June 15, 2021

F&I experts weigh using cameras to drive compliance

In an increasingly digital era, dealerships are debating the pros and cons of recording customer interactions in finance and insurance offices for compliance purposes.

Proponents say installing cameras in dealerships drives F&I employees to more closely adhere to compliance standards set by industry regulators. Others believe recording is invasive and unnecessary as long as dealerships hire scrupulous workers and train them to follow the standards.

Some F&I offices have cameras, but it’s “not what it used to be,” said Ryan Daly, district manager, F&I East Central Region, at KPA, a company that markets F&I compliance, environmental health and safety, and human resources management software.

Daly, who worked as a dealership finance manager from 2013 to 2017, said he had a camera on him at all times during transactions. He didn’t mind it; in fact, he reviewed customer interactions to improve his sales technique.

“The pro for me is kind of scaring somebody [by] saying … ‘You are on tape,’ ” Daly told Automotive News.

Recording isn’t just a compliance or training tool. Saved recordings can be reviewed with customers to pinpoint their concerns. They even may be used as evidence, which can aid dealerships if they are faced with litigation.

But recording interactions isn’t a compliance cure-all.

Filing away the footage, even with ramped-up data storage capabilities, can be a burden. Searching through an accumulation of recordings can be tedious. And customers may not want to be on camera, a factor that poses a potential problem in states where two-party consent is required to record conversations.

Many dealerships that haven’t taken the plunge with cameras are employing other methods to prevent compliance lapses.

The industry is transitioning from passive to active by leveraging new technologies to ramp up compliance, said Doug Fusco, CEO of Dealer Safeguard Solutions, of McKinney, Texas, which offers a digital compliance enforcement platform.

Based on what he’s seen, putting cameras in F&I offices falls into the passive category: They record something and only reveal afterward whether there’s an issue, Fusco said.

“You look at it after the fact and go, ‘Uh-oh, we did this, we shouldn’t have done this,’ ” he said.

Some technologies — such as digital retailing tool docuPad, a large flat screen attached to an F&I manager’s desk — let customers and managers see the sales process as it occurs.

“Rather than record and then somebody review it after the fact, [docuPad] kind of has a forced march that says, ‘This is the presentation, this is the way my F&I provider is going to go through the sales process so that there’s consistency, there’s no disparate impact, there’s no variability where I’m charging different rates for races with similar credit scores,’ ” Fusco said.

Providing ample compliance training to F&I personnel also is crucial, Fusco said. But those efforts aren’t always fruitful, he added.

“Unfortunately, we’ve got turnover,” Fusco said. “We’ve got temptation, distraction. People learn in different ways, people will remember things for different periods of time.”

He said he’s seen cases where F&I managers paid someone else to take a compliance course for them because they were busy.

“Just because they’re trained so much that they signed off on a list that says ‘I was trained on these 155 policies’ doesn’t mean [compliance is] gonna happen,” Fusco said.

Federal scrutiny of F&I offices could increase under the Biden administration, especially as the Consumer Financial Protection Bureau and Federal Trade Commission — agencies that bring auto-related enforcement actions — are getting new leaders who are critical of F&I product sales.

There may be too much focus on recording in F&I offices, said Laurie Foster, founding partner of dealership consultancy Foster Strategies Group, of Charlotte, N.C.

Foster, who has approximately 30 dealership clients, said dealerships’ best bet is to hire people with integrity and drill them on F&I compliance rules.

“You don’t have to videotape them,” Foster said, “because then why aren’t we videotaping every sales manager as they’re talking about a deal because we know, we know, that there are discriminatory things that happen there.”