By Charlie Gilchrist, 2019 NADA Chairman
Last month NADA released our optional Model Dealership Voluntary Protection Products Policy to all NADA dealer members. The model policy aims to assist auto dealerships in developing and maintaining a compliant, consumer-friendly process for marketing and selling voluntary protection products. VPPs, such as GAP Waiver and extended service contracts, are offered to consumers to protect their investment in vehicles that they buy or lease. The policy is especially important in today’s environment as challenges to VPPs have arisen in different quarters.
Just like NADA’s 2014 Fair Credit Compliance Policy and Program, the VPP policy was rolled out with our friends at NAMAD (the National Association of Minority Automobile Dealers) and AIADA (the American International Automobile Dealers Association). It offers critical guidance on how dealerships can successfully navigate the VPP terrain by:
- Affirming the dealers’ unequivocal commitment to a transparent and professional VPP process;
- Stating how the dealership will implement and maintain the policy, and;
- Identifying tasks the dealership will perform throughout the life cycle of VPPs. This begins with product selection and then moves through a process for product pricing, advertisement, presentation, sale, cancellation and any customer complaints.
I want to emphasize that this policy is a template that is not mandated by federal law, and its adoption is completely optional. A dealership may decide not to adopt it or to adopt some — but not all — aspects of the policy. In addition, it also does not address specific state requirements that may apply, so it’s important to review any communications on this topic from your state or local dealer association and to consult with legal counsel in deciding whether — and how — to adopt the policy template.