Management

Dead Or Live, Record Retention And 

Posted on by Jan Kelly

Dead Or Live, Record Retention And 

Deal Documentation Is Vital
A dealer recently telephoned me with an interesting scenario: “A customer asked for the original of the credit application he completed while he was in negotiations for a vehicle. The sale did not go through; however, we did obtain a credit application and ran a credit bureau.”

Dead deal files

When a credit application is obtained and a credit bureau is run during negotiations, according to the Equal Credit Opportunity Act (ECOA) and Regulation B, the creditor must retain the application for 25 months for an individual or 12 months for a company. If the credit bureau also completes a check on the Specially Designated Nationals (SDN) list from the Department of the Treasury, satisfying the Office of Foreign Asset Control (OFAC), the verification of checking the SDN list must be retained for five years. At this point in the process the dealership is viewed as the creditor.

Live deal files

When dealing with live deal files, the original of the credit application usually is sent to the lender with the other loan documents. The dealership retains only a copy of the credit application. This file should be archived for seven years or until the installment contract expires.

Non-published information

Customer and consumer non-published information must be kept secure. The last thing any business owner wants to be is the source of identity theft. Have written processes in place. Actively educate dealership personnel about how to treat and identify sensitive information. Create and implement your own safeguard policies and procedures. Use good business sense and monitor your policies. Make changes as needed to ensure security and minimize the risk of anyone using your business as a source for identity theft.

Make sure everyone in the dealership, from the lot attendant up to the owner, knows who the compliance officer is. In this area, it is prudent to be observant.

I do not believe regulators want to bog us down with so many rules that we forget our mission. These regulations are meant to protect the public. Having secure files and locking our offices seem to be good business practice.

How would you feel if your identity had been stolen because of someone being careless with your non-published information? You would be in orbit without any booster rockets!

Every business should evaluate its facility, its current processes, and after a careful review, document all policies, corrections and self audits.

Documentation

I was taught that the customer should receive a copy of every document he signs, for his own records. I have seen some single-page credit applications. If this is currently your document structure, please equip the finance department with a copier. If I were your customer, I would ask for a copy of everything that I signed, with the exception of Department of Motor Vehicle paperwork.

As always, this article is not meant as legal advice. It is meant solely as educational. Please consult with your own company’s legal counsel for any legal advice.Dealer Marketing, July 2007, P. 46 & 50.