As automotive industry compliance grows more and more complex, dealerships are increasingly starting to videotape their F&I transactions. By recording these interactions between employees and customers, dealers hope to collect evidence that their compliance programs work as intended, or otherwise spot issues as they occur in the real world and take swift corrective action.
As with all emerging approaches and technologies, the operative question is: Is it working? To find out, Kynzie Sims invited George Kurisky to the Smart Compliance Podcast. George is an attorney and shareholder at Johnson DeLuca Kurisky & Gould, in which capacity he supports auto dealers, dealer groups, and other corporate and business clients in legal areas such as alternative dispute resolution, litigation, ownership transactions, and more.
Over the course of half an hour, Kynzie and George talked about the pros and cons of videotaping F&I transactions, how dealers can avoid adversarial situations with consumers, and a few other topics currently on auto executives’ minds. Here are a few highlights:
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1. Recordings Are a Reflection of Your Compliance Program, Not a Substitute for It
“At the baseline level,” said George, “your video or audio recording of transactions are only as beneficial to you as the training of your team members.” He told Kynzie that, depending on the overall health of a compliance program, a recording can either be used as “a sword” by investigators and plaintiffs’ attorneys, or and “a shield” that demonstrates compliance:
“If you routinely engage in best practices and your training and compliance programs are firmly in place, then all of your recorded actions will reflect that. If they’re maybe not quite so good or there are kinks in the system, they can be your worst enemy, because they perpetuate for all time—or for at least the statute of limitations, in many instances—the bad parts of the transaction, which may or may not be actionable by consumers.”
The dealers who are pleased with their audio and video recordings are the ones, says George, whose “training and compliance tend to be very sound, and the video and audio recording tends to serve as a very strong shield in the event of a complaint.”
In other words, recordings can help a dealer make sure employees have the information they need to be successful in their roles. However, if a dealer’s compliance program is lacking, bringing in video probably isn’t a great idea until the foundational elements of a compliance management system are in place.
2. Recordings Can Be a Powerful Tool for Ensuring Consistent Practices Across Rooftops
George told Kynzie that recordings can be great tools for dealers who operate multiple rooftops and where certain F&I departments don’t perform as well as others, or have higher incidences of disputes with customers:
“Management or ownership are looking for ways to improve their F&I transactions to increase their training and to eliminate adversarial situations between consumers and their offices. One way [to do that] is to ensure people are jumping through all the right hoops in their transactions.”
Showing employees what can go right during a transaction, and what can go wrong, helps the team understand the actual implications of their actions. It’s important that employees know there’s a reason for compliance; it’s not just because the boss likes things done a certain way.
3. The Mere Fact of a Recording May Help Improve Compliance Outcomes
George acknowledged that, in his experience with clients, he’s seen videotapes help and harm dealers. “Well performed transactions that are recorded are of great benefit in the defense of any allegation of an improper transaction,” he said, “and those that are not as well performed are then captured for posterity.”
That said, he surmised that employees may potentially behave better if they know they’re being recorded: “We haven’t had as much exposure to transactions going wrong. And for those groups that have instituted audio and video recording, I believe statistically that their incidence of consumer complaints has been reduced.”
How can you know whether a recording will be the shield that protects your dealership or a sword that stabs you in the back? It all depends on how you train your workforce to be compliant with your policies and procedures—ahead of the time when they would be put in a situation in which they need to execute those responsibilities in a videotaped setting. To make sure recordings work in your favor, download our free cheat sheet.
Video Recording F&I Transactions?
Videotaping F&I transactions is a growing trend. But will it be the shield that protects you from a frivolous lawsuit or the sword that stabs you in the back if you’re sued?