F&I Compliance 2025: Checklist, Regulations, and Best Practices for Dealers & Agents

August 25, 2025

Why F&I Compliance Is More Critical Than Ever (in 2025)

Regulatory scrutiny on auto dealerships’ Finance & Insurance (F&I) practices has never been higher. State Attorneys General and the Federal Trade Commission (FTC) have ramped up enforcement against deceptive or unethical F&I practices – and the penalties are steep. In the past year alone, multiple dealerships have faced multi-million dollar settlements for unlawful fees and sales tactics. For example, in late 2024 a group of Rhode Island dealers paid over $1 million for automatically tacking on warranties not reflected in advertised prices, and an Illinois dealer chain was hit with a record $20 million settlement over bait-and-switch advertisingcrowell.com. In early 2025, the Maryland Attorney General secured $3 million in penalties (plus several million in consumer refunds) from a dealer that charged hidden “sales commission” feescrowell.com. New York’s AG likewise recovered $3.2 million from eight dealerships that overcharged customers with undisclosed lease buyout feescomplyauto.com complyauto.com. The message is clear: dealerships that don’t prioritize F&I compliance risk substantial fines, refunds, and reputational damage.

This intense regulatory focus isn’t expected to fade. Even though the FTC’s proposed “Combating Auto Retail Scams” (CARS) Rule – which would have formally outlawed bait-and-switch marketing and junk fees – was vacated on procedural grounds in January 2025, regulators have doubled down on enforcing existing lawscrowell.com crowell.com. Both federal and state authorities are in the midst of aggressive crackdowns on deceptive F&I practices, with bipartisan support for holding dealerships accountablecomplyauto.com. In short, F&I compliance in 2025 is a must, not an option. Dealers and their F&I agents need to build a culture of transparency and ethical practices to avoid becoming the next headline.

New Dealership F&I Regulations and Trends in 2025

Staying up-to-date on dealership F&I regulations is vital, as the legal landscape is evolving. Several new rules and legislative trends in 2024–2025 are directly impacting F&I departments:

State “Junk Fee” Laws: A wave of state laws aims to ban hidden add-on fees and promote upfront pricing transparency. States like New York, Maryland, Rhode Island, California, and Massachusetts have all taken action to prohibit deceptive fees in car salescomplyauto.com crowell.com. Dealers must now ensure any dealer-added fees or commissions are clearly disclosed in the advertised price – no surprises at signing. If a fee or add-on isn’t prominently included in the price or properly explained, it may be deemed illegal under unfair and deceptive acts/practices (UDAP) lawscomplyauto.com complyauto.com.
FTC Enforcement (Post-CARS Rule): Even without a new federal rule, the FTC is actively enforcing existing F&I compliance laws. In fact, the failure of the CARS Rule has led the FTC to refocus on case-by-case enforcement using its UDAP authoritycomplyauto.com complyauto.com. This means dealers should expect continued federal scrutiny of things like payment packing, undisclosed add-ons, false advertising, and discriminatory financing. Notably, the FTC (alongside state AGs) has recently imposed hefty penalties – e.g. a $2.6 million settlement in Arizona for junk fees targeting Spanish-speaking customerscrowell.com – signaling that any dealership engaging in unfair F&I practices can be a target.
Data Privacy & Security Requirements: The F&I office handles sensitive customer data (credit reports, loan applications, etc.), so privacy laws are now a compliance priority. By 2025, at least 20 U.S. states (including California, Colorado, Connecticut, Florida, Texas, and more) have enacted new consumer data privacy lawsus.dealertrack.com. Additionally, the FTC’s updated Safeguards Rule under GLBA took full effect in 2023, requiring dealerships to implement rigorous information security programs to protect customer dataforvismazars.us. F&I managers must ensure their store has proper data protection measures (encryption, access controls, vendor oversight, etc.) and that they train employees on safeguarding personal information. Privacy compliance isn’t just about avoiding fines – it’s critical to maintaining customer trust.
Finance Product Disclosures: Regulators are scrutinizing how dealers sell aftermarket F&I products (extended warranties, GAP insurance, service contracts, etc.). Many states now mandate clear disclosure that these add-ons are optional and not required for financingus.dealertrack.com. Dealers should provide written notices or contract language in line with state law for each product. Charging all customers consistently (and not sneaking products into deals without consent) is essential. For instance, one compliance tip is never to “surcharge” credit customers for add-ons; if you charge more for a product when financed, it effectively becomes part of the finance charge and must be reflected in the APR under Truth in Lending lawsus.dealertrack.com.
Record-Keeping Changes: Effective March 2025, federal rules extended the retention period for certain compliance records. Notably, the U.S. Treasury’s OFAC (sanctions) program now requires dealerships to retain related documents for 10 years instead of 5us.dealertrack.com. Dealerships should review their document retention policies to meet this new 10-year requirement for any OFAC checks or transaction records created on or after March 12, 2025us.dealertrack.com. Failing to maintain required records could itself lead to penalties during an audit.

These developments underscore why an ongoing commitment to compliance is crucial. Next, we’ll provide a practical checklist that F&I departments and agents can use to audit their practices and stay compliant with the latest regulations.

F&I Compliance Checklist for Dealerships (2025)

Use the following compliance checklist to evaluate and strengthen your dealership’s F&I processes. This checklist covers the must-do items to ensure you are following current laws, protecting consumers, and avoiding fines:

Transparent Pricing & No Hidden Fees: Verify that all advertising (online and print) clearly includes all non-government fees in the vehicle’s price. No “surprise” dealer fees should appear at signing that weren’t disclosed up frontcomplyauto.com complyauto.com. The only exclusions from advertised prices should be taxes, title, registration, and similar official fees. If your state (like New York) requires a disclosure near the price about included fees, make sure it’s therecomplyauto.com. Audit your website and listings to eliminate any misleading pricing tactics (e.g. fees buried in fine print or add-ons pre-loaded without customer consent).
Clear Disclosure of F&I Products: Ensure every F&I product (warranties, protection plans, GAP, et al.) is presented as optional and is separately agreed to by the customerus.dealertrack.com. Provide required notices or forms for products as mandated by your state’s laws. For example, some states require a specific written disclosure if a product can be cancelled or if it’s not required for loan approval. Never bundle products into the deal without explaining their cost and obtaining the customer’s clear consent (no “packing” extras into the payment)complyauto.com. Every add-on’s price and terms should be transparent.
Honest Sales and Lending Practices: Review your sales process for any unfair or deceptive acts. Do not allow bait-and-switch offers, misrepresentation of financing terms, or discrimination. Charge the same prices and interest rates for which customers qualify – no discriminatory markups or unauthorized add-ons for certain groups. Remember that any tactic that would “trick” or pressure the customer (hiding fees, altering quotes, etc.) can violate federal and state UDAP regulations. Regularly train your F&I managers and sales team on fair lending and fair dealing practices to uphold an ethical sales culturecomplyauto.com crowell.com.
Data Privacy & Security Compliance: Protect customer information collected during the finance process. Follow the FTC Safeguards Rule requirements by maintaining a written information security program: use encryption for sensitive data, strong access controls, and oversight of any third-party vendors handling customer infocbh.com ftc.gov. Make sure you’re also compliant with any state-specific privacy laws (for instance, provide required privacy notices or opt-outs to consumers if applicable). Train employees on proper data handling – a data breach or misuse of personal info can lead to severe penalties and loss of customer confidence.
Fraud Prevention Measures: Incorporate steps to verify customer identities and prevent fraud in F&I transactions. Given that auto finance fraud losses hit $7.9 billion in 2023us.dealertrack.com, it’s critical to stay vigilant. Use tools like ID verification quizzes, driver’s license scanners, and OFAC checks on every deal. Watch for red flags of identity theft or synthetic identities (e.g. mismatched information). Having a robust anti-fraud procedure not only protects your dealership from losses, but also keeps you compliant with Red Flags Rule requirements and other regulations aimed at preventing credit fraud.
Record Keeping & Documentation: Keep thorough records of all deals, disclosures, and compliance actions. As noted, maintain required documents (e.g. deal jackets, signed disclosures, privacy policy acknowledgments, OFAC checks) for the mandated timeframes – now up to 10 years for certain recordsus.dealertrack.com. It’s wise to document staff training sessions and any compliance audits or corrective actions as well. Good record-keeping demonstrates your dealership’s intent to comply and can be a lifesaver if regulators investigate or a customer complaint arises.
Ongoing Training and Compliance Program: Finally, treat compliance as an ongoing program, not a one-time task. Assign a compliance officer or manager to oversee F&I compliance. Conduct regular training for F&I personnel and sales staff on new laws, ethics, and proper procedures (at least annually, if not more). Monitor your dealership’s transactions and advertising for compliance via internal audits or mystery shoppers. If issues are found, take corrective action immediately and update your policies. A strong internal compliance program – with management support, employee accountability, and periodic reviews – is your best defense against violationsus.dealertrack.com. As one industry expert put it, “Compliance isn’t just about checking a box—it’s about building a foundation of trust and transparency for long-term success”us.dealertrack.com.

By following this checklist, agents and dealers can significantly reduce the risk of legal troubles. Compliance efforts might require time and resources, but they pay off by protecting your business’s reputation and ensuring customer satisfaction.

Best Practices to Avoid Costly Fines

Beyond the checklist items above, consider these additional best practices that top-performing dealerships use to stay ahead of regulations:

Stay Informed of Legal Updates: Subscribe to compliance newsletters or legal bulletins for the auto industry. New state or federal rules can emerge (e.g. changes in advertising laws or consumer finance regulations). Being aware early gives you time to adapt. For instance, if the FTC or a state legislature proposes new F&I disclosure requirements in 2025, you’ll want to know before it becomes law. Velocifi’s blog (and similar industry resources) often provide explainers on new rules – take advantage of those insights.
Use Compliance Tools and Technology: Leverage software solutions that many dealerships use today to assist with compliance. These include deal checklist software that won’t let a deal finalize until all required forms are present, menu presentation tools that clearly show optional products, and website monitors that flag non-compliant adscomplyauto.com complyauto.com. Some platforms even use AI to scan your deals or websites for compliance issues automatically. The right tools can make it much easier to enforce best practices consistently across your team.
Consult Professionals: Don’t hesitate to get guidance from experts such as automotive compliance attorneys or F&I compliance consultants (often called “agents” in the F&I product space). They can conduct a comprehensive review of your processes and spot issues you might miss. They can also provide customized training to your staff. The cost of professional advice is small compared to multi-million dollar penalties or lawsuits that can result from non-compliance.
Foster a Culture of Ethics: Senior management should set the tone that integrity in F&I is non-negotiable. Encourage employees to speak up if they see unethical behavior and reward those who uphold compliance standards. By creating a culture where doing the right thing is valued, compliance becomes part of your dealership’s DNA. This not only helps avoid fines but also builds customer loyalty – buyers return and refer others to dealerships they trust.

Conclusion

F&I compliance in 2025 is a critical priority for auto dealers and F&I agents. With regulators issuing record fines and new laws raising the bar, staying compliant can feel challenging – but it’s also an opportunity. Dealerships that embrace transparency and protect their customers can turn compliance into a selling point, building trust that leads to repeat business. Use the checklist and best practices above as a starting point to audit your current F&I processes. Fix any gaps now rather than later, and consider developing a written compliance plan for your dealership if you haven’t already.

Finally, remember that compliance is an ongoing journey. Make it a habit to regularly update your checklist as laws change (for example, if the FTC or your state introduces new F&I regulations in late 2025). By remaining proactive and informed, you can avoid the costly mistakes that have caught other dealers off guardcomplyauto.com crowell.com. In an environment of increasing regulatory scrutiny, a commitment to ethical, compliant F&I practices isn’t just about avoiding fines – it’s about positioning your dealership as a trustworthy advisor that customers will choose again and again. Stay safe, stay compliant, and let your honest practices differentiate you in the market.

Need more guidance? Velocifi is here to help. We offer downloadable compliance guides and regular updates on F&I laws – feel free to reach out or subscribe to our newsletter for the latest insights. Your dealership’s success in F&I depends on staying ahead of the compliance curve, and we’re committed to keeping you informed.