Slide 1 – Title Slide
Welcome, and thank you for joining today’s Dealer Compliance Training presented by 1st Security Bank.
This training is designed to help you understand the key compliance principles that apply when you interact with customers who may seek financing through us.
Slide 2 – Introduction: Fair Lending & Discrimination
Although you are not employees of 1st Security Bank, the way you interact with customers directly impacts us.
Dealers are often the first point of contact, and regulators view you as an extension of the Bank’s lending process.
This means we share responsibility for ensuring customers are treated fairly and provided with accurate, clear information.
By understanding these requirements, you help protect your business and the Bank from regulatory and reputational risk, while ensuring customers receive an excellent and equitable experience.
Slide 3 – Three Core Principles
Today’s training focuses on three major compliance areas that apply to sales and financing:
1. UDAAP & Complaints
2. Fair Lending & Discrimination
3. Regulation Z & Loan Terms
These principles guide how we communicate with customers, how we present financing, and how we prevent harm or misunderstanding.
Slide 4 – UDAAP Overview
Let’s begin with UDAAP — which stands for Unfair, Deceptive, or Abusive Acts or Practices.
These rules are designed to protect consumers from tactics that could mislead them or cause financial harm.
Slide 5 – UDAAP Intent & Real Consequences
The purpose of UDAAP is to ensure customers are never misled, pressured, or left without the information they need to make informed decisions.
Violations can lead to significant monetary penalties, civil liability, and reputational damage for both the Dealer and the Bank.
UDAAP covers everything from sales practices and advertising to how complaints are handled.
If something you say or do could be perceived as unfair, deceptive, or abusive—it is a concern.
Slide 6 – Unfair Practices
An act is considered unfair when it causes or is likely to cause substantial injury to the customer, the customer could not reasonably avoid it, and there is no meaningful benefit that outweighs the harm.
An example is a classic bait-and-switch tactic.
Slide 7 – Deceptive Practices
A practice is deceptive when information—whether stated, implied, or omitted—is likely to mislead a reasonable customer.
For example: Allowing a customer to believe they are receiving a low interest rate while not disclosing fees that increase the true cost of the loan.
Intent does not matter.
Slide 8 – Abusive Practices
An act is abusive when it interferes with a customer’s ability to understand a loan term, or when it takes unreasonable advantage of their lack of experience or knowledge.
For instance, providing a completion certificate for signature before any work has actually been done.
Slide 9 – UDAAP & Sales: The Three P’s
To avoid UDAAP violations during sales or financing discussions, remember the Three P’s:
- Prominent: Make key terms noticeable and clear.
- Presentation: Use simple, understandable language.
- Placement: Ensure important disclosures are easy to find and not hidden in fine print.
Slide 10 – Avoiding UDAAP Violations
To stay compliant:
- Always use clear, customer-friendly language.
- Do not make claims like “free” or “up to” unless you can support them.
- Make sure customers understand the loan terms—including the rate, payment amount, and due date—before signing.
- Never rely on fine print to fix misunderstandings.
- Share all customer complaints with 1st Security Bank.
Slide 11 – Complaints
Complaints are valuable indicators of customer understanding and process effectiveness.
Even if a complaint seems minor or has already been resolved at the dealership, please report it to Dealer.Support@fsbwa.com.
Slide 12 – Fair Lending & Discrimination
Fair Lending laws require that all customers receive equal treatment during the sales and financing process.
Discrimination can occur at any stage—and is based on customer perception.
No customer should be discouraged from applying for financing.
Slide 13 – Treatment & Discouragement
We cannot treat customers differently based on protected characteristics.
Discouragement includes both what is said and what is not said.
Examples include telling a customer they “probably won’t qualify,” or only offering an application opportunity to certain customers.
Slide 14 – Fair Lending Key Points
Remember:
- Do not ask about gender, marital status, race, color, religion, or national origin.
- Do not require a spouse to sign unless the customer chooses a joint application.
- The customer decides who will apply.
Slide 15 – Regulation Z
Regulation Z requires clear, accurate disclosure of loan terms to customers before they sign the agreement.
Slide 16 – Reg Z Overview
Dealers must ensure customers receive accurate disclosures including APR, finance charges, payment schedule, and total of payments.
These must be provided before the customer becomes obligated on the loan.
Non-compliance can result in penalties and reputational harm.
Slide 17 – Dealer Responsibilities
Responsibilities include:
- Verifying required disclosures.
- Avoiding hidden fees or unclear terms.
- Ensuring the Truth in Lending (TIL) Box is shown and explained.
- Contacting the Dealer Desk or 1st Security Bank with questions.
Slide 18 – Final Wrap-Up
In closing:
- Ensure customers fully understand the loan terms.
- Never discourage a customer from applying.
- Treat every customer consistently.
- Allow customers to choose how they want to apply.
For support, contact Dealer.Support@fsbwa.com.