5 Unethical F&I Practices That Could Sink Your Dealership


It’s no secret that F&I departments have suffered (and sometimes still do) from a bad reputation. Probably the worst in the entire dealership…sleazy, fast-talking sales tactics and less-than-honest disclosures of rate and product cost.

It’s important to remember, though, that some of those shady tactics are actually against the law in most cases and whether or not you are a new dealership or a decades-old store, it’s always a good practice to remind yourselves and your F&I staff what NOT to do…EVER.

Here are the 5 most unethical practices that could literally sink your dealership….

  1. Juicing’ the income – Funny name but a serious violation nonetheless. When an F&I manager adds income that doesn’t exist, it can have far-reaching effects. This is done in an attempt to get a deal bought that otherwise would not be approved. 

Adding a few extra digits to a buyer’s monthly income may look great but doesn’t add the REAL money needed for them to actually make the payments. Repossession and/or chargebacks will follow and that backs up on your department bottom line. Do this too many times and you are also risking an SAR or Suspicious Activity Report delivered from the bank or credit union. Falsified income is fraud, period.

Never, never worth the risk. The buyer’s income is what it is…if you have to pump it up, they are buying too much car.

  1. Packing Payments – A terrible practice but one that always seems to come up in the industry every year with a dealership being sued for adding products to the payment and not disclosing it to the buyer. What was once an accepted tactic that F&I managers used to joke about back in the day is truly one of the quickest ways to find yourself in court now.

Most dealers know better but some may think it’s not really all THAT bad. After all, these products help the buyer, right? Well, in some states it’s illegal (California comes to mind). Some dealers have gotten sued for adding extended warranties as a required part of the approval process. Another horrible and deceptive practice.


CFPB and other regulatory bodies have stated that buyers must have fair disclosure of price, allowable trade value, and APR. Sneaking in credit insurance or GAP without having expressed consent will get your store in hot water and your community reputation will take a hit. Sell your aftermarket products and rate upfront and honest.

  1. Forging Signatures – If your F&I managers are caught forging a buyer’s signature, show them the door. No warning, no second chance. It should not even have to be said in this day and age but yes, there are still dealers that think this is ok. It’s not.

This goes for any product-related documents, contracts, credit documents, or odometer disclosures (if your state requires them). Sometimes it’s just an F&I manager being lazy with paperwork and they think it’s ok this one time since the buyer already left. Maybe it’s a sleazy way to get paperwork for undisclosed products approved thinking the buyer would never find out. Either way, it’s a state AND Federal offense. Full stop.

If your F&I Director does daily deal audits, make sure the signatures look the same. It’s sad to even think this still goes on but better to be safe than sorry. 

  1. Overstating the ‘Best’ APR – This is a practice that many dealers may not see has unethical or deceptive. A buyer comes in and the first thing the F&I manager says is ‘Don’t worry…we got you the best rate for your loan.’ Ok…seems innocent enough but think about what you are promising…

There is no way of knowing if that is the best rate since there are limitless banks and financial institutions your buyer could apply to. You simply cannot promise it’s the BEST because there is no way for the buyer to actually verify that. That’s where it becomes a UDAAP issue (Unfair Deceptive or Abusive Acts or Practices) and subject to FTC rules on proper rate disclosure.

F&I managers always get back a buy rate and add points to pump up the PRU so technically, that is NOT the best APR. It’s the APR that has been made available to them. And that is how it should be presented to every buyer who is financing at the dealership. ‘This is the rate that is available to you if you want to finance here at the dealership.’ No false promises, no ambiguity. 

  1. Winging It – Of all the awful F&I practices (and there are probably more that could be listed), this one could be the worst and most costly for a dealership. An F&I manager that simply doesn’t know what they are doing.

Call it flying blind or winging it, it doesn’t matter. When your F&I manager is not paying attention to the stack of legally binding contracts and agreements they are responsible for executing, it is bound to be a legal problem and usually sooner rather than later.

Missing a signature (and trying to forge one), incomplete credit applications, unsigned contracts, lying in an attempt to cover for lack of product knowledge, not fully disclosing rules on products like GAP and credit life (of which there are many), etc.

Your F&I manager must be ethical in their product presentations and in executing all paperwork, period. It’s too easy to cut some slack here and there when the store is busy but what goes on in that F&I office can either make or break your store. The skills and ethics of the staff cannot be ad-libbed.

It’s always a good idea to revisit the best practices in your F&I department frequently. Keeping up with proper training on rules and compliance will yield strong protections for your staff and the dealership. Don’t let your store be a ‘headline’ in the community.