Last year, the National Automobile Dealers Association revised its code of ethics, which includes a guide for financial services. The guide urges full disclosure, documents written in plain language and voluntary customer choices of optional products.
Bill Price, director of legal affairs for NADA, says the dealer group believes greater transparency in dealership operations is a good thing but has not taken a position on the practice of recording F&I transactions.
"It is a complicated situation," Price says. "Focusing on a single technique leaves things out such as customers' and dealership personnel's rights."
Dave Robertson, executive director of the Association of Finance & Insurance Professionals, calls making a permanent record of the F&I sessions a Pandora's box.
In their most benign application, he says, recorded sessions can be training tools that F&I employees use to review and learn from actual exchanges with customers or as management tools to monitor whether employees are making full presentations of all F&I products offered for sale.
But whatever the positive factors might be, Robertson says, they are outweighed by the potential for disaster.
"The single greatest pitfall is if the person on camera dispenses inaccurate or untrue information," he says. "Such cases usually occur due to ignorance rather than an unscrupulous intent."
Robertson suggests that dealerships that install the recording equipment also should enroll their F&I managers in the association's Certified F&I Professional training. In addition to teaching regulatory and procedural information, the program requires participants to sign and abide by a code of ethical conduct.
Robertson says the training program reduces the odds that an F&I employee will misspeak and creates proof that the dealership tried to prepare the employee to sell F&I products.
Paul Walser, CEO and owner of the 12-dealership Walser Auto-motive Group of Minneapolis, began audio-recording F&I transactions last summer.
"If our F&I world had been perfect, we would not have done this," says Walser, who spent less than $25,000 to install the audio equipment in all his dealerships.
The action is part of a May 2002 agreement with the Minnesota attorney general's office to resolve a state investigation related to service contract sales at several of the group's dealerships.
The state began an inquiry after receiving more than 150 written complaints from customers. Walser Automotive does not admit to any wrongdoing.
Under the agreement, Walser Automotive Group dealerships audio-record transactions during which employees "attempt to solicit, market, offer, discuss or sell to any consumer any optional financial, insurance or service product," according to the Minnesota attorney general's office.
The company must audio-record the transactions indefinitely and keep the recordings for three years. In accordance with the agreement, the dealership group sent copies of the recordings to the attorney general's office for four months.
Customers are advised that they will be recorded unless they object; 80 percent do not object, Walser says. Employees are OK with the tapings, too.
"It provides the customer with the sense that we have a legitimate concern about how they are treated," he says. "It forces (employees) to take a look at how they present things; it's a good management tool."
Staff Reporter Donna Harris contributed to this report.