Given that the average deal jacket consists of hundreds of pages of complex and detailed documents, conducting a thorough and useful audit that will produce helpful results for the dealer is no small task, even for a seasoned expert. Manual deal jacket audits, conducted by experienced professionals, can easily take several hours to complete. RECENT REGULATORY ACTION HIGHLIGHTS AUDIT IMPORTANCE Recent regulatory actions have underscored the significance of thorough deal jacket audits. In a notable recent case filed in August 2024, the Federal Trade Commission (FTC) brought an enforcement action against one of the largest dealership groups in the United States, for alleged violations related to F&I practices. The FTC’s complaint alleged several issues, including: • Charging consumers for F&I products without their consent. • Misrepresenting the cost and coverage of F&I products. • Discriminatory pricing practices. Importantly, the FTC discussed the fact that dealerships in this group conducted deal jacket audits but criticized their scope and adequacy — and the follow-up related to those reviews. This enforcement action is a stark reminder of the potential consequences of insufficient internal controls and highlights the critical role that thorough audits play in maintaining compliance. BEST PRACTICES FOR EFFECTIVE DEAL JACKET AUDITS To ensure the effectiveness of deal jacket audits, dealerships should consider the following best practices: 1. Establish a Regular Audit Schedule: Conduct audits on a consistent basis, not just in response to identified issues. It is only by looking for issues over time that patterns will be revealed. 2. Audit a Range of Personnel and Issues: You should also ensure that you are getting a sampling of different stores, deals with different sales and F&I managers, and different types of deals (new, used, finance and lease) to ensure you are checking for a full array of issues. 3. Use Comprehensive Checklists: Ensure that anyone who conducts an audit on your behalf has developed and maintained detailed checklists covering all aspects of compliance and documentation requirements at the state and federal levels. 4. Leverage Technology: Engage experts who are utilizing the latest technology, systems and specialized audit software to streamline the process and improve accuracy. 5. Engage External Experts: Consider periodic third-party audits to provide an objective assessment and identify potential blind spots. 6. Foster a Culture of Compliance: Emphasize the importance of accurate documentation and regulatory compliance throughout the organization. CAN I UTILIZE TECHNOLOGY TO HELP? Deal jacket audits are an essential component of a dealership’s compliance and risk management strategy. You can accomplish this critical task efficiently and cost-effectively with ComplyAuto’s new tool, Guardian. With Guardian, ComplyAuto has developed patented technology and tools to deliver the first AI-based deal jacket review software. Guardian is faster, more thorough and far more cost-effective than even the best human auditors. It not only looks for more issues but also provides incredible insight through reporting, dashboards, automated mitigation and more. By strengthening audit procedures and creating a culture focused on compliance, dealerships can safeguard against regulatory risks, enhance their day-to-day operations and earn greater trust from their customers. In light of recent enforcement actions, the importance of these audits cannot be overstated, making them an essential practice for modern auto retailers. Contact ComplyAuto today to learn more about how to leverage ComplyAuto’s experience and expertise, along with the power of AI, by deploying Guardian. Deal “jackets” are comprehensive files containing all documentation related to a vehicle sale or lease, and they serve as the primary record of each transaction. 18
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