Tag Archive | "compliance"

Automotive Compliance Leaders gvo3 And DSGSS Collaborate To Deliver Industry’s First Comprehensive Front End Compliance Platform


Two of the industry’s compliance leaders, gvo3 & Associates (gvo3) and DealerSafeGuardSolutions (DSGSS), have collaborated to deliver the first comprehensive front end compliance platform. This effort provides the first end to end solution, incorporating education, certification, execution, inspection and remediation. As dealers continue to struggle balancing the regulatory demands of consistency and perfection with the market demands of speed from the consumer, manufacturers, and sales force, shortcuts and errors are a fact of life. These missteps can cripple a business. This platform mitigates these risks.

Doug Fusco, CEO of DSGSS says “Gil and gvo3 have been the gold standard for years. Their compliance consulting, auditing and training continue to be best in class. Now with this new platform, dealers will be able to leverage these benefits to enhance and most importantly, “maintain” their compliance standards. For years dealers have searched for the “glue” to hold their policies and procedures together in a consistent manner.

Even after best efforts to enforce their investments in strong training and education, there is no guarantee employees consistently behave as instructed, creating this ongoing liability for the dealer. This platform will eliminate these risks”.

Mike Brosin, Managing Partner for Crest Auto group and a client of both gvo3 and DSGSS, states “We take our gvo3 audits very seriously, as they provide us valuable insight and direction into how we can improve and protect our business and our clients. We hold the record for the highest gvo3 score in the group, and DSGSS is the driving force behind that success”.

Steve Goodman of RML Automotive Group says “After we installed DSGSS, our next gvo3 audit score increased by 38 points”.

“One of the frustrations our clients share is the challenge with their staff consistently behaving as instructed after training, or after our audit review and consultation. With turnover, today’s competitive market, and the typical chaotic environment we operate under, this continues to become a growing challenge and liability to the dealer. With DSGSS in place those frustrations are eliminated, and the training leads to more consistent results” says Gil Van Over, President of gvo3.

Gil is also the Executive Director of Automotive Compliance Education (ACE). This firm provides compliance training and industry certification for everyone who touches a deal, from the Sales Person to the Sales, F&I and Office Managers. Certification curricula are also available for Office Clerks and Compliance Officers. “A dealer needs to certify more than just the F&I Manager and the training must be topical. ACE provides that topical training and industry certification.” according to Van Over.

This collaborative partnership will be officially unveiled at this year’s NADA convention. Experts from both companies will be available daily at the DSGSS booth # 5839. Please stop by to learn more about this unique platform. Sign up at the show and DSGSS will have your Compliance Officer ACE certified for FREE!

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Fed Reserve, CFPB Leave TILA, CLA Dollar Thresholds the Same for 2017


WASHINGTON, D.C. — The dollar thresholds in the Truth in Lending Act (TILA)’s Reg. Z and the Consumer Leasing Act (CLA)’s Reg. M for exempt consumer credit transaction will remain at $54,600 for 2017, the Federal Reserve Board and the Consumer Financial Protection Bureau announced on Nov. 23.

The Dodd-Frank Wall Street Reform and Consumer Protection Act amended the TILA and the CLA by requiring that the dollar threshold for exempt consumer credit transactions be adjusted annually by the annual percentage increase in the “Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W).” If there is no annual percentage increases, the board and bureau will not adjust the exemption threshold.

“Based on the CPI-W in effect as of June, 1, 2016, the exemption threshold will remain at $54,600 through 2017,” the two agencies stated in a joint notice.

The decision means consumer credit and lease transactions at or below $54,600 will continue to be subject to the protections and requirements of Reg. Z and M, according to the National Automobile Dealers Association (NADA)’s Regulatory Affairs Group.

“This announcement is consistent with the Dodd-Frank Act amendments to the Truth in Lending Act and the Consumer Leasing Act to adjust these thresholds each year by the annual percentage increase in the Consumer Price Index,” the NADA said.

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An Interview with Gil Van Over III


On Tuesday, Aug. 30, at Paris Las Vegas, 83 industry professionals sat for the Certified Automotive Compliance Professional exam, offered for no charge to Compliance Summit attendees by Automotive Compliance Education (ACE). The following week, Agent Entrepreneur met with Gil Van Over III, the organization’s executive director, to learn more about the program and Van Over’s career in auto finance, training and consulting.

AE: Gil, where are you from?

Van Over: I’m proud to say I’m an Air Force brat. I’ve lived everywhere from the Orient to Europe to the United States. I went to high school in Hawaii and Dayton, Ohio, if you can believe that.

AE: What was your favorite stop?

Van Over: My favorite was Hawaii, but I finished high school in Dayton and then went to Ohio State for a couple years. Then I decided to join the business world. I went to work for a finance company and then went to one of the captives. From there, I was hired as the COO of Premier Auto Finance, which was a Pat Ryan or Aon company. Finally, I started gvo3 & Associates in 2001.

AE: What spurred the move from finance to compliance?

Van Over: At Premier, we were struggling with the manufacturers offering zero percent financing. It was hard to compete anymore. So we decided to shut it down and I decided to go into business for myself, offering compliance solutions, including training.

AE: Compliance was not the hot-button issue in 2001 that it is today.

Van Over: I kind of grew with the times. The timing was fortunate.

AE: How do you keep up with changes to rules and regulations at the state and federal levels?

Van Over: I read a lot of industry publications and I keep track of pending legislation and court decisions that require a dealer to have a plan in place. From that, I apply the methodologies I learned at the captive to incorporate those types of things as processes. We’re a process-improvement company. We use audits as a core competency to deliver consulting. That’s driven by processes, processes, processes. If they’re doing it right, they’re doing it right consistently. If they’re doing it wrong, they’re doing it wrong consistently.

AE: Are dealers and F&I professionals more receptive to change now than they were when you started?

Van Over: There has been a huge growth in awareness around the industry over the past 15 years. In the beginning, I had to spell “compliance.” Now, most people have a better understanding of what it is. The problem is that it’s so voluminous, they don’t know how to manage it.

AE: So you leave it to the experts.

Van Over: Exactly. I can tell you, for example, that the CFPB is focused on this aspect of your business and this is how you can demonstrate you are in compliance. It’s transitioning what you have to do into how to do it. That’s been the biggest key to our success.

AE: Do you still encounter F&I managers who play ball while you’re in their dealership and then go back to what they were doing when you leave?

Van Over: You run the gamut. You’ve got the people who think they’re too small or too isolated or insulated to have to worry about it. You run into the people that are saying, “Well, I’ve been at 17 dealerships in the last seven years, so whatever I’m doing, I won’t be here when the bad news comes.” And you do have the people that are just waiting for you to leave. They know you’re not coming back for six months or a year and they can go back to doing what they’ve always done.

But for the most part, the people working in the industry today understand that it’s the right thing to do for the customer, and it’s simply good business. You can keep the products you’ve sold because they’re not going to be canceled. You will have a higher degree of return customers. I think most people want to do the right thing. They need help understanding what the right thing is.

AE: Will your job get easier as the industry gets younger?

Van Over: That’s a good question. I’ll say there are a lot of urban myths out there and there always have been. Only now, what once was communicated by fax or phone is now on social media, and everyone’s opinion can be heard. You can’t just take a 144-character tweet as gospel, but many younger people do.

AE: We keep hearing about banks and finance companies knocking on dealers’ doors to perform surprise audits, but I have yet to speak to a dealer who has been through one. Is that actually happening?

Van Over: It’s not necessarily your finance company coming into your dealership and doing an audit but statistically reviewing portfolios. Most finance companies will have basically the same escalation process followed by HR professionals: First, you identify the issue and come to an agreement. If the offender doesn’t stick to the agreement, you follow with a written notice. If it still doesn’t correct itself, after determining the level of risk is too high, your finance source will say they can no longer do business with you. It’s not an overnight thing.

AE: Speaking of overnight, we’re fresh off Compliance Summit, where you and Jim Ganther and Michael Tuno presented the review session and proctored the exam for ACE certification. Ganther hinted that you pulled a few all-nighters to get the materials done in time for the show.

Van Over: He’s right about that, but I wouldn’t want anyone to think we threw that curriculum together in a few days. This idea first germinated in my mind about five years ago. I told Jim that there’s an opportunity for us to provide a certification for the industry that would leverage a lot of factors and, more importantly, provide some best-in-class certification that would rival what other professions get.

Think about doctors, nurses and teachers. They all have a requirement to not only get their degree and license but participate in continuing education to make sure they stay current. We didn’t see any offerings in the industry that met that standard.

So we had everything in place, but we still had to finalize some of the details, and that part happened fast. But we had the opportunity to introduce it to a great audience at a great venue.

AE: To use your own word, compliance is a “voluminous” topic. How did you lasso all aspects of dealer compliance into four hours of review and a 200-question exam?

Van Over: First, we understand what we’re good at. We’re good at compliance with all of the rules, regulations and statutes for best practices that revolve around sales and F&I. Dealerships also have parts and service departments, but we don’t pretend to be good at OSHA. What we’re good at is the departments that square off with the customer.

I do a lot of litigation support, so I see the arguments for unfair and deceptive practices. We have developed best practices. We generate the documentation that shows you were not deceptive in the way you sold anything.

We talked about continuing education for the practitioners in the dealership. We certify all of them because they all have a role in compliance. Just as they need to stay on top of the situation, we do as well. Continuing education is the key.

AE: Now that I’m certified, how do I get recertified?

Van Over: Every year, on the anniversary of your certification, you will receive a notification from ACE that you need to log in and take a smaller number of modules to stay certified. There are five we have identified that should be done annually: Safeguards Rule, Red Flags, sexual harassment, discrimination and ethics. Additionally, every year, we will add any modules that have been added to your discipline’s curriculum.

Finally, if you’re a gvo3 client, you are getting regular periodic reviews, and we will include areas where we see the highest area of noncompliance. If we find the highest percentage in the completion of credit applications, for example, we’ll include that module and do it again.

This demonstrates that, not only are we keeping you current on recent changes, we are also reviewing deal files, identifying failure points and retraining on that. With that documentation, the dealer has a strong case if someone leaves and blows the whistle. Sorry, but you were trained. We showed you how to do it the right way.

AE: Is it possible to be fully compliant and still be unethical?

Van Over: You can have paperwork in the deal that suggests you did things the right way. But, yes, you can still be unethical. And if you are, eventually, it’s going to catch up with you. We have a philosophy we share with dealers in our recap meetings: If you’ve made mistakes, it’s one of two things: You are naïve or you’re a kink. I can fix naivety. If you’re a kink, and you’re forging signatures and packing payments, and you think that’s acceptable, your moral compass is off. I can’t fix that.

AE: How often have you had to recommend that a dealer fire a bad actor?

Van Over: It happens occasionally. But it’s happening less and less, and we’ve moved along further into the progression of the company. When we develop a policy and procedure manual for our clients, we include a list of eight or nine non-negotiables. If you violate even one, you’re terminated. If you forge a document, you’ve got to go. If you steal money, adios.

However, we make absolutely certain we’re an independent contractor. We are not making decisions on behalf of the company. We might point out that it looks like someone else signed this document, and the dealer will investigate that. Many times, if they can get someone to admit to it, they do terminate them.

AE: Our readership is agents, so let me ask you: What responsibility do agents bear for keeping dealers in compliance?

Van Over: Agents do not want to be the dealer’s compliance cop. We’ve made that very clear. We work with more than a few agents, either on a referral basis or when we have been retained to be the compliance cop. We tell them to be sure their processes are compliant. Train on the menu from both the sales and compliance perspectives.

But you don’t want to be the guy reviewing deals. Focus on production. If your dealer needs a compliance expert, there are a number of us out there, and some of us do a very good job. Get somebody to be your compliance cop. Agents are there to help dealers make money. That’s what they’ve got to focus on.

For more information about ACE certification, visit AceCert.org. For more information about gvo3 & Associates, visit gvo3.com.

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Federal Appeals Court Rules CFPB Structure Unconstitutional


WASHINGTON, D.C. — On Tuesday, a federal appeals court ruled that the structure of the Consumer Financial Protection Bureau is unconstitutional. The appellant court’s main issue is the bureau’s single-director structure, which it found to possess “enormous power over American business, American consumers, and the overall U.S. economy.”

The U.S. Court of Appeals for the District of Columbia Circuit stopped short of calling for the CFPB to be shut down in its 2-1 ruling. Instead, it ruled that the president will now have the authority to remove the director of the CFPB at will. Currently, the CFPB director can only be removed by the president for cause.

“To remedy the constitutional flaw, we follow the Supreme Court’s precedents … and simply sever the statute’s unconstitutional for-cause provision from the remainder of the statute,” wrote Judge Brett Kavanaugh in court’s 110-page majority opinion. “With the for-cause provision severed, the President now will have the power to remove the director at will, and to supervise and direct the director. The CFPB therefore will continue to operate and to perform its many duties, but will do so as an executive agency akin to other executive agencies headed by a single person, such as the Department of Justice and the Department of the Treasury.”

The case came about after the bureau fined mortgage lender PHH Corp. for allegedly accepting kickbacks from mortgage insurers. The lender appealed the fine, which led to Tuesday’s decision. And as part of that ruling, the federal appeals court threw out the bureau’s $109 million fine against PHH Corp.

To read the full story, click here to read a report from The Washington Post.

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Nine-Store Los Angeles Group Charged With Payment Packing, Yo-Yo Financing


WASHINGTON, D.C. — The Federal Trade Commission today charged nine Los Angeles-area dealerships and their owners with a wide range of deceptive, and unfair sales and financing practices, including payment packing and using “yo-yo” finanicng tactics. According to the FTC’s announcement, this is the first time the regulator has filed an action against an auto dealer for engaging in yo-yo financing.

The FTC’s complaint, filed in the U.S. District Court for the Central District of California, also charges the dealerships with violating the Truth in Lending Act and Regulation Z, as well as the Consumer Leasing Act and Regulation M for failing to clearly disclose reguired credit and lease information in their advertising. The regulator is seeking to end the alleged practices and return money to consumers.

“The car-buying process is a two-way street,” said Jessica Rich, director of the FTC’s Bureau of Consumer Protection, in a statement. “The FTC expects dealers to honor their contractual obligations, and will pursue those who use yo-yo financing tactics and pack unwanted costly add-ons onto consumers’ contracts.”

Charged were Universal Nissan; Kia of Downtown Los Angeles; Glendale Infiniti and Glendale Nissan; Mercedes-Benz of Valencia; West Covina Toyota/Scion; Sage Covina Chevrolet; Sage Pre-Owned; and Sage Hyundai. All are owned and operated by Sage Auto Group.

According to the FTC’s complaint, the dealerships enticed consumers — particularly the financially distressed and non-English speakers — into their showrooms with print, internet, radio and television advertisements that featured misleading claims, including that vehicles could be purchased at lower prices than the dealerships were prepared to sell them for. The dealerships also falsely advertised that customers would receive lower monthly payments and be able to provide smaller down payments for specific cars, the FTC charged.

Other tactics included advertising finance offers that were really leases. The dealerships also falsely advertised that they would pay off consumers’ trade-in vehicles. The FTC also charged the dealerships with using phony online reviews, including ones posted by their own employees, to tout their dealerships and discredit negtative reviews highlighting their illegal practices.

The dealerships were also charged with violating the FTC Act’s prohibition on deceptive and unfair acts or practices for including F&I products like service contracts and GAP in customers’ deals without their knowledge. In some cases, car buyers were told the products were free.

In some instances, according to the complaint, consumers were forced to sign new contracts with different terms than the contract they had already signed. In others, the dealerships allegedly told consumers who completed finance contracts that their agreements had been canceled and that the dealerships were permitted to keep the down payments or trade-ins. If the consumers argued these claims, the FTC charged, the dealerships claimed they could take legal action them if they did not comply.

The FTC’s complaint also lists Joseph Sage, Leonard Sage, Michael Sage, Sage Holding Company Inc., and Sage Management Company Inc. as defendants. The commission’s vote authorizing the filing of the complaint against Sage Auto Group defendants was 2-1.

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NFADA’s MacKay to Deliver Compliance Summit Welcome Address


LAS VEGAS — Andy MacKay, executive director of the Nevada Franchised Auto Dealers Association (NFADA), will deliver the welcome address at the upcoming Compliance Summit, organizers announced Monday. The event will be held Aug. 29–30, 2016, at Paris Las Vegas as part of the annual Industry Summit.

MacKay’s address, “The Dealer’s Voice: Trade Associations on the Front Lines,” will begin at 9:05 a.m. on Monday, Aug. 29, following a sponsored breakfast and preceding the opening keynote address, which will feature The Warranty Group’s Aaron Lunt. MacKay is expected to offer an insider’s perspective on campaigns led by NFADA and other dealer trade associations against regulatory and factory overreach.

“We simply could not have asked for a better speaker to kick off the first Compliance Summit designed for dealers in the Western states,” said David Gesualdo, show chair and publisher of Auto Dealer Today and F&I and Showroom. “Considering the work he and his organization have done on behalf of franchised dealers throughout the state of Nevada in what has been, at times, a hostile regulatory climate, we can’t wait to hear what he has to say.”

The Compliance Summit agenda also will include educational sessions devoted to Rules and Regulations, Your Responsibilities and Easy-to-Implement Processes and Controls. Registered attendees are invited to RSVP to attend the review session and sit for the Certified Automotive Compliance Specialist exam, offered for no additional charge by Automotive Compliance Education (ACE).

To register for Compliance Summit, click here.

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