Turn On F&I Cameras

Don't ever accuse me of being consistent. I've had so many positions on the question of whether it's a good idea to videotape finance and insurance sessions with customers, that you'd need a GPS device to keep track of me.

About 10 years ago, when I learned that some dealers in Alabama were beginning to audiotape, then videotape, their F&I sessions with customers, I was intrigued. I knew why those dealers were trying to create records of their dealings with customers. Alabama had become a hotbed of litigation against dealers, and the dealers were looking for defensive measures to slow down the plaintiffs' lawyers.

Not a bad idea, I thought.

Then I thought some more. And as I did, several concerns came to mind. First, if the F&I process wasn't perfect, the videotape would record the imperfections, and the tape would become Plaintiff's Exhibit 1.

Second, the practices of some dealers, as reflected by the court opinions we see each month, are not what you'd want on tape. Dealers would have to jettison things like payment packing and phony menu selling before videotaping began. That's not a bad thing, but at some dealerships, it would mean a sea change in how business is done.

Third, even an ethical and honest dealership makes mistakes, and some F&I sessions will not be perfect. To avoid those imperfect sessions, dealers would have to train their personnel extensively on the intricacies of the laws governing car sales and finance. Given the general level of knowledge about these topics in many dealerships, and given the typically high turnover at most dealerships, I thought that was a pretty tall order.

Fourth, what if the dealership did not tape every F&I sessions? Judges and juries don't like inconsistent procedures. They immediately think, “Why didn't the dealer tape these sessions?”

Finally, the tapes would become subject to federal and state record-keeping requirements. The burden of keeping several years of tapes appeared significant.

So, given all of these negatives, and seeing few positives, I staked out a position against videotaping. That's where my head was last fall when I was scheduled to talk on the topic at a seminar in Denver.

Just before the seminar, though, I got a call from a lawyer friend who works with a large dealership. He asked if my view of videotaping was negative. I told him it was. He responded with a persuasive case for videotaping. Because he was coming to the seminar, I invited him to join me there in leading a discussion on the topic.

At the seminar, this lawyer recounted the experience that his dealership had to date with videotaping. He pointed out the value of videotaping in training employees and driving away employees prone to do bad stuff.

He noted that it also drove off customers who were engaged in identity theft or fraud in an effort to gain vehicle financing. That really caught my attention. He also recounted that it warded off threatened litigation.

I pay attention when people start talking real-life experiences instead of gut feelings. After listening to this lawyer, I found myself dragged back over the “neutral” line and into “pro-videotaping” territory.

I still had concerns — dealerships need to do the videotaping right. They should videotape all sessions (except where they document a customer refusal and have a process for monitoring which employee's customers are refusing). They should train and re-train everyone in how to do it, and have the dealer's lawyer script the sessions and review samples of the tapes. Finally, dealerships must comply with the record-keeping requirements.

The warnings aside, I now think that videotaping, when done right, makes a lot of sense.

Thomas Hudson is a law partner with Hudson Cook and editor in chief of CARLAW. He's at 410-865-5400.