This blog post was authored and submitted by Myril Shaw of Dealer Profit Services, LLC.
Compliance. No one wants to talk about it. It is that boring topic – just a bunch of useless rules, regulations and paperwork – until you get on the wrong side of law.
How does that happen? You inadvertently allow someone to become a victim of identity theft – or you sell to an identity thief. You don’t check closely enough and suddenly you have sold a boat to someone on the government’s drug or terror watch list. Maybe you get caught up in a money laundering scheme.
Do these things happen often? Absolutely not. They only need to happen to you once.
Selling to someone on the watch list could cost you up to $1,000,000.00 and up to 20 years in prison – and cash transactions count just like finance transactions do. Failure to properly dispose of Consumer Credit applications could cost you $2,500.00 per incident. Just over $42,000 per incident is the potential cost for the improper storage of personally identifiable information. The list goes on and frequently the infractions compound.
So – it does not take repeated sloppiness (or even simple lack of knowledge) for compliance violations to get expensive, or even put you out of business – or in jail. One event can do it.
All of that is the bad news. Compliance is no place to be complacent. That said, the government does give credit for good faith efforts to comply – even if mistakes are made.
Where does a good faith effort start?
Good faith is like horseshoes and hand grenades – close counts. Just trying, counts.
There are three key steps to demonstrating a desire, willingness and effort to be compliant.
- Five Compliance Process and Procedures Manuals must be printed, bound, executed by a Compliance Officer and be on display – the five manuals are Red Flags; Disposal; OFAC; Safeguard; and, USA Patriot Act.
- A recurring training program for all management and everyone who deals with private, personally identifiable information;
- A trained Compliance Officer who is familiar with the rules, the policy and procedure manuals and who will sign the manuals and ensure best compliance efforts.
Today, in the new virtual/no-touch/social distancing world, these rules have not changed – they just may be a little trickier. Here are some tips:
- The Patriot Act requires that you verify the identity of the person that you are dealing with – at the time of delivery you should do the following – have the customer leave their driver’s license and, if possible, their social security card (warn them in advance) on the table or in the unit being delivered before you present the documents for signing – verify and copy those and return them with the documents for signing
- Ensure that you have Red Flag checks turned on in your Credit Bureau returns
- Use soft credit pulls with Red Flag checks turned on for your cash buyers
- Slow down – even more – anyone in a rush today should be slowed and investigated fully – confirm that there are no Red Flags, verify identity
- While documents may be trickier to physically handle, the rules on Disposal and Safeguard have not changed – use gloves to handle the documents for 72 hours and to handle shredding for 72 hours – and shred and file these exactly the way they should be
Compliance is not fun, especially in COVID 19 days – it is more fun than any alternative, especially today. Demonstrate good faith on compliance and save yourself a whole lot of potential trouble.
