3 Compliance Pitfalls (And Solutions) For Your VSC Program
Last week, we covered everything you stand to lose by not being compliant or trying to go about compliance on your own. This week, it’s time to take a look at potential pitfalls in your VSC program – places non-compliant actions can take place and what you can do to ensure it doesn’t happen on your watch.
Your Process. Federal regulations put a lot of scrutiny on how vehicle service contracts are marketed, presented and sold. Because of this, there is plenty that can go wrong whether it’s intentional or not. Payment packing, selling a service contract on a vehicle with a pre-existing condition and more can put your dealership in a tight spot. The solution: Training. Don’t underestimate the value of a solid training program. It eliminates all these fears and lets your staff know that any suspicious activity is unwelcome in your dealership.
Your Claims Handling. If you have a service facility or work closely with one, the temptation might exist for a vehicle service contract to be a menu of problems a mechanic could diagnose, putting your dealership’s money, reputation or perhaps both, in jeopardy. The solution: Random inspections. Randomly inspect the claims process of some smaller-value claims and send the message that there are eyes on the process, even with lighter claims.
Your Incentives. What is in it for your employees when it comes to the success of your service contract program? It’s not their money on the line, after all. But to avoid the costly penalties that can come with non-compliance and lost profits as a result of high reserves, rewarding those who maximize the performance of your service contract program can go a long way. The solution: Monetary incentives. Think about a monetary reward for those who work to keep your loss ratios below a certain threshold. Letting them in on the overall success of a service contract program can help encourage ethical behavior and consistent selling practices.