O'Laughlin, who spent 16 years at the Florida attorney general's office, told the Ethical F&I Managers Conference in Denver that a consumer complaint to a dealer is "radioactive." If a customer is unhappy, a dealer should contact them and try to resolve the issue, he said.
"If you don't solve that consumer problem, guess where it goes," he said.
Another 20 percent of attorney general cases derive from advertising, according to O'Laughlin.
"They're just the easiest case to do," he said.
A regulator can sit in an office and quickly file complaints against dealers who, O'Laughlin argued, simply choose not to be in compliance.
Fifteen percent of cases are referred by other agencies, and 10 percent arise through direct agency observations, according to O'Laughlin.
The remaining 5 percent result from media attention, he said.
But dealers can stave off regulatory disaster through what O'Laughlin called "ethics to the rescue."
O'Laughlin said he felt many dealers don't realize that the existence of measures such as compliance and ethics programs at their store can protect them.
If the actions of a "rogue employee" lead to an investigation of the dealer, "often, the state will back off" if the dealer had otherwise demonstrated a commitment to doing things correctly.
"It's gonna look great," he said.
He said he thought dealers often don't understand trying to do things properly will lead to a better outcome. He has talked to many dealers who consider "I've never been caught" as an argument against improving.
"I would say the risks far outweigh the rewards" of noncompliance, O'Laughlin said.