Since the pandemic our industry has hastened its move from an analog industry to an e-dealership model. Paper four-squares and Sharpies have been replaced with e-pencils. E-contracting has essentially eradicated Truth In Lending Act violations on the face of contracts.  

Unfortunately, It takes more than new technology to change behavior. 

For example, if you are prone to power-book a deal to meet the finance source’s callback or underwriting guideline, you will continue to manipulate the options on the bookout sheet.

If you view credit application fraud as a victimless crime, you will continue to give people raises or stability or move them back in with their family instead of paying rent. It does not matter that you are now committing potential bank fraud using the internet.

If you are a kink, having e-processes won’t change your behavior … it only makes it easier for people like me or the Federales to figure it out.

E-Processes Leave an Electronic Trail

E-processes are a huge benefit to the dealer principal who intends to run a transparent and compliant e-dealership. 

While a kink can still pack payments using an e-desking system just as easy as if she were still using a Sharpie and a four-square, the e-desking system tracks the history of the pencils. Using e-desking software, I can tell what the first pencil is and if it is compliant with the dealership’s desking policy. I can tell if the manager had a credit approval in hand and quoted a payment higher than the approval’s max rate. I can tell if the number of days or number of payments per year were manipulated to pack the payment.

In fact, it is easier for me or a member of the Dark Side to verify that the payments are packed when an e-desking software is used. This is a huge benefit for the dealer principal to understand who is following the dealership’s desking policy and compliance training and who the rogue kink is.

Similarly, long gone are the days of faxing a credit application to the finance source. A dealership manager must submit credit applications to the various finance sources using credit application submission portals. These portals track each submission and change to the credit application. If a manager decides to improve one of the five key credit determinants (income, time on job, time at address, housing expense, and occupation) to increase the likelihood of a favorable credit decision or buy rate, he leaves an electronic trail proving he committed bank fraud.

As dealerships generally use one portal to submit credit apps, I can also usually detect if the manager shotgunned deals for one consumer. Shotgunning is the practice of selling multiple vehicles to the same consumer in a short period of time and selling the contracts to different finance sources. This is an issue if the manager does not let each finance source know about the other deal.

Those Who Object

Oftentimes when a dealer is trying to convert from pulp to electrons, some of the sales managers object and create barriers to implementation. I can tell you from experience, I find a higher percentage of payment packing at dealerships that still employ handwritten four-squares than those dealerships that have converted entirely to e-desking. 

I was listening to the Beatles channel the other day and heard the deejay share a personal story. Seems he was a Beatles fan growing up and completed a sixth-grade project discussing the legitimacy of the “Paul is dead” rumors. I thought, “This guy knew he was destined to become a Beatles expert when he grew up, and he fulfilled his dream.”

Then I thought about the interviews with little kids who say they want to be firefighters or police officers or doctors or nurses when they grow up.

Which leaves me wondering … what did the kinks in our business want to be when they were little? Did they spend time figuring out how to cheat at hopscotch and convert that to packing payments on four-squares? 

People who dreamed of being a kink when they grew up and fulfilled their dream will not change their behavior because of e-processes. It will only make it easier to catch them.

After all – a kink is a kink.

Good luck and good selling!

Gil Van Over is executive director of Automotive Compliance Education (ACE). He is also founder and president of gvo3 & Associates.