Buy Here Pay Here Compliance

Compliance. That is a big, old establishment word that is ominous as it sounds. You must comply to be legal. Sounds a little communist, doesn’t it?

In BHPH, compliance is a little more involved than at a standard car dealership, which already has plenty of regulations to follow. In BHPH, we are primarily in the financing business. As a finance company, we have several different regulations to follow that are lending- and credit-related. Most of you know any legal action against you could cost you very large bottom-line dollars (maybe even your business).

In my experience, automobile dealerships never fare well when it comes to legal actions taken against them. Even if the dealership wins, the business is out thousands of dollars in legal fees, lost production and negative publicity.

This list of laws and acts that we have to follow in our business only covers a portion of what has to be or will soon be adhered to:

• Regulation B and Adverse Action Notices
• Advertising Laws
• Do Not Call Rule
• Fair and Accurate Credit Transaction Act
• Office of Foreign Assets Control
• Gramm-Leach Bliley Act and Privacy Notices
• Magnuson-Moss Warranty Act
• Red Flags Rule
• Equal Credit Opportunity Act
• Regulation Z and Disclosure
• Used Car Rule
• Fair Credit Reporting Act

There are other laws and regulations out there that have to do with employees, payroll, harassment, safety, etc., with many more to come if the current administration stays in power.

Each of the states also has regulations on top of the federal laws. The automobile industry is one of the most regulated industries in America today. The list made me wonder how we keep up with it all. Being in the business for 20 years has helped. Learning the laws as they changed made it easier to get my mind around all of them.

Starting fresh in the business and having to learn it all now would be a monumental task. It does not matter if you’re selling five cars a month or 5,000—these rules apply. With the new Financial Regulation Act passed in July 2010, we now have a new regulating agency operating through the Federal Reserve. This bureaucracy is setting up 18 new regulating departments. Any or all of these entities will make rules and regulations that can or will affect your operations in the coming months and years.

You should have a consultant or an attorney review your policies/procedures regularly to help you stay out of trouble. The expense up front of auditing your operation internally is much better than the cost of litigation later if you have a violation. Regulation is a fact of life. Face it, we are in the car business, and years ago, our peers gave the industry as a whole a bad reputation. Now, the business has changed for the better. Do your homework, get help, know the rules and set your business up to succeed.