5 Legal Drawbacks to a Unified Front-End
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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.