The Law and F&I Managers
Areas to watch
By George Angus

We are in a business that is subject to a myriad of laws and regulations. The FTC, states Attorney Generals, Motor
Vehicle Departments, and Insurance Commissioners target automobile dealers for enforcement. This enforcement is
increasing and we have to be aware of the areas that are causing problems for dealers.
The F&I Department is the place where most of the legal issues arise. The F&I Manager has the responsibility to insure
that they and the dealer are in compliance with all rules and regulations. Of all the legal action taken against dealers, the
majority of problems are those that can be prevented by the F&I Department.
We monitor, closely, the areas of enforcement, nationwide, to assist F&I Managers in keeping within the law. While some
areas of law are well known and fairly obvious, other problems are less understood and can cause problems.
This information is not to be construed as legal advice; you have an attorney for that. However, we will point out some
areas of recent enforcement that you should be aware of.
1. Full Disclosure
Several dealers have recently run afoul of the law for not disclosing all the terms, rates, and products included in the
contract and price of the vehicle. Not only is it mandatory that all products and terms are disclosed to every customer,
but you also have to be able to prove that a complete disclosure was done. This also applies to products. If you offer
credit insurance, service contracts, etc., to one customer, you must offer these options to every customer who qualifies
to purchase them. This is why our process calls for an initial and a signature acknowledging the fact that these products
were offered.
2. Loaded Payments
When a customer is quoted a payment that includes additional products, and the fact that the product is included is not
disclosed, this has been determined to be a deceptive practice by many states enforcement agencies. The way they
catch this is by posing as a customer and asking a salesman what the payment will be to buy a car. They then calculate
the payment and if undisclosed products are in the payment quoted, you are in trouble. Although this has been a
common practice for years, many dealers have been attacked for this practice.
3. Rebating
Rebating is the offering of a lower interest rate based upon the purchase of credit insurance products. You can not offer
the customer a lower interest rate based upon purchase of products. The amazing thing about this is that there are still
F&I trainers, in the marketplace, who are teaching F&I Managers to do just that. There are many reasons to adjust the
interest rate, legally, but buying additional products is not one of them. Charge whatever rate you want but don’t tell the
customer the rate is lower because of the purchase of products. This is a new and dangerous area of enforcement all
over the country.
4. Undisclosed Price Adjustments
This involves changing the price agreed to by the customer without a full disclosure. If the price or terms are changed,
for any reason, this must be disclosed and agreed to in writing. To not do so has been determined to be fraud and
subject to criminal prosecution.
These are just a few of the areas we are hearing about, but, there are others. A little common sense and honesty will
avoid most problems but you need to keep up with the laws that affect your job. Your state dealer association can help
you with local laws and regulations.

George Angus is with Team One Research and Training, a research and training company that specializes in scientific,
research based program development and training programs for the automobile industry. George has trained thousands
of F&I professionals and develops programs and techniques with the top performing F&I departments in the country.
Team One can be reached at 1-800-928-1923 or on the web at