Back in my childhood days, our gang would stay in constant trouble with our parents for doing things without permission.

My dad was in the Air Force. Every summer, he would take his 30 days’ leave and we would visit all our relatives who lived in the same dry county in Kentucky.

One night, my two cousins and I thought it would be a wonderful idea to throw crab apples off a cliff overlooking a curve in the road. We sprang into action when we spotted headlights peeking around the curve. Our crab apple fastballs flew from our hands and nailed passing cars and trucks. Brakes flashed. Doors opened. Drivers yelled. We hid behind bushes. What a great time!

Until we nailed the sheriff’s truck. Ruh-roh!

One good, and bad, thing about rural towns is that everybody knows everybody and are likely related. The sheriff was Mom’s cousin. He took me straight home. With sad eyes I was seeking approval post-action. Didn’t happen. Ouch.

This is analogous to a salesperson hastily agreeing to a price with a customer because the sales manager is tied up with two other deals on a busy Saturday afternoon. He made the sale knowing his manager may not have approved it.

Far worse are decisions made in the heat of the moment by sales and F&I managers that violate the dealer’s agreements with finance sources. Let’s review three common examples and how to avoid them — and the resulting defaults and chargebacks.

1. Credit Card Down Payment

Lender agreements generally prohibit credit card down payments or borrowed down payments. Many prohibit both.

Some finance sources have distributed dealer bulletins that allow exceptions under certain conditions, such as a minimum credit score or a maximum amount financed. Others are aggressive on buybacks when they find that a credit card was used to make the down payment.

You ask for permission when submitting the credit application by providing a note documenting the down payment is being paid via a credit card. This should show on the callback, timestamped before the credit decision timestamp.

2. Multiple Vehicle Purchases

The euphoria of selling two or more vehicles to the same customer on the same day can blind us to the fact that, if they are funded by multiple finance sources, the dealership could have some liability.

If the F&I manager fails to notify each finance source of the other deal(s) and the customer defaults on the payments, there is a likelihood the dealer will receive the dreaded “You need to buy this deal back” phone call.

The finance source’s logic is straightforward: It uses debt ratios in its approval algorithms. If it didn’t know about the second or third or fourth additional debt, it made an uniformed credit decision.

Sometimes in multiple vehicle purchases, the customer’s down payment may be in cash or cash-like instruments and exceed the $10,000 reporting limit. The dealership must file the IRS/FinCEN Form 8300 in a timely manner.

You ask for permission when submitting the credit application by noting this is a two-car deal and the other deal is going to a different finance source. This should show on the callback, timestamped before the credit decision timestamp.

3. Straw Purchases

A straw purchase occurs when the person who is driving the vehicle and agrees to make the payments is not on the contract or known to the finance source.

One of my clients likely had a handful of suspicious activity reports filed by his finance sources due to straw purchases before he engaged me. This changed once I counseled him on the risks he was taking.

You ask for permission when submitting the credit application by noting that the vehicle is for [actual driver’s name]. This should show on the callback, timestamped before the credit decision timestamp. Be prepared for the phone call.

The bottom line? If the bank knows about it, it ain’t bank fraud.

As always, write or call with any questions or thoughts.

Continued good luck and good selling.

LEARN MORE: At-Risk Auto Borrowers Drive Looser Credit Access

Gil Van Over III is executive director of Automotive Compliance Education (ACE), founder and president of gvo3 & Associates and author of “Automotive Compliance in a Digital World.”