Best Practices

Automotive Personnel founder and chief executive officer Don Jasensky addressed what he believes is the most common hiring mistake employers make.

The National Automotive Finance Association board member discussed when dealerships and finance companies might pass on a potentially high performing candidate because the individual did not “blow you away” or “show a lot of enthusiasm” during the first interview.

To illustrate the situation, Jasensky leveraged his 30 years of interviewing experience and several thousand successful placements to describe two hypothetical candidates named Bill and Mary.

“Bill is under a lot of stress at his current job and may soon be terminated for poor job performance,” Jasensky said. “Mary is excelling at her current position, just as she has in her past positions. She does not need a new job but is open to seeing what your opportunity is about and make a smart decision if it is worth pursuing further.”

He then asked managers to consider these questions stemming from those scenarios:

— Doesn’t this put a lot of pressure on Bill to find a new job? How might it affect his interviewing?

— How will the fact that Mary is under no pressure affect her interviewing?

 It’s now interview day. Jasensky first recapped what likely happen during Bill’s interview with the finance company or dealership.

“As possible relief from the pressure of being terminated for poor job performance. Bill will be in ‘sales mode’ and compliment you, your company, and its product or service. Bill will be enthusiastic and ready to jump through any hoop, take any test, and will start very soon with you. Bill wants to impress you,” Jasensky said.

“Yes, Bill will interview very hard for your job. Bill will have no concerns about your position, its work content, or driving distance,” he continued. “Bill will work hard to cover up the fact that he is a low performer. Usually, by compliments, enthusiasm, and lack of job performance specifics. Bill will likely continue to be a low-performer if he gets your job.”

“As a learning and fact-gathering process. Mary isn’t trying to ‘sell’ you on herself nor impress you. She will tell you about her role and successes with pride, but she will not attempt to ‘blow you away,’” Jasensky said.

“Mary will likely be more pensive and ask thoughtful questions and probe you about issues she may see with your company, position, product, or service. She will openly express these concerns. This is how ‘high performers’ interview and make value judgments. Mary will likely continue to be a high performer if she gets your job,” he went on to say.

After the interview, Jasensky indicated that it’s likely Bill will be contacting your company often asking for a status update on the job search while he continues his own search with other firms. Meanwhile, Mary is like to be conducting more research about your company, replying only if you are seeking a second interview.

“Don’t confuse Mary’s behavior as being aloof nor low energy,” Jasensky said. “Mary is in thinking and fact-gathering mode, whereas Bill is in ‘sales mode.’

“If Mary becomes more certain that she wants your position, her interviewing will change, and she will switch gears and become more expressive and enthusiastic during follow-up interviews,” Jasensky went on to say.

Jasensky closed his latest personnel by reiterating what he believes is an important lesson in this situation.

“The best indicator of future job performance is past job performance. High performers tend to be high performers throughout their careers, and low performers tend to gravitate towards low performance,” Jasensky said.

“So invite Mary back for a second interview, and spend the time learning about her past and current job performance while checking references,”” he continued. “You may even need to ‘do some selling’ to entice Mary to your company.

“Many managers loathe the thought of having to sell the position or the company. However, you are not looking for a BFF, you are looking for a person to help your company. In a competitive job market, some “selling” by hiring managers is very beneficial in landing the best personnel,” Jasensky went on to say.

To find candidates who could help your organization or to get more recommendations about personnel matters, Jasensky can be reached at (216) 226-8190 or Don@AutomotivePersonnel.Careers.

ALS Resolvion is trying to make collaboration within the skip-tracing and repossession worlds a little easier to be done online.

The recovery management firm this week announced a transition of its popular community forum, Lenders Repossession Best Practices, from one operating on social media platform to a site that lives within ALS Resolvion’s website.

The forum is a private community limited to individuals involved in collateral recovery issues at banks, finance companies, captives, credit unions and other firms originating or buying loans. Previously an exclusive LinkedIn Group with limited functionality, the platform transition now offers approved members full forum advantages.

Some of these benefits include member gamification, easy forum responses via email, post notifications and access to network with more than 200 auto finance executives.

ALS Resolvion hopes that the platform transition will continue to spark conversations throughout the year among the financing community.

“Lenders Repossession Best Practices forum is another resource that we felt was necessary to the industry but we had to ensure it also provided all the benefits of a forum,” ALS Resolvion chief executive officer Michael Levison said in a news release.

“Our goal behind the initiative was to provide a way for lenders to network and communicate outside of industry events and we think that the forum transition will be a critical element to making that happen,” Levison went on to say.

For more information about ALS Resolvion’s community forum, Lenders Repossession Best Practices, or to register as a member, go to this website.

Not only did Automotive Intelligence Council member Equifax share its latest data about how originations are trending, vice president of automotive marketing and strategy Jennifer Reid also delved into six best practices that could help finance companies of all sizes.

Even as subprime originations slow to the lowest level Equifax has seen in more than five years, Reid maintained in this video that there are several facets of business that finance companies can sharpen, including:

• Need for speed in underwriting for lenders.

• Best practices to make sure you get the right offer back to the dealer while mitigating risk.

• Ensure customer is who they say they are.

• Ensure you understand the customer's financial capacity (verifiable income and employment through real-time databases).

• Look at your portfolio and get ahead of the process to engage with customers for the right buying decision.

• Looking at the process to see where you can automate more.

Reid arrived at those assertions not long after Equifax shared its data as reported through April.

Through the first four months of the year, Equifax indicated 7.96 million auto loans had been originated, totaling $183.9 billion. This data represented a 0.3% decrease in accounts and a 2.3% increase in balances year-over-year.

Equifax said retail installment contracts constituted 86.6% of all auto account originations and 89.8% of all auto origination balances through April.

Analysts found that 1.81 million auto loans have been originated through April to consumers with a VantageScore 3.0 credit score below 620. These individuals are generally considered subprime accounts. The volume marked a 1.8% decrease year-over-year. These newly issued contracts have a corresponding total balance of $33.6 billion, a 1.8% increase year-over-year.

Through the end of April, Equifax determined 22.7% of auto loans were issued to consumers with a subprime credit score, accounting for 18.3% of origination balances. In the same time a year ago, the account share was 23.1% and balance share was 18.3%.

Analysts went on to note the average origination loan amount for all auto loans issued in April was $23,659. This figure is a 4.5% increase over April of last year. The average subprime loan amount was $19,304, which is a 6.1% increase compared to April 2018.

“While overall auto sales have fallen slightly compared to the previous year, we’re seeing active and interesting trends in auto loan originations through April,” Reid said in analysis shared with SubPrime Auto Finance News.

“In particular, while subprime activity continues to grab headlines, it is interesting that the percent of subprime to the total originations are at the lowest level dating back to the end of the recession,” she continued.

“Furthermore, we will keep a watchful eye on lender activity, as it appears lenders are tightening up in the under-620 credit score bucket for both lease and retail contracts,” Reid went on to say.

Equifax also will be among the companies bring their experts to share insights during Used Car Week, which begins on Nov. 11 at the Red Rock Resort in Las Vegas. Early Bird registration discounts are available through Oct. 1.

The complete agenda and other details are available at www.usedcarweek.biz.

Chief fraud strategist Frank McKenna described the fourth gathering of the PointPredictive Fraud Consortium Roundtable earlier this month just ahead of the National Automotive Finance Association’s Non-Prime Auto Finance Conference as the best one yet.

Besides more than 50 attendees from 21 auto finance companies — including five of the top 10 market leaders — McKenna shared  with SubPrime Auto Finance News why the industry is uniting to combat a growing problem.

“It was so much more interactive,” McKenna said in a phone interview following the gathering in Plano, Texas. “When we started the consortium meetings, people were a little shy or maybe didn’t know a lot about fraud, but they were interested. They were less able to share best practices and experiences.

“But at this meeting, there was a lot of collaboration,” he continued. “Everyone was talking, everyone was interacting, trying to figure out what the other lenders were doing to stop fraud and what fraud trends they were seeing. It’s been remarkable to see the transformation of the industry. As soon as they start getting together, they realize the value of working together. The mood was really energetic and participatory.

McKenna and PointPredictive partners including defi SOLUTIONS and Digital Matrix Systems discussed rising fraud trends and potential collaboration on how to best address those issues from an industry perspective.

During the roundtable sessions, finance companies identified their three biggest fraud concerns for 2019. McKenna shared that attendees could use their smartphone to participate in surveys that generated immediate results.

Finance companies in attendance identified their first concern as the dramatic increase in deceptive credit washing where individuals overwhelm creditors with false claims of identity theft to remove legitimate trade lines from their credit. Their second biggest concern is the dramatic rise in synthetic identity which is largely driven by individuals using credit protection numbers (CPNs) to create new credit files under false pretenses. Their third biggest concern is the ongoing and systematic fraud by dealers that results in higher levels of first and early payment default.

The event also included guest speakers, including Sgt. Darren Schlosser from the Houston Vehicle Fraud Task Force and Matt Pannell, former special agent with the Social Security Administration, who shared insights into the growth of synthetic identity fraud and credit repair fraud that are sweeping the nation.

“Synthetic identity is being driven largely by unscrupulous credit repair companies that are convincing ordinary people to commit criminal acts,” Schlosser said. “Using so-called CPNs to apply for credit under false pretenses is a crime and I’m seeing an alarming increase in the number of vehicle financing fraud cases where this is occurring.

“I believe collaboration between lenders, law enforcement, car dealerships and others is important in preventing this type of fraud from growing,” he continued.

At the roundtable, McKenna also provided insight into fraud trends by presenting results from analysis conducted on more than 70 million historical auto loan applications.

The analysis showed that auto lending fraud risk has risen by at least 38% in the past seven years and that fraud origination risk is expected to reach $7 billion in 2019. The analysis further showed a dramatic 140% increase in synthetic identity risk patterns in auto applications since 2016.

McKenna’s research demonstrated that the drivers behind the rising levels of fraud risk were the growth in sharing of fraud methods on social media, the increase in financing to borrowers with lower credit ratings and the billions invested in fraud controls by other industries which have had the effect of pushing fraudsters toward auto finance companies and dealers.

“We appreciate the collaboration that PointPredictive enables through their consortium in addressing our key fraud pain points at these roundtables,” said Jorge Arenado, associate vice president of originations at Westlake Financial. “Their focus on both first- and third-party fraud, and not just identity theft, helps the auto lending industry target all the fraud we experience including income misrepresentation, dealer fraud, straw borrower and fraud ring activity.

“The chance to discuss all of these issues with our peers is a big benefit in helping us shape our future fraud strategies,” Arenado continued.

Mickey Watts is senior vice president at Anderson Brothers Bank and a board member of the NAF Association, which also included a special Fraud Friday segment again this year at its annual conference.

“We learn quite a bit from the PointPredictive roundtable each year,” Watts said. “As fraud continues to morph and change, we are able to meet and discuss the changing fraud patterns with other lenders and discuss best practices and how to use the PointPredictive products to our best advantage.”

During the event, PointPredictive showcased its solutions, including:

—Synthetic ID Alert, which can alert finance companies to potential synthetic identity issues.

—Auto Fraud Alert, which can provide 100 alerts and red flag indicators to finance companies based on comparing and validating information a lender receives on an application against data assets managed by PointPredictive

—Income Validation Alert, which can enable lenders to streamline their income assessment of borrowers.

“Our use of PointPredictive solutions has changed our company’s awareness around stopping fraud and misrepresentation within our portfolio,” said Eric Lin, general manager of Universal Finance Company. “The consortium roundtable event is a unique advantage to us and the industry in the fight to protect against financial losses of this kind.”

PointPredictive’s roundtable continues to grow as more finance companies collaborate to address fraud.

“The growth of our consortium and record attendance this year indicates that we’re on the right track in our approach to help solve auto lending fraud,” PointPredictive chief executive officer Tim Grace said. “When we launched the auto fraud consortium two years ago, our mission was to bring the industry together in the same way we did in the past at other companies to address fraud in mortgage and credit card.

“Since fraudsters and unscrupulous dealers attack lenders serially, it is only through collaboration that the industry can address the issue,” Grace continued. “Our solutions are now scoring over 1.5 million new auto applications every month using shared machine learning models. We’re very proud of our growth and the positive effect we are having in the industry.”

Glenn Munro, executive vice president of defi SOLUTIONS, a PointPredictive partner that provides turnkey access to those PointPredictive solutions through the defi SOLUTIONS Loan Origination System, also addressed the attendees.

“We partner with PointPredictive because we have a common belief that shared fraud intelligence and scoring in real-time is the best way to combat the problem. PointPredictive is doing this the right way,” Munro said.

For further information on PointPredictive solutions or to join future Auto Lending Fraud Roundtables, contact PointPredictive at info@pointpredictive.com.

The Federal Trade Commission recently offered six recommendations to dealerships and auto finance companies that might receive subpoenas and civil investigative demands (CIDs) as part of an investigation into potential law violations

Burke Kappler, an attorney in the FTC’s Office of General Counsel, explained in a recent blog post that the regular subpoenas and CIDs are critical and used deliberately and responsibly to avoid unnecessary burdens on businesses and individuals and consistent with its obligations to enforce the law.

“These requests are legally enforceable demands, and recipients of subpoenas or CIDs need to take their obligation to comply seriously,” Kappler wrote. “We expect all companies and individuals who receive compulsory process to respond completely and in a timely manner, or to disclose quickly and candidly any obstacles to full compliance.

“We routinely work with recipients to narrow or defer requests, and generally, we have found that parties cooperate. But not everyone sees the benefits of cooperation, which can often result in delay,” Kappler continued.

In an effort to make the process go as smooth as possible, Kappler offered these suggestions, including:

— Respond promptly to FTC staff upon receipt of a subpoena or CID.

— Take advantage of meet-and-confer opportunities and be forthcoming about any concerns that you have about your ability to comply on time and in full. In meetings or calls, bring people who have knowledge and information about the required documents and information and the efforts necessary to produce them. Provide specific and concrete information — not just guesses.

— If you run into problems meeting deadlines, call staff immediately. Keep them apprised so they can work with you. Stay in contact. Don’t let deadlines pass without explanation.

— Understand that the FTC and its staff need to move investigations forward expeditiously. Unsupported requests for extended delays may not be granted.

— Abide by commission orders promptly. If you have filed a petition to limit or quash a CID or subpoena and the commission has ordered some form of compliance, you must do so or risk a potential enforcement action within 30 days of the commission’s deadline.

— Bear in mind that there are many other factors that affect the timing and course of an FTC investigation. Delaying compliance with a CID or subpoena in hopes that you won’t have to comply at all rarely works, and most often results in follow up from the Office of General Counsel.

Our podcasts originating from NADA Show 2019 tackle another important topic — human resources and managing your workforce.

KPA chief executive officer Vane Clayton not only discussed the company’s acquisition of Compli earlier this year, but also shared some best practices that can help businesses of all sizes.

The full conversation with Nick can be found below.

Download and subscribe to the Auto Remarketing Podcast on iTunes or on Google Play. 

You can also listen to the latest episode in the window below.

Catch the latest episodes on the Auto Remarketing Podcast homepage and on our Soundcloud page.

Please complete our audience survey; we appreciate your feedback.

A way some of the best recovery industry professionals can be recognized is now available and open for submissions.

Organizers of the 11th annual North American Repossessors Summit — held by the American Recovery Association (ARA) in conjunction with headline sponsor Harding Brooks Insurance — have opened its online award submissions for the 2019 NARS Industry Awards.

The online submissions will be accepted until April 1.

Honoring exemplary repossession professionals, this year’s award categories include Agent of the Year, Service Representative of the Year, Humanitarian of the Year and Agency Owner of the Year. Winners will be announced during the summit, which will take place at the Omni Mandalay Hotel in Irving, Texas on April 18 and 19.

“Every year, we welcome the opportunity to recognize the industry professionals who best demonstrate the values of NARS in their work,” ARA President Dave Kennedy said. “This year, we wanted to create more ways we could honor repossession professionals across multiple job titles who truly embody our 2019 theme, ‘Adapt, Conquer and Overcome.’”

The Agent of the Year Award distinguishes an agent who has demonstrated outstanding professionalism, understanding of lender needs and full compliance with industry standards, as well as protection of the consumer's rights and safety.

The Service Representative of the Year Award represents someone who has shown exemplary performance and has consistently excelled in their position. This person demonstrates integrity, creates a positive atmosphere in their workplace and displays a strong commitment to the mission and values of the professional collateral recovery industry. 

Humanitarian of the Year submissions can be an industry professional of any position who contributes significantly to alleviating human suffering and improving the quality of life in their community. This person demonstrates leadership through outstanding volunteer accomplishments that bring honor to the collateral recovery profession. 

Finally, the Agency Owner of the Year Award will go to an owner who has at least a three-year commitment of excellence within their company and the collateral recovery industry. They should also be able to document their commitment to professional education and compliance training as well as the use of innovation and creativity in enabling their company to prosper and extend its reach in the collateral recovery profession.

Nominations for the 2019 NARS Industry Awards can be submitted at www.reposummit.com/about-the-summit/about-nars-2019-awards/. Regular registration for NARS 2019 remains open through Friday to recovery agents and finance companies at www.reposummit.com.

Coming on the heels of Automotive Intelligence Council member MBSi Corp. making a move involving the firm, Recovery Industry Services Co. (RISC) announced it has joined forces with recently acquired Vendor Transparency Solutions (VTS) to unite compliance services and provide comprehensive vendor vetting, lot inspection and education services to the collateral recovery industry.

For years as independent companies, RISC and VTS stressed that they have advocated for a more professional repossession industry. By integrating the compliance solutions, RISC insisted that it now offers the best of both companies to the industry. 

“We are proud to partner with RISC to provide a repossession training and vetting solution that has been embraced by both vendors and lenders, and we thank those who have supported our efforts,” said Max Pineiro, president of Vendor Transparency Solutions.

“With the recent acquisition of the VTS software platform, we looked to partner with the industry standard CARS program to add value to the VTS training curriculum and vetting services.  Additionally, the involvement of Hudson Cook solidifies it as the industry standard,” Pineiro continue.

In the weeks and months ahead, RISC will announce new product offerings that combine the best of RISC and VTS curriculum and technology solutions.

“With this partnership, we continue to work towards improvement and unification of the industry,” RISC chief executive officer Stamatis Ferarolis said.

“It will take some time to integrate our curriculum and vetting services, but we believe together we now deliver the only comprehensive compliance and education solution to the collateral recovery industry,” Ferarolis went on to say.

Our series of episodes originating from the Vehicle Finance Conference hosted by the American Financial Services Association continues with a conversation including Craig Stokum, who is director of sales in automotive for ID Analytics.

Nick asked ID Analytics about alternative data and how it can be leveraged by auto finance companies to enhance underwriting, especially with the subprime space.

The full episode can be found below.

Download and subscribe to the Auto Remarketing Podcast on iTunes or on Google Play. 

You can also listen to the latest episode in the window below.

Catch the latest episodes on the Auto Remarketing Podcast homepage and on our Soundcloud page.

Please complete our audience survey; we appreciate your feedback.

According to Protective Asset Protection, experts estimated that dealerships leveraging a dealer-owned warranty company structure to sell F&I products are seeing a 20-percent lift in profits on average for F&I sales.

Protective Asset Protection has focused on this topic significantly during the past year since many dealers have offset the recent downward trend in vehicle margins through increased F&I profitability. The company explained that a way some dealers have maximized their F&I income is through participation in the underwriting profits on the F&I products sold.

A number of structures exist for the dealer to participate in these products — each with varying benefits.

Protective Asset Protection explained that typical types of F&I products available for dealer participation include extended vehicle service contracts, GAP waivers and road hazard tire coverage, among others. The profit participation programs typically include guaranteed retrospective (retro) agreements, participating retro agreements, and insurance and reinsurance programs, including dealer-owned warranty companies (DOWC), controlled foreign corporations (CFC) and noncontrolled foreign corporations (NCFC).

Protective Asset Protection vice president Matt Gibson recently offered an in-depth analysis, reviewing the process for dealers transitioning their business from NCFC to DOWC because of federal tax law changes. Gibson also discussed the topic during a recent episode of the Auto Remarketing Podcast.

The company emphasized the importance of this strategy, reiterating that dealership margins keep shrinking. Protective Asset Protection pointed out these data points:

• The average U.S. light-vehicle franchise dealership lost $2 on every used vehicle it retailed in 2017.

• NADA Data 2017 figures: The average dealership saw a net loss of $2 per used vehicle retailed, swinging from a per-unit profit of $65 in 2016 and $132 in 2015.

• NADA Data’s numbers show that domestic-brand dealerships posted a net profit of $159 per used-vehicle sale. Volume import-brand dealerships posted a net loss of $111, and the average luxury-brand dealership posted a net loss of $197 per vehicle retailed.

“Dealer-owned warranty companies enable dealers to tailor and customize their own F&I offerings. For example, an independent dealer can build a portfolio of F&I products that caters to a variety of branded vehicles, not just one. These F&I products can range from service contracts to ancillary products,” Protective Asset Protection said.

“Given the fact that most dealers are entrepreneurs, with some even owning their own dealership, a DOWC will feel natural to them since it’s their opportunity to offer an F&I product that is merely an extension of the brand they’ve worked hard to establish within their own communities,” the company went on to say.

For more details about setting up a DOWC and more, go to www.protectiveassetprotection.com.