state prohibitions or are trying to fly under the radar. TrueCar altered their compensation program in Virginia last year in an attempt to comply with state brokering prohibitions, but apparently is still out of compliance.

Advertising – It’s been noted that TrueCar’s current advertising practices run afoul of certain states’ regulations. It remains to be seen if TrueCar will be able to adjust their adverting accordingly to comply, but there’s a lesson to be learned for dealers. A number of complaints have been published by TrueCar customers about dealerships failing to honor advertised prices, attempting to add additional fees, and alleged “bait and switch” tactics. While these accusations may or may not be true, it’s a good reminder for dealers to ensure that their staff members fully understand and follow state and federal advertising guidelines. Advertising violations can be quite serious and the potential penalties are substantial. Once again, state regulators have indicated that they will be taking a closer look at dealerships since being made aware of the TrueCar model. It’s a good idea to train employees on advertising rules of the road and hold them accountable for strict compliance.

Privacy – The TrueCar discussions have also brought into question the sharing of dealers’ DMS data with vendors. It’s vitally important for dealers to ensure that their privacy policies accurately reflect their actual practices in sharing of consumers’ Personally Identifiable Information (PII). Many dealers have boilerplate privacy policies that may state that they do not share PII with non-affiliated parties. If vendors are accessing DMS data from the dealership, that statement may not be true. The Federal Trade Commission and state regulators have been taking an increasingly aggressive stance against companies that fail to follow their own privacy guidelines. It’s time for dealers to dust off their privacy policies and adjust them if necessary.

The good news is that the regulators have given fair warning that they’re going to be looking closely at these issues. The increased legal scrutiny on dealerships may be an unintended consequence of the TrueCar debate, but at least the dealers that are paying attention won’t be blindsided.

For the Risk-Based Pricing Rule, the solution is simple.  Give every customer who applies for credit—every single one—a credit score disclosure exception notice, the same notice you should have been giving customers since the Rule took effect January 1.  The FTC clarified that it is not only customers on whom you pull credit that need to get this notice.   It is every credit applicant.  So even if you don’t pull credit on a customer, you will have to obtain the customer’s credit score and related information to give the notice.  Companies like DealerTrack provide you a free customized credit score disclosure notice for every customer on whom you pull credit through DealerTrack by loading your bureau codes into the DealerTrack system.  Customers who don’t have credit scores also get a notice and DealerTrack will provide that notice to you for free as well if you pull the customer’s credit through DealerTrack.

The Dodd-Frank Act made one addition to the form of adverse action notice that you must give to consumers who you do not get financed or for whom you need to unwind and recontract a spot delivery.  The additional information relates to the consumer’s credit score and must include, among other disclosures, up to 4-5 “key factors” that adversely affected the credit score (this “key factor” disclosure is not required in the Risk-Based Pricing Rule credit score disclosure exception notice).  It’s up to four key factors unless recent credit inquiries is a factor in which case it is up to five key factors.   Again, if you pull the customer’s credit through DealerTrack, DealerTrack will provide you a free customized adverse action notice for the customer which you can give or mail to the customer if necessary.  Like the prior adverse action notice, the new notice will tell the customer that if they want the reasons for the adverse action, they should call the Finance Manager (or other person you designate) at the dealership within 60 days.  Few customers ever call because most lender adverse action notices give the customers the reasons for their credit decline.  If a customer does call, have 2-4 reasons written in the deal jacket and provide those to the customer letting them know they can get the reasons in writing if they make a written request.  It is not a good idea to use “low credit score” as a reason because, if you do, you must also disclose the factors where the customer fell the farthest below other customers who were approved for credit.  These factors are not the same as the “key factors” described above so use specific reasons (e.g., too many delinquent accounts, recent bankruptcy filing, too high a debt-to-income ratio, too many recent credit inquiries, etc.) if the customer ever calls.

If you pull multiple credit scores on a customer, disclose the one you most relied on or, if you combined them in some way in making your decision, you can disclose any one of them.  In California, dealers must disclose all of the credit scores they pull on a customer.

As the use of social media grows, more and more dealerships are using the internet to screen potential employees. Many managers tasked with hiring find these sites to be particularly helpful because they perceive that this information reflects a more accurate representation of the applicant beyond the interview. This influx of information regarding applicants would seem to be a great way to vet their ability to “fit in” with a company.

While social media may allow employers to learn vast amounts of information about job applicants, hiring managers who even casually use these tools to gather information about a prospective employee could expose the dealership to legal risks.  Given the real possibility for inappropriate and illegal uses in the hiring context, organizations need to carefully consider how, if at all, they utilize the sites when screening candidates.

Discrimination Claims – When a job candidate is the subject of a social media search there’s a possibility that the search will reveal information that would be off limits in an interview, such as age or marital status. Hiring managers should be very careful in using private information people are posting publicly to make hiring decisions. An employer’s availing themselves of such information could pave the way for allegations of discrimination if the employee or applicant believes that the employer used such information to make an adverse employment decision. A risk may be created that that this protected class information actually is being considered or, even if it is not, putting your organization in the position of having to defend a claim knowing that this information existed on the sites you visited. Risk factors include:

• Information regarding age, race, religion, sex, disability, or other protected characteristics, such as pregnancy, illness or disability. For example, a person’s Facebook page may disclose their religion.  Once an employer knows that information, the fact that the employer knew the potential employee’s religion can be used in an employment discrimination suit.
• Checking social media or the Internet only on applicants of a certain race or gender.
• Searching on all applicants, but using the same information differently against one particular type of applicants.  For example, if all of your applicants had pictures of themselves of drinking alcohol in public, but you viewed that fact more negatively against females, that could be considered discrimination.
• Rejecting an applicant based on conduct protected by lawful off-duty conduct laws.
• Rejecting an applicant because of his or her political activities may violate state constitutional law.

To avoid these legal obstacles, you may decide that it’s better to not even collect that information, so you can say that you didn’t have access to it. Another procedure would be to have someone other than a hiring manager or decision maker in human resources conduct an online background check of job applicants. The individual who does the online check should avoid sharing with decision makers any personal information about a job candidate that’s not relevant to the hiring decision. This individual should be properly trained to avoid improper access and to screen out information that can’t be lawfully considered in the decision-making process. Having a firewall between the hiring manager and social media information about job applicants makes it difficult for a plaintiff subsequently to contend that the hiring manager discriminated against him or her based on a legally protected characteristic.

Invasion of privacy claims by potential employees.  Generally, a potential employee will have a tough time asserting this claim because you need a “reasonable expectation of privacy” and a lot of people keep their social media profiles open to the public.  However, it’s clear that if the applicant is using the highest privacy settings and the employer somehow gets past all these barriers, the claim is stronger.

A point to consider is how the hiring manager will obtain access to the candidate’s page. Many social media users have some degree of privacy established in their settings. As a result, access to the candidate’s page may require “friending” the applicant and the applicant accepting the request. Not a good idea.

Using an outside agency to screen applicants – If an employer uses a third party to conduct searches on job candidates the federal Fair Credit Reporting Act and applicable state law on background checks likely will apply. The Fair Credit Reporting Act governs “employment background checks for the purposes of hiring” and applies if “an employer uses a third-party screening company to prepare the check.” Thus, if an employer is using an outside resource to view social networking sites and provide information, the applicant must be informed of the investigation, given an opportunity to consent, and notified if the report is used to make an adverse decision. It’s important to ensure that any company you use to perform background checks follows the correct procedures, and that your employment applications contain the proper notifications.

Best practices for the use of social media in hiring decisions:

1. Develop a policy on whether or not the hiring manager will search the internet or social media sites in hiring.
2. If you decide to use social media in hiring, do the searches on applicants consistently and in a uniform manner.
3. Make sure candidates are notified, in writing, about the companies use of social media to gather information, e.g., on job applications.
4. Ensure that employment decisions are made based on lawful, verified information. Don’t allow factors to be considered that have no relevancy to job performance, such as race, age, or sexual orientation. They’re all protected statuses by law and using them as criteria for hiring is discriminatory.
5. Follow best practices in identifying a legitimate, nondiscriminatory reason for the hiring decision with the documentation supporting the decision.

1. Prohibit “friending” a potential employee to learn things about them that the general public doesn’t have access to.

1. Discourage supervisors from being social media friends with their direct reports.

1. Craigslist – advertise for a customer service representative (send me an email and I’ll send you a sample ad).

2. Create a placard of a woman with a “now hiring” sign.  Station them on the show floor, customer lounge and in the service drive.

3. Quarterly owner base Eblast, “If you liked buying a car from us you’ll love working here.”

4. Put a video on your website showing a woman touting the great advantages to working at your store.

5. Place an ad every week on Linkedin.

6. Post a “now hiring” notice on your Facebook page.

7. Ask your employees to post “now hiring” on their Facebook pages.  Reward them if you hire a friend/liker of theirs.

8. Put a “now hiring” mirror hanger on every service vehicle.

9. Use job posting boards at local universities and placement centers.

10. Create a real referral program for your employees that pays real money (at least a $1,000).

Hiring Made Easy

There are plenty of college educated Gen Y’ers (born since 1980) who are seeking employment. By the end of 2012, two out of every four auto shoppers will be Gen Y.  Therefore, it is incumbent upon you to begin recruiting these Millennials so they can better match up to your customer base. Having said that, this is where the hiring gets hard. To successfully recruit today’s younger generation you’re going to have to make significant changes to your sales process and structure. It is very unlikely you will be successful in hiring if you don’t:

• Become a training organization. If you start to hire the younger generation they will have no auto experience; and that is a very good thing. You want to train people in how your process should be executed, not break bad habits acquired at another dealership. Plus, this group of employees won’t come to work for you without a training program.

• Quit paying on the gross. By paying on gross you’re asking your sales staff to try to make as much money as they can off of everyone they meet. Gen Y’ers aren’t going to do that. Move to a flat fee compensation model with volume bonuses.

• Pay a training salary. To attract a high-quality individual, you’ll need to pay a training salary or an hourly guarantee; without this you again won’t be able to hire people with natural sales skills who lack auto experience. I’d suggest $2,500 per month for at least 2 months; or, $14 per hour seems to work as well.

• Move to a limited or negotiation- free sales process. If you’re any good at selling used cars you’re already pretty much one price. Millennials believe in transparency. You’re not going to be able to hire them and have them try to trick members of their generation into paying too much for a fairly commoditized product.

If you’d like more information on these concepts, please let me know.

Running an OFAC

OFAC is the Office of Foreign Asset Controls, an agency of the U.S. Treasury Department that has been around since the mid-1800s.  OFAC administers and oversees a series of laws that impose economic sanctions against companies and persons hostile to the U.S.  Examples include terrorists and terrorist supporters; narcotics kingpins and their associates; persons from blocked countries such as Cuba, Sudan, and Iran; and other persons identified as targets of U.S. foreign policy and national security objectives.

From an auto dealer’s perspective, OFAC’s list of Specially Designated Nationals and Blocked Persons (the “SDN List”) contains the names of over 5,000 individuals, organizations, and foreign entities with which you cannot do any business.  The list is updated frequently and available for search at the following website:

http://www.treasury.gov/ofac/downloads/sdnlist.txt

However, most dealers find it easier to rely on entities like DealerTrack or a credit bureau to check the name of a prospective customer against the SDN List. “Running an OFAC” means using one of these services (or checking against the online list yourself) to see if the customer is a match to one of the blocked persons with whom you cannot do business.

Will I Get Caught if I Don’t Run an OFAC?

The answer is absolutely you will get caught if you do business with someone on the SDN List.  Banks and financial institutions are obligated to run sophisticated compliance software against new customers and that software is likely to detect any OFAC match.  In that case, the bank or financial institution is obligated to report the match to OFAC within 10 business days.  In reporting the match, they are obligated to name your dealership as the origin of the account.

In every case when such a report is made, OFAC will send an administrative subpoena to your dealership concerning the transaction in question as well as requesting documentation of your OFAC compliance in general.  They will want to see your OFAC compliance program and may audit your dealership’s deal jackets for timely OFAC checks on all cash and credit customer.  Then OFAC will assess civil or criminal penalties.

What are the OFAC Penalties for Noncompliance?

Criminal violations of statutes administered by OFAC can result in penalties ranging from $50,000 to $10,000,000, and/or up to 30 years imprisonment for willful violations.  OFAC also has authority to impose civil penalties of up to $1,075,000 per violation.

In 2010, OFAC assessed fines and penalties in 24 cases totaling $200,735,996.  Included among the penalized were entities that provided credit to individuals on the SDN List and entities that sold goods or services to SDN List individuals.  Today OFAC is actively investigating a number of auto dealers along with other entities.

In our next blog, we will discuss what to do if you get a preliminary OFAC match and steps you can take to mitigate the risk of fines of this magnitude.

To my horror, the voice on the other end started out with “Mr. Van Over, I found an article you wrote on the Internet about straw purchases. I want to sue my car dealer for making me do a straw purchase. Can you help?”

After she confirmed that her dealer was not my dealer, I explained to her I don’t help consumers sue car dealers. End of conversation.

I get some strange calls. On more than one occasion, I’ve received a call from a F&I manager who just lost his or her job because of what I uncovered in my compliance review. Upset. Umbrage. Disbelief. How could I do this?

They forget that I simply found the horrific mistake they made that led to their dismissal. So the question is…can you pass a compliance audit?

Grounds for termination

There are varying degrees of offenses or violations or exceptions to policy that we find. Most of the variances are discussion points and wrist slaps and promises to do better. Some of the variances are grounds for termination. These terminable offenses are federal crimes and put the dealership owners at risk.

Forgery and bank fraud are two offenses that should earn the offender a spot in the unemployment line.

Forgery

You simply cannot sign someone’s name to a document and ever expect it to stand up under scrutiny. It does not matter what document you sign, or how good of a forger you’ve become. Forgery is forgery and is a federal crime.

Most of the forgeries we find are not for personal gain. It is because a manager or a salesperson overlooked or forgot to obtain the customer’s signature on a document while the customer was at the dealership. Instead of either getting the customer back into the dealership or sending someone to the customer to get the signature, a foolish employee decides that it would be easier to just sign the customer’s name.

Many times we uncover the forgery because the name is misspelled. Other times, the signature does not flow like the rest of the signatures.

Also considered forgeries are allowing a spouse to sign for the other spouse without a valid power of attorney.

Finally, using the famous “Signature on File” or any of its numerous variations should be verboten.

Bank fraud

The Federales don’t take kindly to anyone defrauding our financial institutions. General, sales and F&I managers have found themselves ordering a bunch of Soap-On-A-Rope for the time they are spending behind bars for committing bank fraud.

Federally insured institutions must report incidents of bank fraud to their regulator on a form known as a Suspicious Activity Report (SAR). These institutions will file a SAR if it suspects you have:

• Power booked.
• Falsified income.
• Falsified other credit application information.
• Constructed a straw purchase.

The argument that it is just the car business and that is what you have to do to get a deal funded is no longer valid. Even though lenders may have looked the other way in years past because of the amount of business you did with them, it just ain’t that way anymore. If the lender fails to file a SAR when it should have, it is subject to a $16,000 fine for each failure to report.

A lender is not going to risk losing its charter because of a relationship with you.

If you are doing any of these things, you will not pass a compliance audit if caught. You may very well lose your job. Is it worth it?

Continued good luck and good selling.