Third-Party Funds Authorization Forms Help Protect Dealers
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By Phil Villegas
We can all agree there is already more than enough paperwork in current vehicle deal files, with the average vehicle retail sale having between 50 and 100 documents with the deal jacket. While the last thing any of us would want to do is add another document to the deal file, there is a one document that we routinely find missing that can help protect the dealership; the Third-Party Funds Authorization Form.
It is almost a daily occurrence at many dealerships where the funds being used for a down payment or the purchase of parts and/or service come from an individual other than the person named on the deal, parts ticket or repair order. While 99% of these payments may be innocent and well-intended in nature, it’s the one’s that are remitted maliciously that can really cost a dealership. Check and credit card fraud are as pervasive as ever, despite advances in technology and fraud detection systems. We are witnessing dealerships continually being impacted by credit card chargebacks or losses that could have likely been avoided with an extra step at the time of sale.
The Third-Party Authorization Form is a simple document the lists the particulars of the payment being made to the benefit of another individual and is signed by both parties in the transaction. These Third-Party Authorization Forms should be accompanied by a form of identification from the individual providing the funds; some dealerships will go as far as having these forms notarized for added protection. If the funds are coming from a business entity, the dealership should confirm it has valid proof the person executing the payment and Third-Party Form is an authorized agent of the entity.
While this process will not guarantee prevention of inappropriate payments being accepted, it intended as an added safeguard. These processes serve as a deterrent against fraudulent activity and help protect dealers from potential losses, which should always be a priority first and foremost.