Your 10-Point Compliance Checklist

I have a high school senior. I have an ulcer from thinking about college visits, college applications, senior pictures … and the list is growing by the day. Much like managing a high school senior’s chaotic final year with a to-do checklist, dealerships need to rely on a compliance checklist to stay organized.

As a compliance consultant, I review thousands of deal jackets annually. I observe incomplete or poorly utilized checklists that vary from deal to deal. To maximize operational efficiency, you must use the same checklist every time.

Set a precedent that sales and finance-and-insurance should retain copies of the checklist at their desks and sign off on specific action items as they are completed. While the responsibility of the checklist should fall on sales and F&I, the accounting office must conduct a final review as a backstop.

The checklist helps the dealer manage the paperwork, track the process and review key items. It should start with the basic information that is unique to every deal, then follow the flow of a deal from sales to F&I and then accounting.

1. The Basics

• Customer name
• Deal date
• Deal number
• Sales professional
• F&I manager

2. ID, Red Flags and OFAC

• A valid, legible government issued identification must be documented for every deal.
• Run and clear all red flags in accordance with the Federal Trade Commission’s Red Flags Rule.
• Run an Office of Foreign Assets Control check on all parties, including third parties.

3. Credit Application Completion

•  Confirm that the five key credit determinants are consistent across credit applications.

o   If there are differences, supporting documentation is required.

o   If there are alterations, the customer must initial to acknowledge the change.

6. Product Enrollment Forms

• All voluntary protection products must be sold within your pricing guidelines.
• The price of the products must be disclosed on the enrollment forms.
• All product enrollment forms must be signed.

7. Contracts

• Contracts require signatures. Ensure all parties have signed:

o   The buyer’s order or lease order

o   The RISC or lease agreement  

• The amount due must match the amount financed on the RISC.

8. Down Payments

• The down payment must match the amount stated on the buyer’s/lease order and the RISC or lease agreement.
• If there is a credit card policy in place, does the down payment fall within your established limits?
• Cash (or cash-equivalent) down payments of $10,000 or more require an IRS Form 8300.

9. Recontracts

• Mark all original documents “void” and keep them in the file.
• If applicable, attach a signed copy of the acknowledgement of rewrite to voided docs.
• Present new contracts to the customer and obtain his or her signature:

o   Accept/decline and product enrollment forms

o   Buyer’s/lease order

o   RISC or lease agreement

9. Additional Documentation

• Some deals include additional compliance documentation, including:

o   Credit score disclosure

o   Used-car buyer’s guide

o   Privacy notice

o   Vehicle history report

• If a signature is applicable, obtain it and retain a copy in the file.

10. Department Signoff

• To complete the checklist, sales, F&I and the accounting office should each initial its section and check one of three boxes:

o   Yes means its section is complete.

o   No means its section is not complete.

o   N/A means it played no role.

Consult with dealer counsel to tailor the checklist to meet your operational needs. With effective and consistent execution, you should notice improvements in compliance and identify new training opportunities.

Penny Bell is an associate at Automotive Compliance Education (ACE) and gvo3 & Associates.