Fines, fines, everywhere the fines … Oh wait, that is supposed to be “Sign, sign, everywhere a sign,” from the 1970 hit “Signs” by Five Man Electrical Band. The song was later covered by Tesla – the band, not the automaker – in 1990. That is the version I remember, as I was not alive in 1970. But the change to the lyrics is appropriate to fit today’s litigious environment. We are seeing penalties and violations all around us, and the auto industry is no exception.
Let’s discuss some of the violations dealers should be cognizant of and the associated penalties.
OFAC: Up to $1.5M
Controlled by the U.S. Department of the Treasury, the Office of Foreign Assets Control oversees and enforces economic sanctions against groups of individuals, such as terrorists, drug dealers and money launderers. They are known as specially designated nationals, or SDNs, and OFAC is responsible for maintaining a current list.
OFAC must be checked on all types of transactions — cash, wholesale, retail and lease. Dealerships have several resources they can utilize to conduct OFAC checks, including third-party software providers. You can also perform a “Sanctions List” search at ofac.treasury.gov or use the analog approach of downloading the list and manually searching through the names.
Civil penalties for noncompliance range from $80,000 to over $1.5 million per occurrence, and the fines are adjusted annually. In addition to civil fines, criminal penalties can include up to 20 years of prison time.
Red Flags Rule: $3,500
The Federal Trade Commission’s Red Flags Rule states that every dealer is obligated to have an identity theft-prevention program in place to minimize the chances that a thief can use a victim’s personal information to obtain a vehicle. You must also ensure consistent application of the program on every transaction.
For more information regarding implementation of a Red Flags policy, I am going to refer to an article I wrote last month, “How to Clear a Red Flag,” August 2025, page 40, which includes recommendations to address red flags.
Civil penalties for failure to comply with the Red Flags Rule result in a $3,500 fine per violation.
Used Car Rule: $53,000
The FTC also oversees the Used Car Rule. The purpose of the rule is to provide the consumer with information about the warranty on a used vehicle.
To avoid violations, regularly check the Buyers Guides for completion, accuracy and to ensure the guides are adhered to and prominently displayed on all used vehicles and demos for sale.
Failure to comply with the Used Car Rule can result in steep penalties of $53,000 per violation for the dealer.
IRS Form 8300: $25,000
The Financial Crimes Enforcement Network, also known as FinCEN, is the agency that controls the recording and record-keeping of Internal Revenue Service Form 8300. Dealerships and financial institutions are required to complete the form for transactions involving a cash payment of over $10,000.
This form provides a trail for authorities to investigate criminal and terrorist activity. It is required for three types of cash transactions:
A single cash transaction involving more than $10,000
Any two or more related transactions that involve more than $10,000 in cash
Any suspicious transaction that has the appearance of money laundering, even if it is under $10,000
Keep in mind that cash is not limited to U.S. currency. If a cashier’s check, traveler’s check or money order is less than $10,000, it is considered a cash instrument.
The IRS will impose a $25,000 penalty if a dealer intentionally or willingly fails to file a Form 8300.
Having a process in place to ensure accuracy and completion for these areas of compliance is a road sign to success and the best way to avoid any penalties and violations at your dealership.
Penelope Bell is an associate at Automotive Compliance Education (ACE) and gvo3 & Associates.
