Posts Tagged employee dishonesty
Gambling With Your Dealer Plates
Posted by Bernard Boulé in Opinion on April 7th, 2009
“I’ll be back in an hour or so.” He said as he pushed his chair back from the table. “I’m going to run that pickup down to the mall and see if I can find a buyer. I’d sure like to move that thing tonight. If I can that will make three this week.”
“Is it OK if I come along?” She asked.” I could run in to the mall while you work and pick up a few things we need. It won’t take me more than an hour.” While she climbed into the passengers seat he slapped a demo plate on to the tailgate of the late model pickup and they headed to the mall.
“ Having these demo plates from work makes this easy. Without them it would be next to impossible to move these things around. I’m sure glad you were able to get a couple from the dealership.” He said smiling at her.
“ It was easy.” She said smiling back.
We don’t know what went on for the next hour or two. We don’t know what they bought, sold or traded that night. What we do know is that scenarios like the one described above are all too common today. Unlicensed dealers are not only stealing your business they are probably using your equipment in the form of your dealer demo plates to do it.
In conversations with dealers all across the nation I find that a large number of dealers have decided to “protect” themselves by charging their sales personnel large deposits for a demo plates, hoping or perhaps even thinking, that by doing so they are some how making the sales persons responsible for the demo plates. Sadly this is not the case. The dealer remains responsible for all of his demo plates regardless of who has them, when they have them, why they have them, how they got them, or how big a deposit they paid on them.
Unless they have been reported lost or stolen to the appropriate authority you the dealer are responsible for the demo plates and perhaps for any damages that might result from the use of those demo plates.
As a responsible corporate citizen you the dealer owe it to your community, to your dealership, to your family even to your nation to make certain that you know your demo plates are being used in accordance with State and local regulations. You might ask the question.” How can I ever be certain of where and how my demo plates are being used?” The answer of course is to control the demo plates. Once you have control of them then you can manage them. When you can manage them you can know who has them, when they have them, why they have them, even how long they have them. You can even know where they are when they are not being used on dealership business. The best way to get this kind of control is by utilizing a system designed specifically for the purpose, rather than one that has been adapted to it.
By putting off getting a demo plate control system, even for one more day, dealers are gambling with all their dealership’s assets.
Oh! Here they come. It’s 11:00 o’clock. They each have a car, a sporty little ragtop and a mid size SUV, both running on demo plates. Looks like he did some good business tonight. Do you know where your demo plates are?
CPAs Advocate Internal Controls to Reduce Dealership Theft
In a recent post on the blog for Somerset CPAs, the theft of approximately $95,000 dollars from a dealer in the southeast is reported using a simple scheme that went unchecked due to the lack of internal controls at the dealership.
According to our own research:
- It is estimated that internal theft costs employers $9 per employee per day. This amounts to $280,000 a year for dealerships with 100 employees.
- The dealerships that are most vulnerable to this type of theft are those with fewer than 100 employees.
- 50% of all dealers experienced theft during a 5-year period during the 90’s and that percentage has been growing at an alarming 5% annually. This means that the majority of dealers can expect to be victimized by theft of some type every year.
- Reports indicate that 80% of all dealership employees have been involved in some sort of theft from the dealership where they work during the last 5 years.
- Theft or fraud is most likely to occur in departments where cash or other valuable assets are handled but there is significant risk in all departments.
- It is reported that the risk of loss is greater where poor or nonexistent internal controls are in place.
- 95% of all losses paid by insurance carriers results from actions taken by employees.
- $100,000,000 worth of vehicles is stolen from dealerships every year. $50,000,000 worth is recovered and $50,000,000 is paid for by insurance.
- Good loss prevention programs and internal control systems have been proven to halt loss experience growth of 10-15% annually and actually reduce losses by 30%
Theft schemes have been discovered in virtually all departments of dealership operations. The ingenuity of perpetrators is the ONLY limit on the manner in which dealers are being defrauded.
Dealership size isn’t a reliable indicator of the potential risk. Large dealerships with many employees offer a crowd for the dishonest to hide in while small dealerships don’t have the personnel and systems in place to prevent fraud. Theft and fraud rates grow in good economic times because less attention is focused on losses when times are good and they increase in hard economic times because thieves work harder at their craft when the need is the greatest.
You can take steps to reduce your exposure to employee theft by having a risk assessment of your dealership done. Your CPA should be able to provide you with this service, reviewing all aspects of your dealership operations and providing you with an assessment of the risk as well as some recommendations, which should include some type of demo plate control system, for managing and reducing those risks.
Rex Collins of Somerset CPAs also noted that, “dealers should engage a CPA who is familiar with the industry…”. Sometimes the best advice is the most basic.
I Did it Because I Could
Posted by Bernard Boulé in Opinion on March 5th, 2009
‘Because I could.’ was the response given by former president Bill Clinton when asked by news anchor Dan Rather why he had become involved with White House intern Monica Lewinsky. I heard that news just days after I had written the article for the July issue of Dealer Marketing in which I had suggested that there were just two basic causes which lead otherwise good employees to commit dishonest acts. They are: (1) Opportunity and (2) The belief that they can get away with it. When these two conditions exist simultaneously employees will commit dishonest acts, just because they can. Hearing the former president’s explanation for his actions, so simply stated, confirmed to me what I had known for years but only recently understood. Simply eliminating either one or both of the basic causes can stop employee dishonesty of almost any type, including misuse and abuse of dealer demo plates.
Now I don’t pretend to know enough to advise anyone how to eliminate either or both of the a fore mentioned causes in many of the aspects of the complex operations of a modern dealership, but I am certain that if they were eliminated or at least controlled to some degree, the losses due to employee theft would be dramatically reduced.
However one aspect of dealership operations in which I have had more than twenty years of experience working with dealers is in controlling use and access to demo plates. When it comes to solving problems with demo plates I can assure you that the implementation of a quality demo plate control system which has been designed specifically for the purpose of controlling demo plates can and does eliminate both the opportunity to misuse or abuse the use of demo plates as well as the belief that such abuse or misuse could go undetected. When employees realize that demo plates are constantly accounted for and that they can no longer have a demo plate without anyone knowing who has it, where it is or when it was last seen, they understand that they can no longer take advantage of a dealer’s assets for their own benefit.
Some dealerships have experienced serious problems caused by uncontrolled demo plates. In one case a dealer’s insurers refused to renew unless measures were taken to rein in uncontrolled demo plates. In another case a dealership had more than 100 demo plates unaccounted for and was at risk of being audited by the state. Installing and implementing a demo plate control system solved both of these dealerships’ problems.
In virtually every instance where a control system has been implemented, which did not rely on some person, employee or manager for the integrity of its operation, the ‘games’ with demo plates in the dealerships have stopped immediately. Our information shows that most sales persons that have worked in dealerships that used a demo plate control system preferred having such a system to not having one. Many sales persons and managers, when moving to other dealerships, encourage their new employers to install demo plate control equipment. These employees realize that their time is too valuable to use babysitting dealers demo plates. They want to stay focused on selling because that is how they and their dealer earn their living.
Don’t wait for problems to find you, take control of your demo plates now, by investing in a quality Demo Plate Control System today.
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