Tag Archive | "Jim Ganther"

Certified for the Future

If I could predict the future, I’d be at the nearest 7-11 buying one (and only one) lottery ticket. But here I am writing this article, which tells you all you need to know about my powers of prognostication. Still, I can’t help but occasionally peer into my crystal ball and try to interpret what I see. And what I see is a little scary — at least for those who aren’t prepared.

Here’s what I believe: First, the Federal Trade Commission (directly) and the Consumer Financial Protection Bureau (indirectly) issue regulations that affect the retail automotive world. But when it comes to actually impacting a dealership financially, neither the FTC nor the CFPB are as tough as they think.

I also believe the local plaintiff’s bar does more to affect dealership behavior than distant federal authorities. Consumer lawyers have a direct economic stake in finding, exposing and exploiting dealership violations. And trust me, it is very lucrative.

I also believe that technology, particularly social media, will eventually supplant consumer lawyers as the most effective factor in regulating dealership behavior.

Lastly, I believe no one trusts what dealerships say about themselves. However, consumers tend to believe what total strangers say about dealerships, especially if those strangers just bought a car or had one serviced at a dealership. And that’s the power of social media.

Facebook may not seem like a big threat, as scathing reviews posted there are only read by people connected to the reviewer who care or are in the market for a car. But people who go to DealerRater.com or Cars.com are almost all in the market for a car. Get blasted on those or similar sites and your topline revenue will take a hit.

In short, a herd of ticked-off customers with Internet access will have more power to influence dealership behavior than the FTC or CFPB. That’s not just the future; it increasingly describes our present.

If the fair, ethical and legally-compliant treatment of customers, as broadcast across social media, is the future of dealership regulation, how should dealers respond? The answer is obvious: Create a process that ensures customers are treated fairly, ethically, and in a legally compliant manner.

At the end of the day, most federal consumer-protection laws are designed to do just that. So doing right by regulators will also satisfy the real regulators: your customers.

The process must include a consistent, verifiable training program that includes the legal requirements for each job description at a dealership, not just F&I personnel. Per the National Automobile Dealers Association, the average dealership has 67 employees, of whom three or four are F&I managers. That means a program that only trains 4% of the workforce is going to fall short 96% of the time.

To address this need, Compliance Summit, in cooperation with Automotive Compliance Education, offered the ACE-certified Compliance Specialist program to attendees at no additional charge. Certification candidates will have access to online, interactive, video-based training on a broad range of dealership compliance topics. On Tuesday, Aug. 30, leading industry compliance experts (and yours truly) provided live test preparation, followed by the certification exam after lunch. Those who passed will receive the ACE Certified Compliance Specialist designation.

ACE is designed to assure continuous proficiency. Certified Compliance Specialists will be required to recertify annually by reviewing a current “Annual Update” module that focuses on developments relevant to their certification level over the preceding year, and passing the recertification exam.

Making the certification more meaningful is the program’s emphasis on processes that apply the theoretical aspects of regulatory language to real-life situations.

ACE is spearheaded by Gil Van Over III, founder and president of compliance auditing firm gvo3 & Associates. The idea spawned from the constant violations he came across while reviewing dealership operations, infractions that could have been prevented with proper training. “I created ACE to fill that need,” he says.

In addition to launching Compliance Specialist certification at Compliance Summit, ACE will provide certifications tailored to F&I personnel, sales associates, sales managers, business office personnel, and compliance officers. Each program will be offered online at www.AceCert.org, which will go live following the conclusion of Compliance Summit. Live review and test sessions are also expected to be part of future Compliance Summits.

The programs are designed to provide the basis for customer experiences that satisfy both the federal regulators and the real regulators: customers. That’s how smart dealers will face the future.


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F&I Think Tank Adds Top Compliance Experts

TAMPA, Fla. — Organizers of F&I Think Tank, the F&I manager-geared event preceding Dealer Summit 2016 this May, announced that six of the top dealer compliance experts in the industry will be at the Sheraton Tampa Riverwalk Hotel for the preshow event’s “Busting Compliance Myths” panel session. These individuals will field questions from attendees in a 20 Group-like setting, as well as provide an update on key regulatory battles taking place at the federal and state levels.

The panel, which will take the stage at 5 p.m. on Tuesday, May 3, will also take on several long-held beliefs in F&I and offer their take on whether or not they’re legally valid. Examples include the 300% rule (offer 100% of your products to 100% of your customers 100% of the time) and disclosing the base payment on the F&I menu.

“This is going to be a fun session,” said Gregory Arroyo, editorial director of F&I and Showroom and Auto Dealer Today magazines. “Our compliance experts are going to separate fact from fiction when it comes to some of these recommended best practices in the F&I office. They will also take questions from the audience in what promises to be a lively discussion.”

Moderating the panel will be respected compliance and training expert Robert Harkins, who serves as vice president of training for American Guardian Warranty Services Inc. He’s also served as master of ceremonies for a number of industry events, including F&I and Showroom’s annual Industry Summit.

Panelists include David Robertson, executive director of the Association of Finance & Insurance Professionals; Michael Tuno, president and founder of World Class Dealer Services Inc.; Jim Ganther, president of Mosaic Compliance Services; Randy Henrick Esq., associate general counsel for Dealertrack, and Karen Klees, certified consumer credit compliance specialist for EFG Companies.

Tuno is a 20-year veteran of the auto industry and has served as an F&I instructor for the National Automobile Dealers Association since 2007, while Klees was one of the first 100 professionals to earn the National Automotive Finance (NAF) Association’s Certified Consumer Credit Compliance Specialist designation. Henrick, a more than 30-year veteran of banking and consumer financial services, is the author of the annual Dealertrack Compliance Guide, while Ganther began his career as a business attorney and litigator in Washington, D.C., and Tampa, Fla., and is currently a member of the National Association of Dealer Counsel.

“We have the who’s who of dealership compliance,” Arroyo added. “I don’t think there’s another event that can make such a claim.”

F&I Think Tank was created in partnership with Ethical F&I Managers, a more than 5,000-member Facebook group founded by F&I and Showroom’s “Mad” Marv Eleazer. The preshow event is included in the price of a full show pass to Dealer Summit 2016. For more information or to register, click here.

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Dealership Compliance under the Gramm-Leach-Bliley Act

The Gramm-Leach-Bliley Act of 1999, or “GLB” as it is more commonly called, is the law with the biggest impact on the dealership community since the Truth in Lending Act was passed in 1968. From GLB flow at least two major rules that affect every dealership in America: the Privacy Rule and the Safeguards Rule. And because of those rules’ emphasis on protecting nonpublic personal information (“NPI”), the Red Flags Rule (authorized under the Fair and Accurate Credit Transactions Act (“FACTA”) of 2003), which treats identity theft, is often lumped together with them when considering the protection of customer data.

All three of those rules were discussed at the inaugural Compliance Summit by a panel comprised of Doug Fusco,CEO of DealerSafeGuardSolutionS, Becky Barrows, HR and compliance director for KeyRoyal Financial Services, and Michael Tuno, president of World Class Dealer Services.

It is worth noting that none of the panelists are attorneys, and none of their companies are law firms. Rather, they all serve in one way or another the dealership market, and the services of each have grown to address compliance issues dealerships face. That highlights a key take-away from the panel session, everybody who has a piece of the dealership industry can have a piece of the compliance function. If every vendor included a compliance feature that addressed its core services, dealerships would have much of their compliance needs addressed in the ordinary course of doing business. But that happy state has yet to arrive, so the panel spoke both to what can be done and what they are doing.

Becky Barrows affirmed that outside vendors are well-positioned to help with compliance issues. “Dealers are in the business of selling and repairing cars, so compliance can be a bit outside their wheelhouse. This represents a huge business opportunity for outside experts who can provide what dealers aren’t good at doing themselves.”

The first GLB area where a little knowledge and advice could be helpful to dealers is the Privacy Rule. Asked if the Privacy Rule is widely understood and followed by dealers, Michael Tuno responded, “No and no. No to all of the above!” He went on to explain that there is a disconnect between the language of a statute or rule and a dealer’s understanding of it. Using the Privacy Rule as an example, Tuno said that dealers were aware of the rule at the time it was issued, but had no idea what to do about it. Even the FTC’s online model form generator wasn’t much help – dealers were confused by the options they faced on the screen. It was as if the rule and the Government guidance were written by lawyers for lawyers, and most dealers aren’t lawyers!

What Tuno was able to do as an F&I partner for his dealerships was develop an understanding of the Privacy Rule and the FTC forms generator and walk his dealer clients through the process. You don’t need to be a lawyer to do that.

With respect to the Safeguards Rule, Tuno takes the same approach. As he put it, “The first thing I do for a dealer is ask if they’ve appointed a compliance officer, which the Safeguards Rule requires. If the answer is ‘no,’ I know we’ve got to help them understand the rule’s requirements and meet them. It isn’t hard – it’s mostly a process of education.”

Doug Fusco’s company develops compliance monitoring software and related business processes. From his perspective, GLB compliance is driven by “creating verifiable patterns and practices. Show that you have something in place and execute against it so you can defend yourself by making a greater than ‘check the box’ effort to comply.”

Fusco also endorsed the use of a compliance survey to help educate dealers about GLB and other legal requirements. A simple form that asks yes/no questions addressing all of the major requirements of GLB/FACTA creates a good road map, identifying both what is being done and what needs to be done.

“Simple” was a word Michael Tuno latched onto. “What we’ve found works the best is keeping it simple. Start there. You don’t want to get too complicated. Start with policies and procedures and then move on to training on those policies and procedures. And then audit the process to make sure it’s having the intended effect. The audit serves a huge function to keep the ship on the right path.”

The panelists agreed that GLB is all about protecting NPI. Becky Barrows explained what could constitute NPI in the dealership environment: “Anything that’s not available to the public. So we’re not talking about phone numbers. But checking account numbers and driver license numbers would be NPI. Like Michael’s company, we conduct audits to see how dealer’s actually protect NPI. And the number one offense is deal jackets lying around unprotected. Deal jackets are full of NPI, and if they’re not protected, the dealership has a real problem.”

Tuno followed up with his version of the Golden Rule as the sum and substance of GLB compliance. “Don’t leave unprotected any data you wouldn’t want other people to see. If you don’t want the world to see your credit report, don’t treat someone else’s credit report casually.”

The panel was asked to relate real-life GLB horror stories (careful to keep secret the offending dealers’ identities, of course). Doug Fusco told a common tale. “I was visiting a dealership that was a part of a fairly large dealership group. There was paperwork everywhere, and no effort made to keep it secure. I brought this to the attention of the General Manager, who shrugged and said, ‘yeah, but we lock it all up at night.’ So I conducted an audit – at 7:30 in the morning. Needless to say, there was no evidence anything had been locked up. I calculated $23 million in potential fines before I reported back to the General Manager. The big fines come from knowingly violating the law, and they knew. Needless to say, that got his attention.”

So how do you battle GLB and other compliance violations? Fusco offered his “3 E’s” – Education, Enablement, and Enforcement. Those vendors that are in the dealership are in a position to offer training, the tools that enable behavior consistent with that training, and the audits that enforce the process. This is not limited to “compliance companies.” F&I partners, HR services, income development specialists – anyone who has a dog in the fight can bring in the 3 E’s if the will is there to do it.

One valuable lesson that the panel provided was that reasonable minds can disagree about what documents actually contain NPI – but all agreed that this very uncertainty makes protecting all customer data the best possible practice. As Michael Tuno put it, “We don’t want F&I managers making decisions on a document-by-document basis, ‘protect this/don’t protect that.’ Protect everything and you’ll be good.” That’s the best practice.”

That is probably the simplest approach to GLB compliance, and the ultimate conclusion of the panel: protect everything and you’ll be OK. Vendors that serve the dealership community have a role to play in that effort. The future may well belong to those that do.

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Compliance Summit to Feature Rules and Regulations Panel

CHICAGO — Organizers of Compliance Summit have announced the inclusion of a panel discussion devoted to Rules and Regulations. The panel will be part of the Midwest event, which is scheduled to take place April 20–21, 2015, at the DoubleTree Chicago O’Hare in Rosemont, Ill.

“Rules and Regulations is a multifaceted topic,” said David Gesualdo, show chair and publisher of Auto Dealer Monthly and F&I and Showroom magazines. “That reality is reflected in the group we selected to lead this important discussion.”

The panel will be moderated by Jim Ganther, an attorney and compliance expert who serves as president of Mosaic Compliance Services. He will be joined by Robert Steenbergh, the founder and CEO of US Equity Advantage and Marc Waite, corporate counsel for Gurley-Leep Auto Management.

“I believe the composition of this panel is perfect for their task,” Ganther said. “We have a dealership group attorney in Marc Waite and a product provider attorney in Robert Steenbergh.”

More information about Compliance Summit, including registration and travel information, is available at ComplianceSummit.com. For sponsorship and exhibition opportunities, contact Eric Gesualdo via email hidden; JavaScript is required or call 727-612-8826.

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