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June 20, 2016
www.usedcarnews.com
Dealers Must Know What to Keep, Discard By Ted Craig
Deal jacket reviews won’t prevent all compliance problems for a dealership, but they are an important tool. Deal jackets are a collection of documents pertaining to the sale of
ing the law that gives the consumer the most protection. O’Loughlin added that dealers must use proper disposal practices when they do get rid of documents. He also warned that documents must be accessible only by authorized personnel.
“I’ve reviewed deal jackets that look like rat’s nests.� Tom Hudson
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a car at a dealership. “They provide a window into overall compliance,� said attorney Tom Hudson of the Hudson Cook law firm. Hudson and other attorneys spoke at the recent National Alliance of Buy-Here, Pay-Here Dealers about what does and does not belong in a deal jacket. In many ways, knowing what to leave out is more important than knowing what to include. “I’ve reviewed deal jackets that look like rat’s nests,� Hudson said. One document that can be left out, and causes problems if it is included, is a record of the wholesale purchase of the car. Other problem documents are notes on the early negotiation process and any comments that seem like gloating. In addition to knowing what to leave out, dealers need to know how long they must keep certain documents. Terry O’Loughlin, director of compliance for Reynolds & Reynolds, advises not keeping documents any longer than is required. These requirements vary according to state and federal law. The lawyers recommend always follow-
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Other problems arise when dealers include forms that their state bans, said attorney Nikki Munro, also with Hudson Cook. Munro said dealers too often include a document in their dealer jackets after hearing about it in a Twenty Group or other forum. Munro recommends buying documents from a reputable provider and then having them reviewed by an attorney who specializes in auto sales and financing. However, she warned that dealers need to take the time to read and fully understand what is in the documents. They can’t just leave that to the attorneys and the document publishers. “It’s really expensive not to care,� Munro said. One key element regulators look for in documents is readability, she said. “You don’t want a lot of legalese,� Munro said. “Consumers should be able to read and understand the documents.� The most crucial document in the jacket is the retail installment sales contract, O’Loughlin said. “This document represent a longterm relationship,� he said.
Photo by Ted Craig THIRTEEN YARDS: Attendees at the National Alliance of Buy-Here, Pay-Here Dealers look at a 39-foot scroll featuring the documents typical in an auto sale.
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