ACKNOWLEDGEMENT OF EXECUTION OF PURCHASE DOCUMENTS

         On this____dayof_______,20___,I/We,___________________________________ appeared  before a Notary Public in the State of __________ and executed the documents for my/our purchase of a ___________________________________________, having Vehicle Identification Number _________________________________________, from _____________________________________________, having its principal place of business at ________________________________. 

          I/We understand and agree that my/our purchase of the above-described vehicle is deemed to have occurred in the State of _______________ where the documents were prepared and will be executed by an authorized representative of the Dealership and where the vehicle will be delivered to me/us or an agent appointed by me/us to accept delivery of the vehicle.  The validity, interpretation and performance of the purchase transaction and any related documentation shall be governed by and construed under the laws of the State of _______________.

          I/We further understand and agree that it is my/our sole responsibility to ensure that the vehicle meets any applicable State emissions and pollution control laws, as well as any other State laws pertaining to titling and use of the vehicle in the State of _______________. 

          I/We have read and accept the terms and conditions of this Addendum, which is incorporated by reference into the Retail Purchase Agreement.

___________________________________              ___________________________________

Name                                                                          Name

State of ____________________

County of  __________________

          On this ____ day of ________________, 20___, _______________________________ appeared before me personally and, having presented sufficient evidence of his identity, acknowledged his/her/their signature(s) on the foregoing instrument as his/her/their free, knowing and voluntary act.

                                                                      ____________________________________

                                                                        Notary Public

RELEASE OF ALL CLAIMS

KNOW ALL MEN BY THESE PRESENTS, that the undersigned,_____________ _________________________, located at _________________________________, in consideration of the sum of ______________________________($_____________) and other valuable consideration, the receipt of which is hereby acknowledged by the undersigned, voluntarily and knowingly, executes this Release with the express intention of effecting the extinguishment of obligations, as further designated herein.

The undersigned, with the intention of binding [him/her/it] self, [his/her/its] heirs, executors, administrators, successors and assigns, does hereby expressly release and discharge ______________________________________________, [his/her/its] heirs, executors, administrators, successors and assigns from all claims, demands, actions, judgments and executions, known and unknown, which the undersigned may have ever had, now has, or may have, or which the undersigned’s heirs, executors, administrators, successors or assigns may have, or claim to have, against_______________________ __________________________________ [his/her/its] heirs, executors, administrators, successors or assigns, created by, or arising out of, an automobile transaction involving a________________________________________(VIN ________________________) which was [purchased/leased] by the undersigned on or about ___________________.

The undersigned declares [he/she] has read the foregoing Release of all Claims and understands all of its terms and hereby executes the same voluntarily and with full knowledge of its significance. Furthermore, the undersigned declares that this Release contains the entire agreement between the parties.

______________________________ ______________________________

Name Date Witness Date

______________________________ ______________________________

Name Date Witness Date

Go ahead.  Take a good look at your dealership.  It appears to be in good shape, but you know there are compliance  problems.  You just don’t know where.  If only you could see what I see?  What do you think it looks like from my  perspective?

First of all, you need to understand what “compliance” means to me.  Compliance is having your dealership’s paperwork, practices and procedures all in accordance with the law. Compliance is an ongoing process that must be constantly monitored and managed – from the top down!

How can you improve dealership compliance and avoid problems before they happen, while increasing customer satisfaction and overall dealership profitability at the same time?  It can be done.  Remember, I am the guy who says compliance can be easy!

KEITH’S WAY TO MAKE DEALERSHIP COMPLIANCE EASY

1. MAKE PROBLEM AVOIDANCE AND PROBLEM RESOLUTION A PRIORITY

Take action to prevent problems
Make problem resolution a priority; designate a point person, if necessary
Look at the entire deal – not just the potential problem
Consider all options before taking action (remember, doing nothing is taking action)
Review your insurance coverage
Check relevant third party contracts
Use advisors who understand the business

2. HAVE A PLAN FOR YOUR BUSINESS

Selling or Leasing?
New or used vehicles?
Traditional retail, nonprime, buy here – pay here or related finance company financing?
The Service Department is for internal work or customer pay work?
“The problem with aiming at the wrong target is, sometimes you actually hit it!” – KW

3. CONDUCT A “WALK-THRU” OF YOUR DEALERSHIP

Start at the front door and remember, there is a back door too.
Some of the things to look at are obvious (dealership licensing, paperwork and FTC Stickers) and some of the things are not (wastebaskets, copies and computers).

4. REVIEW DEALERSHIP PAPERWORK ANNUALLY AND WHENEVER CHANGES IN YOUR BUSINESS OCCUR

Dealers should have their paperwork reviewed and, as necessary, updated on a yearly basis.  Pay attention to not only legal and regulatory activity, but industry developments and changes in how you conduct business.
Having a relationship with a vendor who stays up to date and can keep you apprised of compliance issues as they develop will help streamline this process.  You should limit who has authority to revise the paperwork and have procedures in place to ensure that employees do not use paperwork brought in from outside sources, such as the last Dealership where they worked.

5. UNDERSTAND F&I AS WELL AS YOU POSSIBLY CAN

Establish solid relationships with your lenders.
Know about the products and services you offer, be able to explain them and answer questions and be sure to actually sell them to the consumer.
Terms like finance reserve, GAP, warranties, service contracts and satisfaction guarantees are not just words, they have a specific meaning.
Menu-selling may be good, but an F&I Purchase Confirmation is even better.
Remember the customer makes decision, and be sure to document what they decide.

6.  AUDIT COMPLETED DEALS ON A QUARTERLY BASIS

Make sure the right paperwork is being used all of the time.
Make sure the paperwork is completed properly.
Check to be sure that automated systems are functioning properly.
Do modifications need to be made to accommodate any changes in your business plan, the law or the industry to keep you current?
Are there any gaps in your deal or areas of misunderstanding where additional training is needed?

7.  HAVE AN EFFECTIVE ADVERTISING STRATEGY

Be familiar with the Federal and State Laws that regulate automobile advertising.
Review advertisement proofs for compliance with these Laws.
Remember, a statutorily imposed duty cannot be delegated to a third party.
Know what advertisement is going to run where, and when.
Material limitations or exclusions to offers must be stated in a clear and conspicuous manner.
Direct mailers and telephone solicitations or follow up calls are different and can raise a whole host of other issues.

8.  KNOW WHAT THE INTERNET IS AND WHAT TYPE OF ACTIVITY YOU ARE DOING THERE

Whether it is your own website or a third parties website, whenever you think of conducting business on the Internet, always ask yourself:

What am I doing?  Where am I doing it?  How am I doing it? Who am I doing it with?
9.  READ ALL CONTRACTS (INCLUDING LENDER AGREEMENTS) BEFORE SIGNING THEM AND KNOW WHAT THEY SAY

Dealers should make sure they have a copy of the dealer agreement for each lender and service provider with whom the Dealership does business.

10. BUILD A TEAM

Invest in yourself and your employees: Stay current, and train your employees well! Use advisors, trainers and consultants that understand the business.  Your work in the compliance area, is never done.

Okay, now you have a glimpse of what I see when I look at your dealership.  Your dealership is likely in pretty good shape, but I see various areas within the dealership that could use a closer look and a little fine-tuning.  There is paperwork that needs to be updated and policies and procedures that need to be developed or revised along with ways to improve customer satisfaction, prevent mistakes and solve existing dealership problems, not to mention many unanswered Internet questions.  If these issues are attended to and appropriate action is taken, it will result in a more efficiently run and profitable dealership.

Accomplishing this must be very complicated, time consuming and expensive, right?  It doesn’t have to be.  In fact, you can do most of it yourself provided you know what to look for and where. If it were my dealership, I would start by checking out these websites when I get back to my dealership:

www.KeithWhann.com – the Toolbox, Problem Solved! and Car Counselor sections.  Take your time going over the Article Take A Good Look At Your Dealership: Do You See What I See? and obtain a copy of The Car Counselor’s Guide To Conducting Your Own Dealership Compliance “Walk-Thru” if you want to give it a try.

www.NIADA.tv – Video and audio presentations on a wide range of topics.  Be sure to watch the segments from the 2006 NIADA Dealership Compliance and Profitability Expo.

www.NIADA.com – various articles on related subjects in Used Car Dealer Magazine.

www.IndependentDealer.com – information on this topic and related subjects along with links to regulatory agencies.

Motor vehicle dealers are increasingly becoming targets for disputes about improper disclosures and deceptive trade practices and, in particular, dealership F & I practices.  The negative reputation continues to get fuel from media programs that foster the consumers’ perception that misrepresentation is rampant in the motor vehicle industry.  This is occurring even as many dealers are working diligently to make their sales and F & I practices more disclosure and consumer friendly.

The goal is to ensure that all of the Dealership’s products and services are offered to all of the customers all of the time.  Claims frequently raised by consumers are related to allegations that the dealership’s representatives failed to make disclosures or made inconsistent disclosures. Examples of these claims include that the dealership included the cost of optional products or services that the consumer did not know he was purchasing in the price of the vehicle (commonly referred to as “payment packing”) or was told that he had to purchase them in order to complete the transaction.

A popular F & I trend geared toward avoiding consumer claims regarding deceptive F & I practices is “menu selling”.  Using a menu selling approach can help ensure Dealership F & I products are presented in a consistent and professional manner.  When done correctly, a menu selling approach should provide the customer with complete information about the F & I products and services that are available at the dealership and create a dialog where the customer is involved in the decision-making process.  Typically, customers are more satisfied if they feel like they have made an intelligent, well informed purchase decision selecting products and services they truly desire.

Let’s be clear though, menu selling will not, in and of itself, eliminate all of the dealership’s potential exposure in the F & I department.  In fact, it may raise a number of additional legal and regulatory issues for the dealership.  I have reviewed many F & I menus for Dealers that contain incomplete information about the products and services offered, inappropriately make reference to products as “insurance” or “environmental protection products,” improperly use the word “waiver,” and make reference to a “package” when in fact all of the products and services being offered by the dealership are being sold individually.

The more thorough the menu, the more protection it should afford the dealership. The menu presentation should let customers know that all products are optional and will not affect their ability to obtain financing. It should include all of the products and services available with consistent descriptions of each one and, at a minimum, how much the product or service will increase the customer’s monthly payment.  Finally, the menu will often contain the ability for a customer to designate the products they elect to purchase and those they decline.

To avoid potential pitfalls, dealers should evaluate their current sales process to determine if the sales strategy supports a full disclosure selling effort.  The dealership’s written policies should stress ethical and honest sales practices and detail how performance will be regularly assessed.  These written policies, along with an ongoing audit process of completed deals, can be effective defenses for the Dealership to unfounded consumer complaints.  Dealers should also consider how F & I Department pay plans are structured and their potential impact on the issue.

Traditional dealership sales paperwork can also play an important role in this area.  Using documents such as an F & I Product Purchase Confirmation in conjunction with an F & I Menu gives the dealership another opportunity to discuss the F & I products and services that are available, while reinforcing that the F & I products that have been offered to the consumer are optional and verifying that the consumer had the opportunity to read the applicable brochures, applications and contracts and to ask questions if any of the information is unclear.  Finally, utilizing a Delivery Confirmation, as opposed to a “We Owe” or “Due Bill”, gives the dealership a final opportunity to obtain a customer’s acknowledgement that he had the opportunity to review the documents and understands the entire transaction.

Dealership sales and F & I paperwork should be reviewed and updated at least on an annual basis, as well as anytime the dealership modifies its product offerings, to ensure that all paperwork accurately reflects the products and services available at the dealership.  If you find a few questions you need answered along the way, visit the Car Counselor section of the www.KeithWhann.comwebsite.  Keeping your F & I materials up to date and employees properly trained can go a long way in protecting your dealership from unwanted legal exposure, while increasing overall customer satisfaction and dealership profitability in the process.

With the regulatory climate being what it is in the motor vehicle industry, there is no time like the present to think about auditing your dealership’s cash reporting policies.  As some motor vehicle dealers are discovering, failing to comply with the Cash Reporting Rules can be costly.  One dealer that was audited by the Internal Revenue Service (IRS) to determine compliance with the Rules was notified that the dealership owed more than $236,000 in fines and penalties for 10 non-reported cash transactions.  Remember, failing to report cash transactions involving $10,000 or more is not only a violation of the Internal Revenue Code, but also the USA Patriot Act.

On October 26, 2001, following a flurry of legislative activity that occurred in the wake of the September 11th terrorist attack on the United States, the President signed the Patriot Act into law making a number of amendments to the anti-money laundering provisions of the Bank Secrecy Act and the Money Laundering Control Act of 1986.  The amendments were intended to make it easier to detect, prevent, and prosecute international money laundering activities and the financing of terrorism.  One of the requirements under the USA Patriot Act is the reporting requirement adopted pursuant to Section 365 of the Act.  Pre-existing laws required financial institutions to file a Currency Transaction Report (CTR) with the Financial Crimes Enforcement Network (FinCEN) whenever they received large sums of money in one or a series of related transactions.  Section 365 of the USA Patriot Act expanded the scope of entities required to file reports to include “anyone” engaged in a trade or business that receives more than $10,000 in cash in one transaction (or two or more related transactions).  Section 365 also requires financial institutions to establish procedures that enable employees to track all cash transactions to determine when a report should be filed and prohibits anyone from structuring a transaction to avoid the cash reporting requirements.

The Form used to report such transactions, titled “IRS Form 8300/FinCEN Form 8300,” is virtually identical to the IRS Form 8300 that motor vehicle dealers are required to complete pursuant to a similar provision under the Internal Revenue Code.  After enactment of the Patriot Act, the IRS issued a Rule amending its regulations to clarify that the information reported to the IRS on cash transactions is also required to be reported to FinCEN.  Motor vehicle dealers were required to begin using the new Form as of January 1, 2002.

In order to comply with the Form 8300 filing requirements, it is important to understand how the term “cash” is defined for purposes of reporting.  The term “cash” means U.S. and foreign currency in excess of $10,000.  It also includes a cashier’s check, money order, bank draft, or traveler’s check having a face amount of $10,000 or less when two or more are presented or when it is combined with cash so that the total amount exceeds $10,000.  The term “cash” does not include a personal check, a check drawn on the account of a business, certified personal and business checks, and amounts charged to a credit card are not considered cash.

If the dealership receives $10,000 or more in cash, the Form 8300 should be filed by the 15th day after the date the cash was received.  If the due date falls on a Saturday, Sunday or legal holiday, it should be filed on the next business day.  If a dealership receives more than one cash payment for a single transaction or for related transactions, it must report the multiple payments if it receives a total amount that exceeds $10,000 within any 12-month period within 15 days of the date the dealership receives the payment that causes the total amount to exceed $10,000.  Keep in mind that filing the Form 8300 is not the dealership’s only obligation; it is also required to give a written statement to each person named on a required Form 8300 on or before January 31st of the year following the calendar year in which the cash is received.  The statement must show the name, telephone number and address of the information contact for the dealership, the aggregate amount of reportable cash received, and that the information was furnished to the IRS.

Given the current political climate regarding tax reform and preventing terrorism, enforcement in this area has likely just begun.  The dealership may be subject to penalties if it fails to timely file a correct and complete Form 8300 or it fails to furnish a correct and complete statement to each person named in a report and it cannot show that the failure was due to reasonable cause.  Therefore, it is important that motor vehicle dealers develop a written policy that explains how cash transactions involving $10,000 or more will be handled and provide ongoing training programs for its employees.  In addition, the dealership should implement auditing procedures to ensure that it remains in full compliance with the filing requirements.  If you discover that a cash transaction has not been properly reported, you can file the Form 8300 late.  Filing late may result in some fines and penalties, but they are insignificant compared to the fines and penalties the dealership may incur for not filling at all, which include fines of up to $500,000 for corporations, seizure of assets and, in some cases, imprisonment for up to five years.