Mid-Atlantic Dealer News - June 2024

DEALER NEWS

How Dealerships Give Consumers Peace of Mind Against Rising Car Thefts

The Last Frontier for Process Improvement: Separating Sales and Marketing

A Layered Approach to Combat Synthetic Identity Fraud

The Power of Video Messaging in Car Dealerships Boosting Sales and Building Customer Relationships PLUS The New 372-Page CARS Rule: How to Avoid Being Prosecuted or Sued

The official magazine of the MIDATLANTIC INDEPENDENT AUTOMOBILE DEALERS ASSOCIATION PENNSYLVANIA • MARYLAND • DELAWARE 1501 North Front St., Harrisburg, PA 17102 (717) 238-9002 midatlanticiada.org

Noah Melamed, Chairman Ticket to Ride Auto, Lancaster, PA nmelamed@yourttr.com

Bert Straub, President 1st Choice Auto LLC, Fairview, PA bertcstraub@gmail.com

Dan Limongelli, President-Elect Jo Dan Motors, Plains, PA jodanmotors@gmail.com

Lisa Cohowicz, Interim Treasurer North East Pennsylvania A/A, Scranton, PA lisac@nepautoauction.com

Clint Weaver, Secretary America’s Auto Auction Harrisburg, Mechanicsburg, PA clint.weaver@americasautoauction.com

Tom Hodges, Vice-President Tom Hodges Auto Sales, Hollywood, MD tom@tomhodgesauto.com

Michael Mansour, Vice-President Car Connection, Inc., New Castle, PA mike@carconnection1.com

Beth Melamed, Vice-President Ticket to Ride Auto, Lancaster, PA bmelamed@yourttr.com

April Hollobaugh ajautosalestitusville@gmail.com A&J Auto Sales, Titusville, PA

James Makia james@exclusivemotorcarsmd.com Exclusive Motorcars, Randallstown, MD

Dan McNamee dtlcars@aol.com

Daniel Thomas Auto Sales, Croydon, PA

Gregg Pachik gregg.pachik@manheim.com Manheim Philadelphia, Hatfield, PA

Kerri Rotunda kerrir@corryade.com America’s Auto Auction Erie, Corry, PA

Danielle Royer

royers322motors@gmail.com

Royer’s 322 Motors, DuBois, PA

Tom Brandis • Executive Director tom@midatlanticiada.org

WOULD YOU LIKE TO RECEIVE A DIGITAL EDITION OF THE MIDATLANTIC DEALER NEWS MAGAZINE? Email steve@midatlanticiada.org Copyright 2024

3 | How Dealerships Give Consumers Peace of Mind Against Rising Car Thefts

From December 2021 to December 2022, reported thefts rose by 50% in cities like Atlanta, Georgia, and El Paso, Texas, while it tripled in Dayton, Ohio. In 2022 alone, more than one million cars were stolen. That’s about two vehicles stolen every minute.

6 | A Layered Approach to Combat Synthetic Identity Fraud

With fraud losses growing rapidly it begs the question: Exactly who should address the issue? The dealer? Lender? Technology service provider? The answer is most likely all of the above.

10 | PA Title and Registration Services

Check out reasons to choose us for your title and registration needs.

14 | New 372-Page CARS Rule: How to Avoid Being Prosecuted or Sued Dealers should re-examine their compliance protocols in certain key areas to avoid CARS from being used against them.

15 | Lessons from the past few years improve inefficiencies

Technological innovation, data-driven processes, improved compliance reporting and the overall sales approach process have made us better.

19 | The Power of Video Messaging in Car Dealerships Boosting Sales and Building Customer Relationships

Video messaging offers a straightforward method to communicate with customers easily and quickly, while car dealers can save time.

20 | The Last Frontier for Process Improvement: Separating Sales and Marketing

In marketing and sales, the crux of where numbers meet human interaction, we often see process improvement needs to catch up to other areas in the business.

22 | Insurance Verification Saves Car Dealerships from Big Risks

To help protect your business, make sure you’re verifying that your customers’ insurance is active and adequate before you had them the keys to test drive, pull their new auto off the lot, or take your service loaner for a spin.

THE IMPORTANCE OF MAINTAINING A BALANCED LIFE OUTSIDE YOUR USED CAR DEALERSHIP

Running a used car dealership can be a demanding and timeconsuming business. With the constant pressure to meet sales targets, manage inventory, and deal with customer demands, it's easy for dealership owners to become consumed by the day-to-day operations. However, it's important to remember that maintaining a balanced life outside the dealership is not just crucial for the business, but also for your personal wellbeing and long-term success.

AVOID BURNOUT

One of the most significant impacts of maintaining a balanced life outside of the dealership is the prevention of burnout. Burnout is a real risk for business owners who work long hours, deal with high-stress levels, and need more time. Without a proper work-life balance, dealership owners can quickly become physically and mentally exhausted, leading to decreased productivity, poor decision-making, and business failure.

IMPROVED MENTAL HEALTH

Stepping away from the dealership and focusing on personal interests, hobbies, and relationships isn't just a luxury - it's a necessity. These activities provide a much-needed break from the stress and demands of work, allowing you to relax, unwind, and recharge. Whether it's spending time with loved ones, pursuing a hobby, or simply enjoying nature, these experiences can help you maintain a healthy perspective and better cope with the challenges of running a dealership.

ENHANCED PRODUCTIVITY AND CREATIVITY

Maintaining a balanced life outside of the dealership can also have a positive impact on your personal growth and development. Stepping away from the business allows you to gain new perspectives and approach challenges with fresh ideas and renewed energy. Whether it's taking a weekend getaway, attending a cultural event, or simply relaxing and unwinding, these experiences can help stimulate your creativity and improve your problem-solving skills, leading to better business outcomes and a more fulfilling personal life.

STRONGER RELATIONSHIPS

Running a dealership can be all-consuming, leaving little time for family and friends. However, it's important to remember that maintaining a balanced life outside work is not only possible, but essential for nurturing these relationships. By prioritizing relationships outside of work, you can create a more fulfilling and rewarding personal life, positively impacting your overall happiness and well-being. It's about finding the right balance that works for you and your business.

IMPROVED PHYSICAL HEALTH

Finally, maintaining a balanced life outside of the dealership can positively impact physical health. Long hours spent sitting behind a desk or on the showroom floor can take a toll on the body, leading to a range of health issues, including obesity, back pain, and cardiovascular problems. Taking time away from work to engage in physical activity, whether it's going for a run, hitting the gym, or simply taking a walk outside, can help dealership owners stay

Congratulations to Danielle Royer, Royer’s 322 Motors (Dubois, PA) as 1 of 11 Dealers Named as Finalists for NQD to be Awarded at NIADA Convention

The 11 finalists for this year’s honor are:

1. Alabama: Randy Little, Randy Little, Little’s Auto Sales, Satsuma, Ala.

2. Carolinas: Michael Threadgill, Triple T Motors, Florence, S.C.

3. Colorado: Dave Guttenberg, Automotive Imports, Denver, Colo.

4. Florida: Jason March, March Motors, Jacksonville, Fla.

5. Iowa: Jeffrey West, Jeff’s Car Corner, Davenport, Iowa

6. Indiana: Melanie Goldman, GMG Motors, Morgantown, Ind.

7. Michigan: Kelly Herb, Tom Stehouwer Auto Sales, Grand Rapids, Mich.

8. Ohio: Lisa Marshall, North Main Motors, Marysville, Ohio

9. Pennsylvania: Danielle Royer, Royer’s 322 Motors, Dubois, Pa.

10. Texas: Armando Villarreal, McAllen Auto Sales, McAllen, Texas

11. Virginia: Donald Sullivan, Jr., Sullivan Auto Trading, Fredricksburg, Va.

Read all about the finalists in the recent issue of Used Car Dealer: digitaleditions.walsworth.com/publication/?i=819163 n

fit, healthy, and energized, allowing them to perform better both at work and in their personal lives.

Let's be clear: running a used car dealership is a demanding and challenging endeavor. But it's equally important to maintain a balanced life outside of work. By prioritizing your well-being and personal life, you can avoid burnout, improve your mental and physical health, enhance your productivity and creativity, and ultimately achieve tremendous long-term success and happiness in both your personal and professional life. n

Bert Straub President MidAtlantic IADA

"Amidst the chaos of rising car thefts, GPS systems emerge as the beacon of hope for dealerships and consumers alike."

How Dealerships Give Consumers Peace of Mind Against Rising Car Thefts

By Jeff Karg, Director of Marketing & Communications, Passtime GPS

It’s been a roller-coaster ride for franchise, independent and BuyHere-Pay-Here car dealerships since March 2020. The latest stomachchurning drop? Car theft. From December 2021 to December 2022, reported thefts rose by 50% in cities like Atlanta, Georgia, and El Paso, Texas, while it tripled in Dayton, Ohio. In 2022 alone, more than one million cars were stolen. That’s about two vehicles stolen every minute.

THE RISE IN KIA AND HYUNDAI CAR THEFTS

Kia and Hyundai car thefts skyrocketed in 2022, fueled, in part, by viral TikTok videos explaining how to hotwire the vehicles using USB cables. The Kia and Hyundai car thefts have gotten so bad that some insurance companies now refuse to insure them. With thieves using the vehicles’ own design and software weaknesses to their advantage, dealerships and consumers alike might feel hopeless and helpless. That’s where GPS systems for car dealerships come in.

WHY GPS-TRACKING SYSTEMS FOR CAR DEALERSHIPS ARE KEY IN CAR-THEFT PREVENTION

There’s no single-solution

anti-theft device for cars. Instead, there needs to be a multifaceted approach to car-theft prevention from multiple stakeholders. To start, vehicle makers need to improve their designs and software systems to better protect vehicles from theft, especially these thefts occurring by hacking into a vehicle’s ECM. Car dealerships also help by implementing a GPStracking system designed for car dealerships and consumers that uses batterypowered GPS devices.

GPS SYSTEMS FOR CAR DEALERSHIPS OFFER SAFE, FAST AND ACCURATE RECOVERY

With GPS tracking for cars, a dealership can manage, track and protect vehicles on and off the lot in seconds. If a car theft does occur, recovery can happen quickly and safely thanks to duallocation technology that uses both GPS and cellular tracking for cars. Whether a stolen vehicle is out in the open or concealed in a parking garage, warehouse or shipping container, duallocation GPS technology gives dealers the power to track vehicle assets with unprecedented accuracy. That provides critical peace of mind for dealers and consumers, plus it makes

recovery times shorter and more cost-effective.

BATTERY-POWERED GPS TRACKING FOR CAR DEALERSHIPS THAT’S STEALTHY, RELIABLE AND SEPARATE FROM VEHICLES’ SYSTEMS

A third-party theft recovery system that is separate from the vehicle’s internal system may seem redundant or unnecessary, but actually has several key benefits.

For one, a potential car thief would have no ideas it is even on the vehicle. A small, battery-powered GPS device is easy to install discreetly: inside seats, glove compartments, consoles and trunks. With a magnetized case, you can install it on the undercarriage or in a wheel well. Plus, you can install and activate it in seconds, giving dealers—and consumers— instant insight and peace of mind.

Perhaps even more importantly, a batterypowered GPS theft recovery system is separate from the vehicles’ engine control units (ECUs) that controls multiple systems. Because it is separate from the vehicle’s engine control units (ECUs) that control multiple systems, it is much less

Continued on next page

DEALERS DIGEST: A MONTH OF MILESTONES AND INSIGHTS

Hello Dealers,

The last 30 days have been a whirlwind to say the least. It all began on April 10th, when Kathy Sabaski and I were invited to attend Bel Air Auto Auction’s Anniversary celebration. The gang at Bel Air really knows how to throw a party. On Wednesday evening, dealers and industry vendors were treated to cocktails, dinner, and live music in the auction lanes. Many of the highline vehicles were on display to view before the sale on Thursday, April 11th. It was fun getting to spend time with the Maryland dealers when they weren’t busy buying and selling vehicles.

Next, I hopped on a plane and headed to Las Vegas to attend the third annual BHPH United Summit held at the Bellagio on April 23rd-25th. This event has quickly become the benchmark for BHPH education and training. Nearly 400 attendees spent two full days attending sessions presented by industry-leading presenters and dealers. Mark your calendars for next year’s Summit to be held at Ceasars Palace on April 22-24, 2025.

Then it was off to Harrisburg to attend the second meeting of the MidAtlantic Regional 20 Group from May 5th-7th. The group, which added four new members, spent two days reviewing KPI’s and discussing various industry hot topics. Special thanks to BlytzPay for sponsoring dinner and providing valuable knowledge on the latest payment technology. The next meeting will be held at the Baltimore Inner Harbor, October 6th-8th. Give me a call if you are interested in attending.

Finally, it was off to ADESA Mercer to attend a Board of Directors meeting and Title Training Class dubbed the “West Coast Bash.” It was cool to have the Board members get to enjoy lunch with the class attendees. Thank you to AFC for sponsoring the day.

Next up, the NIADA Convention on June 17th-20th at the Wynn in Las Vegas. For more information on how to attend, check out page 5 in this issue or contact the MidAtlantic IADA office.

If you have any questions, concerns or ideas, I can be reached at tom@midatlanticiada. org or my direct cell phone, 215-805-2034.

Until next month,

Tommy

Continued from previous page prone to software hacking and cannot be hacked by accessing the vehicle’s ECU.

Even if they’re able to unlock the vehicle’s doors, disable an alarm or start the vehicle through the vehicle’s ECU systems, they won’t be able to disable the battery-powered device. And dealers and consumers are better positioned to protect your vehicles from theft.

WHY PASSTIME’S INTOUCH VP IS THE BEST GPS SYSTEM FOR CAR DEALERSHIPS TO

PROTECT AGAINST THEFT

PassTime continues to lead the industry with cutting-edge, GPS-tracking technologies and solutions. Our InTouch VP Theft Recovery Systemuses Encore, our iconic battery-powered device, to give you essential insights and tools to bolster your bottom line. Here’s how:

InTouch VP

• Simple, reliable and accurate inventory management

• Smartphone app gives you dashboard snapshots of assets in real time

• Protection from car theft

• Improved stolen vehicle recovery

• Resell to the customer for additional revenue

InTouch VP uses Encore, giving customers:

• Third-generation, battery-powered GPS device

• Ultra-compact design (smaller than a deck of cards)

• Super lightweight (2 ounces)

• Dual-location technology with Beyond GPS™

• Installs in seconds practically anywhere

• Long-lasting 5+ year lifespan

• Advanced lithium battery with low power consumption

• Four flexible power modes:

• Endurance: track assets twice a day automatically

• Trip: Accelerometer gives you data on the start and end of each trip

• Active: Full functionality for real-time tracking

• Recovery: Full-power mode for vehicle recovery

• Optional industrial-strength magnetized clam-shell case

At PassTime, we’re a true partner dedicated to your dealership’s success and car-theft prevention. Protect your dealership’s assets today. Your customer’s peace of mind depends on you. Get a free quote. n

Executive Director

MidAtlantic IADA Tommy Brandis q

2024 NIADA CONVENTION AND EXPO

Join us at the Wynn in Las Vegas June 17-20, 2024

Network with more than 800 dealers from across the nation at the largest convention and expo for independent car dealers.

GENERAL SESSIONS

9 A.M.

TUESDAY, JUNE 18

Michael Darrow kicks off the convention and starts his term as NIADA President. Darrow owns and operates The Car Finders, Inc., in Durham, N.C., and is looking forward to building on the association’s past and moving it forward. The session also includes the NIADA annual analytics report, a great way to benchmark your dealership and start your convention education.

3:30 P.M.

TUESDAY, JUNE 18

Sugar Ray Leonard, John Taffer, Michael Irvin, Dick Vital, Captain Richard Phillips, and Bobby Bowden are just a few of the big names who have addressed the NIADA attendees on the big stage in past years. You will not want to miss this year’s keynote speaker who will address attendees just before the grand opening of the largest expo hall in the used vehicle industry.

2:45 P.M.

THURSDAY, JUNE 20

Celebrate the milestones for the industry at the NIADA Awards Celebration. The closing session will give attendees a chance to network, unwind and close out the convention in style. The session will culminate with the naming of the 2024 National Quality Dealer of the Year.

A Layered Approach to Combat Synthetic Identity Fraud

With fraud losses growing rapidly it begs the question: Exactly who should address the issue? The dealer? Lender? Technology service provider? The answer is most likely all of the above.

By Sharla Godbehere, VP of Sales in Auto Lending at Equifax

Fraud in the automotive industry is increasing at an alarming rate, making it one of the hot topics of discussion at the recent annual auto shows. While many attempts to defraud auto dealers and lenders are foiled before they happen, fraudsters continue to get more sophisticated at finding weak controls they can evade.

The topic of fraud is important as the industry continues to try to find solid footing after a few years of tepid post-pandemic growth. The Equifax February 2024 U.S. Credit Trends data report shows that total outstanding balances on auto loans and leases have increased to $1.633 trillion, up 3.1% year-over-year. Additionally, the severe balance delinquency (60-plus days past due) rate in February was 1.61%, which is 17 basis points higher than February 2023.

Fraudsters are focusing more of their activities on areas such as new-account fraud, where they create new, fraudulent identities or synthetic identities. Synthetic identity (ID) fraud is a fictitious identity, often built

with a combination of real data and fabricated information. Fraudsters use a synthetic ID in an attempt to gain credit with the fictitious identity to monetize a transaction.

The use of synthetic identities in auto has grown more than 59% per year since 2020, according to recent Equifax data – creating a significant risk for the industry with an impact expected to exceed $250 million in losses over the past five years.

There also have been a growing number of cases of individuals falsifying vehicle paydowns, where fraudsters are duping dealers into paying or crediting these fraudsters with funds based on phantom equity built up on vehicles used when selling inventory to dealers.

With fraud losses growing rapidly, it begs the question: Exactly who should address the issue? The dealer? Lender? Technology service provider? The answer is most likely all of the above. Unless each party contributes to a

layered approach to reduce the threat, the fraudsters will continue to win.

What Solutions Can Help With Today’s Required Layered Approach?

Each segment of the auto industry can play a role in maximizing the best protection against theft. No one solution can stop fraudsters, but rather a variety of solutions that can easily fit into the current lender and dealer processes as an added line of defense to help decrease losses from bad actors.

A layered approach to detecting fraud is a good way to defend against it. Early alerts can warn the dealer/lender of potential or known identity theft and application fraud in real time and quickly identify identity documents not consistent with issuer formats.

One example of service providers stepping up their efforts for the industry is Cox Automotive, which announced at the 2024 NADA Show that they will add Synthetic ID Fraud Alerts to their Dealertrack capability. This solution leverages proprietary Continued on next page

Continued from previous page data sources and is integrated with best-inclass fraud detection, helping to protect dealers against fraudulent transactions earlier in the F&I process.

Another part of this layered approach are instant validation tools. These solutions offer a fast, secure and user-friendly experience that uses mobile carrier data to instantly validate a customer’s identity and mitigate fraud while also populating key fields within the application to reduce data entry and accelerate the transaction process.

Strengthening Internal Controls

Internal controls play a pivotal role in reducing fraud risks. Auto dealers and lenders should enforce robust internal policies and procedures governing customer authentication, credit underwriting and account monitoring. Regular audits and reviews can help identify vulnerabilities and ensure compliance with regulatory requirements.

Continuous Education and Training

Educating employees about the evolving nature of synthetic ID fraud and imparting training on fraud detection techniques is essential. Staff members should be equipped with the knowledge and skills necessary to identify suspicious activities and escalate concerns promptly. Ongoing training programs can empower personnel to remain vigilant against fraudulent schemes.

Synthetic ID fraud poses a pervasive threat to auto dealers and lenders, necessitating a multi-layered approach to mitigation. By prioritizing vigilance and layered proactive measures, the automotive industry can mitigate the impact of synthetic ID fraud and safeguard its financial interests and reputation. n

All statistics provided in this article were developed from Equifax databases and are provided for illustrative and informational purposes only.

SAVE THE DATE

VEHICLE DEALER FINANCIAL DISCLOSURE & ASSOCIATED COOLING-OFF PERIOD

BY TYLER BURKE, ASSOCIATE, MILLIRON & GOODMAN GOVERNMENT RELATIONS

On April 5th, 2024, State Senator Maria Collett (Montgomery-D) introduced a cosponsorship memo calling for increased financial disclosures and mandatory cooling-off periods. MIADA is writing to ensure that its members are aware of the legislation and that MIADA has already started educating the legislature about the burdensome requirements that this cosponsorship memo entails.

As the legislation’s language has not yet been introduced, the bill has not been referred to a committee. The pending legislation would require a disclosure containing supporting information on financing, providing notice of other potential costs, and advising consumers that seeking additional finance offers can reduce monthly payments and/or total costs. In addition, the legislation would require that a new disclosure be provided if

a different amount of interest or different financing without interest is offered after the initial disclosure is provided. MIADA has taken notice of this burdensome requirement and has begun educating about how independent automobile dealers operate in the Commonwealth and how this legislation is unnecessary.

Finally, the legislation would also require a waiting or “cooling-off” period after a disclosure is provided before a contract is presented. As the language of the legislation has yet to be introduced, we do not know the specific length of the cooling-off period, but MIADA is keenly aware that any cooling-off period would not be in the best interest of our customers.

The key role of MIADA’s legislative and advocacy efforts is to ensure that legislators

and staff are educated about Pennsylvania’s independent automobile dealers and the clientele that we serve.

MIADA is and will continue to closely monitor this legislation as the language is introduced and referred to a committee.

REQUIRING PHOTO EVIDENCE OF A VIOLATION IN PHILADELPHIA:

On April 10, 2024, the House unanimously passed House Bill 816, which required photo evidence of violation for removal of a vehicle in Philadelphia.

The legislation outlines that in the City of Philadelphia, the Philadelphia Parking Authority (PPA), must take digital photographs if a vehicle is found to be stopped, standing, or parked in violation, before its removal.

House Bill 816 passed the House 2000 and is now on its way to the Senate for consideration. MIADA will continue to monitor this legislation and keep our members updated. n

Dealer

Dealer

Dealer

Salvage Certificates

1

4th Annual SUMMER SLAM CAR SHOW

SUNDAY, JULY 28

8AM - 12PM

Hosted by Manheim Baltimore-Washington to benefit Wounded Warriors Day on the Bay 7120 Dorsey Run Road, Elkridge, MD, 21075

FREE & OPEN TO THE PUBLIC EVENT IS RAIN OR SHINE

Ample parking available at no cost!

VEHICLE REGISTRATION:

$20 Registration Fee

To pre-register, please email greta.stetson@coxautoinc.com

Variety of Food Trucks will be on site. Flag Presentation at 8AM Trophy Ceremony at 11:30AM

8th Annual SUMMER SLAM SALE

JOIN US ON TUESDAY, JULY 30 9:30AM | 2,500 UNITS 15+ LANES

Please join us for our 8th Annual Summer Slam event sale and enjoy a day of home runs, your favorite ballpark food, and amazing inventory! First 200 clients in the doors will get a complimentary lunch ticket, a commemorative Summer Slam T-shirt, and the chance to get an autographed baseball by our favorite baseball team’s mascot!

DUNK A MANAGER! 11AM - 12:30PM BEHIND LANE 1

For a donation of $20 to the Boys and Girls Clubs of America, get three chances to dunk the manager of your choice!

The New 372-Page CARS Rule: How to Avoid Being Prosecuted or Sued

By Terrence J. O’Loughlin, J.D., M.B.A.

On Dec. 12, the Combating Auto Retail Scams Rule, or CARS, was promulgated by an activist Federal Trade Commission. It will take effect on July 30, and creates significant new perils for dealers.

In the briefest terms, CARS mandates the following:

• No misrepresentations concerning price and cost

• The offering price, total payments, and voluntary protection products pricing must be clearly explained and disclosed.

• Voluntary protection products must offer true objective value.

• Consumers must provide dealers with express and informed consent.

The FTC clearly seeks to amplify disclosures and explanations that must be provided to consumers and, in so doing, create a clear record for prosecuting and litigating dealers for their disclosure failures. Prohibiting junk fees and deceptive trade practices are the government’s objectives. There doesn’t appear to be anything truly new in CARS, just a substantial augmentation of what is currently legally demanded. This is not to say that CARS won’t require new disclosures and protocols, as it probably will, after it’s been thoroughly reviewed

and applied. But dealers should re-examine their compliance protocols in certain key areas to avoid CARS from being used against them.

New laws create urgency in all forms of enforcement by all agencies.

Whenever new laws are enacted to police commercial activity, state, federal and private plaintiffs become motivated to take legal action regarding, not only the new law, but other related consumer-protection laws. In addition, both the FTC and the Consumer Financial Protection Bureau have been encouraging state agencies to advance their federal agendas, which undoubtedly will include CARS.

O’Loughlin advises dealers to go ahead and prepare now instead of waiting on pending litigation over the rule to resolve.

Basic rules to avoid being prosecuted or sued – how do prosecutors and plaintiffs decide which dealers to prosecute? Every dealer should know all the laws and follow each one diligently and without fail. But is this possible? It probably isn’t because the regulatory burden is substantial. How do government agencies and attorneys decide which dealers to target? Answer: They track

the most obvious issues that come to their attention. Dealers need to prioritize their compliance efforts in two areas to avoid this attention: advertising and consumer complaints. The vast majority of cases are brought due to deceptive advertising and unresolved consumer complaints. Controlling these two aspects of dealers’ businesses will reduce the chances of legal problems by approximately 70%.

Regulators’ favorite case –deceptive advertising

Government regulators must generate cases as part of their jobs. What could be easier for these regulators than tracking dealer advertising from their offices that is available online or through print or other media? These cases can be quickly developed and are simple to prove. Statutory damages, usually around $10,000 per infraction, can be expensive. In addition, identified dealerships are now on the list of perceived law breakers for future investigations, an unenviable situation.

The most damaging and dangerous cases – consumer complaints

If regulators receive several complaints regarding a particular dealer, it’s likely that an investigation will be initiated. This means that subpoenas may be served, and copious files will be audited for not only the reasons for

which the consumers complained, but for all other detectable legal transgressions. In other words, dealers are enormous targets when regulators examine all their operations.

Three remedies all dealers should implement

There are remedies all dealers should immediately implement:

• Appoint a compliance officer who oversees advertising, consumer complaints, and other compliance issues.

• Know the advertising laws and follow them.

• Establish a rigorous consumercomplaint protocol so that these complaints are resolved and are never filed with a state agency, attorney or on a website.

Regardless of the final interpretation and application of CARS, these remedies will be a foil to being a defendant. The time to act is now. n

Terry O’Loughlin is director of compliance for Reynolds & Reynolds and is admitted to the Pennsylvania and Florida Bars. Before joining Reynolds, he was employed by the Florida Office of the Attorney General, where he investigated automobile dealers and financing sources. He previously was a public accountant.

Lessons from the past few years improve inefficiencies

By April Hanson

As I reflect on when I started in the BHPH industry and “the way things used to be,” I am amazed at the efficiencies we have picked up in the last few years. Technological innovation, data-driven processes, improved compliance reporting and the overall sales approach process have made us better.

One of the biggest efficiencies I have noticed is in inventory on hand. I remember the days when I would determine the amount of necessary inventory on hand by simply doubling my sales goal for the month. If I wanted to sell 100 cars this month, I needed to have 200 cars on the lot.

Due to the declining availability of cars over the past few years, we learned how to meet our sales goal with fewer vehicles. As a result, we have picked up savings in floorplan interest, recon costs, and labor costs.

Today we have half the number of vehicles on our lots, and we are selling the same number of cars. That means our inventory costs have gone down. I am not saying that we just cut

the number of vehicles in inventory and the savings rolled in. We had to make changes to our recon process as well.

I am reminded of the justin-time purchasing model with lean manufacturing. To reduce inventory costs, we needed to replace sold units with “Front-line ready” units immediately. To do this, we monitored the following:

• Number of vehicles on the line, ready for sale

• Number of vehicles in recon and when they will be ready for sale

• Number of vehicles coming back to us through repossession

• Number of vehicles we need to purchase to maintain the proper number of vehicles in recon

This was no easy task. My old “double your monthly sales and that is the number of cars we need on the lot” method was no longer realistic. We had to review the number of cars on the front line and review the type of vehicle that is selling most often. From there, we developed a lot plan and reviewed the number of each vehicle

category we had in recon, including repossessions that have been flagged for reconditioning. This allowed us to isolate the type of vehicles we needed to purchase to have our optimum inventory level.

Today we monitor our vehicles sold and compare that to our vehicles coming out of recon to determine the number and type of vehicles we will purchase at auction. I am amazed at how much we have saved on costs associated with the inventory acquisition process. I am also amazed at our ability to meet our customers’ desire for different vehicle categories at the time of purchase.

I hope we never experience the difficulties of these past few years again, however, I am grateful for the lessons I learned while navigating it. We are a better, more efficient company today. I doubt we would have made the same changes if we were not forced to.

April Hanson will be a speaker at the NIADA Convention and Expo. See her article in the March issue of UCD. n

The CARLAWYER©

By Eric Johnson, Partner in the law firm of Hudson Cook, LLP, Editor in Chief of

Here’s our monthly article on selected legal developments we think might interest the auto sales, finance, and leasing world. This month, the developments involve the Department of the Treasury, Senate and House Committee Chairs, Federal Communications Commission, and the Consumer Financial Protection Bureau. As usual, our article features the “Case(s) of the Month” and our “Compliance Tip.” Note that this column does not offer legal advice. Always check with your lawyer to learn how what we report might apply to you or if you have questions.

FEDERAL DEVELOPMENTS

On March 27, the Department of the Treasury released a report on the current state of artificial intelligencerelated cybersecurity and fraud risks in the financial services sector, including an overview of current AI use, trends of threats and risks, best practices for managing risks, and next steps to address AI-related operational risks, cybersecurity, and fraud challenges. The report's findings are based on 42 indepth interviews conducted in late 2023 with representatives from the financial services sector, information technology firms, data providers, and anti-fraud/antimoney laundering companies.

On April 7, U.S. Senator Maria Cantwell (D-WA), chair of the Senate Committee on Commerce, Science, and Transportation, and U.S. Representative

Cathy Rodgers (R-WA), chair of the House Committee on Energy and Commerce, released draft federal data privacy legislation titled the American Privacy Rights Act. According to the joint press release by Cantwell and Rodgers, the APRA would establish uniform data privacy rights for individuals; preempt existing state comprehensive data privacy laws; minimize the personal data that companies can collect, store, and use to what those companies actually need to provide individuals with products and services; give individuals control over their personal data, including the ability to prevent the transfer or sale of their data; require affirmative express consent before sensitive data can be transferred to a third party; require companies that collect personal data to let individuals access, correct, delete, and export their data; allow individuals to opt out of targeted advertising; and disallow mandatory arbitration for claims involving minors, a substantial privacy harm, or specific physical or mental harms. The APRA would allow individuals to opt out of a company's use of algorithms to make decisions about, among other things, housing, employment, healthcare, credit, education, and insurance. The APRA would also require companies subject to the Act to implement data security standards. Individuals would have a private right of action for violations of the Act, and the Federal Trade Commission and the states would be authorized to enforce the Act. Small businesses, as defined, would be exempt from the APRA.

On April 8, the Federal Communications Commission issued a notice of proposed rulemaking that seeks comment on the types and frequency of use of connected car services offered by wireless service providers and auto manufacturers in order to help protect survivors of domestic violence from misuse of such services. The FCC also seeks comment on

whether changes to its rules implementing the Safe Connections Act are necessary to address the impact of connected car services on survivors of domestic violence. Finally, the notice seeks comment on what steps connected car service providers can proactively take to protect domestic violence survivors from stalking, harassment, and intimidation through the misuse of connected car services. Comments are due by May 23, 2024.

On April 8, the Consumer Financial Protection Bureau issued a new edition of Supervisory Highlights, which focuses on the Bureau's findings from recent examinations of consumer reporting agencies ("CRAs") and furnishers concerning their obligations under the Fair Credit Reporting Act and its implementing Regulation V. The spring edition of the publication covers certain examinations in connection with credit reporting and furnishing that were completed from April to December 2023. CFPB examiners found several deficiencies in CRAs' compliance with the requirements of the FCRA and Reg. V.

Specifically, examiners found that CRAs: (1) automatically refused to implement identity theft blocks upon receipt of the requisite documentation based on "overbroad disqualifying criteria" and without making an individualized determination that there was no statutory basis to decline the block; (2) failed to give timely and compliant notices to consumers after declining to implement an identity theft block or after rescinding an identity theft block; (3) failed to provide identity theft victims with the required identity theft summary of rights; (4) violated Reg. V's new human trafficking rule by failing to timely block, or in some cases failing to block whatsoever, adverse items of information identified by the consumer as resulting from human trafficking; and (5)

failed to maintain procedures designed to ensure maximum possible accuracy with respect to oversight of furnishers. Specifically, examiners found that CRAs failed to adequately monitor dispute metrics that would suggest a furnisher may not be an accurate source of reliable and verifiable information. CRAs also failed to implement procedures to assure the accuracy of information reported by unreliable furnishers. The CFPB required the CRAs to revise their internal policies and procedures to address the issues cited above as well as revise template notices to confirm that the required information is included.

The spring edition of Supervisory Highlights also addresses FCRA compliance issues that CFPB examiners uncovered during examinations of furnishers. Notably, examiners found that furnishers: (1) failed to promptly correct and update furnished information after determining that the information was incomplete or inaccurate, sometimes for several months or years; (2) failed to investigate direct disputes that did not satisfy the furnisher's enhanced identity verification requirements (despite satisfying the statutory identity verification requirements); (3) deleted tradelines upon receipt of disputes rather than conducting investigations; (4) inaccurately reported dates of first delinquency (e.g., furnishers of information concerning auto financing often reported the date of first delinquency as the first day of the statement cycle following the consumer's missed payment rather than 30 days after the missed payment due date); (5) failed to promptly send corrections or updates to CRAs after determining that accounts were paid in full, particularly in the case of auto leases; and (6) continued to furnish information identified in a consumer's identity theft report to CRAs before knowing or being informed by the consumer that the information was accurate. As with the CRAs, the CFPB required furnishers with the above-referenced deficiencies to update their policies and procedures to address the issues cited and to engage in lookbacks to correct the furnishing of inaccurate information.

On April 16, the Consumer Financial Protection Bureau issued a rule to update its procedures for designating nonbank covered persons for supervision. Section 1024(a)(1)(C) of the Consumer Financial Protection Act authorizes the CFPB to supervise a nonbank covered person that it "has reasonable cause to determine ... is engaging, or has engaged, in conduct that poses risks to consumers with regard to the offering or provision of consumer financial products or services."

In 2013, the CFPB issued a procedural rule to govern supervisory designation proceedings. After years of largely not using this authority, the CFPB issued an amended procedural rule in 2022 and established a process to publicize the director's final decisions and orders.

In February 2024, the CFPB published its first decision and order where the nonbank subject contested the CFPB's supervision, and now the CFPB seeks to update its procedures through a new procedural rule. The new procedural rule clarifies that an agreement consenting to the CFPB's supervision does not constitute an admission by the respondent and is not subject to the public release process. Orders issued because a respondent failed to file a response or has defaulted in the process are subject to public release, however. If a respondent consented to supervision under the 2022 procedural rule, the term was limited to a two-year period of supervision. Under the new procedural rule, the notice of reasonable cause will continue to include a proposed consent agreement, but instead of a twoyear supervision period, the duration of the supervision will be on a case-by-case basis. The CFPB noted that it still expects most of the consent agreements to create a two-year period of supervision.

According to supplementary information to the rule, in February 2024, the CFPB began a transition to a new organizational structure for its supervision and enforcement work. Specifically, the functions of the Associate Director of the Division of Supervision, Enforcement, and Fair Lending ("SEFL") are being transferred to the Supervision Director as head of a Division of Supervision and the Enforcement Director as head of a

Division of Enforcement. Although not yet on the CFPB's website, it appears that the SEFL Division is being discontinued and that Enforcement and Supervision will now be their own divisions and report directly to the CFPB Director.

In light of this restructuring, the procedural rule transfers certain functions to the Supervision Director. The CFPB is hopeful that this new structure will streamline the internal decisionmaking process. The procedural rule allows the initiating official to withdraw a notice of reasonable cause and request supplemental briefing. It also imposes word limits for the notice, response, and certain key filings. The procedural rule was effective on April 23, 2024, and applies to all proceedings issued on or after that date. It also applies to proceedings that are pending, unless the director determines that it is not just or practicable. Although the procedural rule is exempt from the notice-and-comment requirements, the CFPB is accepting comments on the rule until May 23, 2024.

CASE(S) OF THE MONTH

Arbitration Agreement Signed on Same Day and as Part of Same Transaction as Vehicle RISC Was Not Enforceable Under Pennsylvania Motor Vehicle Sales Finance Act's One-Document Rule: In separate transactions, two individuals bought used vehicles from a dealership. In connection with the purchases, the buyers each signed a retail purchase agreement, a retail installment sale contract, and an arbitration agreement. The buyers then brought a class action lawsuit against the dealership, alleging that it failed to properly register their vehicles, in violation of the Pennsylvania Unfair Trade Practices and Consumer Protection Law and in breach of contract. The dealership moved to compel arbitration or, in the alternative, to dismiss the claims. The trial court denied both motions.

The U.S. Court of Appeals for the Third Circuit affirmed the trial court's decision denying the motion to compel arbitration Continued on next page

Continued from previous page and remanded the matter. The appellate court looked to Pennsylvania law to determine whether the arbitration agreements signed by the buyers were enforceable.

Under the Pennsylvania Motor Vehicle Sales Finance Act, a contract governing an installment sale must: (1) be in writing; (2) contain all of the agreements between the buyer and the seller relating to the installment sale of the vehicle ("onedocument rule"); and (3) be signed by the buyer and the seller. The appellate court clarified that this one-document rule in the MVSFA requires all agreements between the parties to an installment sale to be incorporated into the RISC. Here, because the arbitration agreement exists independently of the RISC, it is unenforceable. In addition, the RISC itself states that it represents the complete and exclusive agreement between the parties.

The appellate court rejected the dealership's argument that, because the buyers signed the RPA, RISC, and arbitration agreement on the same day and as part of the same transaction, the three documents should be considered one contract under Pennsylvania contract law. The appellate court found that all three documents could not be considered one contract because they do not reference or incorporate one another. The RISC unequivocally states that it constitutes the entire agreement between the parties. The dealership also argued that, even if the MVSFA imposes a onedocument rule, it does not apply to the arbitration agreement because the Act is only concerned with financing terms. The appellate court disagreed, finding that the MVSFA requires that certain financing terms be included in a RISC, but it also dictates that all agreements be contained within the RISC. See Jennings v. Carvana LLC, 2024 U.S. App. LEXIS 6705 (3d Cir. (E.D. Pa.) March 21, 2024).

COMPLIANCE TIP

This month’s Case of the Month illustrates why it is so important to not only review all of the documents you ask the consumer to sign at the dealership, but also whether you may be running afoul of other federal or state law in doing so, like a state’s single document rule. There are several states that impose a single document rule that requires a Retail Installment Sales Contract to contain all of the agreements between a buyer and a seller relating to the installment sale of the motor vehicle. If your RISC doesn’t contain an arbitration agreement, or you don’t follow your state’s single document rule (if it has one), then you may end up like the dealer in the case above and have your motion to compel arbitration denied by a court. Time to talk to your friendly lawyer and see if you’re doing things correctly in your state! n

BASIC AGENT TRAINING COURSE

The Power of Video Messaging in Car Dealerships: Boosting Sales and Building Customer Relationships

For car dealerships, video messaging typically includes creating a brief clip sent to a client, featuring service appointments, specific car sales information or features, and offered specials. These video clips can be shared by software that integrates with a CRM or by using an embedded YouTube link.

Video messaging offers a straightforward method to communicate with customers easily and quickly, while car dealers can save time.

Why Video Messaging?

Video messaging is a powerful way for car dealerships to boost sales and build better customer relationships. It allows dealers to showcase cars in detail directly to interested buyers without the hassle of long emails or back-and-forth phone calls. This quick and easy sharing of information makes customers feel special and valued. They can watch the video whenever and how many times they want. In essence, video messaging combines the power of visual appeal with the effectiveness of personalized marketing to drive sales and build trust in customer relationships.

Guidelines for Producing a Quality Video

1Make it Personalized Personalization goes beyond merely mentioning the customer's name multiple times. It encompasses, for

example, revisiting subjects that were previously mentioned in discussions with the customer. This could mean recalling the specific features they desired, referencing a problem they wanted to solve based on past conversations, or even following up on personal anecdotes they shared. An example of this could be producing a video showcasing particular safety features of a car, tailored to the customer's expressed interest in finding a vehicle suitable for family use.

2Be Quick and to the Point

When crafting video texts, brevity and promptness are key. Aim to make your videos concise, covering only essential elements such as a greeting, a brief introduction, showcasing the vehicle, and concluding with a clear call to action. Additionally, the speed of your response can significantly impact a customer's decision to visit your dealership. Strive to send your video texts swiftly, ideally within 10 minutes of receiving an inquiry. This approach sets you apart from competitors and demonstrates your commitment and efficiency, making your video stand out.

3Go Beyond the Basics

To captivate your audience, share insightful details about the car worth watching. Focusing on readily available information through a simple Google search will make your video message uninteresting.

BY SEAN TOUSSI GLO3D.COM

Instead, enhance your video's appeal by creating a detailed walk-around, delving into specifics, and showing comprehensive 360-degree views of the vehicle. This approach highlights unique aspects customers only discover by visiting the dealership in person.

4Choose a Hosting Platform

Opting for YouTube or a similar video-sharing website works well. Many dealerships use applications that allow them to create videos directly on their smartphones and then upload them to a platform from which the video can be integrated into an email or a text message through the CRM system. Avoid attaching videos directly to emails because it requires the recipients to download a video and wait for it to play. You want to improve the accessibility and

convenience of your video communication.

In summary, video messaging is a crucial strategy for car dealerships to boost sales and strengthen customer relationships. By emphasizing personalization, delivering concise messages quickly, offering unique information, and choosing the right hosting platform, dealerships can effectively use video to showcase vehicles and communicate with customers engagingly. This approach enhances the buying experience, promotes efficiency, and fosters loyalty, positioning dealerships for greater success and customer satisfaction. n

If you have any questions or comments regarding this article, please email Sean@Glo3D.com.

The Last Frontier for Process Improvement: Separating Sales and Marketing

By Kendra Brown, Operations Director, Dream Team Media

Sales and marketing come naturally to operators in the automotive industry. Independent dealers increasingly use data to inform financial, accounting, underwriting, and marketing decisions. As data plays a more significant role in even the smallest operations, the next frontier for sustainable success relies on creating and documenting processes. The quantitative and compliance aspects of the business lend themselves more to creating consistent processes. In marketing and sales, the crux of where numbers meet human interaction, we often see process improvement needs to catch up to other areas in the business.

What makes a good salesperson? What makes a good marketing plan? Does a car salesperson need to be charismatic, an extravert, and gifted with a flair for small talk? Sometimes, managers and operators think they have to allow deviation from processes among sales teams to give the ideal sales personality the space it needs to work its magic. Implementing CRM software to gather more information about customer behavior and lead-handling metrics can be a prolonged and painful process where managers view sales and marketing as innate talents rather than a skill achievable by any personality type. Most commonly, dealership branding gets relegated to individual salespeople to selfpromote on social media, in local markets, etc. Nothing can risk your dealership’s marketing potential like a commissiondriven salesperson ill-equipped for properly selling on social platforms.

In Daniel Pink’s book, “To Sell is Human,”

he investigates the heart of selling and how it is innate to all humans, regardless of personality type. He cites several researchers and their studies of sales performance where the correlation between extraversion and sales is “essentially nonexistent.” What does this mean for the independent dealer? Prioritize your sales and marketing process for efficiency and a better work culture without fear of failure.

Sales and marketing are siblings, not twins. When a manager demands its salespeople to self-generate leads, the unintended consequence is that valuable customer information will escape the dealership. It won’t get entered into a CRM, which leaves the dealership without a customer base for follow-up. Side conversations on personal messages can lead to side deals that hurt the dealership. Bad individual relationships can tarnish the dealership’s reputation. And more. The potential for things to go wrong outweighs the potential for things to go right when the dealership leaves marketing in the hands of the salespeople. These problems are very familiar to independent operators. But what are you doing to improve it?

It’s time to tackle the last frontier in operational improvement for the independent dealer: separating sales and

marketing. Marketing aligns more with your business model than with the sales team. Here is a quick guide to knowing if you are dealing with marketing or sales.

1. Is the role transactional? If the person is closing the deal, you are dealing with sales. Find someone who is a team player with a positive attitude and is willing to use a CRM to track details. Details are more important than personality. You can teach someone how to ask for the sale and close the deal. You can’t teach someone how to be willing to learn and embrace the process. You can create an environment that incentivizes and encourages it (and you should), but attitude is not a learned skill.

2. Does their role require communicating directly with new, unconverted leads? If yes, then the position is under sales. You don’t need a marketer if you are looking for someone to represent your dealership at a table at an event. You need sales. They may not transact, but each person approaching your table is a lead. Your dealership’s representative should be able to communicate the value proposition to the potential customer, enter their information into the dealer’s database, and proceed with a follow-up process.

3. Are you looking for a way to reach or bring more customers to your online or real-life business? You are looking for a marketer. The marketer communicates the benefits of your product or service by crafting communication for various channels to trigger the emotions that make that customer convert to a lead. The marketer tells a story.

4. Does their role require the interpretation of data analytics? Leave data analysis and market research to the marketer. The marketer should have a close understanding of your business model and your brand. Their role requires interpreting data to ensure it aligns with the business objectives.

Is your dealership too small to separate sales and marketing? Absolutely not. There has never been an easier time to outsource specific skills efficiently. Vertical integration, where you keep all skillsets in-house, can be part of your growth

plan. However, if you want to optimize for efficiency, start with these priorities:

1. Create and guard your dealership’s brand value and reputation. You don’t have to be on every platform at the same time. The more you advertise without overseeing performance metrics, the more likely you are to waste money. Focus on your owned media, like your website, social platforms, search engine listings, and email marketing to your customer database. Put someone in charge who is not motivated by commission or wearing other hats.

2. Control and own your data. Data is quickly becoming currency, so treat it as such. There is an affordable solution for every size operation to consolidate customer data. Track your website analytics using your Google Analytics account and control its access wisely.

3. Hire a teachable sales team that will abide by your processes. Dr. Atul Gawande runs a unique physician

practice in New Jersey, where finding talent is challenging. I’m not likening the automotive industry to healthcare. However, each retailer must set itself apart in a sea of competition. Your dealership is unique, just as Dr. Gawande’s practice is unique. When asked how he fills the necessary positions in his practice, he says, “We recruit for attitude and train for skill.”

The separation of sales and marketing forces you to define roles and processes in these areas. When you manage your customer data, you will improve your sales and marketing performance, resulting in efficient spending and better decisionmaking regarding advertising. n

Sources: 1) Pink, Daniel H. (2012). To Sell is Human: The Surprising Truth About Moving Others. Riverhead Books. 2) Taylor, B. (2014, July 23). Hire for attitude, train for skill. Harvard Business Review. Retrieved April 6, 2023, from https://hbr.org/2011/02/hire-forattitude-train-for-sk

Insurance Verification Saves Car Dealerships from Big Risks

By Joel Samen, Modives

According to data from the Insurance Information Institute, nearly 13% of drivers—or one in eight—is uninsured. But that crucial data point might not come to light until it’s too late to protect your auto dealership or service department.

To help protect your business, make sure you’re verifying that your customers’ insurance is active and adequate before you had them the keys to test drive, pull their new auto off the lot, or take your service loaner for a spin.

How Missing Insurance in the Car Sales Process Can

Cost Dealerships

Gabe hadn’t been driving much over the past few years while he was living in the city, but now that he’s moving out to the suburbs for his new job, he needs to buy a car. While he’s looking around to see what he wants, he doesn’t want to pay for car insurance, instead just flashing his old insurance card from when he was covered under his parents’ policy during college.

Each dealership Gabe visits has no problem making copies of his driver’s license and the old insurance card, and Gabe loves test driving all these new cars.

Until one rainy day, when Gabe take a highend electric vehicle out for a spin. He misses the car merging into his lane, swerving out of the way at the last minute and injuring a pedestrian in a crosswalk before smashing into a pole.

Luckily Gabe was only driving at low speed, so both he and the pedestrian walked away with only minor injuries. But since he wasn’t covered under an auto policy, the dealership could be on the hook for damage to the expensive vehicle and injuries to the pedestrian—bills that could really rack up!

That’s the risk auto dealerships run when they don’t verify with carriers that a driver’s insurance is both active and adequate. An insurance card, deck page, or other proof of insurance isn’t good enough—you need insurance verification you can trust before you hand over the keys.

What Is Insurance Verification?

Insurance verification for auto dealerships is the process of checking that a test driver’s, buyer’s, or service customer’s auto insurance is both active and adequate. This process is conducted by reaching out to the consumer’s auto insurer, which can be time-consuming and aggravating for those at the auto dealership or in its service department.

Typically, someone from the auto dealership’s finance and insurance office manually calls the consumer’s insurance carrier, often waiting on hold for at least 15 minutes to talk with someone in the insurer’s call center—and that’s assuming someone picks up on the first call.

CheckMy Driver, Modives’ solution for auto dealerships and their service departments, offers a consumer-driven and intuitive insurance verification process to consumers in a fraction of the current wait time through its automation.

Where Today’s Process Falls Apart

There are many different flavors of how car dealerships gather proof of insurance for their customers, but many only do so at the point of purchase rather than any of the other vital steps in the process.

For example, the dealership in the hypothetical above would benefit from verifying insurance before letting shoppers take their autos out on a test drive. The same could be said of service departments handing out loaners without verifying insurance with the customer’s carrier.

Many dealerships have shared stories similar to the following: Mia brings in her ten-yearold car for repairs and is handed the keys to a loaner after the service representative takes a cursory glance at the screenshot of an insurance card on her phone.

However, Mia’s coverage is below the state minimums, which in her state are low compared to the national averages. Her teenage son takes the loaner out for a joy ride and ends up totaling it, with the cost to repair far exceeding Mia’s coverage and the value of her old, broken car combined.

The dealership’s only choice is to eat the cost of the totaled loaner, with the busted old car sitting on a corner of the lot for years after.

What Car Dealerships Should Consider for Insurance Verification

There are several steps car dealerships and service departments can take to make the insurance verification process easier and still provide better protection for their business than today’s systems:

• Proof ≠ Insurance: Dealerships and service departments can’t depend on their customers’ ID cards, declaration pages, or other “proof” of insurance to cover business risks during the sales and service processes. Make sure the insurance is verified to be both active and adequate through the customer’s insurance carrier.

• Verify Before It’s Too Late: Don’t wait until the last minute to verify

that insurance is active and adequate with the customer’s carrier, because you could hit a snag that kicks your deal—or at least delays it. Instead, check early in the process as the sale progresses to line everything up for later success.

• Monitor to Avoid Surprises: It’s incredibly easy for your customer to cancel his or her insurance the day after you check that it’s active and adequate in order to save a couple bucks. If they’re going to be holding onto your loaner or test drive for an extended period of time, make sure that you’re

verifying that the insurance remains active and adequate throughout that period to get the transparency you need to keep your business safe.

While those steps may seem difficult and time consuming, the good news is that CheckMy Driver makes insurance verification and monitoring easy.

Through CheckMy Driver’s automated and consumer-driven process, dealerships and service departments can cut down on hours of frustrating work while still getting vital visibility into their customers’ insurance coverage. n

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