Automotive professionals and executives face a complex challenge in meeting the increasingly stringent auto dealer laws and regulations imposed by federal and state governments. There are a wide range of critical legal requirements dealers must understand and implement to avoid crippling penalties. Many auto dealerships may feel they don’t have the time, expertise, and manpower to implement these mandatory compliance procedures.
However, failing to comply with vital car dealer laws and regulations can be a costly mistake. Here at Total Dealer Compliance, we specialize in helping auto dealerships enact compliance procedures and protect their dealerships from hefty fines and potentially even criminal penalties. Is your dealership fully compliant? Check out the top 10 most important automotive laws and regulations you need to be aware of.
• Gramm-Leach-Bliley Act Privacy Rule. The GLBA requires that auto dealers protect the privacy of their customers and protect the security and confidentiality of their personal data. This impacts how auto dealers collect, store, and share a client’s personal and financial information. Dealers must take steps to ensure that customers understand how their data is being shared, and that data is secured effectively.
• Gramm-Leach-Bliley Act Safeguards Rule. The GLBA also requires that companies take real, tangible steps towards information security. This includes a written information security plan, a thorough risk analysis, and more. Financial distributions must make specific efforts to comply or risk penalties.
• Disposal Rule. The disposal rule is a federal regulation which requires companies that collect consumer reports to dispose of them in a secure format that ensures customer privacy. Proper disposal can include shredding papers, security erasing digital records, and more. Auto dealers must be sure that consumer reports are not left disorganized and unaccounted for.
• Used Car Rule. This regulation mandates that auto dealers post a Buyer’s Guide before offering a used vehicle for sale. This guide must include information on the car’s warranty, an advisory to have the car inspected by a mechanic before the purchase, and information about the major mechanical and electrical systems in the car. Dealers must be sure that this guide is posted “prominently and conspicuously” on any used car for sale.
• Equal Credit Opportunity Act. Auto dealers are considered lenders, and must comply with ECOA. This means dealers must not discriminate based on factors like race, color, religion, national origin, sex, marital status, or age when providing loans. This law also requires that dealers notify applicants of action taken on their applications, report credit history in the names of both spouses on an account, retain records of credit applications, and more.
• Red Flags Rule. This law requires that auto dealers have a written Identity Theft Protection Plan (ITPP) designed to detect and protect against the common warning signs of identity theft. This includes checking for suspicious documents, reviewing unusual changes in a customer’s credit report or account activity, and more. Dealers must be proactive in protecting against identity fraud to comply with the Red Flags Rule.
• Form 8300 and Reporting Cash Payments of Over $10,000. Auto dealers may deal with large cash payments when selling cars, and as such must comply with these federal reporting requirements. Your dealership must file a Form 8300 whenever a cash payment of over $10,000 is received. This form is used by the IRS and Financial Crimes Enforcement Network (FinCEN) in protecting against money laundering.
• Office of Foreign Assets Control (OFAC). The Office of Foreign Assets Control administers and enforces economic and trade sanctions against targeted countries and groups, especially groups involved with terrorism, drug trafficking, and other crimes. Auto dealers are required to check customers’ names against the Specially Designated Nationals List - a list of people and groups targeted by the OFAC.
• OSHA 29 CFR 1910.157.Almost every business, including auto dealers, is required to have an Emergency Action Plan to “facilitate and organize employer and employee actions during workplace emergencies.” Your dealership must have this written document prepared to protect employees and comply with OSHA standards.
• Regulation Z. This is also known as the “Truth in Lending Act” and requires that lenders, including auto dealers, disclose all credit terms in a clear and meaningful way. It also requires that lenders use the same standard terminology and expression of rates. Auto dealers must be sure customers are presented with clear written information about the terms of their loans to comply with this regulation.
Does your auto dealership comply with all of the above laws and regulations? Many dealerships have not met the required compliance standards, and may find themselves subject to heavy fines and other regulatory and legal problems as a result of non-compliance. To learn more about car dealer laws and regulations, and to build a comprehensive compliance program for your car dealership, contact Total Dealer Compliance today.