Complacency isn’t a hot-button issue until it’s entirely too late. In today’s episode of Training Camp, Adam Marburger is joined by Jim Ganther, compliance expert and owner and CEO of Mosaic Compliance Services, to discuss why Trump’s deregulation doesn’t eliminate compliance risk and how dealers can protect themselves, their legacy and their employees.
Under the Trump administration, there has been almost a false sense of security where many assumed regulations would ease. There have been several events that enforce this sense of security, such as the FTC’s Combating Auto Retail Scams (CARS) Rule being overturned, an executive order halting “disparate impact” enforcement, and 67 CFPB compliance guidance documents and at least 21 enforcement actions repealed.
Despite these wins for the auto industry, Ganther stresses that compliance risk hasn’t vanished under the Trump administration—it has simply evolved. He outlines three significant reasons why compliance is mission-critical:
State enforcement is rising
Federal pullback under the Trump administration is creating a vacuum, and state governments, particularly in Democratic states, are rushing forward to fill it.
There is greater political incentive for enforcement at the state level versus the federal level. Voters aren’t likely to vote for a presidential candidate if they come down on a car dealership, whereas they may vote for leaders at a more local level.
Federal agencies continue to pursue “real harm” cases
While there may be a shift in focus under the Trump administration, there hasn’t been a reduction in oversight. While disparate impact cases may be fading, actual consumer harm is still high-risk and, in some cases, even more targeted now than it was a year ago.
Personal liability is the most significant threat
While personal liability isn’t new, the stakes are growing higher each passing year. In the past, agencies like the FTC or a state Attorney General would typically sue the dealership or dealer group, not the individual. When individuals were named, the financial exposure was often minimal and usually covered by the company.
That changed dramatically in December under the Biden administration, when the FTC and the Illinois Attorney General sued AutoCanada—a publicly traded dealer group based in Canada—and its U.S. subsidiary, Leader Automotive Group, for $216 million. Leader Automotive operated 10 dealerships in the Chicago area.
Even more alarming: They also sued James “Jimmy” Douvas, AutoCanada’s vice president of U.S. operations, personally for the full $216 million.
The FTC and Illinois settled with both corporate entities for $20 million, marking the largest compliance settlement ever levied against a dealership group. But Douvas was not part of that settlement. In June, he filed a motion to dismiss the case. The judge denied it. He is still being pursued individually for the full $216 million.
His alleged crime? A routine dealership practice: maximizing profit on every transaction.
Compliance management is mission-critical
Ganther stresses that now is the time for dealers to take a hard look at their compliance status.
These are the most vital questions to ask oneself:
- Is there a compliance system in place?
- If so, is it doing its job?
- Is there consistent, ongoing staff training?
- Are there written policies?
- Are audits being conducted frequently?
- Is there active top-down leadership commitment?
Roughly 75% of new car franchise dealers believe that they are compliant. However, Ganther estimates that only half are “defensibly” compliant, 40% are at significant risk, and the final 10% are “bad actors” who risk reputational damage for the entire industry.
Too many dealers treat compliance as a box-checking or reactive measure. Ganther urges them to view it as brand and asset protection instead of bureaucracy.
Remaining proactive, instead of being reactive, is the key. Too many dealers continue to kick the can down the road, preferring to deal with the situation when the problem arises. When it does, it’s often too late, and a single mistake can cost a dealer everything they’ve worked to build.
"Why do you use a sledgehammer on a fly? Not for the fly, but for all the flies that are watching. The FTC is putting the world on notice that 'If we think you actually harmed consumers, we're not going to show any mercy.'"
