Compliance training grows with digital retail

With customers going deeper into the car-buying journey away from the dealership, compliance training has become increasingly important.

Shannon Robertson, executive director at the Association of Finance & Insurance Professionals, said his organization and others have seen an increase in compliance training requests from auto retailers as digital sales have gathered momentum amid the coronavirus pandemic.

"Dealers that we felt like that we have not heard from for a while are following up with us, asking us to provide training, and there seems to be an increased emphasis on getting it done now," he said.

In the past, some stores have relied on the finance department to have its proverbial ducks in a row to clean up any mistakes that may have occurred in the sales process.

But with some salespeople now presenting certain F&I products to customers, they need to be educated on properways to sell extras that range from less-risky add-ons such as tire or key protection to more- regulated items such as guaranteed asset protection.

Online retail tools can give dealership customers access to things such as payment calculators, vehicle protection plans or online credit applications.

"So the customer is entering those arenas early on," said Ritch Wheeler, vice president of training at F&I product and training company American Financial & Automotive Services Inc. "And so because of that, the first person that engages with the customer, whether it be a BDC manager, an Internet manager, a salesperson … oftentimes that person has to be equipped with the information to have that conversation."

Even before the rapid rise in digital retailing, Wheeler said his company has always encouraged dealers to send sales and BDC managers to compliance training, because "F&I is a holistic process."

That means there should always be communication between front-line personnel and the F&I office.

This holistic approach is more important than ever with a growing number of customers venturing deeper into the purchase process online. F&I managers need to move further up that buying funnel, Wheeler said.

As the shift toward more customers inquiring about F&I products earlier in the sales process appears to be a permanent one, compliance training across staff is paramount, Wheeler and other experts say.

Salespeople increasingly have to deal with remote transactions, and that alone opens up new areas where such personnel need to be mindful of how they're conducting a sale, said Terry O'Loughlin, director of compliance at Reynolds Document Solutions.

For example, there are issues with vertifying the identity of the remote buyer. The fraud-prevention Red Flags Rule should be understood by whomever is handling the remote transaction.

Another challenge is how to remotely sell voluntary protection products, also known as ancillary products. It goes beyond just the sale — there are questions surrounding how to handle a test drive, value a trade-in and deliver a vehicle remotely without triggering certain laws or regulations a salesperson may not be familiar with, O'Loughlin said.

He noted the Federal Trade Commission's Cooling-Off Rule as an example. If a salesperson tries to sell an F&I product while delivering a vehicle, that rule, which applies to door-to-door sales and gives a buyer three days to cancel a transaction, could suddenly come into play.

O'Loughlin, a former regulator with the Florida attorney general's office, said it is more important than ever that customer-facing personnel are trained properly.

"I would not unleash someone in my store on a consumer who wasn't thoroughly trained," he said, adding that training should be coupled with ethical standards in the store. He said every dealer should have a compliance officer who handles meeeting the regulations.

Robertson noted that having a compliance department is essential, "so that an appropriate process is put in place, and your compliance department makes sure that the dealer follows that process."

That protects everyone involved, including the dealership's staff and the customer, he added.

Some dealership groups have been proactive in regard to training, F&I professionals told Automotive News.

#1 Cochran Automotive, of Monroeville, Pa., is putting every one of its variable operations managers through Automotive Compliance Specialist certification. The group has had its F&I personnel certified by the Association of Finance and Insurance Professionals.

"We believe that every variable manager that is in contact with [private personal information] or customer information needs the knowledge to know what the laws are," said Justin Buzzell, the group's corporate finance director.

The company revamped its fair-credit and voluntary protections policies — which are in line with recommendations by the National Automobile Dealers Association — and rolled them out across its roughly 1,200 staff members in the first quarter of this year.

"It gives our team members and variable managers the guideposts to work within and to feel very comfortable," Buzzell said.

Buzzell said a variety of things sparked the effort, driven by dealer principal Rob Cochran, and that the rise in digital retailing amid the pandemic was chief among them.

"We're just excited to get it done," Buzzell said. "And we think that over time, it's going to really help with our customer experience, it's going to help with customer retention, it's going to help with team member retention."