Do Your F&I Practices Comply?
By Daryl Kaiser
Auto Dealer Alert , September 2005

With the recent increased scrutiny and resultant lawsuits surrounding F&I practices at dealerships, proper F&I compliance with federal and state laws has become an important element of a dealership's operations.

While F&I abuses, deceptive trade practices, and the resultant class action lawsuits are widely known, which hopefully will decrease and deter occurrences, customer oriented dealers who strive to comply with the myriad of rules and regulations are finding problems in their F&I department practice processes and procedures. These problems are due to inadvertent mistakes, overlooked items, or just simply the dealer wasn't aware that a certain law or rule was in place that required compliance.

It is not uncommon to find issues with the paperwork that is used to document the transaction such as:

• Four square or selling form
• Buyer's order
• F&I menu selling form
• Credit application
• Retail and lease agreement
• Arbitration agreement
• Enrollment forms for ancillary products

What can a dealer do to combat this?Design a F&I policy manual to include polices on the following areas:

• Acceptable forms completion
• Prohibited practices
• Rate and product pricing policies
• F&I job description and pay plans
• Quoting payments
• Recontracting and unwinding deals

Addressing the above items is a start to documenting the proper F&I processes and procedures an F&I department should have. In addition, a dealership can have an independent review of its F&I processes and procedures performed in order to determine if it is compliant. Without appropriate compliance, a dealership could have substantial adverse legal exposure. We can help with any questions you may have. Call Daryl Kaiser at 248-223-3432 or contact your Plante & Moran advisor.