Auto Dealer Monthly, May 2013

LEGAL ALL SHOW NO GO The magazines legal eagle uses another dealer targeted lawsuit to encourage dealerships to walk the walk when it comes to their privacy policies I recently read a complaint fi led by a consumer in federal court against a North Carolina dealer Th e complaint contained 11 counts all centering around alleged identity theft by an F I manager who supposedly faked a credit application and leaked the consumers private information to other parties Th e claims that got me thinking however were those pertaining to the dealerships privacy policies One count claimed the dealership committed an unfair and deceptive trade practice when it falsely represented to its customers that it had created and implemented a system of physical and electronic safeguards and that it restricted access to customer information entrusted to it by customers and potential customers In actuality the dealership had no such system in place Th e dealership was talking the talk but wasnt walking the walk Another count argued that the dealerships action constituted negligence per se for failure to comply with the Gramm Leach Bliley Act the federal law that imposes privacy and safeguarding responsibilities on dealers and other creditors Still another count alleged a breach of express and implied contractual duty to safeguard confi dential fi nancial information As I read the complaint I recalled several recent legal audits wed done for dealers We asked the dealers to produce for our review all of the documents they provide to customers and potential customers Each of the dealers included a copy of their privacy policy in the document review Each privacy policy said something like Our dealership has created and implemented a system of physical and electronic safeguards Th e policy also stated We restrict access to customer information entrusted to it by customers and potential customers Does that sound familiar When we asked the dealers to show us the system we got blank looks Th e system didnt exist It was all talk and no walk So the dealers who had no existing privacy safeguarding systems were handing out privacy policies and posting them on their websites to tell their customers that such systems were in place Th ats the basis of 30 AUTO DEALER MONTHLY MAY 2013 the unfair and deceptive act or practice claim in this lawsuit So what are you telling your customers about your privacy safeguarding practices You are probably handing out a document titled Privacy Policy and you probably also have your privacy policy posted on your dealerships website But have you read that policy Is your dealership actually doing what your privacy policy says it is doing with regard to protecting consumer information Th is sort of claim isnt limited to privacy policies Is your dealership a member of a state or national dealer association with a code of conduct or code of ethics that claims you abide by all federal and state laws Do you proudly display that code in your dealership and on your website If so do your dealership sales and fi nancing practices and procedures mirror the codes provisions Or are you all talk and no walk If your practices dont measure up to your own posted description of your conduct count on some plaintiff to turn that discrepancy into an unfair and deceptive act or practice claim When one does you can bet Ill be writing about your case on this page Comparing the walk with the talk at your dealership and making sure they match can head off claims like this one and keep you out of court l co de all m By Tom Hudson ISTOCKPHOTO COM RYCCIO Thomas B Hudson is a partner in the law firm of Hudson Cook LLP and the author of several widely read compliance manuals available at CounselorLibrary com Counselor Library com 2012 all rights reserved Based on an article from Spot Delivery Single print publication rights only to Auto Dealer Monthly magazine HC 4850 4630 0435 THudson@ AutoDealerMonthly com