Remember when we told you 2017 would be the year of the compliance management system? Well, that was the nice way to put things. We could just as easily have said it would be the year noncompliant businesses get their comeuppance.
Over at Auto Dealer Monthly, Tom Hudson (chairman of Hudson Cook) recently published an article about why “flim-flam artists” and the dealerships that employ them are about to face the music. According to Hudson, there’s an upcoming crackdown against F&I employees who engage in fraudulent and felonious activities such as “powerbooking,” misrepresenting buyers’ credit information, and failing to make proper disclosures to consumers.
This time around, it’s not just the Consumer Financial Protection Bureau and the Federal Trade Commission kicking down dealers’ doors. Spearheading the crackdown are companies that buy retail installment contracts, motivated by recent penalties and settlements with state attorneys general. Hudson writes:
“Just as dealers have conferences periodically to catch up on new developments, the AGs from the various states talk and meet regularly to share information on their latest efforts to enforce the laws. You can bet that the AGs involved in these actions will be crowing about their successes to their colleagues from other states.
The companies involved in these actions will certainly be tightening up their antifraud practices, but they won’t be the only ones. Every finance company, bank and credit union in the business of buying RICs from dealers has by now gotten the word that the AGs are targeting dealer fraud. They will be parsing every word of the settlement agreements to see what steps the companies were required to incorporate into their RIC-buying process.”