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WHEN DEALERS MAKE HEADLINES IT’S NOT GOOD FOR THE INDUSTRY

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BY

S. ALLEN MONELLO, D.P.A.,­MANAGING MEMBER

When headlines about a dealer are good – concerning benevolent acts of kindness and support for the community or a particular cause – it’s good PR for other dealers. But when those headlines speak of fraud, lawsuits and whistle blower employees, the entire industry can take a hit in the “image” department. It doesn’t matter whether you are an independent, franchise or RV dealer, consumers, regulators and plaintiffs’ attorneys will view you as “just another unscrupulous dealer.”

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As reported in the Tampa Bay Times (Sunday, May 8, 2016), an independent dealer located in Pinellas Park is alleged to have defrauded customers, according to his former comptroller and former customers. Although the dealership has been around for a while, was well established and had repeat customers, its alleged practices left several customers in a bad place.

A repeat customer (this was her third purchase from the dealership) began to receive late payment notices from her credit union for the car she traded in to the dealership during her last purchase. The credit union advised her that her lien was not paid off by the dealership and that she was responsible for the loan (over $16,000). When she called the dealership to find out what was going on, she learned that the dealership had closed. So far, 35 complaints have been filed with the DMV.

According to a former dealership comptroller, the dealership routinely overcharged for title and tag fees and employees were instructed to delay paying off loans on customer trades. These delayed payments (or no payment made at all in some cases) resulted in loan defaults and hits against customers’ credit scores. Allegations were also made that the owner directed employees to forge information on contracts (such as dates) to be able to maintain the dealership’s floor plan. A former customer reported he purchased a trade-in that was never paid off by the dealership. Before the comptroller left the dealership last June, she made copies of alleged fraudulent documents.

So how does this affect you? You may want to take this opportunity to ensure that your staff are following all laws and regulations regarding dealer licensing and consumer protection mandates. So here’s a quick review:

  1. By state law, dealers have 10 working days to pay off a trade.
  2. Trades must not be sold until the liens on them have been satisfied.
  3. Never charge more for tag and title fees than what Florida law requires.
  4. Contracts should never contain blank spaces when presented to customers for signature.

You already knew all of this. But it never hurts to “inspect what you expect.”


We will bring live training to your dealership! ­ ­For more information contact Allen at Allen@TheAICE.com­ or (727) 623-9075

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Industry News

WHEN CUSTOMERS ARE IDENTITY THIEVES

BY

S. ALLEN MONELLO, D.P.A.

MANAGING MEMBER

AUTOMOTIVE INDUSTRY CENTER FOR EXCELLENCE, LLC

We all know how much paperwork there is to complete a deal. We also know how many steps a dealership must follow to ensure it is complying with all state and federal laws. Sometimes dealerships don’t check enough; other times, no matter how many checks are conducted, the results aren’t good.

Such is the case when you end up selling a unit to an identity thief. A franchise dealer in the Tampa Bay area was recently reminded of this when it sold an Escalade to an identity thief for just over $102,000. I am not saying the dealership didn’t do all that it should have done to prevent the identity theft. Perhaps it did; I have no personal knowledge of the circumstances. Rather, this article is to remind you that it can happen to you, no matter what you do.

The victim of the identity theft was interviewed for an article that appeared in the Tampa Bay Times on May 23rd, 2016.­ He was alerted about the theft when a bank called him to ask him why he kept missing payments.­ After filing a report with law enforcement, he was told about the circumstances of the theft. The victim was quite surprised to learn how much information the thief had about him. The thief had the victim’s father’s address which he used as a reference on the credit application. The thief also had information going back to the victim’s first address of his business. Apparently, the thief had done his homework and had much more information than the victim’s name and social security number.

So what does this mean to you? Each dealership should review its Red Flags Rule policies and procedures to ensure you are doing all that is possible to “prevent, detect and mitigate” identity theft. Ask yourselves these questions:

  1. Are we running all the checks we can through one or more databases (credit reporting agencies, social security master death file, etc.)?
  2. When we come across a discrepancy (Red Flag) are we doing everything we can to find out why the discrepancy occurred and whether it could be explained?
  3. Is our written policy up-to-date?
  4. Have all sales and F&I staff been adequately trained to detect and prevent identity theft and do they know what steps to follow when they are dealing with a suspected identity thief?
  5. Are they asking appropriate challenge questions to determine whether the customers are who they say they are?
  6. When our software program identifies the customer as a “High Identity Theft Risk” are we doing anything about it or are we going through with the deal anyway?

There are many more questions that dealerships should be asking. If you don’t have good answers to all of the above questions, it’s time to reassess your level of compliance with the Red Flags Rule.

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(Allen can be reached at (727) 623-9075 or by email at Allen@TheAICE.com.­ You may visit his website at www.TheAICE.com­)


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Automotive Industry Center for Excellence, LLC (AICE)
1497 Main Street, Suite 344
Dunedin, FL 34698
Phone (727) 623-9075
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1-866-930-4577