Every year, California releases an onslaught of new laws that either directly or indirectly affect dealership Finance & Insurance (F&I) offices. A myriad of applicable federal and state laws makes navigating the F&I sales process compliance challenging. As such, CNCDA has continually updated our F&I Compliance Manual to keep pace with the ever-changing environment.

This year, CNCDA again commissioned Manning Leaver to produce the 7th Edition of the CNCDA F&I Compliance Manual. Reynolds & Reynolds’ continued partnership with CNCDA resulted in multiple forms for use as examples throughout the manual. The manual consists of 250 pages split over 50 chapters, covering compliance in the F&I office in detail and addressing numerous concerns brought to CNCDA via the Legal Hotline and in discussions with dealers facing the daunting task of F&I compliance. This manual is made for dealers, considering the issues faced by the boots on the ground in dealer showrooms and sales offices throughout California. Additionally, CNCDA and Manning Leaver presented a two-part webinar covering the major changes to the law and the current issues impacting the F&I office.

Outlined below are some of the major points dealers should be aware of, but this certainly is not an exhaustive list.

New LAW-CA-553 Retail Installment Sale Contract

• Existing at over two feet long, this document underwent some changes to reflect the new requirements, and the new version was released March 2023.

New Pre-Contract Disclosure

• This statutorily required form underwent an update in March 2023 to reflect the changes to match the language in the statute addressing GAP waiver.

New laws effective January 2023 vastly changed the way GAP waivers may be sold, including but not limited to:

• new limits to amounts of GAP waivers in relation to vehicle value or amount financed;
• new disclosures required regarding GAP waivers;
• changes to whom dealers may sell GAP waivers to, including a prohibition on selling to an active-duty military member; and
• new refund obligations.

Prior History Disclosures

• Lemon Law Disclosures
• Reported stolen
• Unwind/rollback
• Damage history
• NMVTIS vehicle history reports

New Requirements for Co-Buyers

• The co-signer disclosure form was changed to reflect the additional language

Advertising Issues

• Statutory duties to sell at advertised price
• Discussion of MSRP issues
• Discussion of mark-ups and supplemental sticker use

GLB Privacy Notices

• Covers updates to the requirements
• Customer privacy concerns addressed
• Information on safeguarding computerized consumer data

Trade-in/Lease Return Issues

• What fees are allowed or prohibited
• Process as required by law
• Handling buyouts

Safety Recall Issues

• Disclosure requirements
• Dealer responsibility

Use of Supplemental Stickers

• When and how to use them
• What products or features should be included

Credit Card Payments

• Discussion of credit card surcharges

Fair Credit Compliance

• Preventing discrimination

Warranty Start Date Requirements

• Changes to commencement date requirements of warranties
• How service contracts are affected by this new law

Partial Driving Automation Features Disclosure

• New requirement to notify customers about partial driving features

Electronic Contracting

• How to remain compliant with the requirement to provide a customer copy of the contract
• When e-contracting is permitted

Ten-day Right of Rescission

• Proper notification procedures
• When the right applies
• Compliance with processing a rescission

Licensing Issues

• Navigating the web of new financial licensing regulations

Any dealers or members of dealership staff in the F&I office or who deal with the F&I office did not make it to the webinar can still register and view the recording at www.cncda.org/events. At a minimum, dealers should review the updated 7th Edition of the CNCDA F&I Compliance Manual, available on CNCDA Comply at www.cncda.org. As always, if you have any questions about this or any other legal issue, feel free to reach out to us via the Legal Hotline at legalhotline@cncda.org or 916-441-2599, option 1.