As awareness of fraud and identity theft intensifies, will more dealerships latch on to video recording as a way to deter misbehavior in the F&I office?
Although video cameras have been turning up in dealership F&I departments with some regularity for the past decade or more, some industry insiders are still weighing the risks and rewards.
Many F&I trainers and dealership finance managers consider taking video to be an effective way to train dealership employees to follow store procedures and adhere to compliance guidelines. But experts caution that documenting F&I transactions on video has a downside: The footage could work against a dealership should the store be challenged in court.
Terry Dortch, CEO of Automotive Compliance Consultants in suburban Chicago, says videos should be deleted immediately after training is complete. "The problem comes in when dealers don't have a clear process in place to do it, and if there is an incident where there is some sort of legal action, those videos can be subpoenaed and used against them," Dortch said.
Indeed, said attorney Aaron Jacoby, automotive group leader at law firm Arent Fox: "Question No. 1 in discovery in a class action is 'Do you have any audio or tape of this transaction?' If the answer is yes, [item] No. 1 on the document request is 'Please provide all the audio footage from this tape to that tape.'" Any evidence of wrongdoing gleaned from camera footage, he added, could be found in a traditional audit.
Ron Reahard, president of F&I training firm Reahard & Associates Inc. in Soddy Daisy, Tenn., says most of the dealers he works with have cameras in their F&I offices. Some are apprehensive about it. "If their attorneys say, 'Don't do it,' then they don't do it," he said. "I would tell a dealer: 'If you're afraid of what those cameras might see, you're doing something wrong." Everyone makes mistakes, he added. "But if there is a pattern, and you're afraid to see what's happening and you're putting blinders on, then we've got a bigger issue."
Reahard said his dealer clients combined record 8,000 to 10,000 transactions a month. "It's a tremendous training tool," he said. "We retain them for 60 days, which is plenty of time to discover if there's been any issues in the deal, if there is a customer-satisfaction issue."
Though the recordings are used for training, they also can clear up disputes with customers, Reahard said. For example, occasionally an F&I manager will forget to collect a down payment from a customer. Typically, that means just contacting the customer to retrieve it. "It's going to happen once or twice a year," he said.
But he said there have been numerous incidents in which the customer claims to have given the F&I manager cash. "If your F&I manager has been with you for 15 years, you can say, 'I know that didn't happen.' But if the F&I manager started two weeks ago, it's: Is the customer lying, or is my F&I manager a crook? That's where the camera saves the day. You can watch that transaction and then say, 'Folks, you didn't give us a check, you didn't give us cash.'''
And if the F&I manager is seen in the video doing something wrong or making an innocent mistake, the dealer benefits by knowing that the manager needs additional training or, worst-case scenario, to be terminated, Reahard said. It also lets the dealer know that he or she needs to do what it takes to make things right with the customer.
"We've recorded F&I transactions for over 15 years, and we have never in all of those years had it be an issue for the dealer," Reahard said. "It has only been a benefit to the dealer."