Starting off the year, the compliance landscape for auto dealerships includes both regulatory and enforcement shifts as well as some important best practices aimed at fraud prevention. As Robert Newman, Director of Performance Management and an auto retail compliance specialist at Cox Automotive says, “Compliance isn’t just about checking a box—it’s about building a foundation of trust and transparency that supports long-term success.”
Dealers need practical, actionable strategies to protect their business and their customers, ensuring confidence and reliability in an increasingly digital and regulated landscape. With that in mind, here are some of the key trends you should take into consideration for deal compliance this year:
1. Auto Financing Scrutiny
The Consumer Financial Protection Bureau (CFPB) announced plans to increase its monitoring of auto financing practices into 2025, focusing on unwanted add-on products and hidden fees, deceptive advertising, erroneous repossessions, improper loan servicing, and inaccurate reports to credit reporting companies.
What You Can Do: Be sure to review the CFPB’s recent Supervisory Highlights for specific examples of auto dealer practices that regulators seek to discourage and include rules against them in your compliance program. CFPB regulators will be paying special attention to parts of the finance process like unwanted add-on products (such as payment insurance and paint protection), inconsistent contract language, improper repossessions, inaccurate reporting to credit companies, and more.
2. Consumer Protection
Barring any additional legal challenges, the finalized CARS (Combating Auto Retail Scams) Rule from the Federal Trade Commission (FTC) is set to take effect in late 2025. This legislation is also designed to protect consumers from unfair and deceptive practices with a focus on add-on products, vehicle pricing and advertising, and hidden junk fees.
What You Can Do: Prioritize compliance measures including consistent disclosures and consumer notices to protect consumers from unfair and deceptive practices. Recent examples of these practices enforced by the FTC include bogus recall notices sent to customers, inflated consumer income information on financing applications, and discrimination against car buyers based on ethnicity in the form of higher financing markup rates.
3. Privacy and Data Security
Federal regulators and at least twenty states—including California, Colorado, Connecticut, Delaware, Florida, Indiana, Iowa, Kentucky, Maryland, Minnesota, Montana, Nebraska, New Hampshire, New Jersey, Oregon, Rhode Island, Tennessee, Texas, Utah, and Virginia—have enacted new data privacy and security laws. Several other states are considering similar legislation.
What You Can Do: Make sure you are protecting your dealership, employees, and customers from the rising number of data and other security breaches through appropriate technology and training. Familiarize yourself with your state’s privacy regulations because they can vary from one state to the next.
4. Fraud Prevention
Fraud accounted for $7.9 billion in losses for the auto lending industry in 2023 according to Point Predictive. Sophisticated exploits such as synthetic identity fraud represent a growing percentage of this criminal activity.
What You Can Do: Make sure your compliance processes and staff training reflect this growing risk. Don’t hesitate to add ID verification steps such as out of wallet questions whenever there’s uncertainty—and consider using compliance tools for ID verification such as red flag alerts and OFAC checks, as well as fraud detection technology designed to detect ID fraud or synthetic ID fraud attempts.
5. Building and Executing Your Compliance Program
Every dealership needs a robust compliance program that should include appropriate resource allocation, training, monitoring, assessments, updates, oversight, and disciplinary measures.
What You Can Do: To make sure your program is comprehensive, be sure work with your legal counsel to review enforcement actions, reports, and updates issued by federal and state regulators to develop policies that will help you avoid unlawful and discouraged practices.
Take Charge of Compliance in 2025
Learn more about the latest compliance trends and get a handy reference all year long when you download the free Dealertrack Compliance Guide.
To get some useful compliance tips at a glance, download our Best Practices for Compliance at Every Stage of the Deal infographic.
If you don’t have Dealertrack Compliance to safeguard your deals, schedule a demo with a compliance specialist today.
Disclaimer: This is not meant as legal advice, and we do not purport to provide any legal or regulatory analysis. Consult with your attorney for any legal, regulatory, or compliance questions you may have.
