Car dealers have been living in the era of compressed margins and now they are entering a cyclical sales slowdown. Now, more than ever, general agents must be the trusted advisors that bring value in all areas of dealership operations. In this difficult environment compliance becomes critical because fines and penalties might be devastating especially when it is harder to make money by selling cars. More importantly, implementing a comprehensive compliance program results in transparency and culture change.

Companies like mine are working with agents across the country to provide onsite compliance audits and online compliance training for all departments of a car dealership. This approach allows the agent to promote the culture of compliance and bring the necessary value-added service to their dealer clients. 

However, there are still employees in the equation. There will always be bad apples. There’s no way around it. 

Statistics show that 75% of employees have stolen at least once from their employers. Not to mention, 33% of all business bankruptcies are caused by employee fraud. Bad apples will find a way to circumvent any compliance program, which is why a whistleblower hotline is so critical for the organization and survival of car dealerships today. 

Employees might cut corners in order to up their sales, and therefore, their commissions. They want to put more cars on the road, and in order to get there, they may throw theirethics to the curb. To hit these numbers, they might be violating dealership policies and procedures and that in turn will trigger compliance-related penalties and fines, which can completely undercut the profitability of any dealership in seconds. There needs to be a way for employees to submit an anonymous report in order to alert the owner about a pressing issue. 

A whistleblower hotline does exactly that, and there are plenty of providers to choose from. I encourage you to find one you like and consider implementing it in your dealerships. The benefits of these services include: 

1. Reputation and Asset Protection

At the end of the day, the success of a dealership is built upon its reputation. Dealers need to have a stellar reputation in order to increase customer satisfaction and retention. In addition, dealerships with a good reputation are able to attract talented employees. For example, you might find out that one of the salespeople is sexually harassing customers, and that will have a detrimental effect on the dealership’s reputation.

There are plenty of assets in a car dealership that must be protected, including cars, parts, computers, and customer data. Implementing a fraud hotline might be the difference between knowing and not knowing what is really going on in the dealership. 

2. Improved Organizational Culture

Although a dealership owner might preach transparency to their staff frequently, nothing screams openness and welcomes communication like a third-party whistleblowing platform. Equipped employees feel like they can actually communicate theft and other activities they previously kept to themselves.

Whenever a general agent installs a fraud hotline, you bring another value-added service. People will feel like they are able to be honest, which will carry its way through everything that they do.

3. Unethical Behavior Detection

Employees are permitted to file any kind of report, whether it’s related to HR, sexual harassment, or theft, and the list goes on. This is a great way to detect potential erratic behavior in an employee. If multiple reports are filed every single week about the same person and what they do in your absence, that’s a good indication that you should hone in on this information.

Being able to detect this behavior will then allow management to act appropriately, either by speaking with the offender directly or firing them.

4. Unethical Behavior Prevention

If employees know there is a third-party hotline where their coworkers can communicate about illegal and noncompliant behavior, then they are going to be less likely to steal, cheat, and lie. It’s an unspoken tool that will demand respect, which is especially important if one owns multiple dealerships and needs employees in every location to respect the operations. 

It is impossible for the dealer principal to be in two places at the same time. Dealership fraud hotlines can be their eyes and ears. A whistleblowing hotline should be in every agent’s toolbox so you can focus on growing your businesses, remaining compliant, and providing top-notch services to your dealer clients.

Max Zanan is the founder and president of Total Dealer Compliance, an automotive dealership compliance firm that specializes in onsite audits and online training for all car dealership departments, including sales, BDC, F&I, HR, IT, and fixed ops.