Friday, December 28, 2007

Good F&I Introduction before going into the box

**Importance of the Meet & Greet

by Arzu Algan (ADI)

The customer has probably spent several hours with a salesperson,
and now is introduced to a new individual who has the power to make,
or break, the transaction. The fear of the unknown is always scary,
so there is bound to be some trepidation on the customers behalf.

To help put the customer at ease, the F&I manager needs to let him
know he is in his corner. So the Meet & Greet will set the stage for
the Finance Manager for the next 20-30 minutes. He can do this by
congratulating the customer on his purchase, and talking about the
excellent decision he made by talking up the vehicles attributes.
Once the customer is comfortable the F&I manager should brief the
customer on the next step in the sales transaction to eliminate the
fear of unknown.

Use your own words to relate to the customer, but convey the
following information:

Congratulations, Mr. and Mrs. Smith. Im sure youre going to love
your new ________, which gets great gas mileage for an SUV. May I
call you John and Jane?

My name is Jeff Myers, and Im the finance manager. Im going to
prepare all the legal and registration paperwork, so youll be able
to drive home in your new car. Ill also assist you with financing,
if you need it, and discuss how you can protect your new investment.
The whole process should take about 20 minutes, and while were doing
the paperwork, your new car is being prepared for delivery.

Before we begin, can I offer you a soft drink or a cup of coffee?


Very simple. I use an approach similar to this one. Meeting the customer before having them brought to you will increase product sales because they are already somewhat comfortable with you.


Wednesday, December 26, 2007

Auto Dealer Closes Lot, Agrees to Change Ad Practices

Auto Dealer Closes Lot, Agrees to Change Ad Practices.
By Tim Christie
The Register-Guard 2007

A Eugene auto dealer has agreed to shut down one of his lots, stop what state officials called misleading advertising and pay $10,000 in a settlement agreement with the state Department of Justice.

John P. Kiefer, owner of Kiefer Kia, Kiefer Mazda and U.S. Auto Wholesale, all in Eugene, and CarMart Inc. in Portland, made false credit offers, misled consumers with some advertising and hid the true ownership of one of his dealerships, department officials said Monday.

"When dealerships purposefully confuse buyers in advertising as to whom they are dealing with and exactly what type of deal they are getting, our office must step in and stop the conduct," Oregon Attorney General Hardy Myers said.

"They requested we settle the matter, so that's what we did," Kiefer said. He said he felt his business was being careful with its advertising before, but will now "redouble our efforts to make sure our advertising is compliant" with state law.

To settle the charges, Kiefer reached an agreement called an Assurances of Voluntary Compliance with the Department of Justice. In the deal, in which he admitted no violation of the law, Kiefer agreed to:

• Permanently shut down CarMart, a used car lot in Portland, and not to open another used car store in the Portland metro area for at least one year.

Kiefer said the decision to close CarMart was made before the advertising issues arose with the state. "There was never a recommendation, request or suggestion (to close the lot) until I told them I would close it," he said.

• Advertise using only names of dealerships licensed with the Department of Motor Vehicles and, for one year, submit copies of all ads and direct mail flyers to the Justice Department staff for review 14 days before publication.

• Pay $10,000 to the Justice Department's Consumer Protection and Education Fund.

The Justice Department received numerous complaints about CarMart, department spokeswoman Jan Margosian said. Aimed at consumers who had filed for bankruptcy, the offer enticed customers with a prequalified certificate that supposedly was good for up to $24,995 in financing. Investigators found that consumers were not prequalified for any loan.

Consumers complained that CarMart refused to undo deals and return deposits and consumer trade-ins when the company was unable to obtain financing as negotiated. Oregon's Unlawful Trade Practices Act requires dealerships to do all three.

Kiefer's U.S. Auto Wholesale also ran afoul of investigators. The dealership was not a licensed dealership through the state Department of Motor Vehicles. Several times earlier this year, the dealership advertised a "vehicle disposal" sale at Gateway Mall in Springfield, calling it the "exclusive Oregon location" for a "West Coast auto disbursement" sale. In reality, it was a Kiefer sale, and thus there was no "exclusive Oregon location" nor a "West Coast" sale, the state said.

"When it comes to consumer protection laws in Oregon, advertising needs to be truthful," Margosian said.

Finally, investigators said there was deceptive advertising on an electronic billboard at Kiefer's Eugene Kia dealership, offering consumers free gas. Newspaper ads and placards on individuals cars also offered "free gas for a year" with the purchase of a new Kia.

In what investigators called "mice type" - so small it was barely readable - under each offer, consumers were told the deal was "a combination offer" and to "make your best deal on a package price ... Gas Offer is $500 gas card." State staff found the ads not to be clear and conspicuous and that $500 would not cover gas for a year for a typical driver.

Good post from ADI

Dealership Sales Methodology
by ADI on the December 26th, 2007

People love cars and the decision-making process: the model, equipment, color and so forth. They take pride in the possession of a new car. What they generally don’t like is the experience of shopping for a new car. They often feel manipulated and mismanaged. Regardless of the deal they negotiated, there is always the feeling they could have done better, or that they were “taken.” Many are convinced that an undercurrent of dishonesty runs through the retail automotive business.

The basics of the automotive sales process are well known. First you advertise to get people in the door. As soon as they are on the premises, you determine the model that interests them and explain the product highlights. While conducting this walk-around presentation, you point out the performance, safety and comfort features. After a test-drive around the neighborhood, you get down to the basics of making the deal: checking and appraising any trade, presenting your first offer at pricing, and taking a deal to management (or sometimes taking management to the deal). With offers, counter-offers and negotiations complete, it’s time to talk financing. After presenting the other dealer services, an F&I (Finance and Insurance) manager calculates the financing, rate and monthly payments. By the time the customer picks up the new car, the salesperson is already focused on the next customer.

That’s the way cars and trucks have been sold for more than 70 years. Today’s consumers require better service, professional qualities and excellent product knowledge. The only way to guarantee an enjoyable shopping experience for your customers is to follow a sales process that is firmly grounded in meeting customer needs and exceeding their expectations:

Attract new customers without relying merely on price-oriented advertising.
Welcome the prospective buyer and establish a relationship, removing the customer’s apprehensions about the process of shopping for a new car.
Determine your customer’s needs, then target your presentation of product features and benefits to meet those needs.
View the delivery process as the beginning of a productive relationship – not the end of the sales process.
These procedures not only help turn prospects into buyers, but set the stage for long-term customer relationships that result in both repeat and referral sales. Today the customer cannot be manipulated by old-fashioned, high-pressure sales techniques. Instead, their needs must be identified through communication.

The same rules apply to the transaction in the Finance Office: customers expect the open communication, respectful treatment, and superior product knowledge they experienced on the sales floor to continue while they meet with the F&I Manager. Should this expectation be disappointed, the customer is likely to abandon the transaction all together.

In the past, F&I Mangers and salespeople alike may have spent 10 percent of the time building rapport with the customer, 30 percent presenting products and 60 percent closing the deal. Nowadays successful F&I personnel and salespeople invest 50 percent of the time building rapport, 40 percent presenting products and dealer services, with the remaining 10 percent usually more than enough to close the deal. Today’s focus is on the relationship between the customer and the dealership personnel, rather than just the mechanics of the deal.

Friday, December 21, 2007

Massive ESC Fraud Conviction. Wow!

Former Ford dealer pleads to fraud charges
Wednesday, December 05, 2007
By John S. Hausman

Tony Allen Nielsen will avoid state prison under a sentencing commitment Tuesday by 14th Circuit Judge Timothy G. Hicks. That still leaves the option of a county jail term of up to a year when Nielsen is sentenced at 8:30 a.m. Jan. 11. Hicks allowed Nielsen to remain free on bond until sentencing.

Nielsen also is expected to be socked with a huge restitution tab. Prosecutors say he has already paid back more than $300,000 that authorities say he stole by defrauding hundreds of customers.

Nielsen, 43, now of Wayland, pleaded to three counts of larceny by conversion of more than $1,000 but less than $20,000. A no-contest plea is not an admission of guilt but results in conviction, and judges treat it as a guilty plea at sentencing. It's allowed when a defendant faces civil liability, as in Nielsen's case.

The criminal charges against Nielsen were the outcome of a complicated, yearlong investigation that included repeated interviews with more than 400 victims allegedly defrauded in an extended warranty scam and failure to pay off loans on trade-in cars. Investigators also painstakingly scrutinized reams of financial documents.

At the time of the fraud -- from April 2005 through August 2006 -- Nielsen owned and operated Discovery Ford at 3001 W. Holton-Whitehall.

The dealership has had a new owner since November 2006 and a new name, Whitehall Ford. Nielsen has no connection with the current dealership.

State Police in August 2006 began investigating Discovery Ford after police were contacted by a customer who had taken a vehicle to another Ford dealership and found out the car never was registered for an extended warranty.

Investigators quickly found that the dealership had allegedly failed to forward money paid by customers for extended warranties. In many cases, the payment was $2,000.

The investigation soon spread. Authorities believe Nielsen defrauded hundreds of customers and kept hundreds of thousands of dollars that should have been forwarded to insurers and lenders.

Only three charges were filed because additional counts would not have increased Nielsen's possible sentence exposure, Prosecutor Tony Tague said earlier.

All the convictions relate to the extended warranty issue. In each count, the theft victim is listed as Vehicle One Warranty Service. That's because that insurance company ended up paying for the extended warranties.

The other broad area of fraud -- involving some 25 victims -- involved lenders' liens on customers' cars. Discovery Ford allegedly failed to pay off existing loans on vehicles traded in by customers for new vehicles. The dealership also allegedly failed to forward customers' payments for "gap insurance" to cover the difference between the value of a car totaled in an accident and the amount owed on a new car.

Prosecutors and police met several times with those victims and wound up with an arrangement under which Nielsen paid off all of the loans and gap insurance.

Tuesday, November 27, 2007

Bullet Proof Your Dealership

By: Robert W Linkonis Sr.

At 7:00 a.m. in a perfect world, there wouldn't be a criminal coming to a dealership for vehicle service, wandering the showroom while waiting for his car, and deciding to take a credit application and several copies of drivers' licenses that were left on a salesperson's desk the night before.

Unfortunately, this major safeguards rule violation and others can happen at any time at any dealership unless there's an enforced process of adhering to finance and insurance compliance laws.

Some dealerships use the threat of termination to force employees to comply. This approach is effective on the surface, but doesn't truly make the employee care about protecting the dealership.

Unintentional mistakes can happen during hectic days. For example:

* A salesperson leaves the permission-to-drive slip in the car after a customer's demo drive.

* A sales manager pulls the credit of a “phoned-in” co-signer.

* With several deals waiting, an F&I manager has a customer sign a blank menu “in the interest of time”.

But in a government investigation, offering busy-day excuse for such mistakes is like hiding behind a skinny lamppost to avoid machine-gun fire.

The way to bulletproof your dealership and potentially save millions of dollars in lawsuit payouts is to comply with every rule, regulation, policy and procedure.

This is attainable if all dealership personnel are committed to creating and maintaining a culture of compliance. This starts with building habits.

The first step is to totally secure all personal and private information in the finance or sales office with locked doors and file boxes. Identify who will control that information and designate them in your information security plan.
Every employee should be aware of the designated managers, and sign an acknowledgement.

Maintain a protected central location for copies of driver's licenses, deals in the works or any information the sales staff will need to access on a daily basis. Set up a procedure that defines the use of this information. Impress upon the staff that this is the system. Their daily routine will conform accordingly.

Stored deals from previous years and dead deals need to be in locked file cabinets at all times, with only the people designated in your information security plan having access. Sales people will soon realize that only an authorized manager can look up an old deal.

Teamwork is important to a culture of compliance.

Make sure every employee hears you say “we” are protected because of these procedures. And stress this: “We're a team in every aspect of this dealership, including doing things right.”

That fosters sales people's respect and reinforces their desire to help keep the dealership compliant.

The goal is compliance as a natural way of doing business.

Take personal responsibility if you catch a violation.

Sit down with the offender and say, “We messed up, I'm counting on you to not let this happen to us again.”

Explain that to protect “our dealership” is why, for example, the employee must fill out a permission-to-drive slip for a dealer plate. Say: “Don't let the customer leave it in the car next time; it compromises their personal information.”

Because of gained respect for the F&I department, sales managers will enforce 100% turnover to F&I, knowing customers' personal information is secure.

In turn, the F&I department will help the sales department hold more front end gross.

Good habits developed in compliance will pass over to all areas of operation, such as menu selling.

The F&I manager will give a properly presented menu with all optional products fully explained and disclosed for every delivery every time, no matter how busy the day gets.

In a culture of compliance, the F&I manager will happily get used to making more money and enjoying higher customer satisfaction scores.

The original article can be found at:

Saturday, November 24, 2007

The Good 'Ol Days





Monday, November 19, 2007

This is a fantastic article from one of my favorite compliance trainers - Joe Bartolone. I have been reading his articles for the past couple of years and they are all fantastic.

5 Legal Drawbacks to a Unified Front-End
By Joe Bartolone
November 2007

Unifying the front-end is definitely a top-of-mind topic these days, but there are several compliance issues to keep in mind. Compliance expert runs through five possible issues, and shows how the F&I office can solve each one.

Recently, there have been discussions about unifying the sales and F&I departments. Among other reasons, unifying the front-end gets sales personnel to begin introducing F&I products to a potential customer.

At first glance, this idea makes sense.

If the customer trusts the salesperson enough to buy the car, the customer should also be willing to hear about other products and services that will enhance his or her overall buying experience.

However, before we start moving down this path, we should take an historical look at other attempts to merge F&I functionality into the sales department.

1. The Sticky Truth About Addendum Window Stickers

Let’s start with the addendum window sticker. It’s only within the last couple of years that most dealers have discontinued the practice of adding F&I-related products to the addendum window sticker. Prior to that, surface protection products and theft deterrent products were regularly added to the addendum sticker.

The problem with this practice was that it was used mainly as a discounting tool and it potentially gave the appearance to the consumer that the products were not optional — both considered unfair and deceptive sales practices.

2. The Legalities Surrounding Credit Applications

Then there’s the credit-application process. This is a multi-step process that involves completing a credit application, getting the customer’s consent to investigate his or her credit, obtaining a credit report and reviewing it.

There are potential issues with completing the application when sales personnel are involved. Accuracy of the information and the possibility of alterations are two that come to mind.

There are also some dealers who continue to use a customer registration card or some other form to capture customer information, which includes the customer’s consent to investigate credit.

Unfortunately, the consent statement can sometimes be in micro print. This is one of the main reasons dealers have to retain credit applications for five years.

Other issues include safeguarding the credit reports and reviewing them for fraud alerts and other identity-theft-related information. And don’t forget the requirements of sending adverse action notices and providing privacy notices.

All of these potential risks fall under the requirements of the Equal Credit Opportunity Act, Reg. B, the Fair Credit Reporting Act and the Gramm-Leach Bliley Act, which includes the Privacy Rule and Safeguards Rule.

Page 1 of 3

5 Legal Drawbacks to a Unified Front-End
( Page 2 of 3 )

3. Desking and Its Potential Risks

The desking process is also popular with many dealerships.

In many cases, the desk managers will calculate the first pencil, sometimes before credit is run and sometimes after credit is run. Some desks also will submit the deal for lender approval.

Sometimes, the deal is structured before the customer is turned over to F&I. This includes deals with negative equity and deals with high upfront acquisition fees. I refer to this practice as the “Larry the Cable Guy” approach, or “Git-R-Done.”

This is why I believe the desk is another area for potential risk. Discriminatory pricing, unfair and deceptive trade practices, and Reg. Z Truth in Lending disclosure violations are a couple of potential problems related to this approach.

4. Safeguarding the Used-Car Department

Let’s not forget the used-car department.

Quite a few dealerships use an outside service to produce laser-printed FTC Used Car Buyer’s Guides, which are affixed and prominently displayed in used cars. When the vehicle is sold, the sales personnel are required to have the customer sign a duplicate copy as evidence that he or she was provided a copy of the FTC Buyer’s Guide.

They are also required to complete the reverse side of the guide, disclosing the dealership name, address, phone number and a person or position to contact should they have a question about the vehicle’s warranty.

This process may seem simple, but it is consistently listed as an issue on many compliance reviews. The potential risks fall under the FTC Used Car Rule and the Magnuson-Moss Warranty Act.

5. Expansion of Sales Training

One of the problems we’re dealing with is quite simple. Sales personnel are not trained to be F&I professionals. They follow the process and complete the forms because they know they won’t get paid if they don’t.

Another problem we face today is F&I managers are being held more accountable for production than compliance. Ask a dealer who’s been on the wrong side of a class-action lawsuit or an attorney general’s investigation the cost of compliance.

5 Legal Drawbacks to a Unified Front-End ( Page 3 of 3 )

Getting F&I Involved at the Start

Is there a solution? Absolutely.

Instead of moving the F&I processes out into the sales department, why not integrate F&I personnel into the sales process?

A good example of this concept is the use of an F&I administrative assistant. This is a person who typically comes out of the back office environment and is familiar with the paperwork flow and F&I process. This person’s job is to assist in the administrative functions of F&I, which include ensuring that all the required paperwork is properly executed, acting as a liaison to the office, fulfilling lender stipulations and putting the funding packages together.

The bottom line result is that the F&I director and managers have more time to sell products and get deals approved. Not to mention, this approach can help reduce contracts in transit.
Instead of having a salesperson take a credit application, let an F&I professional be a part of your qualification process, and let him or her coach the customer on completing a properly executed credit application.

Instead of letting the desk manager run the credit report, review it and structure the deal, let an F&I professional work with the desk manager. This will ensure that the credit information is properly secured, that the credit report is reviewed for fraud alerts, that the customer was cleared through the Office of Foreign Assets Control (OFAC), and that the deal is properly structured and falls within compliance and underwriting guidelines.

Instead of the salesperson reviewing warranty-related information at delivery, have an F&I professional take over this responsibility to ensure the forms are properly executed and the warranty terms are properly explained. Customers will appreciate someone who is proficient in explaining the differences between an “AS IS” vs. “IMPLIED” warranty, the differences between a “FULL” and “LIMITED” warranty, a “REMAINING FACTORY WARRANTY” or “PRE-OWNED CERTIFIED FACTORY” warranty, and between a warranty and service contract.

F&I professionals who are more involved with the sales process are also going to be able to train sales personnel on planting seeds and eventually selling more products.

As an example, during the appraisal process, do you ask the customer if there is a service contract on the vehicle?

This technique is very effective when the appraiser asks the question. If there is a payoff on the trade, do you try to get a copy of the previous RISC to see what products the customer purchased and if you can help with the refund process?

Do you work with the service advisors to have them check to see if customers have purchased a service contract?

Does an average salesperson know that offering GAP to a person who is financing 30 percent of the Manufacturer’s Suggested Retail Price (MSRP) is akin to selling credit insurance to a cash customer?

Being more visible in the sales process will also remove some of the fear and anxiety customers have when they are turned over to F&I.

Consider this scenario: Your dealership is sued by a customer who claims the dealership ran his credit without consent. It is documented that a salesperson was involved in the credit application process. The salesperson is being deposed by the plaintiff’s attorney and is asked to describe what training he or she received regarding credit applications. How would your salespeople respond?

It’s time for a paradigm shift.

Joe Bartolone is an associate with gvo3 & Associates, a nationally recognized sales and F&I compliance consulting and training company. For more information, visit

Here is a new group of finance blogs to link to:

Tuesday, November 13, 2007

Auto Finance F&I Compliance New Car insiders advice

I still wonder if anyone is going to figure out who I am.

It's only been a couple of months that I've branded AFI and posted his brilliant insight and compliance wisdom out for the betterment of society.

I've gotten several emails asking for compliance knowledge. Go to:

Insiders advice should bookmark and always refer to this page:

The best automotive Finance website on the internet will always be:

Again the question is posed:

Who am I?
Can you guess?

Post a guess or comment on
or email to:


Monday, October 29, 2007

Who is this guy AFI ?

This is a question for the ages. Clues have been scattered through the internet. Can you complete the puzzle?

Here is the original AFI post:

"Who am I? Most of you probably don't care and just want to continue absorbing the vast amounts of wisdom and knowledge I am providing in the areas of Automotive Finance.

Some might even be curious: why must I conceal my identity?

Well, if you arrived here through my website: or one of the other F&I blogs you know that I am a full-time Finance Director for a car dealership.

If the owner of my dealer group, much less - my GM found out what I do with a couple hours of company time each day, it would not bode well for my job security.

The time wouldn't be as much of an issue as would the f&i content I'm sharing for free with the world.

What would probably happen is that one of the numerous F&I training companies would come in trying to sell their programs to my dealership. They would see all of this and, after offering to hire me repeatedly through telephone calls, offerings and emails, will get pissed off when I won't jump ship and tell my managers what I'm doing here just for spite.

Or it might even be that the owner himself would type my name next to the characters: F&I in a google search window to see what comes up.

After extensive review of these insider sites, it would appear to him that my energies spent creating this mecca of finance wisdom and knowledge is probably a conflict of interest and that we should part ways so that I can consult in these areas full-time.

I am in no way in danger of being fired for any reason and would rather not be forced to have to think up any sudden explanations for my creation of these websites. You should just forget about trying to find out my identity and figure out if you might already know me ?

Either way it is none of anyone's business what I choose to put out there for the betterment of society.

Educating the public on what really goes on inside a car dealership cannot help but relieve the fear of the unknown that everybody has toward the F&I office.

It should also hopefully help the car salespeople when these customers come in. Just make a fair deal for yourself and the customer. Go to my site:

The Carmax down the street sells over 500 used cars per month at $2000 front end gross pru without any negotiation. Is it because they have fantastic salespeople? NO - they have order takers not REAL salespeople.

Why does Carmax sell so many more cars than an established franchised New Car Dealership ??? We will explore this answer in a future post.I'll keep saying it - if the independent franchise car dealership gets driven to bankruptcy by everyone buying below factory invoice, the consumer will be left paying a higher non-negotiable price from FACTORY-OWNED stores.

Sorry, I know this is'nt the soapbox blog. Feel free to comment or try to guess who I am. I'll do something cool for the person who finally figures it out.