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• ONLINE REPUTATION AFFECTS SALES • FULL-SERVICE AUCTIONS • AIMEE’S DEALER QUIZ

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MARKETING NEWS

Help Your Dealership Go for the Gold Think your shot at living like an Olympian ended after your high school or college athletic career? Think again. Successful Olympic athletes employ a set of traits and techniques you can still use to help market your car dealership. The elements that work together to create popular medalists, with thousands or millions of people rooting for them, can similarly elevate your dealership in the eyes of your customers. On the website marketingprofs.com, Veronica Maria Jarski showed how winning Olympians’ behavior relates to marketing, and that applies perfectly to the way your car dealership can win by adopting the same focus. Don’t believe it? Here’s how you can use what works for the gold medal winners: Share your story: The personal story behind the winners often creates massive support for one athlete or another, or sometimes an entire team. You weren’t dropped onto this earth running a successful auto dealership, so go ahead and share what it took to get there. Every dealership began with a lifelong love of cars, a careful plan or a less-than-direct route that included far-flung adventures. Whatever the story, knowing it helps people identify with you. Understanding the journey

builds support for current success. Deliver on your promises: Actions count far more than words, so prove what matters to you with every engagement, every customer and every sale. The claims you make about what distinguishes your dealership carry a lot more weight when they’re backed up in the interactions that happen minute by minute. Use the right tools: A diver can’t use a pommel horse and a gymnast doesn’t get any mileage out of a pool. Make sure your marketing messages go to the audiences that can use them best. Your brand and your message should be consistent, but it’s smart to craft and deliver the relevant points with laser targeting. Details, details: Try to think about the dealership experience from a customer’s perspective. The little details of each phone call or visit are critically important in shaping the impression visitors take away from any contact. It’s all connected: Authenticity matters everywhere your dealership has a presence. The customers who seem to disappear are still making waves and influencing your reputation long after they’ve left the premises. What happens on the showroom floor and in the finance department today will assuredly be reflected someday, somehow, in a conversation online or in person where you don’t hear it.

You can only run today’s race today: Letting go of the past, wins and losses alike, is the best way to free up energy to focus on today’s challenges. Learn from what worked and what didn’t, but greet each new customer with fresh and full intent to create a lasting asset. Remember the team: Good sportsmanship is appealing. Acknowledging all the people who make your dealership successful is as relevant as the cars and deals themselves. From the manufacturers to the service personnel, your team merits respect and appreciation. They will appreciate the recognition, too. Happy employees will work harder and are more loyal. While you might never stand on a podium and proudly listen to the national anthem while your fans cheer wildly, you can certainly enjoy strong popular support and the loyalty of customers who see you as a winner. Follow these strategies and go for the gold!

BY JIM FITZPATRICK

JIM FITZPATRICK IS PRESIDENT/CEO OF FITZPATRICK ADVERTISING, A FULL-SERVICE AUTOMOTIVE ADVERTISING AGENCY, AND FOUNDER OF FORCE MARKETING, A DIGITAL AND DIRECT MARKETING COMPANY. FOR MORE INFORMATION, CALL 1-800917-8637, EMAIL JFITZPATRICK@FITZADV.COM OR VISIT FITZPATRICKADVERTISING.COM.

Auction Update: Manheim

The Manheim 2012 Q2 update is a quick look at web traffic, online visits and transactions at Manheim.com for the second quarter of 2012. Mobile: Mobile visits to Manheim.com are up an astounding 368 percent over last year – 4.76 million vs. 1.02 million for the second quarter of 2011. One in three customers accessed Manheim.com on a mobile device, an indication mobile is becoming increasingly popular in the auto remarketing industry as dealers use smartphones to conduct business at their convenience. More customers are choosing to do business online – 25 percent of all transactions for the quarter were made by an online buyer. Digital visits: Digital visits to Manheim are up 12 percent over last year. Simulcast turns 10: More than 4 million vehicles have been purchased via Simulcast since its launch in 2002, representing almost $60 billion worth of inventory. Buying: More than 30,000 customers bought vehicles online in 2012. Selling: More than 20,000 customers sold a vehicle online in 2012. 3

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MAGAZINE CONTENTS 06 08 12 15 20

Credit Reports: What You Need to Know Form 8300 Reporting Full-Service Auctions Online Reputation Affects Sales Aimee’s Dealer Quiz

MARKETING NEWS

BOARD OF DIRECTORS President of MA John Elefetherakis John’s Auto Sales 617-628-5511 johnnycars@comcast.net

Treasurer of MA Eric Schneider The Garage 508-583-5955 rickthegarage@gmail.com

VP of MA Bob Hayes Auto Towne Rentals Inc 781-878-9656 bobh4433@aol.com

Clerk of MA Melissa Otis Oakland Auto Sales 508-822-8822 oaklandautosales@aol.com

ADVERTISERS INDEX ADESA...................................................Inside Back Cover Ally....................................................................................5 AutoTrader.com................................................Back Cover Berkshire Risk................................................................16 Chase.............................................................................14 Dodah.com......................................................................7 First Consumers Financial...............................................3 LA’s 1st Choice Auto Auction............... Inside Front Cover Manheim.com..................................................................9 NIADA Certified ...............................................................3 Nowcom ....................................................................... 11 Protective...................................................................... 13 United Acceptance ....................................................... 15 Voisys ........................................................................... 22 West Insurance Center..................................................17

MIADA OFFICE

NATIONAL INDEPENDENT AUTOMOBILE DEALERS ASSOCIATION WWW.NIADA.COM • WWW.NIADA.TV NIADA HEADQUARTERS: 2521 BROWN BLVD. • ARLINGTON, TX 76006-5203 PHONE (817) 640-3838 FOR ADVERTISING INFORMATION CONTACT: TROY GRAFF (800) 682-3837 OR TROY@NIADA.COM.

The Spark Plug is published bi-monthly by the National Independent Automobile Dealers Association Services Corporation, 2521 Brown Blvd., Arlington, TX 76006-5203; phone (817) 640-3838. Periodicals postage paid at Dallas, TX and at additional offices. POSTMASTER: Send address changes to NIADA State Publications, 2521 Brown Blvd., Arlington, TX 76006-5203. The statements and opinions expressed herein are those of the individual authors and do not necessarily represent the views of The Spark Plug, the Mississippi Independent Automobile Dealers Association, or the National Independent Automobile Dealers Association. Likewise, the appearance of advertisers, or their identification as members of NIADA, does not constitute an endorsement of the products or services featured. Copyright 2011 by NIADA Services, Inc. All rights reserved. STATE MAGAZINE MGR./SALES Troy Graff • troy@niada.com EDITOR Andy Friedlander • andy@niada.com ART/PRODUCTION MGR. Christy Haynes • christy@niada.com PRINTING Nieman Printing

NIADA’s Two for One: CMD and 20 Groups in October Are you content with your current profits? Not many of us are. Most dealers are looking for the magic that will take their profits to the next level. NIADA has spent much of this summer reviewing data, talking to dealers and exploring ways to make that magic happen. The result – the first NIADA Dealer 20 Group – is scheduled to meet Oct. 11-12 at the Dallas-Fort Worth Airport. This group is unique, designed for both the retail and the Buy Here-Pay Here dealer – or the dealer who does both. It reflects the independent industry as we know it today. The composite, which will drive the group analysis, was created with your dealership in mind, analyzing the numbers crucial to your bottom line. The group will be led by NIADA director of dealer development Joe Lescota and Kenny Loveless, a 30-plus-year veteran independent dealer who recently retired after selling his highly successful BHPH dealership in Virginia. “This approach is no nonsense,” Lescota said in a recent discussion. “It is about looking at the math of the dealer’s business and showing him where he is and helping him get where he wants to be. It’s a 20 Group, so it’s a collective effort to improve the business and the industry.” For more information, email Lescota at joe@niada.com, or call Georgia Brown, NIADA director of education, at 800-682-3837. And while you’re there, consider this: NIADA’s fall Certified Master Dealer course is scheduled for Oct. 8-10, also in Dallas-Fort Worth. That’s right. You can get two for the price of one airfare! Attend the CMD class, then stay over for the first meeting of the NIADA 20 Groups. Same place. Visit www.niada.com for an application or send an email request to georgia@ niada.com.

MOBILE NEWS

Autobytel Launches Mobile Website Autobytel Inc. has launched a dedicated mobile version of its website. Studies show shoppers prefer using a browser to a downloadable mobile app, so Autobytel’s mobile website was developed from the ground up with today’s mobile consumer in mind. Autobytel mobile includes many of the popular features on the full website built specifically for the mobile environment. The site features a customized dealer directory that allows consumers to find local dealers as well as new and used vehicle research and automotive industry news, and customized shopping tools such as a used car finder, car calculators and the ability to determine used car values and submit purchase requests directly to dealers. For more information, visit www.autobytel.com.

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F E D E R A L T R A D E C O M M I S S I O N G U I D E ( W W W. F T C . G O V )

IN THE INDUSTRY

Credit Reports: What Information Providers Need To Know The Fair Credit Reporting Act (FCRA) is designed to protect the privacy of credit report information and to guarantee that information supplied by consumer reporting agencies (CRAs) is as accurate as possible. If you report information about consumers to a CRA, you are considered a “furnisher” of information under the FCRA. The responsibilities of information providers are explained here. Items 2 and 5 apply only to furnishers who provide information to CRAs “regularly and in the ordinary course of their business.” All information providers must comply with the other responsibilities. 1. General prohibition on reporting inaccurate information: You may not furnish information you know – or consciously avoid knowing – is inaccurate. If you “clearly and conspicuously” provide consumers with an address for dispute notices, you are exempt from this obligation but subject to the duties discussed in item 3. What does “clear and conspicuous” mean? Reasonably easy to read and understand. For example, a notice buried in a mailing is not clear or conspicuous. 2. Correcting and updating information: If you discover you’ve supplied one or more CRAs with incomplete or inaccurate information, you must correct it, resubmit it to each CRA and report only the correct information in the future. 3. Responsibilities after notice of a consumer dispute from a consumer: If a consumer writes to the address you specify for disputes to challenge the accuracy of any information you furnished and if the information is, in fact, inaccurate, you must report only the correct information to CRAs in the future. If you are a regular furnisher, you will also have to satisfy the duties in item 2. Once a consumer has given notice that he or she disputes information, you may not give that information to any CRA without also telling the CRA that the information is in dispute. 4. Responsibilities after receiving notice from a consumer reporting agency: If a CRA notifies you that a consumer disputes information

you provided: • You must investigate the dispute and review all relevant information provided by the CRA about the dispute. • You must report your findings to the CRA. • If your investigation shows the information to be incomplete or inaccurate, you must provide corrected information to all national CRAs that received the information. • You should complete these steps within the time period the FCRA sets for the CRA to resolve the dispute – normally 30 days after receipt of a dispute notice from the consumer. If the consumer provides additional relevant information during the 30-day period, the CRA has 15 days more. The CRA must give you all relevant information it gets within five business days of receipt, and must promptly give you additional relevant information provided from the consumers. If you do not investigate and respond with the specified time periods, the CRA must delete the disputed information from its files. 5. Reporting voluntary account closings: You must notify CRAs when consumers voluntarily close credit accounts. That is important because some information users might interpret a closed account as an indicator of bad credit unless it is clearly disclosed that the consumer – not the creditor – closed the account. 6. R  eporting delinquencies: If you report information about a delinquent account that’s placed for collection, charged to profit or loss, or subject to any similar action, you must, within 90 days after you report the information, notify the CRA of the month and year of the commencement of the delinquency that immediately preceded your action. That will ensure CRAs use the correct date when computing how long derogatory information can be kept in a consumer’s file. How do you report accounts you have charged off or placed for collection? A few examples: • A consumer became delinquent on

March 15, 1998. The creditor placed the account for collection on October 1, 1998. In that case, the delinquency began on March 15, 1998. The date the creditor placed the account for collection has no significance for calculating how long the account can stay on the consumer’s credit report. In that case, the date that must be reported to CRAs within 90 days after you first report the collection action is March 1998. • A consumer fell behind on monthly payments in January 1998, then brought the account current in June 1998, paid on time and in full every month through October 1998 but thereafter made no payments. The creditor charged off the account in December 1999. In that case, the most recent delinquency began when the consumer failed to make the payment due in November 1998. The earlier delinquency is irrelevant. The creditor must report the November 1998 date within 90 days of reporting the charge-off. For example, if the creditor charged off the account in December 1999 and reported the charge-off on Dec. 31, 1999, the creditor must provide the month and year of the delinquency – November 1998 – within 90 days of Dec. 31, 1999. • A consumer’s account became delinquent on Dec. 15, 1997. The account was first placed for collection on April 1, 1998. Collection was not successful. The merchant placed the account with a second collection agency on June 1, 2003. The date of the delinquency for reporting purposes is December 1997. Repeatedly placing an account for collection does not change the date the delinquency began. • A consumer’s credit account became delinquent on April 15, 1998. The consumer made partial payments for the next five months but never brought the account current. The merchant placed the account for collection in May 1999. Since the account was never brought current during the period partial payments were made, the delinquency that immediately preceded the collection commenced in April 1998, when the consumer first became delinquent.

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IRS STEPPING UP FORM 8300 COMPLIANCE AUDITS

IRS Form 8300 Reporting Shaun Peterson, legislative counsel for NIADA, recently reported that the IRS is stepping up compliance audits regarding Form 8300, “Report of Cash Payments Over $10,000 Received in a Trade or Business.” The law requires trades and businesses to report cash payments of more than $10,000 to the federal government by filing Form 8300, a joint form issued by the IRS and the Financial Crimes Enforcement Network (FinCEN). The information provided on the form assists law enforcement in its antimoney laundering efforts. Transactions that require Form 8300 include, but are not limited to: • Pre-existing debt payments. • Making or repaying a loan. • Sale of goods/services. • Sale of real property. • Rental of real or personal property. • Exchange of cash for other cash. Businesses must report cash payments received, if all of the following criteria are met: • The amount of cash is more than $10,000. • The business receives the cash as one lump sum of more than $10,000, installment payments that cause the total cash received within one year of the initial payment to total more than $10,000, or previously unreported payments that cause the total cash received within a 12-month period to total more than $10,000. • The establishment receives the cash in the ordinary course of a trade or business. • The same agent or buyer provides the cash. • The business receives the cash in a single transaction or in related transactions. Cash Includes Cash includes the coins and currency of the United States and foreign countries. Cash may also include cashier’s checks, bank drafts, traveler’s checks and money orders with a face value of $10,000 or less, if the business receives the instrument in a designated reporting transaction, as defined below, or in any transaction in which the business knows the customer is trying to avoid reporting of the transaction on Form 8300. Example: Tom Greenwood purchases a used car from XYZ Auto Dealership for a total of $12,000. He pays with a cashier’s check having a face value of $12,000. The cashier’s check is not treated as cash because its face value is more than $10,000. The business does not need to file Form 8300. A designated reporting transaction is the retail sale of any of the following: • A consumer durable, such as an automobile, boat or property other than land or buildings that is suitable for personal use, can reasonably be

expected to last at least one year under ordinary use, has a sales price of more than $10,000 and can be seen or touched (tangible property). • A collectible such as a work of art, rug, antique, metal, gem, stamp or coin. • Travel or entertainment, if the total sales price of all items sold for the same trip or entertainment event in one transaction or related transactions is more than $10,000. The total sales price of all items sold for a trip or entertainment event includes the sales price of items such as airfare, hotel rooms and admission tickets. Example: Ed Johnson asks a travel agent to charter a passenger airplane to take a group to a sports event in another city. He also asks the travel agent to book hotel rooms and admission tickets for the group. He pays with two money orders, each for $6,000. Since each money order was less than $10,000, the travel agent has received more than $10,000 cash in the designated reporting transaction and must file Form 8300. Cash Does Not Include Cash does not include personal checks drawn on the account of the writer. Example: Jim Roberts purchases an automobile from ABC Auto Dealers for $19,000. He pays with $4,000 in currency and a personal check in the amount of $15,000. Since a personal check is not considered cash, ABC Auto Dealers does not need to file a Form 8300. Cash does not include a cashier’s check, bank draft, traveler’s check or money order with a face value of more than $10,000. When a customer uses currency of more than $10,000 to purchase a monetary instrument, the financial institution issuing the cashier’s check, bank draft, traveler’s check or money order is required to report the transaction by filing FinCEN Form 104, “Currency Transaction Report.” Cash does not include a cashier’s check, bank draft, traveler’s check or money order received in payment for a consumer durable or collectible if all three of the following statements are true: • The business receives it under a payment plan requiring one or more down payments and payment of the rest of the purchase price by the date of the sale. • The business receives it more than 60 days before the date of the sale. • The business uses payment plans with the same or substantially similar terms when selling to ultimate customers in the ordinary course of its trade or business. Definition of a Related Transaction The law requires trades and businesses to report transactions when customers use cash in a single transaction or related transactions. Related transactions are transactions between a payer, or an agent of the payer, and a recipient of cash that occur within a

24-hour period. If the same payer makes two or more transactions totaling more than $10,000 in a 24-hour period, the business must treat the transactions as one transaction and report the payments. A 24-hour period is 24 hours, not necessarily a calendar day or banking day. Example: A retail motorcycle dealer sells a motorcycle for $9,000 in cash to Gary Jones at 10 a.m. During the afternoon of the same day, Mr. Jones returns to buy another motorcycle for his son and pays $9,000 in cash. Since both transactions occurred within a 24-hour period, they are related transactions, and the motorcycle dealer must file Form 8300. Transactions are also related even if they are more than 24 hours apart when a business knows, or has reason to know, that each is a series of connected transactions. Example: A client pays a travel agent $8,000 in cash for a trip. Two days later, the same client pays the travel agent $3,000 more in cash to include another person on the trip. These are related transactions, and the travel agent must file Form 8300. Example: A customer purchases a vehicle for $9,000 and then within the next 12 months pays the dealership additional cash of $1,500 for items such as a new transmission, accessories, customized paint job, etc. The dealership is not required to file a Form 8300, if the additional transactions are not part of the original sales contract and the customer has no additional legal obligation to make such additional transactions. Reporting Suspicious Transactions There might be situations where the business is suspicious about a transaction. A transaction is suspicious if it appears a person is trying to prevent a business from filing Form 8300; if it appears a person is trying to cause a business to file a false or incomplete Form 8300; or if there is a sign of possible illegal activity. The business should report suspicious activity by checking the “suspicious transaction” box on the top line of Form 8300. Businesses are also encouraged to call the IRS Criminal Investigation Division Hotline at 800-800-2877 or the local IRS criminal investigation unit. If a business suspects a transaction is related to terrorist activity, the business should call the Financial Institutions Hotline at 866-556-3974. The business can voluntarily file a Form 8300 in situations in which a transaction is for $10,000 or less and suspicious. When to Report Payments Generally, a business must file Form 8300 within 15 days after the cash is received. If the 15th day falls on a Saturday, Sunday or holiday, the business must file the report on the next business day. C O N T I N U E D O N PA G E 1 0

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PRE-LICENSING SEMINAR

C O N T I N U E D F R O M PA G E 8

IRS Form 8300 Reporting

Multiple Payments In some situations, the payer can arrange to pay in cash installment payments. If the first payment is more than $10,000, a business must file Form 8300 within 15 days. If the first payment is not more than $10,000, the business adds the first payment and any later payments made within one year of the first payment. When the total cash payments exceed $10,000, the business must file Form 8300 within 15 days. After a business files Form 8300, it must start a new count of cash payments received from that buyer. If a business receives more than $10,000 in additional cash payments from that buyer within a 12-month period, it must file another Form 8300 within 15 days of the payment that causes the additional payments to total more than $10,000. If a business must file Form 8300 and the same customer makes additional payments within the 15 days before the business must file Form 8300, the business can report all the payments on one form. Example: On January 10, a customer makes a cash payment of $11,000 to a business. The same customer makes additional payments on the same transaction of $4,000 on February 15, $5,000 on March 20, and $6,000 on May 12. By January 25, the business must file Form 8300 for the $11,000 payment. By May 27, the business must file another Form 8300 for the additional payments that total $15,000. Required Written Statement for Customers When a business files a Form 8300, the law requires the business to provide a written statement to each person named on Form 8300 to notify them that the business has filed the form. The statement must include the name and address of the cash recipient’s business, the name and telephone number of a contact person for the business, the total amount of reportable cash received in a 12-month period and a statement that the cash recipient is reporting the information to the IRS. The only exception to the customer’s notice requirement is when the Form 8300 was filed for suspicious activity. In that event, it is actually illegal for the business to notify the customer the Form 8300 was filed. When to Provide a Statement to the Customer The business must provide the written statement to its identified customers on or before January 31 of the year after the year in which the customer made the cash payment that caused the business to file Form 8300. A business that chooses to mail the statement must mail the statement in a timely manner to ensure the customer receives the statement by January 31. IRS Form 8300 and additional instructions can be found at www.irs.gov.

BY ADR STAFF

Congratulations to those who have attended and completed our pre-licensing seminar, which is required by the Department of Revenue. see page 21 for schedule of next classes

JUNE GRADUATES Beasley, Walter L W-C Auto Sales Hattiesburg Benson, Japel L Resses” Accessories LLC Columbus Brewer, Kimnerly A Deals on Wheels LLC Petal Bryant, Debra J B and T Auto Sales Jonestown Burchfield, Michael Gluckstadt Powersport Madison Carruth, Alisha Running Tiger DeKalb Chisolm, Christopher Lucedale Herndon, Perry Joseph Indianola Johnson, Chey J&J Wholesale Jackson Jones, William Guntown Keith, Doug Tupelo Marshall JR, Floyd Delta Auto Sales Jackson Motter, Richard RDM Motor Co. Inc Hattiesburg Pate JR, Glen A Pate Auto Sales Mathison Rebry, John Gaston MJR & Associates Taylorsville Robinson, Steve Flowood Russell, Ronald Goodwill Industries Gulfport Sanders, Robert J. Mid-South Truck & Trailer Mendenhall Singh, Major Singh Auto Sales Clinton Stepp III, James L Gluckstadt Powersport Madison Strange, Allen Goodwill Industries Gulfport Tate JR, John B Meridian Wadford, Jeremy P Canton Ritchey, Richard Memphis Young, Anterreo Resse’s Chrome & Accessories Crystal Springs White, Michael A Canton

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JULY GRADUATES Coolsey, Michael MC Auto Sales & Repair Waynesboro Ezejiofo JR, Okees Used Auto Sales Jackson Emmanuel Okechukwu Green, Jacob Brandon The Car Lot Coldwater Hale, James H Hales Auto Sales Walnut Hammack, William Hamax Auto Sales Philadelphia Hegwood, Lillie Jo Hegwood Auto Sales Richland Logan, Anthony Jackson Newman, Don Southern Auto Credit Grenada Palacious, David Direct Auto Sales LLC Cleveland Parker, Heath Southern Automotive Calhoun City Russell, Ronald Goodwill Industries Gulfport Smith, Cheryl Auto Source Saucier Strange, Allen Goodwill Industries Jonestown Walters, Mack Toomsuba Wilcher, Jimmy D. L.R. Wilcher & Associates Union Mognon, Jean C. JC Auto Import Export Inc. Laurel Dossou, Adjo S. JC Auto Import Export Inc. Laurel Ozugha, Henr I Sure Foundation Inc. Laurel Lofton, Bryan Scott Indianola Collision Doddsville Short, Schevelian Auto Body Solution, LLC Florence Williams, Julius Williams Electronics Byram Ricks, Markus Lake

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T E C H N O L O GY A N D N E C E S S I T Y E X PA N D T H E S E R V I C E S O F F E R E D B Y A U C T I O N S

Back to the Basics: On the Block

Auto auctions today are full-service operations with a growing list of options to keep inventory rolling. The infusion of the Internet into the traditional auction business model has been, arguably, the most significant change in recent years. “The Internet keeps expanding and expanding,” said Charlotte Pyle, owner of Capital City Auto Auction in West Virginia and president of the National Auto Auction Association (NAAA). “I attended an auction recently and the entire lane was not there. They sold every car from a TV screen.” An increasing number of websites are emerging with features allowing dealers to shop for cars across the country without ever leaving the office. IndependentAuctions.com, for instance, has more than 67,000 searchable vehicles from 69 member auctions and boasts more than 41,000 registered dealers on the site. On any given week some 27,000 vehicles are sold. The site contains the inventory, postsale reporting and account management tools to help automotive professionals buy, sell and research vehicles from independently owned locations. ADESA, which operates 68 auctions throughout North America, has been one of the industry leaders in embracing online auctions. “Our biggest news as of late was the acquisition of OpenLane last fall,” said Tom Caruso, ADESA president and CEO and a recent inductee into the National Independent Auto Dealers Association Ring of Honor. “This industry-leading technology will help dealers as they expand their reach outside of their local markets in the online market. We are really excited about the progress we are making bridging our physical auctions and our online tool, ADESA OpenLane, to create a better buyer experience.” Auction Options While the economic issues of the past few years have meant fewer vehicles coming to auction, it has forced auctions to increase their level of service, Pyle said. “Volumes are down for the leases and repos, so auctions have opened up to do more outside work,” Pyle said. Auctions have stepped up floorplanning – providing the inventory loans that are a primary source of financing for dealers to purchase inventory to then resell, either from the showroom or in a wholesale format.

Post-sale inspections have become an expected feature at auctions to give dealers assurance and peace of mind for both their in-lane and online wholesale purchases. “A dealer purchasing a post-sale inspection has assurance that the vehicle purchased passed a rigorous test, was properly represented by the seller and that Perry’s Auto Auction guarantees that the vehicle meets the dealer’s expectations,” noted an item on the website of Perry’s Auto Auction in central Georgia. Most auctions with post-sale inspections follow a checklist of items that would cost $500 or more each to repair or replace. That includes checking the frame or unibody for structural damage as well as checking the paint, transmission, air conditioning system and brakes. They also check for things like odometer verification, flood inspection and emission control. Often there’s nothing mechanically wrong with a vehicle – it’s just dirty. But that’s OK, because many auctions are trumpeting reconditioning packages for dealers. At the Greater Erie Auto Auction, serving Buffalo, N.Y., Cleveland and Pittsburgh, a $95 “full detail” comes with an exterior wash, engine clean, exterior buff, interior clean and tire dressing. At a minimum, they’ll wash it for $10. Auctions also offer around-the-clock security for safe vehicle drop-offs, car title verification and transportation of vehicles. “Some of our dealers are heavily dependent on these truckers delivering the cars to the auctions, and over time the gas bill adds up,” Pyle said. Dealer Reaction Roger Montbleau, owner of Chelmsford Street Auto Sales in Lowell, Mass., buys cars at auction weekly. He’ll typically shell out money for the post-sale check his local auction offers as an extra service. “Good cars are not as plentiful as they used to be,” Montbleau said. “A lot of people mask these vehicles that come through. We need someone who can give us a certification. People aren’t as forthright as we want them to be.” If the cars he brings to the auction do not sell, Montbleau said, he appreciates the auctioneers washing it before the next scheduled date. Stanley Thompson, owner of First Auto Sales in Bradenton, Fla., visits the auction about three times a month and sells 25 to 30 cars per month. “Auctions give you a greater selection at

competitive prices you can’t get anywhere else,” Thompson said. Still, the new lineup of auction services has not exactly won him over. “We do everything in-house,” said Thompson, who has been in business for 20 years. “We know what we’re doing.” Indeed, as much as auctions keep working to enhance their services, some dealers would still rather do without. In fact, some avoid auctions altogether, choosing to get their inventory from other sources. Jay Iverson, manager of Carz Central in Estherville, Iowa, is not a fan of auctions, period. “Other than the fact that the cars are there, there’s not a whole lot I like about auctions,” Iverson said. “There’s a lot of politics involved. The rules keep changing. There’s no consistency.” David Shoffner, owner of David Shoffner‘s Auto Sales in Redding, Calif., visits the auction twice a week. He likes the guarantee that the title is always good. “Whereas buying them off the street, you don’t know what you’re getting,” Shoffner said. Much has changed since Shoffner started selling cars with his dad in the early 1960s. He said he prefers an old-school method of buying cars. He is not impressed with online auctions – he’d rather go in person. “I pretty much cherry-pick the auctions to find what I like, and it allows me to make a good living,” Shoffner said. “I bought two or three cars from the Internet and it was a horrible experience. The cars required mechanical work that was not previously disclosed. “As for me, I like to see them and touch them first.” To be sure, online auto auctions come with risks. Similar to the other popular scams, Kristin Judge, executive director of the Trusted Purchasing Alliance, a division of the nonprofit Center for Internet Security, said there are two central themes to keep in mind when dealing with auto auction fraud: First, if an offer seems too good to be true it probably is, and second, never send money to someone you have not met in person, though that might not always be a practical rule for dealers to follow with online auctions. In 2011, the federal government’s Internet Crime Complaint Center (www.ic3.gov) received 4,066 complaints from victims of auto auction fraud. The total financial C O N T I N U E D O N PA G E 1 4

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T OOnUtheRBlock N |O BackL toFthe Basics:

cost to those victims was more than $8 million, with the average loss being $2,000 per victim. The calls reporting the scams averaged two per hour. “Criminals misrepresent themselves as either Kelley Blue Book agents, or possibly a person moving out of town and needing to sell a car quickly before they leave,” Judge said. “Like other scams, the criminal sets up a persona that helps him appear legitimate. The price for the vehicle is usually at a great discount, too good to pass up. “When a buyer shows interest in the vehicle, he is asked to send a deposit to a third party to hold while the inspection takes place. Unfortunately, there is no legitimate third party. Once the scammer collects the deposit, the victim is left without his money or a car.” Auction Projections The future of auto auctions will place a continued focus on manipulating technology to benefit dealers. “We continue to make investments in our auction infrastructure to facilitate our buyers’ diverse business needs,” ADESA’s Caruso said. “That includes more computer terminals for customers to use, better Wi-Fi access and more reconditioning options both presale and

A M E N T - A W A R D S

post-sale. We will continue to evolve our business to meet the demands of our dealers.” One example is ADESA’s newly released dealer application for the iPhone. “The app combines relevant industry guide books, vehicle history reports and other useful business data with the cars running at our auctions,” Caruso said. “The evolution of mobile technology will continue to shape how we do business.” The new auto auction services have put the technology companies that develop those services in the driver’s seat. In July, vAuto, an Oakbrook, Ill., company specializing in dealer support services and a wholly owned subsidiary of AutoTrader Group Inc., announced the acquisition of Auction Genius, a web-based software solution for auto dealers buying vehicles at auction. “This acquisition advances vAuto’s mission to help dealers become more efficient and effective used vehicle retailers,” vAuto founder Dale Pollak said. With Auction Genius, vAuto promises to eliminate the inefficiencies and difficulties dealers encounter every day as they evaluate and purchase used vehicles from wholesale auctions. “Today, every dealer relies on wholesale auctions for used vehicles,” Auction

D A Y - T R A D E

S H O W

Genius president and co-founder Todd Kinzle said. “This highly competitive environment requires dealers to evaluate far more vehicles than they used to, and the time it takes to do the proper research is overwhelming.” Enter Auction Genius. Kinzle says dealers can now analyze as many as 10 times the number of vehicles and zero in on the “right” cars with significantly more speed and efficiency. Typically dealers will use multiple systems and tools to create used vehicle buy lists, match the lists with cars scheduled to be sold at wholesale online auctions and gather condition/market valuation reports to assess individual vehicles for potential purchase. They also access live online auctions through a separate system to buy the cars that fit their purchase parameters. It’s a piecemeal process. Auction Genius also integrates with a growing list of industry partners, including CARFAX, AutoCheck, NADA Guide Book, Black Book, Kelley Blue Book and Galves. Current auction integration includes Manheim Simulcast, OVE.com, Manheim PowerSearch, ADESA LiveBlock and OpenLane.

BY JASON ROBERSON

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C R E D I B I L I T Y I S T H E M O S T I M P O R TA N T PA R T O F A N Y D E A L E R S H I P ’ S S A L E S .

How Your Online Reputation Affects Sales We all know the saying, “Sticks and stones may break my bones, but words will never hurt me.” Unfortunately, the reality is for any business, words can break you. It is imperative to your dealership that you proactively manage and build your online reputation. You need to have strategies in place to monitor what is said about you and respond appropriately. That starts with knowing the sites available for dealership reviews. Google+ Local or Google Places, Yelp, Cars.com, DealerRater and CarHelp are some of the most popular sites. Monitoring what is posted online about you allows you to contact customers who were dissatisfied and address their complaints. Addressing their concerns effectively eliminates the complaint. Once you have satisfied the angry customer, you can ask him to please revise his statement and to always communicate with you directly should he have a concern. That responsibility should be handled by someone who has the highest authority to make customer decisions,

such as giving away a free service or replacing a bare tire on a vehicle that was just purchased from your pre-owned selection. Credibility is the most important part of any dealership’s sales. It’s a good idea to have one person monitor review sites and report any issues to the general manager, who can then direct customers to the managers of the departments about which they had complaints. Every employee who has contact with customers should be trained on how to handle and manage customer complaints, only escalating the situation to the general manager when a decision is needed beyond the employee’s authority. Next, you need to effectively encourage your clients to post positive reviews about you. That’s actually much simpler than you think. Just ask. If there is a customer you know comes in regularly for service, or who is purchasing his third vehicle from you, just say, “Thank you for your continued business. Can I ask what makes you continue to come back?” His response is your review.

Ask if he would mind posting a positive review about you, or if he would mind being recorded with a testimonial. That is a great tool to place in the header of your website, so that every prospect who visits your site receives a positive review to encourage him to come in and become a customer. There are several ways to encourage a review, but you must be careful not to encourage or blindly ask your customers to post negative reviews about you. It takes 18 positive reviews to outweigh one negative review. And once a negative review is posted, it is almost impossible to get it removed. The only way to rectify a negative review is to contact the person who posted it, address his complaints and turn the complaint into a compliment. That’s why monitoring what is said about you is imperative. There are proactive measures you should take before a negative review is posted about you. Not only do you need to constantly encourage your customers to post positive reviews, you need to have someone responsible C O N T I N U E D O N PA G E 1 6

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C O N T I N U E D F R O M PA G E 1 5

| How Your Online Reputation Affects Sales

for following up with each and every customer after the purchase of a vehicle or a service visit to ensure every customer was completely satisfied with his experience. Have a polite script of no longer than 30 seconds in place. It is important that the person responsible for contacting your customers has the authority and understanding of what goes on in the dealership to proactively address any complaints immediately. The customer should not be passed to two or three managers, with none of them really sure of the entire situation. Making the customer repeat himself raises his level of frustration. The person contacting the customer initially should be able to make a decision. “I understand, Mr. Smith.” Repeat the problem back to the customer so he knows you truly understand. “I apologize that your visit was not completely satisfactory. I am here to help you. We need to have you bring your vehicle back to our service department so we can make sure to correct this problem. I will have a loaner car available for you. What time would be best for you, morning or afternoon?” No promise was given, no diagnosis, no one was thrown under the bus. We listened, we acknowledged and we acted. Now we will have a manager handle the customer from here, with a full understanding of the situation and without

passing the customer to two and three voicemails. Follow-up is one of the most important parts of your online reputation. See the problem and fix it before it causes permanent damage. Before contacting a customer for follow-up, you should know: • When he came in. • What he came in for. • If service, was the service internal, warranty, or customer pay. If a customer paid for the service, he is more likely to be upset or request some type of compensation if dissatisfied, and you should be prepared for that. • Who was the service advisor or sales representative? The customer will expect you to know, and if you don’t, it immediately makes him feel impersonalized and like he is insignificant or unimportant. • Who is the manager of the department? If there is a complaint, who will the customer be working with? It is important to tell the customer who he should ask for and to let him know that a manager will be working with him personally to address his concerns. If he was unhappy with his service advisor or sales representative, he will not want to work with him/her to address the complaint he feels the advisor/sales rep might have caused. Once the complaint has been addressed, the manager should build the integrity of the service

advisor or sales representative back up with the customer and bring the customer and service advisor or sales representative together for an apology and understanding. If a manager cannot support his employee, the employee should not be there. Furthermore, that customer might need to work with that employee again. You never want to get into the problem of having to be careful of who you place customers with. If the follow-up process is not handled correctly, you will end up with more complaints than if a follow-up was not made. Be sure to have policies in place for how to handle a complaint and be sure every manager understands the importance of handling a complaint with the highest sense of priority and urgency. The bottom line is, your dealership needs to have strategies in place to ensure its reputation is secure. If your online reputation is not being monitored and proactively maintained, it will decline. With 80 percent of your prospects checking your reviews before making a purchasing decision, it should be one of your top priorities.

BY PETER MARTIN

PETER “WEB DOC” MARTIN IS PRESIDENT OF CACTUS SKY COMMUNICATIONS. HE CAN BE REACHED BY CALLING (941) 756-1932 OR E-MAILING PETER@CACTUSSKY.COM. FOR MORE INFORMATION, VISIT WWW.CACTUSSKY.COM AND CLICK ON “REPUTATION BUILDING”

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S O F T WA R E N E W S

V I S I T W W W. PAY N E A R M E . C O M

Westlake Financial Adds PayNearMe’s Technology

PayNearMe, the cash transaction network, has launched PayNearMe Lending, a cash payment system for subprime lenders, and has teamed with Westlake Financial Services to integrate PayNearMe’s technology into existing systems, enabling customers to repay retail installment contracts in cash 24/7 at any of 6,600 participating 7-Eleven® stores nationwide. Using PayNearMe, customers of Westlake’s network of more than 15,000 new and used car dealers will be able to make account payments in cash at their local 7-Eleven store, where a unique loan barcode or PayNearMe Card is scanned at the register. With PayNearMe, the transactions are completed instantly, and consumers’ accounts are credited instantly. “PayNearMe offers a remarkably simple way to make our collections process more efficient,” Westlake director of operations John Mason said. “We anticipate reduced operational costs while adding payment locations for our customers.” “Subprime lenders need to make cash payments as easy as possible for themselves and their consumers,” PayNearMe CEO Danny Shader said. “We’ve dramatically changed how cash payments are made by opening up thousands of additional payment locations, accessible any time they are needed.” PayNearMe Lending, a secure hosted web application, provides a comprehensive turnkey service lenders can use to accept cash payments without integration. Lenders can set up PayNearMe Lending in less than 15 minutes and start collecting immediately, and can add additional sites almost instantly. Because PayNearMe Lending does not require any integration with existing systems, it can be used by lenders of any size. “We appreciate that PayNearMe allows our customers to make payments at any time,” Tidalwave Finance Corp. president Ted Beresford said. “In fact, we’ve been pleasantly surprised by how many customers make their payments at 10 p.m.”

DealerRater Adds Chat Software

The car dealer review website DealerRater has partnered with Contact At Once! to add a live chat feature for its certified dealer partners, enabling real-time chat between automotive dealerships and online shoppers. “Our third-party generated dealer reviews and ratings have helped car shoppers to determine and validate which dealerships they would like to do business with,” DealerRater president Chip Grueter said. “We believe the integration of Contact At Once! chat will enable our certified dealers to connect with in-market consumers in a way that is faster and more convenient than an email or a phone call.” The Contact At Once! dealer chat network includes third-party listing sites such as AutoTrader.com, Cars.com and UsedCars.com, as well as standalone dealership and dealer group web pages. Once enabled, dealers can respond to consumer chats originating from anywhere in the dealer chat network. Dealers that use dealer live chat typically experience a 25 percent increase in online shoppers contacting the dealership.

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Miss-Lou Post Convention Coverage Jimmy & Diane Boling, Jerry Brown, Madalene Daniell, Stephen & Kerry Watkins

MIADA Executive Board (Stephen Watkins not pictured)

Fred & Diane Robinson

Lester & Ann Howell

Lester Howell, Diane Boling, Ann Howell, Patrick Sellers

Aaron Williams & Star Wilson

Patrick Sellers, Toni Sellers, Janis Fallow, Jimmy & Diane Boling, Robert Dowe, Aaron Williams

Swearing in MIADA/LIADA officers Mike Browning

Education

Stephen & Kerry Watkins

Fred & Diane Robinson

Clint Blakely - LIADA President

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Miss-Lou Post Convention Coverage This year’s annual Miss-Lou convention, held in the heart of New Orleans, was a great success. There were 169 in attendance. Toby Reiley of FinCo Management, LLC presented an education session on finance alternatives for used car dealers. We also gave away $12,500 in cash prizes in a raffle drawing. A good time was had by all! 19

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D E A L E R E D U C AT I O N

Aimee’s Dealer Quiz: Auctions 101 Completing our Mississippi Dealer Education Seminar is only part of becoming compliant with the state as a Mississippi independent auto dealer. The process begins with purchasing a dealer bond, completing the dealer registration and paying dealer fees.

6. If a dealer writes a bad check at one auction, that will not change buying privileges at other auctions.

The same is true when you go to any auto auction for the first time. You’ll complete your dealer registration packet, learn the auction’s rules and make banking arrangements when necessary before you buy your first car.

7. A driver for a dealership is allowed in the bidding (ring) area.

Use the quiz below to test your dealer knowledge of auto auction regulations and processes. You need to create your company’s auction buying and selling policies in order to fully use the auctions to grow your business.

8. If a registered buyer representative no longer works for a dealership, it is the dealer’s responsibility to notify the auction or the representative can continue to buy cars under that dealer ID number.

Of course, you can always learn from the ”Auction School of Hard Knocks,” but MIADA prefers you skip that school and stick with our education instead.

_____ TRUE _____ FALSE

After you answer each true-false question, check your answers and learn more about auctions. 1. Once the dealer completes dealer registration with the state and has a dealer number, there will be no problem if a dealer representative just shows up the day of the auction ready to buy cars. _____ TRUE _____ FALSE 2. When paying with cash, no banking information is required. _____ TRUE _____ FALSE 3. When a car is sold at the auction, the dealer or dealer representative can leave the auction with a check as long as he presents clear title. _____ TRUE _____ FALSE 4. Once a dealership is registered at one auction, it is automatically registered at all auctions. _____ TRUE _____ FALSE 5. If a dealer representative is buying for an individual, he can bring the individual as a guest even if it is a dealer-only auction.

_____ TRUE _____ FALSE

_____ TRUE _____ FALSE

9. Each auction has a different policy concerning a purchase turn-down. _____ TRUE _____ FALSE 10. A vehicle can be sold through the auction without the title in hand and the seller has an indefinite period of time before supplying the title to the buyer. _____ TRUE _____ FALSE 11. Auction dealers are renewed automatically every year. _____ TRUE _____ FALSE 12. Auctions are fast-paced, so pay attention. Red light means “as is.” Yellow light warns of an announcement on the vehicle. A green light means “ride and drive.” _____ TRUE _____ FALSE 13. A dealer can arrive at an auction one week and be told he cannot buy that day. _____ TRUE _____ FALSE 14. Once a dealer completes the bank authorization form, he will have completed all banking information the auction requires. ______TRUE _____ FALSE

Answers: 1. False: Ideally, new dealers should complete a dealer’s registration packet with clear document submissions prior to the date of the auction. Time rarely allows for processing a new dealer the day of the auction. The dealership owner must submit a representative authorization letter with signature, a current, valid driver’s license and a picture for the Auction Access card. New dealers should plan to meet with and tour the auction with the auction dealer representative prior to auction days. Be sure all is on go to buy before the day of your first auction. 2. True: All other forms of payment, including floorplans, require banking information. 3. True: The clear transferable title, ideally submitted prior to the auction, will allow the auction to cut a check after the sale. 4. False: The Auction Access program shares your information in most cases, but some independent auctions do not use the program so you must register with those auctions individually. 5. False: Dealer-only auctions are not open to the general public. No retail customers can attend with a dealer or dealer representative. Retail customers are a liability – they get in the way and can cause you to get burned. Dealerships not obeying this rule could lose buying privileges. 6. False: Individuals doing bad business at any auction are noted as such in the KO book (auction uninsurable list). Listed by social security number, issues are linked to an individual in the KO book, which is available to auctions throughout the United States. Dealerships are also listed. When that happens, it ties to auction insurance. Auction insurance must be contacted and be willing to insure that dealership/individual. From there, the auction credit manager will have to allow the individual to use the auction. He might have to put money down or buy only with cash. There are a series of steps that must be followed. Each auction has a risk management system. The KO listings can also affect the ability to log on to Internet simulcast auctions. 7. True: Only one driver is generally allowed. Most auctions require a valid driver’s license and prefer that drivers not be in the bidding area. Only dealer representatives are allowed to bid. 8. True: A letter is required to remove a representative of a dealership. It should be submitted anytime someone leaves your dealership or you could be liable.

_____ TRUE _____ FALSE

C O N T I N U E D O N N E X T PA G E

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Mississippi’s Used Auto Dealer Pre-licensing Seminar 9. True: Study arbitration rules and post-sale inspection policies carefully, as they vary from auction to auction. Some auctions say, “If a vehicle leaves the auction, it’s yours.” There can be instances when the auction will make exceptions. Know the rules! 10. False: Understand title issues when buying or selling at auctions. If you are a seller, you have 30 days to produce a title to the auction or the buyer can return it. Do you want someone to use your vehicle for 30 days and never be required to pay for it? If you are a seller, bring your title with you so it doesn’t cost you extra. Ideally, have the title before you run a car through the auction. 11. False: Records must be kept updated from year to year. Mississippi dealers’ licenses renew each Oct. 31 and must be updated in your auction file. Driver’s licenses for each dealer representative must be current and updated when expired. Some auctions require a copy of a bond renewal and current liability insurance. Banking information must be current as well. If you change banks or account numbers, remember to notify the auction. Auction payment status is based on the banking information on hand. 12. True: It is easy to “stub your toe,” so pay attention!

Required by the Department of Revenue Seminar Location: MIADA Home Office 1705-A Old Whitfield Road Pearl, MS 39208 Office: (601) 939-9866 Fax: (601) 939-9882 Seminar dates are as follows: q September 15th / 8 a.m.- 5 p.m.

q October 20th / 8 a.m.- 5 p.m.

q Registration Fee - $175.00 Please submit registration with payment to MIADA at least seven days prior to the date of the seminar you plan to attend. Your seat will be reserved and certificates will be presented at the end of the seminar. Dealer Resource Manual - $75.00 Late Registration Fee - $25.00 Late registrations are accepted the week before class and walk-ins are accepted on the morning of class. However, the late fee is applied to the original registration fee and certificates for walk-ins will be mailed out the following week. *On the day of the seminar, No checks will be accepted.* Transfer Fee - $50.00 If you wish to transfer your registration to another scheduled seminar date, a 72 hour notice is required and a transfer fee is applied. Cancellations - $50.00 All cancelations are to be made 72 hours in advance in order to receive a refund, minus the cancellation fee. *Please Note* Due to limited and reserved seating, we can not allow sit-ins. Also, if you have any disabilities that require you to bring an assistant, please let MIADA know at the time of registration so we can reserve adequate seating.

Full Name_______________________________________________________________ Address________________________________________________________________ City___________________________State__________________Zip________________ Phone______________________________Fax_________________________________

13. True: There are many issues that could slow or stop your ability to buy on any given day. Auctions want your business, but outstanding amounts due, expired or missing information, and behavior issues will be addressed.

Email __________________________________________________________________

14. False: A bank authorization form must be completed. Banking activity will be studied. A contact person and signature form will be necessary with the bank. The auction credit manager handles a consumer credit authorization based on the owner only. A bank reference letter will be required. A payment status will be decided, including whether company checks will be accepted.

City___________________________State__________________Zip________________

If you got 100 percent correct, auto auctions will rarely be difficult for you or representatives of your dealership to navigate. Our thanks to Manheim Mississippi, Dixie Auto Auction, First Choice Auto Auction and others for the information used in this quiz and during our dealer education seminars. For more information on ways to run your business effectively, we recommend you attend our next dealer education class, offered Saturday, Sept. 15 or Saturday, Oct. 20. The registration form for the class is located to the right.

Business Name__________________________________________________________ Address________________________________________________________________

Phone______________________________Fax_________________________________ Email __________________________________________________________________ Payment Method ___Check Enclosed

___Money Order

___VISA

___MC

___DISC

___AMEX

Account #________________________________________________________

Exp________________

Account Name____________________________________________________

Zip_______________

Registration Fee $_________________ + C/C Proc. Fee $ 3.50 = Transaction Total $___________________ Signature of Authorization______________________________________________________________________

Aimee Smith Pruitt is MIADA’s Pre-licensing education specialist. With more than five years experience in pre-owned dealership management and more than four years in education development and instruction for MIADA, she is our greatest asset. She has made major contributions to the curriculum that was first offered in July 2007. Education class participants continually rate this class as superior. 21

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COMPLIANCE OVERDRIVE

Regulatory Landscape Feeling Tougher? You’re Not Alone There is no denying that dealers and lenders have grown accustomed to a regulatory environment that is constantly changing, with new laws and regulations. But today’s regulatory landscape is different than it was years ago – and not just because the requirements continually change. If you feel like it’s becoming increasingly complex, you’re not alone. Here are the likely culprits: Shorter notice: Some states have started publishing regulatory changes on rather short notice. For example, in New Mexico the attorney general recently gave 30 days’ notice to add a new spot delivery disclosure to the sales transaction document or purchase order. The short notice was made worse because a proposed regulation had not been published – at least not recently – so the final regulation came as a surprise to the industry. While one month might feel

like a long time to add one disclosure, the required notice is quite large and requires substantial formatting changes to the documents affected. The attorney general eventually delayed the effective date of the regulation by 60 days, apparently after significant industry feedback. More frequent changes and updates: Across the country, there seem to be more frequent changes being made. That has clearly been the case with state motor vehicle title forms. Previously, those forms were rarely revised. But over the past few years, some states have changed their title forms as many as two or three times per year. One potential driver for that might be that technology now allows states to redesign and reissue their forms and revise (increase) the related fees more easily. But often the changes come with little or no notice, which underscores how important it is for dealers and lenders to be confident in their ability to monitor the changes that are constantly taking place. Volume of information: While it can be difficult to keep up with the pace of change and various deadlines and effective dates, it’s also quite a task to consume the volume of information and content surrounding new laws and regulations. For example, the Consumer Financial Protection Bureau (CFPB) published a proposed rule July 9 regarding integrated mortgage disclosures under RESPA and the Truth in Lending Act. It was one of the first significant proposed rules from the CFPB, and the planning process involved extensive research and solicitation of industry and consumer feedback. As a result, the proposed rule and explanatory materials total more than 1,000 pages. The good news is the proposed rule provides significant details and explanations of the changes. The bad news is that many pages of material can be overwhelming (aren’t you glad you’re not in the mortgage lending business?). Operating in a highly regulated industry, one can’t help but wonder if that is an indication of the volume of change yet to come and how dealers and lenders will absorb all of the changes and their nuances.

Disparate technology systems: Though computer technology allows us to do many things faster than before, disparate file formats, field naming conventions, calculation engines, software and hardware, and reliance on multiple vendors can make it difficult to quickly change or revise transaction documentation and its completion tools. That often means all the component parts need to be updated in sequence rather than in parallel – adding more time to make the required changes. Today’s environment is characterized not only by constant change, but by tougher enforcement as well. There is more visibility and greater scrutiny of compliance and risk management in all organizations. Dealerships and financial institutions should regularly question whether they feel confident that new laws and regulations are being embedded in their business operations. The challenges underscore a need for greater operational efficiency. Disparate systems and procedures can make even relatively simple changes more timeconsuming and complex. As you prepare for additional changes, consider reviewing your process maps, technology, vendor coordination and steps necessary to respond to compliance changes. Creating greater operational efficiency now will make it that much easier for you to respond to the inevitable next compliance crunch-time event.

BY CHIP ZYVOLOSKI

CHIP ZYVOLOSKI IS A SENIOR ATTORNEY FOR INDIRECT LENDING AT WOLTERS KLUWER FINANCIAL SERVICES. FOR MORE INFORMATION, VISIT WWW.WOLTERSKLUWERFS.COM/INDIRECT.

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Mississippi Spark Plug Sept/Oct 2012