Compliance Checklist

General Considerations

  • Registering your business as a (corporation or LLC) may insulate you from personal liability.
  • Establishing a related finance company (RFC) may provide legal and accounting benefits.
  • Obtaining all necessary licenses for your dealership and RFC (*note some state may requires you to be licensed as a debt collector.
  • Obtaining insurance coverage, such as Errors and Omissions and/or Directors and Officers Coverage, to avoid “bet the company” risk.

Don’t Open Your Doors Unless You…

  • Appoint a Compliance Officer.
  • Appoint a Privacy Officer.
  • Know you obligations under: GLB, TILA, ECOA, FCRA, UDAAP etc.
  • Determine how you will safeguard customer information.
  • Establish a policy for accepting both cash and credit card information and know how you will report cash transactions over $ 10K (IRS form 8300).
  • Learn your regulator’s “do’s and don’ts”.
  • Know your record retention obligations and have a plan to comply.
  • Know how legal requirements when transacting business with a military service member.
  • Ensure your consumer transaction forms are compliant and consistent with one another.
  • Establish a hiring process which includes a job application that offers protection, approved questions for interviews, and strategy to hire subject matter experts.
  • Develop employment contracts with confidentiality and non-solicitation provisions and accurate job descriptions with acknowledgement by employee.
  • Create an employee manual, which includes policies to follow all relevant laws, a policy on document and information security, and code of conduct.
  • Train your employees on legal obligations

Originating the Transaction – The Preliminaries

  • Make sure your advertising including social media is compliant with state and federal laws.
  • If you are pulling or reporting credit, know your legal obligations the credit reporting laws.
  • Make sure your credit application is up to date with FCRA and ECOA and business practices.
  • Understand your legal obligations for sending adverse action and risk based pricing notices.
  • Have a compliant and effective credit underwriting policy.
  • Know your obligations under OFAC.

Originating the Transaction – "We’ve Got a Deal"

  • Originating practices must be consistent with floor plan covenants.
  • Rebate method must match RISC.
  • RISC and DMS must treat interest the same way.
  • Hierarchy of payment application must match RISC, if applicable.
  • Late and NSF fees must match RISC and not exceed permissible limits in state law.
  • When needed, use a “spot delivery” form.
  • Consider use of an arbitration clause.

Servicing of Accounts

  • Draft a Collections/Servicing Manual and review collections training materials.
  • Learn relevant state and federal collection laws.
  • Ensure all contact with customers is legally compliant.
  • Be aware of limitations for contacting consumers on cell phones.
  • Develop a process to resolve customer complaints and document the process.
  • Objectively track the type of complaints received and be pro-active in addressing them.
  • Establish policies for accepting payments and payment processing.
  • Establish policies for releasing titles must be in compliance with state laws.


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