What Compliance Moves BHPH Dealers Should Make

By Ken Shilson

The BHPH indus­try faces some impor­tant new legal and reg­u­la­to­ry chal­lenges from the new­ly formed Con­sumer Finan­cial Pro­tec­tion Bureau (CFPB), the Fed­er­al Trade Com­mis­sion (FTC), and the attor­ney gen­er­als’ offices in each state. All of these reg­u­la­to­ry author­i­ties will be mon­i­tor­ing con­sumer com­plaints to iden­ti­fy reg­u­la­to­ry vio­la­tions and those oper­a­tors who are vio­lat­ing the rules.

These reg­u­la­tors will inves­ti­gate con­sumer com­plaints and have the author­i­ty to levy sub­stan­tial fines for non-com­pli­ance.

In these cir­cum­stances, I rec­om­mend that all BHPH oper­a­tors do the fol­low­ing:

  • Care­ful­ly scru­ti­nize their adver­tis­ing and web­sites for state­ments which could be con­strued as false or mis­lead­ing.
  • Deter­mine that their doc­u­men­ta­tion match­es their inter­nal poli­cies and prac­tices.
  • Make writ­ten dis­clo­sures of all impor­tant con­trac­tu­al terms to every con­sumer.
  • Update and doc­u­ment their inter­nal col­lec­tion, under­writ­ing and com­pli­ance poli­cies and pro­ce­dures in writ­ing and ask employ­ees to sign a writ­ten acknowl­edg­ment that they have read and under­stand them.
  • Estab­lish writ­ten con­sumer-com­plaint res­o­lu­tion pro­ce­dures and pro­to­cols.

In 2012, many oper­a­tors addressed the first four points and appoint­ed a chief com­pli­ance offi­cer as required. Writ­ten con­sumer com­plaint res­o­lu­tion pro­ce­dures and pro­to­cols have not been pri­or­i­ties in the past but need to be in the future.

You should have a com­pe­tent attor­ney review your dis­clo­sures and con­tract doc­u­men­ta­tion and help you devel­op a “com­pli­ance man­age­ment sys­tem.” This will be mon­ey well spent.

I also rec­om­mend estab­lish­ing a wel­come call­ing pro­gram short­ly after each sale to ascer­tain whether the con­sumer had a pos­i­tive buy­ing expe­ri­ence. Dur­ing that call, all con­sumer com­plaints should be tak­en seri­ous­ly and addressed by the oper­a­tor at that time. Con­sumer com­plaints are best resolved before they become a com­pli­ance issue with reg­u­la­tors.

In cas­es where the con­sumer is being unrea­son­able, an operator’s writ­ten poli­cies and pro­ce­dures can be used to evi­dence how that oper­a­tor deals with con­sumer com­plaints. Upon inves­ti­ga­tion by a reg­u­la­to­ry author­i­ty, the doc­u­ment­ed poli­cies and prac­tices will be con­sid­ered in those cir­cum­stances.

This year, the reg­u­la­to­ry author­i­ties will care­ful­ly scru­ti­nize col­lec­tion pro­ce­dures. Col­lec­tors must be par­tic­u­lar­ly care­ful to avoid vio­la­tions of the Fair Debt Col­lec­tion Prac­tices Act. This will require more indi­vid­ual knowl­edge and train­ing.

Although the year ahead is full of legal and reg­u­la­to­ry uncer­tain­ty, pru­dent oper­a­tors should start the year with a proac­tive approach to com­pli­ance. You can’t con­trol what oth­ers do but each oper­a­tor must be respon­si­ble and account­able for their own actions. Best wish­es for a pros­per­ous New Year.

Ken Shil­son is pres­i­dent of the Nation­al Alliance of Buy-Here, Pay-Here Deal­ers (NABD). For more infor­ma­tion vis­it . NABD will be in Booth No. 1229 at the Nation­al Auto­mo­tive Deal­ers Asso­ci­a­tion Con­ven­tion & Expo in Orlan­do, FL on Feb. 8—11.

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