Digital Compliance, Part 2
Digital Compliance, Part 2

Last month in this space, we discussed the existence and usefulness of inexpensive “digital” compliance tools. For purposes of this series, we consider “digital compliance” to mean any compliance tool or solution that is:

  • Web- or computer-based
  • Automated
  • Efficient
  • Effective

Part 1 evaluated digital compliance as it applied to OFAC, the Safeguards Rule, the Red Flags Rule, and F&I menus. This month we’ll look at the Dodd-Frank Act, Environmental, Health & Safety, Human Resources, and Compliance Training. Next month (assuming reader mail doesn’t suggest additional topics) we’ll wrap up by examining digital compliance solutions for Product Training, Deceptive Trade Practices, and Audits & Review.

Dodd-Frank Act

The topics of Adverse Action Notices and Risk-based Pricing Notices have generated great angst in the dealership community of late, due in large measure to the Dodd-Frank Wall Street Reform and Consumer Protection Act. I could argue that Act neither meaningfully reforms Wall Street nor protects consumers, but it certainly got dealers’ attention.

The reason for dealer attention was the expansion of disclosures that adverse action notices must contain. Dodd-Frank amends the Fair Credit Reporting Act to require creditors to disclose in their adverse action notices:

  • A numerical credit score used in making the credit decision
  • the range of possible scores under the model used
  • Up to four key factors that adversely affected the consumer’s credit score (or up to five factors if the number of inquiries made with respect to that consumer report is a key factor)
  • The date on which the credit score was created
  • The name of the person or entity that provided the credit score

And then there’s risk-based pricing. Dodd-Frank requires risk-based pricing notices (RBPN) be given in situations where credit is offered on terms “materially less favorable” than “the most favorable terms available to a substantial portion of consumers” where the credit decision was “based in whole or in part on the consumer report.” In the alternative, dealers may provide an “exception notice” to all consumers after a credit score is obtained and before a financial contract is consummated.

Confused yet?

Fortunately for dealers, many third party vendors in the credit-approval process provide compliant adverse action notices and RBPN. In addition, CRM and DMS systems generally can print a compliant notice as well. You can check out CoreLogic Credco’s solution at; RouteOne's at; and ProCredit Express' at So you’re covered, right? In the immortal words of Lee Curso, “Not so fast, my friend…”

It’s easy to provide a customer in F&I with an exception notice, but what about unsold showroom traffic? And how do you ensure a proper notice was actually provided in F&I, or emailed (after securing permission to use email), or mailed within 30 days of a credit bureau being pulled? And how do you document that your dealership complied? Remember, in the world of compliance, if it isn’t documented, it didn’t happen. So be sure to determine that the solution you choose addresses those issues.

Environmental, Health & Safety

In the EHS arena, dealerships need to comply with OSHA, DOT, EPA, State regulations, and the local press corps if things don’t always work out. Inspections are a part of this, and those generally require real people making actual site visits. But the miracle of the internet can improve and automate many processes.

For example, consider Material Safety Data Sheets (MSDS). An MSDS explains the properties of a given substance used or present at a dealership. They are intended to provide workers with procedures for handling or working with the covered substance in a safe manner, and must be available for workers and emergency personnel.

MSDS can be stored, catalogued and updated in thick black three-ring binders. Or the appropriate MSDS can be accessed online and maintained on the dealership’s behalf by a third party vendor. For my money, the latter approach is the way to go.

Similarly, DOT/Hazmat training can be had online. Online solutions for the management of documentation are also available, including inspection reports, issue logs, safety committee meeting notes, DOT and other employee certifications, and accident reports. Online dashboards make status easy to observe and track. For one such vendor, see KPA at

Human Resources

Much of the value of digital compliance solutions lies in their ability to create repeatable, verifiable processes. One of the areas in which this capability is tremendously important is Human Resources (HR). Treating all employees consistently and fairly is vital in order to both do right and avoid lawsuits based on discrimination or wrongful termination.

Web-based applications exist to make consistent and compliant HR actions easy. Such tools address Recruitment and applicant training, performance management, incident reporting, even online advice from employment law attorneys. Dashboards can provide a bird’s-eye view of the status of individuals and the dealership as a whole.

When employees sue employers, the value of being able to document reasonable actions cannot be overestimated. Web-based solutions create checklists and processes to be followed, and a secure archive of those actions from which reports can easily be generated. Paper employee files look archaic by comparison.

For an example of such a web-based solution, see HotlinkHR at

Compliance Training

True fact: delivering a motor vehicle in an American retail transaction is one of the most heavily-regulated activities on earth. It is only slightly less regulated (deep breath…) than building a nuclear power plant on a bald eagle eating a manatee in the wetlands behind Al Gore’s house. Seriously. A dealership’s daily business involves the Fair Credit Reporting Act, Equal Credit Opportunity Act, Regulation M, Regulation Z, the Magnuson-Moss Warranty Act, Red Flags Rule, Safeguards Rule, Used Car Rule, Holder-in-Due-Course Rule, Privacy Rule, Disposal Rule, Credit Practices Rule, Telemarketing Sales Rule, Cash Reporting Rule, CAN-SPAM, FTC Act, FACT Act, OFAC, and the Equal Employment Opportunity Act.

That was just a partial list – to tell you the truth, in all this confusion I kind of lost track myself. So you’ve got to ask yourself one question: How can a dealership’s non-attorney employees follow laws they don’t even know exist? Do you feel lucky? Well do ya, punk?

With apologies to Dirty Harry, it’s easy to cut through the confusion with a web-based legal compliance training program that educates dealership employees on the laws that govern their jobs. Coupled with a Learning Management System, records and reports are created that demonstrate who took the training, when, and how they did on the module-end test that confirms learning took place. Done right, this can even create admissible evidence in support of a dealership’s position in consumer litigation.

Curricula can be tailored for the specific job description of the learner. So, for example, every employee can take Sexual Harassment training, while only F&I personnel would take a module on the legal implications of F&I menus. Automated reporting features can be configured to give the appropriate manager regular emails concerning the progress of those in his department.

To see one such program – mine – go to

If you’ve made it this far, good news: only one more article to wrap this up. And the finale will include a compliance checklist to keep all these obligations (and the options to address them) straight.