Top Five Car Dealership Compliance Violations

“Some dealerships take compliance seriously, some don’t,” says Doug Fusco, founder of Dealer Safeguard Solutions.

Originally published on WardsAuto News
May 9, 2023 | STEVE FINLAY

Doug Fusco credits his wife for inspiring him to found Dealer Safeguard Solutions, a digital company that serves car dealers.

“It’s like a police officer sitting in the showroom,” Fusco says of the system that fights two different types of wrongdoing.

First, the software guards against con artists who use fake IDs to bilk dealerships out of cars. Fusco tells a few tales about those capers.

Second, the system helps dealerships comply with government regulations regarding the privacy of sensitive customer information.        

Such compliance with government regulations is a big deal for auto retailing – and it’s getting bigger.

That’s because the Federal Trade Commission’s expanded Safeguards Rule is slated to take effect June 9.

The thicker rule book aims to strengthen financial and data security for various small businesses, including auto dealerships. Safeguard Rule fines are stiff for violators. Then there’s the potential of facing litigators who specialize in suing dealers.

Some dealers are more prepared for the impending beefed-up rules intended to protect customer information from threats that are both internal (i.e., employees who play fast and loose or are just plain careless with customer information) to external (i.e., cyberattacks).

Compliance conscientiousness varies from dealership to dealership.

“There’s everything from cowboys to Boy Scouts,” Fusco tells Wards. Some dealerships take compliance seriously, some don’t.”

Fusco was working in data security for information technology provider UCS (which later acquired Reynolds & Reynolds in a fish-eats-the-whale merger) when his wife gave him the idea for creating Dealer Safeguard Solutions.

At the time, she was a compliance officer for the Van Tuyl Auto Group, which is now Berkshire Hathaway Automotive.

“She was responsible for compliance but not authorized to do anything about it,” Fusco recalls. “Compliance shouldn’t be something you pay attention to only if the showroom isn’t busy; it’s a full-time effort. She told me her frustrations, and I got to thinking.”

The Van Tuyl organization became the first customer for Fusco’s newly created company that’s now part of Informativ along with CreditDriver and Credit Bureau Connection.

Today, Dealer Safeguard Solutions offers digital protection of customer information and deal jackets. It protects dealerships from various internal transgressions, ranging from unauthorized alterations to deal jacket information (such as retrospectively padding a potential buyer’s income on a credit application) to external threats (such as criminals using fake driver’s licenses while posing as customers).

His company’s solution to the latter scheme is to run proffered driver’s licenses through a dealership validation scanner. 

“Just eyeballing a driver’s license isn’t enough for a dealership to confirm someone’s identity,” Fusco says. “Fraudsters have gotten so good and so have their fake IDs.”

Fusco tells of one ambitious con artist who victimized 10 Connecticut dealerships, conning them out of 13 cars in one week. His mode of operation was to soften up salespeople by giving them $1,000 downpayments.

What happens to those illegally acquired vehicles? “They’re often wrapped up and shipped overseas,” Fusco says.

On the compliance front, he outlines the top five trouble spots.


Not having a way to enforce a consistent, compliant process on every deal. Hope is not a strategy, but that’s what many dealers rely on when it comes to compliance.

Being busy or short-staffed isn’t an excuse that resonates with regulators.

“A dealership needs an enforceable physical and administrative compliance process,” Fusco says.


Sales staff storing consumer information on their cell phones or personal email accounts. It’s not just salespeople. Fusco tells of a general manager who admitted to storing photos of hundreds of driver’s licenses on his phone.


Not securely sending and receiving consumer information for remote deals. Instead of asking consumers to email or text information to salespeople (which is not compliant), send them a secure link that allows them to upload the documents needed to process the sale.


Private consumer information left exposed in unsecure locations, such as on a salesperson’s desk or a copier. Leveraging a platform that almost completely eliminates the use of paper protects both staff and customers, Fusco says.


Not storing dead deals for the required five years. That represents a lot of deals with a slew of personal information dealers are legally responsible for storing, protecting and proving that they’re retained. Fusco says storing dead deal jackets electronically supports compliance efforts.


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