Quiz:
Compliance Dos and Don'ts

Compliance can’t be that complicated, can it? Surely, your dealership understands its obligations and is keeping up with the latest requirements, right?

Take this short quiz to test your knowledge before you assume your dealership is safe from violations.

Question 1:

True or False: Your dealership only needs to run OFAC on cash deals.

Incorrect.

You should not do business with a customer until you are certain they are not on the SDN List. You need to run OFAC on all deals, not just cash. To help protect yourself further, keep a record of OFAC checks for five years.

Potential Fines: Criminal $250k + JAIL per each individual violation; Civil $89k per each individual violation*

*As of 2022 and subject to alteration depending on the circumstances of violations. Please seek legal counsel for verification and further details.

Correct!

You should not do business with a customer until you are certain they are not on the SDN List. You need to run OFAC on all deals, not just cash. To help protect yourself further, keep a record of OFAC checks for five years.

Potential Fines: Criminal $250k + JAIL per each individual violation; Civil $89k per each individual violation*

*As of 2022 and subject to alteration depending on the circumstances of violations. Please seek legal counsel for verification and further details.

Question 2:

True or False: Using knowledge-based authentication, like asking out-of-wallet questions helps verify the identity of buyers that have failed red flags.

Correct!

Asking out-of-wallet questions is a great way to verify the identity of any buyer you might have concerns about.

Incorrect.

Asking out-of-wallet questions is a great way to verify the identity of any buyer you might have concerns about.

Question 3:

True or False: Your dealership needs to send an adverse action notice to an applicant that was approved for credit, but did not end up purchasing the vehicle on credit.

Correct!

Adverse action notices are a dealership’s responsibility as a loan originator or an indirect lender. If an applicant is approved for credit but a deal did not go through – you must send the applicant a notice.

Potential Fine: $46,000 per violation.*

*As of 2022 and subject to alteration depending on the circumstances of violations. Please seek legal counsel for verification and further details.

Incorrect.

Adverse action notices are a dealership’s responsibility as a loan originator or an indirect lender. If an applicant is approved for credit but a deal did not go through – you must send the applicant a notice.

Potential Fine: $46,000 per violation.*

*As of 2022 and subject to alteration depending on the circumstances of violations. Please seek legal counsel for verification and further details.

Question 4:

True or False: A consumer’s digital signature does not have the same legal effect as their ink signature on a paper document.

Incorrect.

A consumer’s signature on an digital signature pad linked to an electronic document or their signature on a tablet has the same legal effect as an ink signature on a paper document.

Correct!

A consumer’s signature on an digital signature pad linked to an electronic document or their signature on a tablet has the same legal effect as an ink signature on a paper document.

Question 5:

True or False: A Risk-Based Pricing Notice is required when you’ve run a credit bureau for a customer who is financing a vehicle, and it must be provided to said customer before the car is delivered.

Correct!

Dealerships are required to give a customer a Risk-Based Pricing notice every time they look at the customer’s credit bureau and the customer is financing the vehicle, and it the notice must be provided before the contract is signed.

Potential Fine: $4,000 per individual violation.*

*As of 2022 and subject to alteration depending on the circumstances of violations. Please seek legal counsel for verification and further details.

Incorrect.

Dealerships are required to give a customer a Risk-Based Pricing notice every time they look at the customer’s credit bureau and the customer is financing the vehicle, and it the notice must be provided before the contract is signed.

Potential Fine: $4,000 per individual violation.*

*As of 2022 and subject to alteration depending on the circumstances of violations. Please seek legal counsel for verification and further details.

Question 6:

True or False: The Red Flags Rule requires dealerships to implement a written Identity Theft Prevention Program designed to detect the “red flags” of identity theft.

Correct!

A written Identity Theft Prevention Program (ITPP) is required to detect, prevent and mitigate identity theft. There are 26 potential red flags that need to be considered in your dealerships’ ITPP.

Potential Fine: As high as $4k per each individual violation*

*As of 2022 and subject to alteration depending on the circumstances of violations. Please seek legal counsel for verification and further details.

Incorrect.

A written Identity Theft Prevention Program (ITPP) is required to detect, prevent and mitigate identity theft. There are 26 potential red flags that need to be considered in your dealerships’ ITPP.

Potential Fine: As high as $4k per each individual violation*

*As of 2022 and subject to alteration depending on the circumstances of violations. Please seek legal counsel for verification and further details.

Question 7:

Assuming you’re not making loans directly to consumers, does your dealership need a defined compliance policy?

Correct!

Having a compliance policy is required. Without a defined compliance policy implemented at your dealership, there is plenty of room for mishaps to occur, ultimately leaving you vulnerable to fraud, fines, audits, and even legal action.

Incorrect.

Having a compliance policy is required. Without a defined compliance policy implemented at your dealership, there is plenty of room for mishaps to occur, ultimately leaving you vulnerable to fraud, fines, audits, and even legal action.

Question 8:

True or False: Independent dealerships have fewer regulations to comply to compared to franchise dealerships.

Incorrect.

Independent dealerships are required by law to follow the same FTC practices as any other auto dealership. They are also subject to the same penalties.

Correct!

Independent dealerships are required by law to follow the same FTC practices as any other auto dealership. They are also subject to the same penalties.

Question 9:

True or False: It is only the Compliance Officer’s responsibility to ensure compliance, not a company-wide policy that all managers are required to uphold.

Incorrect.

Though it’s newly required to appoint a “qualified individual” to oversee, implement and enforce the information security program and submit an annual written report to the board of directors or governing body, it’s still all managers’ responsibility to uphold compliance policies.

Correct!

Though it’s newly required to appoint a “qualified individual” to oversee, implement and enforce the information security program and submit an annual written report to the board of directors or governing body, it’s still all managers’ responsibility to uphold compliance policies.

Question 10:

True or False: Your dealership needs to complete a dealer participation form if the final dealer participation rate equals the standard dealer participation rate.

Incorrect.

The dealer should always complete the form and include it in the deal jacket for all sales, regardless of whether the Final Dealer Participation Rate equals the Standard Dealer Participation Rate.

Correct!

The dealer should always complete the form and include it in the deal jacket for all sales, regardless of whether the Final Dealer Participation Rate equals the Standard Dealer Participation Rate.

Your Compliance Quiz Score is 0/10

Looks like this quiz taught you a thing or two! Ready to feel even more assured when it comes to compliance? Dealertrack Compliance can protect your deals and your dealership throughout every step of the process.