How to Reduce Recall Liability

Ignore a written policy at your peril.

Would you like one simple idea that could increase profitability and dramatically reduce your liability while increasing compliance? Something that shouldn’t take more than a few hours to set up?

Think about two dealerships that look at liability in two different ways.

Dealership No. 1 is almost solely focused on profit — by moving wheels. As many units as possible. It tries to check safety recalls but realizes it is only illegal to sell new (i.e. in-brand) motorcycles, not used (especially off-brand) bikes. It may check the government website for off-brand but doesn’t have a mandate to do so via a written safety recall management policy. When asked, it says, “We have a recall policy,” but when pressed to answer 1) if it is written and 2) if every employee has signed a copy, it says, “We know what it is; it’s not written.” It thinks that as long as it uses SaferCar.gov (which does, in fact, check motorcycle vehicle identification numbers (VINs) as well), its liability is “covered.”

Dealership No. 2 is not only focused solely on profitability, but it recognizes that with all the laws, rules and regulations, compliance isn’t an option. The last thing it wants to do is hurt anyone who has purchased a vehicle from it with a material defect, and the dealership also realizes that anyone can sue anyone at any time. SaferCar.gov does not provide safe harbor. It takes just a little more time to do the necessary things required to reduce liability while generating additional profits.

The simple thing you can do? To reduce your liability, your customers’ risk and increase your revenue and profitability, it is essential to have a written safety recall management policy. Otherwise, your shop is at serious risk. As the dealer principal, you are at risk.

If you rely on verbally relaying orders, people will forget, new hires won’t know what your policy is, or it may “shift” over time. Your organization will then definitely operate however it wants to.

And, if worse comes to worst, you sell a bike with an open safety recall that injures or kills someone, by not having a written policy, damages could be far greater.

However, if you have a written policy that every employee reads and signs and is trained to implement with a process in place, then only “rogue employees” may not follow it. A written policy will help communicate your desires throughout the organization and minimize your liability.

Things to consider when developing you policy, include:

  • Key roles and responsibilities: You will want to identify who has the responsibility and authority to ensure the policy and procedures are carried out.
  • Employees: All employees should read and sign your policy. To help ensure it is followed, you may even consider that not following your policy may be grounds for termination.
  • Procedures: The point person should develop necessary procedures for employees to follow. These will include, but are not limited to the following high-level processes:
    • Daily multi-source verification
    • Daily safety recall report distribution
    • Consumer disclosure statements
    • Post-sale auditing and reporting.

It is highly recommended that you talk with your attorney as well as your state Motorcycle Dealers Association or even the Motorcycle Industry Council (MIC). (Note: The author is not an attorney and is not providing legal advice.)

Not having a written safety recall policy is a bad idea! A policy affirms and documents your commitment to safety, creates a framework for effective recall compliance, and establishes the scope, authority and responsibilities for managing safety recalls.

To obtain a free template, simply email the author at [email protected], if you are a dealer. We will send you a copy for your consideration.

So, develop your written policy, have employees sign it, implement and then follow it; your liability should decrease significantly. Your profitability should even increase, due to additional warranty reimbursement you will undoubtedly find. 

Mark Paul is the president and CEO of AutoAp Inc. and the author of “Safety Recalls: Think You’re Covered?” For more information about safety recalls, visit www.autoap.com and www.profitfromrecalls.com.

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