E-contracting needs standard definition

Although electronic contracting has gained traction, it’s still not widely embraced by dealers.

Why? Confusion is standing in the way.

Companies define e-contracting differently. It won’t be desired or embraced until the industry develops a standard definition.

To get dealers on board, the industry needs to use the same dictionary.

There has to be a “common language” when discussing e-contracting, said Ron Greer, vice president of provider services at Provider Exchange Network, a division of Open Dealer Exchange that integrates dealer systems with insurance providers’ forms.

“E-contracting” is often used as a blanket term for any process involving electronic documents in the F&I office, but there are actually different levels and purposes for digital and electronic operations in F&I.

Provider Exchange Network defines e-contracting for F&I products as insurance contract origination. F&I managers use a digital deal jacket with all the electronic forms already in place. Insurance providers electronically verify and accept the contract before the customer leaves the dealership.

Some other processes defined as e-contracting end after the customer signs. But the customer is not actually covered until the F&I manager verifies the contract with the insurance provider.

On the lending side, an e-contracted transaction would also have a retail contract or lease agreement that is e-signed, sent to the lender and electronically vaulted, which means securely stored and transferred, said James Maguire, ‎director of product marketing for CDK Global.

There are other levels to digital F&I that are sometimes confused for e-contracting, when actually, they’re just steps in the process.

CDK Global calls its levels of electronic F&I procedures Digital Contracting -- as a branded name.

But there is a subhead also called digital contracting, which is when F&I managers scan documents into a digital deal jacket that allows them to share, using a secure site, all the documents related to their transactions, instead of handing them a packet of paper on the way out.

With digital contracting, customers provide an electronic signature on a signature pad or tablet. The signature replaces a wet signature and shows acceptance and acknowledgement of the deal.

A digital signature, on the other hand, incorporates encryption technology to ensure the integrity of the e-signature. It’s authentication that the customer has approved the transaction.

Steps with similar names, which vary depending on who you ask, can make the process puzzling for dealers. There is a generic definition for e-contracting, Maguire said, but no detailed, industry-standard definition.

Many lenders, insurers, dealership groups and automakers are pushing dealers to adopt e-contracting with pilot programs, or they’re starting dealers at one of the midlevels. To move forward, there have to be more explanations and generally accepted terms.

You can reach Hannah Lutz at hlutz@crain.com