F&I Compliance Tip: Properly Disclose Aftermarket Products

Make no mistake: the world of aftermarket product sales is changing, right along with the ongoing evolution of automotive retail. The 2022 Cox Automotive Car Buyer Journey study shows just how quickly it’s happening: The survey revealed that 53 percent of consumers researched F&I products before visiting a dealership and 51 percent of them were more likely to buy based on their research. Add in the scrutiny by the FTC and the CFPB, and the message is pretty clear: dealerships need to adjust the way they approach F&I product sales.

Why it Matters

Unfortunately, it’s not quite as simple as going online with a few product blurbs and images. According to the Car Buyer Journey study, 67 percent of buyers purchased an F&I product with their recent vehicle purchase and this rise in F&I purchases is driven by increases in the sale of extended warranties, GAP insurance and tire and wheel protection. It’s a significant area that is likely to become even more valuable as buyers do more steps of their purchase online. That makes it critical that your F&I consumer presentations include required checkpoints and disclosures.

Best Practice Tips

Consistency is the key to creating the type of experience that meets compliance standards and helps to create an environment of trust and credibility:

  • Offer every product to every customer every time. Use a good electronic menu product for consistency, and understand what is legally required by your state’s law. Prepare scripts, FAQs, and presentations that fairly and honestly state what the product is and how much it will cost.
  • Use a menu for consistent selling, and charge each customer the same price for each aftermarket product or groupings of products. Do not surcharge credit customers, as the surcharge is considered part of the “finance charge” under TILA and must be calculated into the APR and disclosed in the RISC.
  • Monitor and adjust your menus, presentation scripts, and practices to address consumer feedback and your CSI scores. Adapt your menu and aftermarket product selling to take into account changes in the law or unintended consumer negative reaction.
  • Obtain customer signatures to signify their acceptance or rejection of each product, and store them in case of future audits. Every customer should sign a final menu that clearly shows which products were offered, which were accepted and which were declined.

To learn more about disclosing aftermarket products, download the free 2024 Dealertrack Compliance Guide. 

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