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Do Dealerships Really Need Compliance Officers?

The quick answer is yes. Dealerships are required by law to have on-site compliance officers. Compliance officers help protect dealerships from violating state and federal laws that could lead to hefty fines or even jail time if they aren’t avoided or corrected.

Right now, there are dozens of regulations on the books when it comes to dealerships. From Red Flag Rules to Computer Security to Physical Security, there are lots of moving pieces that must be accounted for, or dealerships could end up in hot water. Compliance officers juggle these tasks, freeing up staff to do what they need to do to sell cars. 

The Right Person for the Job

Because there are so many things to stay on top of when it comes to regulations and compliance, it’s recommended to create a designated compliance officer role, and for that person to be answerable directly to the board, not the office. This person can be a full-time or part-time hire from inside or outside the dealership.

However, though compliance officers are required by law, many dealerships don’t have anyone in that role or even realize they need to appoint someone to that position.

In cases where there are compliance officers in place, dealerships tend to double-up jobs, often choosing a high-ranking staff member, such as an office manager or business manager to take on the compliance role as well. compliance officers

Sometimes dealerships will choose the finance manager for the role. Most experts warn strongly against doing this, no matter how tempting it may be. This is because doing so constitutes a conflict of interest, asking the F&I manager to audit themselves. 

A Job to be Done 

In addition to looking over dealership policies, staying abreast of regulations, and updating the dealership’s Identity Theft Protection Plan (ITPP), compliance officers take on the tremendous task of training dealership staff in essential dealership protocols. These need to be reviewed annually.

Not only do these trainings help keep things running smoothly at dealerships, but they also create liability protection. If the dealer isn’t training their staff, they could end up sharing responsibility if someone at the dealership acts inappropriately — ignorance of regulations won’t help get them off the hook. If a compliance officer provides the proper training regularly, however, dealers can gain protection against the wrongful actions of one employee, by showing they had done their due diligence to prevent the transgression. 

Supporting Your Compliance Officer

Compliance officers aren’t necessarily the most popular on staff. Theirs is a tough job, no matter how essential it is. Dealers can make things easier for them, though.

First, dealers should make sure always to lend their support to their compliance officer, both when they are and aren’t present. Remind staff that complains that the officer fulfills a vital function for the dealership and deserves respect.

Second, dealers should make sure their compliance officers have access to the training they need. There are certification programs available for compliance officers, such as the one provided by the Association of Dealership Compliance Officers. Help them also keep abreast of dealership news and regulations by getting them access to trade publications and including them in trade conferences. 

Chana Perton
Chana Perton
Chana Perton is a contributing writer and investigative journalist for CBT News.

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