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.


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