In the past decade, government regulators have come up with dozens of new rules and have updated existing ones, Metrey said. The pace of new rules has picked up in the last few years, he said.
Examples include rules governing identity theft, cash transactions and money laundering, the use of credit scores, maintenance and disposal of customer information, consumer disclosures on loans and leases, and nondiscrimination. The list goes on, and each regulated area generates its own paper trail.
Some of the newest rules create paperwork requirements coming or going.
When customers apply for a loan and get turned down, based at least in part on a credit report, they get an adverse action letter to explain why they got turned down. When they're approved, they get a "risk-based pricing" notice to explain why they didn't get the best rate, or else a "credit score disclosure exception notice."
The latter provides the customer's credit score and puts it in context, by showing how the individual's score stacks up against the possible range of scores. Those requirements kicked in last year.
NADA recommends that dealerships meet the requirement by giving all customers an exception notice, rather than trying to decide which customers should get a risk-based pricing notice.
Some of the dealers and F&I managers who responded to a recent unscientific online Automotive News survey on F&I topics vented about the paperwork burden.
Martin Gubbels, dealer and general manager of Big Sky Ford in Torrington, Wyo., said that he's "very scared" of government regulation of F&I.
"Every year it seems like [there's] more and more competition, regulation, government intervention, and less and less F&I gross. When does it stop? Pretty soon I will be profit-proof in F&I, and my manager of 11 years will just be a salaried paper-pusher, and not a revenue source," he said.
"We have customer comment that there is now more paperwork involved with buying a car than there is buying a house," said Aaron Masterson, general manager of CarCorp Inc. of Columbus, Ohio. "We know that isn't really true, but the average customer doesn't buy that many houses." CarCorp has two Hyundai stores and a Kia dealership, plus service points for Isuzu and Suzuki.
Masterson guessed that the cost to keep the group's financial transactions running and in compliance has increased more than $100,000 annually in the past five years.
"We are in the process of installing a CRM [customer relations management] system with an eye toward compliance as much as customer interaction," he wrote in an e-mail.
A system that covers the Red Flags Rule, disclosures, identity protection, adverse actions and the paperwork associated with credit inquiries will cost more than $80,000 in the first year, Masterson said.
"If one were to add all costs to the various actions to be in compliance and conduct financial interactions with consumers over and above what it cost just five years ago, it would easily eclipse the $100,000 mark on an annual basis," he said.