KEY TAKEAWAYS
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Growing up, many of us were told that it didn’t matter if we won or lost – the important thing was to just try our best. That’s still solid advice for youth sports. But it doesn’t work as well for dealerships looking to build and maintain a compliance program.
Customers don’t care how hard you tried. They care what actually happened. Ditto for regulators like the FTC. They only care about what is, and is not, working.
That’s why “good enough” isn’t good enough. Dealerships that want the kind of compliance program that prevents FTC audits need to build in proactive systems that are powered by more than good intentions.
Here are six things to keep in mind as you build yours.
1. Know How FTC Audits Actually Start
An FTC audit is the kind of surprise that no dealership wants to deal with. It’s often instigated by customer complaints, and it generally doesn’t come with much warning.
By the time the dealership is aware of an FTC audit, in fact, the investigation behind it is usually well underway. Before anyone shows up, they’ve already audited your digital footprint – including your website, social media outlets, advertisements, and disclosures.
Go Beyond Good Intentions: Your online presence is your first audit. Review your offerings and disclosures for compliance regularly rather than waiting for someone to call you on something.
2. Aim for a Strong, Living Compliance Program
Nobody’s perfect. Even the most conscientious compliance program is subject to the humans who operate within it and the mistakes they make. But here’s where a little extra effort can make a difference.
Document your processes so no one has to guess what “compliant” looks like. When it comes to pricing disclosures, for example, staff should not have to assume what they can and cannot say. They should know exactly where to look for the right answer.
And by monitoring those processes and controls regularly and making adjustments as new regulations emerge, you’ll have a program that’s evolving in real time – not relying on what’s worked in the past.
Go Beyond Good Intentions: Is your compliance program current and vital? Great. Now schedule regular staff training to make sure your people know all about it and what has changed.
3. Build a Bulletproof Consumer Complaint Process
Because customer complaints are the impetus of most FTC audits, it’s imperative for dealerships to have a solid process for documenting and responding to them.
No dealership wants an unhappy customer. But many complaints can be handled quickly and easily at the dealer level if they’re recognized and addressed early. An unresolved or misrouted complaint, on the other hand, is the kind that tends to escalate beyond the dealer and become a compliance issue.
That’s why a solid complaint process should incorporate…
- Clear internal routing from frontline staff to decision-makers.
- Fast response and resolution timelines.
- Less friction for customers to report issues.
Not only should your complaint resolution process be accommodating, but customers should also find it easy to register their feedback in the first place. It’s about meeting customers where they are through things like…
- Website feedback submission forms that are easy to find and complete, and are routed to the staff member(s) that are designated to respond.
- Links in email signature blocks that make it simple to reach your designated staff members directly.
- QR codes in showrooms and service areas that point to the feedback submission forms.
The goal is to accept and respond to customer complaints before they turn to regulators.
Go Beyond Good Intentions: A customer complaint isn’t a death knell for a long-term relationship. It’s an opportunity to turn things around. Make sure your complaint process shows your customers that you care what they have to say.
4. Audit Your Website Like the FTC Would
What do you see when you look at your website? Links to special offers. High-quality videos of vehicles in action. Photos of staff. These can all help your dealership stand out.
But they’re not necessarily what regulators are looking for when they review your site. The FTC’s concerns run more along the lines of things like pricing displays, fee disclosures, and advertising language. Once you’ve determined that you’re compliant in these areas, audit your online presence to look for the following:
- Missing required disclosures tied to so-called triggering terms, such as “payments” or “financing.”
- Disclaimers that are buried or disconnected from pricing.
- Instances of inconsistent or unclear fee presentation.
Part of this exercise should also include checking to see how any third-party website providers and marketing platforms the dealership uses control disclaimer placement and present disclosures across devices. Even if you don’t control those platforms, you may still be liable for what they’re showing to customers.
Go Beyond Good Intentions: Nothing kills the fun vibe of a good website like a bunch of disclaimers or disclosures. But nothing kills the fun vibe of good business like an audit. Make a checklist of review items for your website and schedule regular reviews.
5. Stay on Top of New Enforcement Focus Areas
There’s a good rule of thumb to remember when it comes to running your dealership. If it’s important to the FTC, it should be important to you. That’s why it’s so important to stay on top of any shift in regulatory expectations.
A good example is the FTC’s recent focus on how fees are baked into vehicle pricing. In March, the FTC sent warning letters to 97 auto groups regarding this issue. And while there are still some questions, the FTC’s focus is now clear.
As such, proactive, adaptive dealerships should be…
- Staying up to date on compliance interpretations.
- Reviewing their advertised offers and transaction documentation to make sure everything is still in line with expectations.
- Eliminating any gaps between what is advertised online and what people are relaying in the showroom.
And the next compliance frontier? While specific requirements are rapidly evolving, customer data privacy is a growing area of focus. Which means data collection, data sharing, and customer consent should be on every dealer’s radar.
Go Beyond Good Intentions: Even practices that were once thought to be “technically compliant” may now be considered deceptive. Make it a regular exercise to get out ahead of these kinds of changes long before a regulator or plaintiff’s attorney points them out to you.
6. Build a Culture of Transparency (Not Just Compliance)
Building a culture of transparency means embracing over-disclosure as a strategy. In doing so, you’ll not only lessen your chances for an FTC audit, you’ll also earn a lot of good will with your customers, leading to…
- Fewer complaints.
- Increased trust.
- More repeat and referral business.
Go Beyond Good Intentions: Don’t think of over-disclosure as overkill. Present it to the organization as a mindset shift – from compliance as a regulatory necessity to compliance as a competitive advantage.
Prevention Is the Only Real Protection
No matter how much you prepare your people and tighten up your operations, complaints can still happen and trigger an audit.
More often than not, however, consumer protection audits are the result of patterns, not one-off mistakes. And by being as proactive, transparent, and customer-focused as possible when it comes to compliance, you can make sure your dealership doesn’t fall into one of those patterns.
But it takes intentional effort to get there. Good intentions may not prevent scrutiny, but systems do.
If your compliance program wouldn’t hold up to an FTC audit today, it’s time to fix that. We can help you build one that does. Get in touch when you’re ready to get started.
