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NADA Launches Voluntary Protection Products Policy


Voluntary protection products are offered to consumers to protect their investment in vehicles which they purchase or lease—this includes GAP Waiver and extended service contracts. On April 2, NADA released our optional Model Dealership Voluntary Protection Products Policy to all NADA car and light-duty truck 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). This 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 dealer’s 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 lifecycle of VPPs. This begins with product selection and then moves through a process for product pricing, advertisement, presentation, sale, cancellation and, should they arise, customer complaints.

I want to emphasize that this policy is a template which 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 respective state dealer association and to consult with legal counsel in deciding whether—and how—to adopt the policy template.

I’m proud that NADA is, as always, committed to proactively helping our members remain compliant with today’s federal regulations. We’re happy to once again collaborate with our industry allies, and we’re proud that this guide was strengthened by input from many experts including dealers, dealership managers and attorneys, state and metro dealer associations, VPP providers and finance sources, finance trainers and many others.

I have implemented the policy in one of my dealerships and it works very well. I’m in the process of using it in all my dealerships, so I hope you find it to be a valuable resource and that it serves to enhance your ability to meet the needs of your customers too!

Gilchrist is president of Gilchrist Automotive in greater Dallas-Ft. Worth.