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2015 GNYADA Membership Directory
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UDAP activity can also result in criminal prosecution. Three sales managers, a finance manager, and three
salespeople who worked at a dealership in Alabama face an 11-count indictment of federal criminal charges
of conspiracy, bank fraud, wire fraud and aggrevated identity theft for actions taken to fraudulently boost
loan approvals and deceive consumers. The dealership employees falsified customer information by inflating
income and the value of vehicles being financed, payment-packed optional aftermarket items into the price
of the vehicle, and falsified supporting documents in credit submissions to banks to get the deals purchased.
Defrauding federally-regulated financial institutions by falsifying credit documents is a federal crime as is wire
fraud for fraudulent information submitted to automotive finance companies. Customers were also defrauded.
One count also charged aggravated identity theft for the unlawful use of a customer’s Alabama-issued personal
identification card during the commission of the bank and wire fraud. Two other managers who were charged
earlier pleaded guilty to conspiracy and bank fraud and are awaiting criminal sentencing. As federal crimes
pursued in this case by the F.B.I. and U.S. Attorney’s Office, dealer employees in all states are at risk of being
charged personally for criminal misconduct if they engage in these or similar activities.
Recommended Practices
1.
Adopt a dealership code of conduct and train all your employees on it.
While you can’t specifically prohibit every possible practice your employees should not do, you can establish
a set of principles and guidelines to govern employee conduct. Your employees have to know how you want
your business to be conducted, and each employee should sign their affirmation that they understand and
will comply with the code of conduct to reflect well on your dealership. Your code of conduct and training
should contain specific standards of behavior that exemplify the principles embodied in the code of conduct.
Enforce your code of conduct by reviewing deal files, listening to customers and stressing the importance of
proper behavior. Make employees understand shortcomings and why it is necessary to immediately correct
them. Make compliance with the code of conduct a part of compensation decision-making.
2.
Be honest, direct, transparent, and fair in all dealings with consumers.
Make sure customers have the chance to read and understand all documents they are signing. When
selling a vehicle, understand the difference between puffery (stating a salesperson’s fanciful opinion about
a vehicle) versus making representations about a vehicle which can be legally actionable under UDAP laws
if relied upon by consumers. Consumers have won or favorably settled numerous cases against auto dealers
when the dealer made representations about a vehicle’s performance qualities, condition, prior usage and
financing terms. Active concealment of damage repair or defects in a used car sale or odometer tampering
run the risk of both a UDAP claim and a lawsuit for common law fraud.
3.
Know your state’s law on the amount of “doc fees” a dealer can collect, and if the law does not
prescribe a speci c amount, be sure you can reasonably defend your “doc fees” in relation to your
cost of preparing documents and titling work for vehicles you sell.