14 Mar

Posted at 09:38h in Blog

On a busy Saturday at a dealership, what is sometimes the first corner to be cut in the sales process can be the costliest. Something as simple as taking a photo of a customer’s driver’s license when that potential buyer is in a hurry to take a test drive can result in big fines. Beyond that, there are many other pitfalls from lead to sale.   The newly expanded FTC Safeguards rule takes effect June 9, 2023, and requires administrative, physical, and technical compliance to ensure the security and confidentiality of consumer information, prevent unauthorized access to consumer information, and to protect against any threats or hazards to the security or integrity of that information. Whether you’re the owner, General Manager, Dealer Principal, F&I Manager, or General Sales Manager, the new guidelines impact you. These compliance requirements can have a huge impact on your dealership if you’re not prepared and will result in devastating fines. Most dealers struggle with what the sales team collects, creates, and controls, which is why they need a platform to enforce compliance across the four “Ps”: people, policies, paperwork, and process. Here are five of the top violations that involve those four Ps and that are putting your dealership at risk and how leading dealers avoid them. VIOLATION 1: Not having a way to enforce a consistent, compliant process on every single deal. The saying is “hope is not a strategy”, but that’s what many dealers rely on when it comes to compliance. Whether you have a busy dealership, staff turnover or haven’t consistently trained your staff, your dealership needs an enforceable physical and administrative compliance process that leverages technology to ensure your dealership is compliant. Bonus points if the solution is one that your team will love and will help them sell cars faster (like ours). VIOLATION 2: Sales staff storing consumer...

11 Mar

Posted at 09:11h in Blog

86% of dealers think fraud is getting harder to prevent. Search Google and you’ll find story after story of criminals trying and often succeeding in stealing vehicles from dealerships by pretending to be someone else with the help of a fake ID.In the last year according to an eLend study, 79% of dealers had an identity fraud-related loss and 60% lost at least three vehicles due to identity fraud.“I would say just before the pandemic, it (identity fraud) started to explode, and it continues to be a bigger and bigger challenge for dealers,” said Doug Fusco, founder of Informativ’s Dealer Safeguard Solutions. “I think fraudsters are getting better and they're getting smarter. The IDs they're generating are very authentic looking and they're also not coming in on a Monday morning, they're coming in when the dealerships are at their busiest hoping that they can get through the hoops and the distractions and not get caught.”Add to that–fraudsters have unlimited time to work on this and when they win, they win big. All that has made preventing fraud a big challenge for dealerships.Informativ offers ID fraud detection technology that scans an ID, verifies it against 250+ unique state driver’s license barcodes, and instantly alerts you if the ID is fake or real.But beyond implementing tech to identify and prevent fraud, there are things dealers can look for to avoid getting ripped off.Money is no object: If the car buyer isn’t putting any money down, doesn’t care what the payments orterms are, you may want to take a closer look at that customer. “If it’s ‘yes, yes, yes, check the box andjust get me through the process’, that’s the first thing we see pretty consistently,” said Fusco. “They'renot putting any money down. They don't care what the payments are, they don't care...

01 Apr

Posted at 08:59h in Blog

Joint Measures from Consumer Credit Reporting Agencies Remove Nearly 70% of Medical Collection Debt Tradelines from Consumer Credit ReportsEquifax, Experian, and TransUnion have announced effective July 1, 2022, they will no longer include medical debt paid after being sent to collections on consumer credit reports.  In addition, the time before unpaid medical collection debt appears on a credit report will increase from 6 months to one year.The companies also announced that beginning in 2023, they will only report medical debt when the amount owed is at least $500.  They estimate that these changes will remove nearly 70% of medical collection debt tradelines from consumer credit reports. The announcement comes on the heels of a CFPB report issued earlier this month titled “Medical Debt Burden in the United States.”  The report aims at medical debt collections, with the CFPB indicating that it intends to determine whether it is appropriate for medical debt to be on credit reports.  Medical debt collection was also the subject of a January 2022 CFPB compliance bulletin which dealt with medical debt collection and consumer reporting requirements in connection with the No Surprises Act.Last month, the Department of Veterans Affairs announced that it was adopting new standards for when it will report information on outstanding medical bills to consumer reporting companies.  The CFPB called the new standards “a clear and important precedent for the health care industry.”Key Takeaways The U.S. big three major credit reporting agencies—Equifax, Experian, and TransUnion—are removing most medical debt from credit reports starting in July.The change may provide relief to Americans dealing with financial consequences from incurring medical debts.Experts applaud the change but say changes from credit reporting agencies alone are not enough to alleviate healthcare costs.Businesses may find an increase in credit scores ranging from a few points to dozens rising in the coming monthsIn SummaryEquifax, Experian, and TransUnion —...

03 Dec

Posted at 08:53h in Blog

Most businesses don’t have it in the budget to hire a compliance consultant or pay for compliance training, despite the fact violations can be hefty and potentially even include jail time.We aree on your side and is here to provide a stable foundation for a solid compliance program that will keep you on the right track with your compliance obligations.Through this series of newsletters, we will cover compliance as it pertains to a credit transaction. Read on…INTRODUCTIONKnowledge is Power! Unfortunately, we don’t all have time to be a superhero. Keep these newsletters nearby, then rest assured that you’ll have the answer or answers you need when in doubt.Informativ is well known throughout the industry as the “best-in-class” leader of credit reports, and federal and state regulatory compliance tools. We will provide a straightforward understanding of the What, When, Why, and To Whom to satisfy credit report compliance requirements. Nothing in these materials should be regarded as rendering legal advice for specific cases. Please seek appropriate assistance from qualified legal counsel.DEFINITION OF A CREDITORA creditor is anyone who requests information from a person, persons, or business with the intent of providing or facilitating credit. Also, a creditor is any business that accepts a credit application regardless of whether you are the funding source or providing credit information to a lender. You must abide by FCRA, ECOA, GLBA, and other agency guidelines, and failure to do so can result in hefty fines leveled against an individual or business. Towards the end of this newsletter series, we will provide a list of all compliance fines and secure document storage rules. LET’S BEGIN WITH THE ITPP (Identity Theft Prevention Program)The Red Flags Rule requires creditors to implement a written Identity Theft Prevention Program. Templates are most likely available from your compliance provider or available on the internet...

17 Nov

Posted at 08:39h in Blog

What is a Soft Pull?In general, soft pulls are classified into two standard terms. Prescreen and Prequalification. Both do not affect your consumer credit report because they are not an application for credit. A prequalification soft pull is a request to be prequalified to apply for credit. A prescreen soft pull is a non-consumer-initiated offer of credit typically sent without your knowledge. Both do not affect your credit score and do not show other credit providers or lenders you have been shopping for credit. A soft pull or soft inquiry is used when a lender or finance source requires access to a consumer credit file to decide to extend credit. A consumer credit file consists of a consumer’s financial data collected over time and stored by one or more of the three major credit reporting agencies. In the United States, those are Experian, TransUnion, and Equifax. Your data can be accessed when you apply for a form of credit from a bank, auto dealer, or other lending sources—the same way one would use a traditional hard pull or hard inquiry. The difference is, a hard pull or hard inquiry is used when an applicant is applying for a line or form of credit, whereas a soft pull is not an application for credit but an application to apply for credit. Your consumer credit file is used by lenders to determine a consumer’s creditworthiness or credit risk and is typically accompanied by a credit score. Your credit score is calculated by factors such as previous repayment history of financial loan obligations or debt. Those accounts and debt can consist of everything from your mortgage loan, car loans, revolving charge cards, etc. A stable repayment history shows creditworthiness, whereas a poor repayment history shows credit risk. Your credit score is like a summary of your credit history.  There are many different types of credit...

23 Sep

Posted at 08:11h in Blog

Most businesses intend to consummate a deal for financing every time a hard-pull credit report is requested. However, when that transaction is not consummated, there is an obligation to send an Adverse Action notice to the applicant within a 30-day time frame.That’s when problems arise. Regardless of the number of Adverse Action letters you are mandated to send or deliver, the in-house process requires a dedicated employee or additional resources that don’t exist in the budget. When it comes to regulatory compliance, is it worth the financial risk and the negative effects of an Adverse Action notice slipping through the cracks? And let’s not forget the cost of postage stamps is always increasing.That’s when problems arise. Regardless of the number of Adverse Action letters you are mandated to send or deliver, the in-house process requires a dedicated employee or additional resources that don’t exist in the budget. When it comes to regulatory compliance, is it worth the financial risk and the negative effects of an Adverse Action notice slipping through the cracks? And let’s not forget the cost of postage stamps are always increasing.With all that in mind, we developed the most advanced and most SECURE method of sending Adverse Action notices via email or text message, at a fraction of the cost of traditional methods.Current delivery methods offered by other providers limit your business to producing Adverse Action letters at the time of the credit pull, before submitting the application to lenders, or relying on a process of snail-mailing letters within 30 days of the credit pull.Eliminate the burden today with our electronic delivery service. Don’t worry, if for any reason we cannot electronically deliver a notice, we have a fail-safe backup that will send it via snail mail in the time frame allowed by law.The setup process is...

09 Sep

Posted at 09:05h in Blog

Adverse Action SimplifiedAdverse Action notices are by far the most misunderstood of all compliance regulations. To put it in the simplest terms, Adverse Action is an explanation of credit denial or the inability to come to acceptable terms by either the creditor offering credit terms or the applicant’s counteroffer of credit terms.You must provide an Adverse Action notice to inform the applicant or applicants that a decision of credit or denial of terms has been reached. The content of the letter includes the reason code(s) provided from the CRA or credit reporting agency or agencies.Adverse Action Notices Explainedin part with ECOA (Regulation B) Part 1002.2 and additional sources.An Adverse Action Notice must be produced within 30 days of the date the credit report is obtained based on the explanation above. If a counteroffer is deemed to be unacceptable by the customer, the Notice must be provided to the customer within 90 days after delivering the counteroffer. The ECOA does not specify how the Notices are to be delivered. But they advise to deliver in person, by regular mail, by fax or electronically. Note that a customer accepting a counteroffer of credit, no matter how unfavorable, negates "adverse action" under the ECOA definition. If that doesn't happen, either because no lender approved the customer or the customer refused all credit offered, you are stuck with an adverse action situation. See the official Federal Trade Commission ruling here.Who is required?Creditors are generally required under the Equal Credit Opportunity Act and Regulation B to notify applicants within 30 days of receiving a “completed application” of the creditor’s approval, counteroffer, denial or other adverse notice regarding the application. Regulation B notifications of action taken are designed to help consumers and businesses by providing transparency to the credit underwriting process in a timely manner. Information that is generally...

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