Mid-Atlantic Dealer News - November 2023

N O V E M B E R 2 0 2 3 • M I D AT L A N T I C AU TO D E A L E R S U N I T E D. O R G

MIDATLANTIC

DEALER NEWS

H I G H L I G H T I N G P E N N S Y L V A N I A • M A R Y L A N D • D E L A W A R E

DEALER OUTLOOKS Rest on Used-Car Availability Exploring Market Segments for Independent Dealerships MIDATLANTIC AUTO DEALERS UNITED 1501 North Front St., Harrisburg, PA 17102

How Auto Dealerships Can Prevent Data Breaches AI-Powered Tools You Can Use To Boost Your Automotive Marketing “Be Afraid, Very Afraid,” Car Dealers Told

PLUS

4 Things Used Car Shoppers REALLY Want from a Salesperson

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NOVEMBER 2023 | CONTENTS

The official magazine of the

MIDATLANTIC INDEPENDENT AUTO DEALERS ASSOCIATION

PENNSYLVANIA • MARYLAND • DELAWARE 1501 North Front St., Harrisburg, PA 17102 (717) 238-9002 midatlanticautodealersunited.org Noah Melamed - Chairman Ticket to Ride Auto, Lancaster, PA nmelamed@yourttr.com

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Chris Smiley - Advisor Mountville Motor Sales, Columbia, PA rcsmiley@comcast.net

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

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Vacant, President - Elect John DeFilippo - Treasurer U Drive Today Sales & Finance, Prospect Park, PA john.m.defilippo@gmail.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 Dan Limongelli, Vice-President Jo Dan Motors, Plains, PA jodanmotors@gmail.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 Lisa Cohowicz • lisac@nepautoauction.com North East Pennsylvania A/A, Scranton, PA Jeff Dreier • dreierauto@hotmail.com Dreier Auto Sales, Shavertown, PA

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April Hollobaugh • ajautosalestitusville@gmail.com A&J Auto Sales, Titusville, PA Kevin Luring • k.luring@yahoo.com ADESA PA, York, 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

Dealer Outlooks Rest on Used-Car Availability Franchised dealers are a bit more optimistic about the current market than they were three months ago, the Q3 Cox Automotive Dealer Sentiment Index finds.

“Be Afraid, Very Afraid,” Car Dealers Told: Regulators zero in on abusive auto lending practices.

“Dealers are an enormous target,” says O’Loughlin. “Try to do something.

Once targeted (by government regulators), it is too late.” Some dealer discrimination cases are apparent.

Online Image Analysis and Used-Car Transparency Advanced imaging technology can better inform customers of vehicle issues such as external damage that may not always be clear in the few uploaded images in each online listing.

AI-Powered Tools You Can Use To Boost Your Automotive Marketing This article provides a glimpse into the transformative role of AI in automotive marketing, exploring its applications and the tools that marketers can explore to put it to use.

If You Can Believe It, You Can Achieve it One of the best ways to capitalize on the power of positive affirmations is when achieving goals. If your dealership is not achieving the results you desire, I recommend the following actions.

Exploring Market Segments for Independent Dealerships To succeed in this competitive market, dealerships must understand and effectively target various market segments and should have a good handle on who their buyers are and how they will market to them.

The 4 Things Used Car Shoppers REALLY Want from a Salesperson We’re hearing lately that shoppers are skeptical and wary, the buying timeline is longer, and they are not willing to pay what they were just a few months ago for a used car.

Attorney General Sues Used Car Dealer How Auto Dealerships Can Prevent Data Breaches Implementing a robust document-management system combined with tighter security standards can help auto dealerships ensure the highest levels of data protection.

DEPARTMENTS 2 | 4 | 5 |

President’s Message Executive Director’s Message Advanced Issuing Agent Training Courses

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Auction Directory The CarLawyer©

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MIDATLANTIC INDEPENDENT AUTO DEALERS ASSOCIATION SPONSORS

George Smouse • gasmouse@zoominternet.net Smouse Trucks & Vans, Mt. Pleasant, PA Steve Worley • worleymotors@hotmail.com Worley Motors, Enola, PA _____________________________ Tom Brandis • Executive Director WOULD YOU LIKE TO RECEIVE A DIGITAL EDITION OF THE MIDATLANTIC DEALER NEWS MAGAZINE? Email heather@piada.org

Copyright 2023 MIDATLANTIC DEALER NEWS | MIDATLANTICAUTODEALERSUNITED.ORG • NOVEMBER 2023 | 1

q PRESIDENT’S MESSAGE

STAYING FOCUSED ON PROBLEM SOLVING I hope this letter finds you well. Amid our bustling business day, I wanted to reflect on something fundamental to me - kindness.

In the whirlwind of meetings, deadlines, and everchanging priorities, it's easy to get caught up in the hustle and bustle of our professional lives. However, no matter what's happening in our day-to-day business, we should always strive to be kind to one another.

Kindness is like a beacon in the storm, a guiding light to help us navigate our challenges and build solid and Bert Straub meaningful relationships. It costs nothing to offer a kind President word, a helping hand, or a smile, yet the impact it can have MidAtlantic IADA is immeasurable.

So, let's remember that behind every email, every phone call, and every decision, there's a person with their own set of hopes, fears, and dreams. Let's be mindful of this and treat each other with the respect and compassion that we all deserve, even when the demands of our business may seem overwhelming.

In the grand scheme of things, the success of our business is essential. Still, the relationships we forge and the kindness we share make our journey worthwhile. So, as we navigate the ups and downs of our professional lives, let's not forget to be kind, for kindness can be the glue that holds us together, no matter what challenges we face.

I wish you a wonderful day filled with both success and kindness.

MARIADA is GROWING!

MidAtlantic IADA is currently seeking qualified candidates for these roles: •

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Title Department Lead – Pennsylvania (starting at $23/ hour)Ideal candidate will have a minimum of 3 years PennDOT and/or CVR experience Title Clerk – Pennsylvania, Retail and/or Salvage (starting at $20/hour) Ideal candidate will have a minimum of 1 year PennDOT and/or CVR experience Administrative Assistant (starting at $18/hour) Administrative Assistants are given preference for future title clerk positions.

All pay plans are based on proven experience. We also offer medical, dental, vision and retirement plans.

There will be additional upcoming advancement opportunities.

Submit resume and cover letter to: kathy@piada.org or call Kathy at 717-238-9002 for more information.

2 | MIDATLANTIC DEALER NEWS | MIDATLANTICAUTODEALERSUNITED.ORG • NOVEMBER 2023

OUTLOOK

Dealer Outlooks Rest on Used-Car Availability Franchised dealers bank on pre-owned profits

BY ALYSHA WEBB Franchised dealers are a bit more optimistic about the current market than they were three months ago, the Q3 Cox Automotive Dealer Sentiment Index finds. Independents, meanwhile, are decidedly less confident. One area is responsible for that divergence, Jonathan Smoke, Cox Auto’s chief economist, tells Wards.

“Separate what they are saying about the used-car market,” he says. “Franchised (dealers) are positive and independents negative.”

Of course, independent dealers only sell used cars but used cars are an important source of income and profit for franchised dealers. And the outlook for that part of a franchised dealers’ business is doing well and will continue to do so, says Smoke.

Supply is the key.

“Franchised (dealers) have had an advantage because they have greater sources of (used) inventory and in particular during the pandemic, the access to off-lease (inventory) is not only a source but also a source of particular strength in profits for franchisees,” says Smoke.

As the supply of new vehicles became constrained by the chip shortage and other supply chain disruptions, the market price of used vehicles shot up, he explains. Vehicles coming off lease had positive equity. “Historically, that number is negative,” he says.

Even as the used market begins to stabilize, franchised dealers still have a huge advantage; they can buy the off-lease vehicles at the contract rate instead of the market rate, “which is a built-in $4,000 profit,” says Smoke.

“We do an estimate every month of lease equity position, and it is still greater than $4,000,” he says. Furthermore, “We think we are likely to see positive equity (on off-lease vehicles) for at least another two years.”

It’s Still a Good Time to Be a Franchised Dealer In the most recent CADSI, the overall current market index was 45, below the threshold of 50, indicating that more dealers see the market as weak than as strong.

But franchised dealers’ current market index score was 57, up one point from last quarter (Q2). Independents’ score fell one point to 41.

Franchised dealers are also more positive about the market outlook for the next three months; their score increased one point to 58 while independents’ score declined three points to 41.

The Q3 2023 CADSI is based on 983 U.S. auto dealer respondents, comprising 554 franchised dealers and 429 independents. The survey was conducted from July 24 to Aug. 8, 2023. Dealer responses were weighted by dealership type and sales volume to represent the national dealer population.

Rising interest rates were the top concern for both franchised and independent dealers in the Q3 CADSI. But independents take a bigger hit than franchised dealers when interest rates rise, says Smoke.

Independents tend to be smaller scale, with inventory financing (flooring) tied to the Federal Reserve interest rate policy, he says.

Franchises “tend to have broader access to credit, including manufacturer’s flooring,” says Smoke.

Higher interest rates also have a negative effect on consumer financing costs and both franchised and independent dealers are concerned, as evidenced by the list of “Factors Holding Back Your Business” in the CADSI. But their reasons for concern are different.

For franchised dealers, number five is “Lack of Consumer Incentives from my OEM.” For independents, number five is “Credit Availability for Customers.”

“The difference on number five is pretty telling,” says Smoke.

“There is a big difference in their customer base; independents tend to be serving a more credit-challenged customer.”

Overall, franchised dealers deserve to be optimistic, says Smoke.

Looking at the full set of data, all areas of a franchised dealer’s business have been performing quite well, he says.

It is still “extremely profitable” to be in the franchised dealership business, says Smoke. New-car and fixed operations margins are also expected to remain strong, he says. “That is the benefit franchised dealers have with multiple businesses tied into one.” n

MIDATLANTIC DEALER NEWS | MIDATLANTICAUTODEALERSUNITED.ORG • NOVEMBER 2023 | 3

q EXECUTIVE DIRECTOR’S MESSAGE

TIME FLIES WHEN YOU HIT THE GROUND RUNNING To say that my first month as your Executive Director has been crazy would be an understatement, but I wouldn’t want it any other way. I had the opportunity to spend a few days on the “west coast” of Pennsylvania visiting auctions and chatting with dealers in the lanes.

Executive Director MidAtlantic IADA Tommy Brandis

In September, a few of your Executive Board members and I attended the NIADA Policy Conference in Washington D.C. where dealers from across the country attended over 100 meetings with federal lawmakers and their staff. Major topics brought to their attention included catalytic converter theft, Right to Repair and the FTC’s vehicle shopping rule.

Finally, after months of preparation, dealers from across the region joined us at Caesars in Atlantic City for our first convention in five years. I can only sum up the convention with one word: AWESOME!!! Everyone in attendance had a great time learning during the breakout training sessions, visiting with vendors, and watching the Eagles whoop up on the Bucs. We also raised over $8,000 for the Curing Kids Cancer foundation. It was so incredible that we have already booked Caesars for our convention in 2024.

All in all, it was a great first month. I am looking forward to settling into my role and beginning to work on some of the program ideas the Board has been discussing over the past year. Please reach out to me if you have anything you would like to discuss or just to say hi. My cell number is 215-805-2034 and my email is tom@ midatlanticiada.org I would be happy to hear from you.

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NIADA Names PAC Cup Winner

By UsedCarNews The National Independent Automobile Dealers Association PAC Cup was captured this week by Region II, as the dealers in the region raised and donated $43,350.

In all, the four regions combined to add $100,950 to the NIADA PAC fund during the spirited dinner.

The NIADA PAC supports candidates who understand issues facing independent automobile dealers in our nation’s capital.

“Our voice keeps the association going,” said Stan Norton, the chairman of the NIADA PAC. Dealers during the dinner heard from Andy Zay, who is running for Indiana’s District 3 Congressional seat. Zay, the former president of the Indiana Independent Automobile Dealers Association and longtime dealership owner, is a state senator. He is in a crowded race for the seat in Congress.

He asked dealers to help him raise $1 million to stand out in the 10-person race.

“It’s time to take our voice to the national level,” Zay said. “Lobbyists cost hundreds of thousands of dollars. With me, you’ll not only have a voice but a vote.” n

REGISTER AT 1 10/9/23 12:23 PM niada.com/bhphdealerforum

MidAtlanticDealerNews-NOV2023-PRINT.pdf

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MIDATLANTIC DEALER NEWS | MIDATLANTICAUTODEALERSUNITED.ORG • NOVEMBER 2023 | 5

“BE AFRAID,

VERY AFRAID,”

CAR DEALERS TOLD Regulators zero in on abusive auto lending practices.

BY STEVE FINLAY

T

he federal Consumer Financial Protection Bureau, which oversees lending institutions, officially wields no direct control over car dealers.

But the agency is stepping up working with other regulators, such as the Federal Trade Commission and individual state attorneys general, to target dealers for alleged unfair, deceptive and abusive auto lending practices.

So says attorney Terry O’Loughlin, compliance director at automotive information technology services provider Reynolds & Reynolds.

Speaking at an Association of Dealership Compliance Officers webinar, he says CFPB Director Robert Chapra has a “hit list” targeting what the bureau considers undue fees and markups on indirect auto loans that dealers arrange between their customers and banks.

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In doing the middleman work for indirect auto loans, dealers typically get a so-called “reserve” cut. That’s an extra percentage point or two added to the lenders’ wholesale rates.

It’s a traditional practice, but the CFPB is no fan of it.

“Dealer markups are not expressly prohibited, but the CFPB has sought to render enforcement against industries it has no direct control over,” O’Loughlin says.

Also in the bureau’s crosshairs is the potential that loan rates can discriminate against minorities, intentionally or not.

“Be afraid, very afraid of federal regulators’ timetable,” O’Laughlin tells webinar attendees, citing policy changes. “They are ramping up their approach to regulations. They’re giving notice.”

Last year, the CFPB announced its intention to use its authority to prosecute perceived discrimination as unfair acts or practices in any financial services category.

“This is a new approach, untested, and there are no examples of its application just yet,” O’Loughlin says.

In the bureau’s view, injuries sustained from discrimination need not be on purpose.

“Machine learning models and artificial intelligence will be a point of focus for any potential discriminatory outcomes,” he says. “Disparate impact will be a preferred theory for UDAAP (unfair, deceptive and abusive acts or practices).”

In other words, a dealership F&I manager teeing up an auto loan can do something deemed discriminatory without even realizing it.

He urges dealers to avoid practices that could attract the attention of regulators, let alone draw their ire.

“Dealers are an enormous target,” says O’Loughlin.

“Try to do something. Once targeted (by government regulators), it is too late.”

Some dealer discrimination cases are apparent.

For instance, regulators penalized a New York City Chevrolet dealership for allegedly telling employees to charge higher loan rates for minority customers.

In another case involving an Arizona dealership, some staffers, not just the store itself, were held liable.

But not all instances are so overtly egregious, says O’Loughlin, citing a less obvious form of discrimination called disparate impact.

Regulators can allege disparate impact if a statistical analysis shows that dealership customers – often identified as minorities by last names and zip codes – paid higher interest rates on auto loans arranged by dealers.

O’Loughlin, who once worked for the Florida attorney general’s enforcement division, says, “I’ve talked to dealers over 33 years who say they’ve done something for years without being cited.”

That’s an unwise position, he says. He recommends dealership compliance officers create and follow processes to prevent discrimination regarding all aspects of consumer financial products or services.

O’Loughlin notes franchise auto dealers are immune from “the direct threat” of the CFPB. But he adds, “the FTC and, much more significantly, state attorneys general, may be able to prosecute this new wrinkle in UDAAP and discrimination law.”

He adds: “Franchise dealers may be targeted in this new way regardless of CFPB jurisdiction or authority. Because the unfairness standard is broad and flexible, the capability to prosecute discrimination in this manner will be far easier to advance.”

Congress created the CFPB in response to the financial crisis of 2007-2008. Its status as an independent agency has faced court challenges.

Dealers should not have the discretion to set interest-rate levels for car loans,

a CFPB representative has said, calling instead for a flat fee.

The National Automobile Dealers Association has created its fair-credit compliance program that the trade group recommends its members follow.

The program calls for dealers to first establish a preset amount of compensation for arranging indirect financing, then make downward adjustments depending on circumstances.

Those include: • A customer’s inability to satisfy a monthly payment constraint at the predetermined amount.

• A customer’s access to a more favorable credit offer from another lender.

• A financing promotional offer a dealer extends to all customers.

• A particular transaction is eligible for a subvented (decreased) interest rate from an automaker, finance company or other third party. n

Don’t forget about the MARIADA

DEALER SERVICE PROVIDER DIRECTORY Visit piada.org/vendorsauctions/vendor-directory to search the database of vendors and service providers who work specifically with independent dealers. You’ll even find special discounts and offers exclusive to MARIADA members.

Please let us know if you have any questions.

MIDATLANTIC DEALER NEWS | MIDATLANTICAUTODEALERSUNITED.ORG • NOVEMBER 2023 | 7

Online Image Analysis and Used-Car Transparency Advanced imaging technology can better inform customers of vehicle issues, such as external damage, that may not always be clear in the few uploaded images in each online listing.

S

hopping for books, tech products, clothing and much more has gone online – and auto sales are no exception. Drivers seeking to purchase a used car, as well as individuals seeking to sell one, now have an online option, too: the online auto auction, where sellers can reach potential buyers from across the city, state, or country while buyers get access to a huge selection of vehicles.

“What you see is what you get” is generally the rule for online sales, but you often can’t see what you need to in order to make the most informed decision. When customers bid on and receive a vehicle that is not as represented online – for example, with scratches that may not show up well in online images – they’re likely to be unhappy, to the extent that they may demand reimbursement for the undisclosed damage or, worse, request a full refund and return.

To avoid that, sites can adopt advanced imaging technology, which will enable them to better inform customers of vehicle issues, such as external damage that may not always be clear in the few uploaded images in each online listing.

More car buyers than ever are purchasing vehicles at online auctions. As high prices and high loan interest rates make new cars out of reach for many, and as used-car availability continues to be tight – with prices high there, as well – more consumers are buying vehicles at online-only retailers,

By Jim O’Brien, General Manager, North America at Ravin.ai where selection is far greater than at local dealers, and prices may be somewhat lower.

Demand is so great that turnover at auction sites – from the time a vehicle is listed until the time it is sold – is often counted in days, if not hours, for quality vehicles.

According to industry experts, some 9 million vehicles are sold at online auction sites yearly, providing shoppers with many more choices than they could find at their local used-car lot. But unlike at the lot, buyers have to rely on the data and images supplied by the seller.

Of course, online sites require sellers – whether they are individual or used-car agents – to provide a history of the vehicle, information on damage, accidents, repairs and anything else that could affect the vehicle’s price. Auction sites will disclose that information to buyers, who can expect to pay less for a car that has, for example, been in an accident. And while sites do their best to keep sellers honest, they can’t always ensure that they catch every detail. One thing they can do to catch those details, however, is using advanced image technology, which will highlight issues that sometimes even the seller may not be aware of.

Applying this technology may sound like a good idea, but not a necessary one; after all, all vehicles sold on auction sites will carry a clear history. But if a detail does get overlooked, it could cost the site; a dissatisfied customer who gets stuck with a car that doesn’t match up with the images posted on the site may just return the vehicle (with transport costs borne by the site).

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Using high-res cameras and advanced data analysis, inspection services can provide in-depth data on the state of a vehicle, including whether it experienced an accident or other damage. Inspection can also be done remotely from mobile-phone cameras.

Indianapolis Car Exchange, a dealerfocused auction company, recently implemented such technology to increase transparency and buyer confidence in online sales. For accident damage, cameras can detect very subtle shade differences in paint, or whether the paint’s patina matches the reported model year or vehicle age – indicating that part or even all of the vehicle was repainted.

Images of bumpers, fenders or external parts like mufflers could indicate they were replaced – and with machine learning, systems can analyze the condition of the entire vehicle compared to the replacement part to indicate why that part was replaced.

For flood damage, images can detect subtle signs of rust, or whether there is sand or other material embedded in bumpers, fenders or decorative piping. These are issues that a human inspector would be unlikely to pick up on.

With such analysis, the consumer can get a full report within seconds, enabling them to decide quickly whether to bid on a vehicle or move on to the next one. With this advanced technology, vehicle buyers who shop at online auction sites will be able to get the cars they need at a price that’s right for them – and auction sites can ensure that their customers drive away happy. n

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AI-Powered Tools You Can Use To Boost Your Automotive Marketing

BY TY W. FOR AUTORAPTOR.COM AI, a technology that enables machines to replicate human-like intelligence, is becoming a cornerstone in modern marketing campaigns. With roots dating back to the 1940s, AI has evolved from being a niche technology used to automate simple tasks into a prominent tool to help marketers and business owners make important decisions.

assistants provide instant responses, streamline inquiries, and offer personalized assistance, enhancing the overall customer experience. They can handle regular questions, provide product information, set up service appointments, and even assist in car troubleshooting, all in real-time. This level of engagement ensures prompt and relevant interactions, making customers happy.

Many big companies like Google and Microsoft are already using AI to help improve their services. Its transformative impact extends to industries far and wide, including the automotive sector.

This article provides a glimpse into the transformative role of AI in automotive marketing, exploring its applications and the tools that marketers can explore to put it to use.

AI-Powered Chatbot Builders TARS: TARS is a cutting-edge platform that offers a versatile chatbot solution with significant potential for automotive marketing. With TARS, businesses can easily make chatbots powered by AI without knowing much about coding.

Its easy-to-use interface lets you create conversational flows, so you can have personalized conversations based on the current company data you have.

Personalized Customer Engagement First on this list is chatbots. These intelligent

Chatfuel: This platform provides prebuilt blocks that can be customized to

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create conversational paths, making the development process efficient. Chatfuel allows seamless integration with popular messaging platforms like Facebook Messenger and Telegram.

Predictive Analytics AI’s role in predictive analytics is not just about understanding the past; it’s about foreseeing the future. This technology processes historical data, identifies patterns, and uses these patterns to make accurate predictions. This translates to understanding which vehicle models are likely to gain traction, what features consumers value the most, and even predicting when maintenance might be needed.

AI-Powered Tools for Predictive Analytics DataRobot: DataRobot’s automated feature discovery generates diverse and relevant features for improved predictions, leveraging complex relationships within the data. Its AI-powered predictions provide insights into buyer preferences and help optimize marketing efforts, ensuring relevant and effective promotions are delivered to potential customers.

Alteryx: Alteryx offers a comprehensive suite of predictive analytics tools, making it a powerful asset for automotive marketing.

These tools include advanced spatial, predictive, time series, and optimization analysis capabilities.

Automated Marketing Campaigns Marketing automation tools allow automotive companies to schedule and execute repetitive tasks automatically, freeing up marketing teams so they can focus on strategic planning and creative aspects of campaigns.

Automated marketing campaigns can include email and social media in addition to traditional print. For example, an automated tool can schedule posts showcasing new features or special offers for upcoming car models.

AI-Powered Tools for Automated Marketing Campaigns AutoRaptor: AutoRaptor is a premiere CRM for automotive dealerships and comes with a marketing automation platform that enables dealerships to manage marketing campaigns efficiently.

AutoRaptor’s automation features include personalized email marketing, text (SMS) marketing, and versatile action plans.

Zapier: Through Zapier, automotive marketing can be optimized by connecting marketing automation tools to various other tools the team uses. This integration ensures smoother workflows, scalability, and enhanced communication across systems. For instance, automotive companies can automate lead generation by connecting their website forms to CRM systems, triggering personalized follow-up emails, and scheduling test drive appointments.

Optimized Content Creation Leveraging AI to create content such as blogs and videos for automotive marketing offers a range of compelling advantages.

Firstly, AI-driven content creation accelerates the process of producing highquality content at a faster pace than manual methods. Automotive marketers can use it to create a steady stream of content that addresses the growing demand for relevant, up-to-date information.

AI-Powered Tools to Create Content VEED: Automotive marketers can utilize VEED to create dynamic promotional videos showcasing vehicle features, benefits, and visual aesthetics. VEED offers tools like video translator, video converter, Instagram Reels downloader, and avatar generator.

Bard: Bard is an AI chatbot developed

by Google, renowned for its unique features that facilitate content creation

and engagement. It can answer questions, provide information, generate text, and seamlessly integrate with various Google apps and services.

Enhanced Customer Insights With artificial intelligence, companies can delve into customer sentiments and perceptions at a level of granularity that traditional methods might overlook. This allows marketers to comprehend customer touchpoints, leading to a more precise understanding of customer preferences. For example, Tesla uses artificial intelligence to learn about its customers and determine which touchpoints influence purchasing decisions. They then use this insight to inform how they prioritize content creation, distribution channels, and budget allocation.

AI-Powered Tools to Gather Insights and Feedback Chattermill: Chattermill is a customer feedback analytics platform that helps companies gather insights from customer feedback through AI-backed sentiment tracking and text analytics software. It focuses on providing actionable intelligence to deliver retention-driving customer experiences.

MonkeyLearn: MonkeyLearn, on the other hand, is a text analysis platform with unique tools for collecting and analyzing customer comments, which can help automotive marketers learn valuable insights. Their advanced natural language processing (NLP) lets companies get useful information from unstructured text data like customer reviews and comments on social media.

Take Aways AI is a powerful tool, and if used correctly, there’s no question that it can help automotive brands reach new levels of success. It can help you create engaging content, optimize your campaign strategy, and boost ROI. But it’s also important to note that AI isn’t a magic wand. You must understand how to use it properly to get the most out of it.

In this post, we’ve covered some AI marketing tools. This list is by no means exhaustive; there are plenty more tools out there that can be used for growth. Some are free, and others are paid. The best advice is to know what you need, how much money you’re willing to spend, and what your goal is. Once you’ve figured that out, it’s time to get started! n

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INSURANCE INSIGHT

If You Can Believe It, You Can Achieve it

BY TODD SHEPARD, SHEPARD & SHEPARD INSURANCE SOLUTIONS

2.

3.

4.

“You get what you think about.” I’m sure you’ve heard or read that at least a dozen times in your life, maybe more. The process of reminding yourself in a positive way, verbally or in writing, on a regular basis is called an affirmation. You simply picture or describe the outcome you desire and convince your mind that it is a reality, or the truth as you see it.

Like magic, it happens.

There have been many studies as to why making repeated affirmations and reviewing goals with a positive outcome can actually make them a reality. The magic takes place in the sub-conscious. What happens is, if the mind is convinced of a particular outcome, and anything other than that outcome occurs, it suffers dissonance. This dissonance causes the sub-conscious to create ideas or take actions toward matching that vision, resulting in achievement of goals or desired outcomes. It works the same way if a person anticipates a bad result so be careful!

One of the best ways to capitalize on the power of positive affirmations is when achieving goals. Setting goals is pretty common in business. Unfortunately, business owners tend to get so busy they are unable to budget time for goal setting and of those that do, many just ‘set and forget’. If we rely on the studies mentioned above, we know that in order for goals to become a reality they need to be reviewed and ‘affirmed’ on a regular (daily) basis.

Successful businesses don’t happen by accident. If your dealership is not achieving the results you desire, I recommend the following actions: 1.

If you are the owner, manager, or part of the leadership team and you haven’t taken time to create a written goal, do it now. The end of October and first of November is

14 | MIDATLANTIC DEALER NEWS | MIDATLANTICAUTODEALERSUNITED.ORG • NOVEMBER 2023

5.

6.

a great time to create goals because its easy math. You add up your JanuaryOctober results and divide by 10.

That’s your monthly average. Shoot for an achievable increase in sales and/or revenue. Even a small goal of 5-10% increase will add up quickly.

If you are an employee and your manager has not shared business goals with you, encourage them to do so. You are an important part of the business success.

If you have taken the time to create written goals, review them today. Just writing them is ineffective, you need to review them again and again.

If your business has written goals, they should be shared with your staff on a regular basis. It helps get everyone on the same page and keeps your business on track.

Encourage your team to set their own goals and be available to assist them in doing so. A good leader helps guide their staff to success. Perform regular one-on-one meetings with managers and your sales or service team. Ask them about their goals and offer guidance on better achieving them.

Listen to their concerns (as a business owner, they are your concerns too!)

Engage with your staff and ask for their input on shared goals. Chances are, if they are working for you, they are amazing people and their input is a valuable resource when it comes to achieving your business goals. n

Todd Shepard is the founder of Shepard & Shepard Insurance Solutions and a regular contributor to IADA publications. For information on insurance for your dealership visit shepquote.com or call 855-396-0488.

Exploring Market Segments for Independent Dealerships

BY PROFESSIONAL MOJO MARKETING

W

e already know that independent dealerships play a vital role in the automotive industry, serving a diverse array of customers with distinct needs and preferences. To succeed in this competitive market, dealerships must understand and effectively target various market segments and should have a good handle on who their buyers are and how they will market to them. Let's consider some of the potential segments and how a dealership might reach out to them. Keep in mind that even though some of these segments may seem to overlap, they are distinctive and your marketing to them should be, as well.

FIRST-TIME CAR BUYERS: Does your dealership target the first-time car buyer?

If so, your messaging should focus not only on what a first-time buyer is looking for in a car, but also automotive education (maintenance, safety), the car buying process and what to expect after the sale.

• Demographics: Young adults, college students, or first-time buyers due to life events • Messaging Opportunities: Focus on safety, affordability, and low maintenance costs. Provide educational content on car ownership and financing.

FAMILY-ORIENTED BUYERS: Familyoriented car buyers may prioritize safety features and space. Dealerships should consider focusing on things like space for car seats, technology to keep kids entertained and the family safe, storage, and cargo space.

• Demographics: Families with children or those needing spacious vehicles • Messaging Opportunities: What makes a family-friendly car? Highlight safety, space, and reliability.

ENVIRONMENTALLY CONSCIOUS BUYERS: Does your dealership target ecominded buyers? According to Automotive News, nearly two-thirds of Americans consider environmental sustainability when making purchases, a 14 percent jump from 2021.

• Demographics: Eco-minded consumers looking for eco-friendly cars • Messaging Opportunities: Hybrid or electric cars are in stock, emphasizing sustainability with educational content about why they are considered an eco-friendly choice. Partner with local environmental organizations for marketing.

YOUNG PROFESSIONALS AND COMMUTERS: If your dealership is located near a metro area, then targeting commuters could be a consideration.

• Demographics: Working individuals in urban areas with commuting needs • Messaging Opportunities: Focus on compact, fuel-efficient vehicles with connectivity features. Use digital marketing to reach tech-savvy customers.

SENIORS AND RETIREES: Growing older isn't for the faint of heart, and older buyers are looking to purchase vehicles that meet their changing needs. For example, older buyers might not have the quick reactions they used to enjoy or may not see or hear as well as when they were younger. Consider targeting these individuals with education and content about ergonomics, safety, and reliability.

• •

Demographics: Older individuals seeking reliable and comfortable transportation Messaging Opportunities: Offer lowmileage vehicles with safety features.

Emphasize ease of use and comfort.

OFF-ROAD AND ADVENTURE SEEKERS: This region excels for those seeking nature. If your dealership has adventure-ready vehicles, these buyers may represent an opportunity.

• Demographics: Outdoor enthusiasts and adventurers • Messaging Opportunities: Stock SUVs, trucks, motorhomes, and offroad vehicles. Promote capabilities for outdoor activities and partner with local adventure clubs.

WHICH SEGMENTS ARE RIGHT FOR YOUR DEALERSHIP? New dealerships should focus on an initial target segment that takes into consideration location, competition, and available inventory. Ongoing market research is essential to identify the most underserved or profitable segment in your area. Focusing on one or two segments initially allows for concentrated efforts and can help build a strong customer base. As your dealership grows, you can expand your target segments.

Tailoring your inventory, marketing, and services to the needs of your chosen segments creates a thriving dealership and provides value to a diverse customer base. n

MIDATLANTIC DEALER NEWS | MIDATLANTICAUTODEALERSUNITED.ORG • NOVEMBER 2023 | 15

SOMEONE TO GUIDE THEM Buying a car can be fun, but those first steps can be rough for somebody who does not understand all of their options. People want to work with reps that are confident and competent. They want someone that will take their hand and guide them through the process. Don’t be afraid of speaking transparently with shoppers. Even when the news is not good. Don’t shortcut your sales steps either. Ask prospects for their permission to ask them a few questions.

The benefit to them is the assurance that you are all on the same page.

The 4 Things Used Car Shoppers REALLY Want from a Salesperson

BY MICHAEL RENAUD, CEO, ALAN RAM’S PROACTIVE TRAINING SOLUTIONS

According to J.P. Morgan, used car prices have likely peaked, but new car prices are expected to remain high. In 2023, prices are expected to decline by roughly 10% for used cars and by 2.5% to 5% for new cars.

SOMEONE THEY LIKE 3-4 hours is a really long time to spend in a dealership with someone you didn’t even like on the phone. According to Cox Automotive’s 2022 Car Buyer Journey Study, buyers are frustrated with the amount of time required to complete the process. The time spent in the vehicle buying process jumped significantly in 2022, with the typical vehicle buyer reporting the process took 14 hours and 39 minutes, up from 12 hours and 27 minutes in 2021, an increase of 18%. Time spent online shopping and researching vehicles increased by more than 1 hour compared to 2021, while time at the dealership increased by approximately 20 minutes.

The upside is that people are still buying cars and the preowned market is still hot with retail buyers. In fact, today’s car shopper is 3X more likely to respond to a used vehicle ad they see online, versus a new one. So, people are still buying cars.

The question is, will they buy from you?

At the end of the day, these are the four things that today’s preowned shopper REALLY wants when dealing with a salesperson:

By the time your shopper has decided to contact your dealership, they’ve already done hours of research. They know that prices are higher than usual, and they know that interest rates are high. By the time they decide to reach out to you, their anxiety level may be above normal first impression is everything. Whether on the phone or online, they’ll decide if they like you within the first few moments of the call. Don’t we all do the same?

In this blog, I would like to talk about everything used cars. Lots of the dealerships I talk to are seeing an uptick in sales calls and leads in general. But all we’re hearing lately is that shoppers are skeptical and wary, the buying timeline is longer, and they are not willing to pay what they were just a few months ago for a used car.

Interest rates are climbing too, which has created resistance, more objections, and even more challenges for salespeople.

16 | MIDATLANTIC DEALER NEWS | MIDATLANTICAUTODEALERSUNITED.ORG • NOVEMBER 2023

SOMEONE TO INFORM THEM Salespeople often forget that shoppers only buy a car once every few years. We become numb to the experience of “buying a new car,” and forget to slow down for the customer. When a prospect reaches out to you, don’t assume they are 100% set on one thing or another.

How often do we see a shopper switch sedan to SUV, from SUV to truck, from dead set on white to black on black. Be informative and enlighten your shopper with the choices. Offer to help them with pointers, tools, and tips from the pro – you!

SOMEONE WHO OFFERS SOLUTION(S) In the end, most people want solutions.

And not just the solution that works best for the dealership. People like having choices and offering prospects different solutions is something that will appeal to them. Perhaps they’re upside down on their trade, or their credit is in the tank right now. Maybe their teenager will be driving soon, or you have a single mom looking for help with the best value. Maybe they just need help finding the perfect car. Most people just want someone to take them by the hand and say, I got you!” “I understand and I am happy to help.”

Remember why you are in this business in the first place. There is something special about you that makes you a great salesperson. Showcase those special talents. Right now, it is the time to hone in on those fundamental things and master them. Don’t let the moment’s circumstances determine your outcome!

At the end of the day, we are still human beings serving human beings. n

NOTICE: THIS CAN HAPPEN ANYWHERE, SO STAY AWARE!

Attorney General Sues Used Car Dealer

By Used Car News Staff Ohio Attorney General Dave Yost is suing a fourth Columbus used-car dealership for allegedly rolling back odometers and selling salvaged vehicles without informing its customers.

The legal action against Ohio Mega Group and its owner, Dominic Wiley, follows an investigation by the Attorney General’s Office, which received 17 complaints against the dealership. The lawsuit cites multiple violations of state consumer-protection laws, including the Ohio Consumer Sales Practices Act and the Odometer Rollback and Disclosure Act. “Stop scamming Ohioans,” Yost said. “We’re committed to getting to the bottom of this odometer-tampering scheme as these deceptive practices betray the trust that consumers place in businesses.”

Investigators from Yost’s Consumer Protection Section learned during their work that Ohio Mega Group, 4333 E Main St., shared a lot with S Automotive, which Yost had already sued for similar violations.

This case marks the fourth odometertampering suit filed this year by Yost’s office, with the other two involving Kalango Links and Uncle B, both also in Columbus.

The suit against Ohio Mega Group, filed in Franklin County Common Pleas Court, accuses the dealership and Wiley of: • Failing to promptly file title applications within 30 and 40 days of vehicle assignment or delivery.

• Concealing the rebuilt salvage status of vehicles from consumers.

• Falsifying odometer disclosure statements.

• Withholding accurate and complete odometer disclosures.

• Engaging in odometer tampering or alterations.

• Failing to obtain a surety bond in an amount not less than $25,000.

• Selling a used motor vehicle to a consumer from a location that was not Ohio Mega Group’s established place of business.

Yost is seeking restitution for the consumers who bought vehicles from Ohio Mega Group and recovery of the money from the

Title Defect Recision Fund that was paid to resolve the consumer complaints.

Additionally, the lawsuit requests civil penalties and seeks to prohibit Wiley from acquiring or maintaining auto-dealer or sales licenses. n

Happy fall!

GET TO KNOW YOUR MID-ATLANTIC STAFF Tommy Brandis, Executive Director (717) 317-3098 | tommy@piada.org Nicole Autry, Dealer Set-Up Unit (717) 317-1966 | nicole@piada.org Cynthia Slemons, Membership Specialist (717) 238-9002 x16 | cynthia@piada.org Jessica Barton, Title Supervisor (717) 238-9002 | jessica@piada.org India Thomas, Title Clerk (717) 238-9002 | india@piada.org

Tammy Farmer, Receptionist (717) 238-9002 x10 receptionist@piada.org Heather Levesque, Accounting (717) 238-9002 | heather@piada.org Steve Smith, Office Manager (717) 238-9002 x118 | steve@piada.org Ashley Bohner, Administrative Assistant (717) 238-9002 | ashley@piada.org

MIDATLANTIC DEALER NEWS | MIDATLANTICAUTODEALERSUNITED.ORG • NOVEMBER 2023 | 17

How Auto Dealerships Can Prevent Data Breaches By: Michelle Grondin, Director of Sales, DealerDOCX

A

uto dealerships handle a myriad of documents that contain customers’ personal data, extensive vehicle records, transaction histories, and much more.

Therefore, auto dealerships should have stringent security protocols in place to protect such sensitive data. Data has to be protected from potential breaches originating from external cyber criminals and even internally from employees with malicious intent.

Implementing a robust documentmanagement system combined with tighter security standards can help auto dealerships ensure the highest levels of data protection.

Security Benefits of a DocumentManagement Solution Document-management systems are best known for capturing, digitizing, and organizing documents in order to help companies eliminate paper-based workflows, automate tasks, manage content lifecycles, and better govern records. A strong document-management solution can also provide numerous security benefits: • Controlled Document Sharing: With a document management system in place, you can easily store and share digitized documents. The system also enables you to control access to information.

Unlike paper documents, scanned files can be accessed by everyone. You can protect sensitive data by authorizing only specific users to access and share the documents among themselves.

• Limited File Access: Advanced features like password protection and multifactor access can enable you to control access at both document and folder levels.

Not all employees need to have access to all information. You can grant access to users on a “need-to-know” basis.

Even the time period for accessing the document can be controlled. Not just that, you can also view an audit trail to track who accessed a file, at what time, and whether it was downloaded, edited or distributed.

18 | MIDATLANTIC DEALER NEWS | MIDATLANTICAUTODEALERSUNITED.ORG • NOVEMBER 2023

• Better Regulatory Compliance: Running a successful auto dealership also means staying on the right side of regulatory compliance. A dealership needs to have all audit records and reports readily available in order to meet various standards set by the government and local authorities. Not to mention, dealerships need to have their records in place in case they face any kind of lawsuits. Using a document-management solution makes it convenient to catalog and retrieve all your company and dealer records that might be needed in the event of an audit.

• No Lost Documents: One of the most significant advantages of using a document-management system is the elimination of piles of paper-based files.

They not only waste your employees’ time when they are trying to track down old data but also put valuable information at risk of being misplaced or lost. With a secure documentmanagement system, all your files are indexed and stored in a way that makes retrieval really convenient. You can use keywords, phrases or even simple text searches to track a particular document within a few clicks.

Be Picky About Your DocumentManagement Partner For all the security advantages involved with implementing document-management technology, you should be aware that not all solution providers employ the highest levels of security that an auto dealership requires.

Below are 14 key security measures that an auto dealership should look for in a document-management partner: 1.

2.

3.

Security of Data Centers and Computer Rooms: Physical security for data centers and computer rooms is established commensurate with possible threats.

Media Handling and Security: Computer media is controlled and physically protected to prevent damage to assets and interruptions to business activities.

Protection from Malicious Software: Precautions are taken to prevent and

detect the introduction of malicious software to safeguard the integrity of software and data.

4. Virus Controls: Virus-detection and -prevention measures and appropriate user-awareness procedures have been implemented.

5. Network Security Controls: Appropriate controls ensure the security of data in networks and the protection of connected services from unauthorized access.

6. 256-Bit Encryption: Data stored on the file server uses 256-bit encryption.

7. Secure Transmission: All communication is delivered using industry-standard TLS 1.2 8. Access Controls: User access to files is strictly granted on a permissions basis where administrators can quickly make changes.

9. Active Directory Integration: You can manage users from Active Directory, ensuring you only need one user store.

10. Data-Handling Procedures: Procedures exist for handling sensitive data to protect information from unauthorized disclosure or misuse, both when onsite and in transit.

11. Operational Procedures and Responsibilities: Responsibilities and procedures are established for the management and operation of all computers and networks.

12. Documented Operating Procedures: Operating procedures are clearly documented for all operational computer systems to ensure their correct, secure function.

13. Incident-Management Procedures: Incident management responsibilities and procedures are in place to ensure a quick, effective, and orderly response to security issues.

14. Data Back-Up: Documented procedures are established for taking regular back-up copies of essential business data and software to ensure that it can be recovered following a computer disaster or media failure.

Certifications Matter Too Certifications are not easy to obtain. An enormous amount of effort, knowledge

and expense is involved in order to achieve and maintain the certifications that matter in document management. Auto dealerships should expect their documentmanagement solution provider to maintain these certifications, at a minimum: PCI DSS Document-management providers should show their commitment to secure processing and protection of information by completing the Payment Card Industry Data Security Standards (PCI DSS) program. Through the PCI DSS Program, several security and policy requirements must be addressed including access to data, firewall integrity, encryption of stored data, physical security and a wide range of business, human resources, and policy issues. Annual audits by Qualified Secured Assessors ensure compliance with the security and policy requirements of the PCI program.

SOC 2 Type II Annual audits ensure that documentmanagement providers have the policies and processes in place to ensure the operating effectiveness of validated and tested controls.

A SOC-certified organization has been audited by an independent certified public accountant who determined the firm has the appropriate SOC safeguard procedures in place. It requires companies to establish and follow strict information security policies and procedures encompassing the security availability, processing, integrity, and confidentiality of customer data.

A robust document-management solution for an auto dealership cannot only simplify day-to-day activities, but also make sure that data is fully protected. So, invest in a well-vetted document-managed partner today. n Michelle Grondin has 26 years of marketing and sales experience. As DealerDOCX’s Director of Sales, she leads sales and marketing efforts including business-development, onboarding accounts, and consulting on intelligent document management and business process automation. Grondin has spent seven-plus years in the automotive industry.

MIDATLANTIC DEALER NEWS | MIDATLANTICAUTODEALERSUNITED.ORG • NOVEMBER 2023 | 19

AUCTION DIRECTORY PENNSYLVANIA ADESA MERCER 758 Franklin Road, Mercer, PA 16137 724.662.4500 / Fax: 724.662.8716 Friday 9:00 AM Office M-W: 9-4:00; TH: 9-5:00; F: 8-5:00 adesa.com ADESA PA I-83 Ex. 28 (Old Ex. 12), 30 Industrial Rd. York, PA 17406 717.266.6611 / Fax: 717.266.7650 Wednesdays 9:00 AM; INOPS 8:30 AM Specialty Sale every 4th Wed 8:30 AM adesa.com ADESA PITTSBURGH 378 Hunker Waltz Mill Rd. New Stanton, PA 15672 724.925.4700 / Fax: 724.925.4701 Tuesday 9:00 AM pittautoauction.com AMERICA'S AA - HARRISBURG 1100 S. York St., Mechanicsburg, PA 17055 717.697.2222 / Fax: 717.697.2234 Thursday 8:45 AM harrisburgautoauction.com AMERICA’S AA - LANCASTER 1040 Commercial Ave., P.O. Box 406 East Petersburg, PA 17520 717.569.5220 / Fax: 717.569.3109 Wednesday 9:00 AM; INOPS 8:30 AM americasautoauction.com AMERICA’S AA - PITTSBURGH 55 E. Buffalo Church Rd. Washington, PA 15301 724.225.1777 / Fax: 724.225.7223 Thursday 12:30 PM americasautoauction.com AMERICA’S AA – ERIE P.O. Box 317, 12141 Route 6 West Corry, PA 16407 814.664.7721 / Fax: 814.664.7724 Thursday 10:00 AM 3 Lanes Dealer Consign, Fleet/Lease americaserie.com BLAISE ALEXANDER AUCTION 350 Fairfield Rd., Montoursville, PA 570.435.8391 Mondays: 10:45am blaisealexanderauction.com BLOOMSBURG AUTO AUCTION 25 Ridge Road, Bloomsburg, PA 17815 570.784.2306 Wednesday 10:00 AM bloomaa.com

CAPITAL AUTO AUCTION 5135 Bleigh Ave., Philadelphia, PA 19136 215.332.2515 Monday thru Friday 9:00 AM - 4:30 PM capitalautoauction.com

NORTH EAST PENNSYLVANIA AA 860 N. Keyser Ave., Scranton, PA 18504 570.207.CARS / Fax: 570.207.1860 Tuesday 10:00 AM nepautoauction.com

CENTRAL PENNSYLVANIA AA Exit 178 of I-80, Lock Haven, PA 17745 800.248.8026 / Fax: 570.726.7841 Thursday 9:45 AM Office: MTF 8-5:30 W-Th 8-6:00 cpaautoauction.com

PERRYOPOLIS AUTO AUCTION Route 51 S. Perryopolis, PA 15473 724.736.4445 / Fax: 724.736.0466 Friday 9:45 AM perryautoauction.com

GARDEN SPOT AUTO AUCTION Robert Rd. & Apple St., Ephrata, PA 17522 717.738.7900 / Fax: 717.738.7930 Tuesday 10:00 AM gardenspotautoauction.com

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20 | MIDATLANTIC DEALER NEWS | MIDATLANTICAUTODEALERSUNITED.ORG • NOVEMBER 2023

MANHEIM BALTIMORE-WASHINGTON 7120 Dorsey Run Rd., Elkridge, MD 21075 410.796.8899 / Fax: 410.799.0512 Tuesday Sale, 9:30 AM Tuesday Frontline Sale, 9:00 AM TRA/Salvage, 1:00 PM manheim.com NEW YORK STATE LINE AUTO AUCTION 830 Talmadge Hill Rd. S., Waverly, NY 14892 607.565.8151 / Fax: 607.565.3915 Ally Financial Open Sale –EVERY FRIDAY, 9:20 AM GM Financial Open Bi-weekly.

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MIDATLANTIC DEALER NEWS | MIDATLANTICAUTODEALERSUNITED.ORG • NOVEMBER 2023 | 21

The CARLAWYER

©

By Eric Johnson, Partner in the law firm of Hudson Cook, LLP, Editor in Chief of CounselorLibrary.com’s Spot Delivery® principal reason(s) for the adverse action.

Nor, as a general matter, may creditors rely on overly broad or vague reasons to the extent that they obscure the specific and accurate reasons relied upon." The Bureau's detailed analysis is provided in the circular.

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 Consumer Financial Protection Bureau, Federal Reserve Board, Federal Deposit Insurance Corporation, Office of the Comptroller of the Currency, Federal Trade Commission, Federal Communications Commission, and the National Credit Union Administration.

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 September 19, the Consumer Financial Protection Bureau issued Circular 2023-03, titled "Adverse action notification requirements and the proper use of the CFPB's sample forms provided in Regulation B." The circular presents the following question: "When using artificial intelligence or complex credit models, may creditors rely on the checklist of reasons provided in CFPB sample forms for adverse action notices even when those sample reasons do not accurately or specifically identify the reasons for the adverse action?" The Bureau's short answer is no, stating that "creditors may not rely on the checklist of reasons provided in the sample forms (currently codified in Regulation B) to satisfy their obligations under ECOA if those reasons do not specifically and accurately indicate the

On September 20, the Federal Reserve Board, the Federal Deposit Insurance Corporation, and the Office of the Comptroller of the Currency released an interagency statement announcing that they extended the period for giving favorable consideration under the Community Reinvestment Act regulations to financial institutions for bank activities that help to revitalize or stabilize Puerto Rico and the U.S. Virgin Islands. Puerto Rico and the U.S. Virgin Islands were declared major disaster areas on September 20, 2017, after the areas were hit by Hurricane Maria. Pursuant to the CRA regulations, the agencies give favorable consideration to financial institutions' activities that satisfy the definition of "community development." These activities include loans, investments, and services that help to revitalize or stabilize designated disaster areas. The current interagency statement grants a second 36-month extension for recognizing activities that help to revitalize or stabilize Puerto Rico and the U.S. Virgin Islands through September 20, 2026. The agencies previously extended the period for giving favorable consideration in May 2021.

On September 21, the Consumer Financial Protection Bureau released an outline of proposals under consideration for the Bureau's Fair Credit Reporting Act rulemaking. First, the Bureau states that it is "considering proposals to regulate many data broker activities as covered under the FCRA, which would prohibit the sale of covered data for purposes other than those authorized under the FCRA. Most notably, this would limit the sale of certain data broker data for advertising or marketing,

22 | MIDATLANTIC DEALER NEWS | MIDATLANTICAUTODEALERSUNITED.ORG • NOVEMBER 2023

for the most part constraining the sale of data to only those companies or persons to whom the consumer applied for credit, insurance, employment, housing, or some other service, or to whom the consumer otherwise authorized access. This would also subject certain data brokers to FCRA obligations, ensuring, for example, that consumers have a right to obtain data about themselves held by data brokers and to dispute inaccuracies in that data." Second, the Bureau is considering proposals relating to the reporting of medical debt.

Specifically, the Bureau is considering proposals that would prohibit consumer reporting agencies from including medical debt collection information on consumers' credit reports used by creditors in making underwriting decisions and prohibit creditors from obtaining or using medical debt collection information when evaluating consumers' credit applications.

The proposal would not stop creditors from obtaining medical debt collection information for certain other purposes, such as evaluating loan applications to pay for medical services. Third, the Bureau is considering a proposal that would clarify circumstances in which data breaches may result in a consumer reporting agency violating the FCRA's permissible purpose provision. Finally, the Bureau is considering proposals relating to consumers' rights under the FCRA to dispute the completeness or accuracy of information contained in their consumer reports, either by filing a dispute directly with a consumer reporting agency or by filing a dispute directly with the entity that furnished the disputed information.

Noting how costly, ineffective, and timeconsuming the consumer reporting dispute process can be for consumers, the Bureau is considering proposals related to two types of disputes: (1) those that are classified by a consumer reporting agency or furnisher as involving legal matters; and (2) those involving systemic issues at a consumer reporting agency or furnisher.

Continued on page 24

H E T G P U O OD E L B I ES O O !

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Continued from page 22 On September 21, the Federal Trade Commission and the Federal Communications Commission announced that they signed a renewed memorandum of understanding with international public agencies that are members of the Unsolicited Communications Enforcement Network in an effort to continue to promote crossborder collaboration, informationsharing, and intelligence with respect to illegal unsolicited communications, including illegal telemarketing calls, text messages, and emails. The original MOU was signed in 2016.

On September 21, the National Credit Union Administration approved a final rule that amends the agency's regulations regarding the purchase of loan participations and the purchase, sale, and pledge of eligible obligations and other loans (including notes of liquidating credit unions). The final rule relocates and clarifies the NCUA's provisions regarding indirect lending and indirect leasing. The final rule also provides credit unions with additional flexibility to participate in loans acquired through indirect lending arrangements, allowing credit unions to use advanced technologies and opportunities offered by the fintech sector. In addition, the final rule removes certain prescriptive limitations and other qualifying requirements relating to eligible obligations and provides credit unions with additional flexibility to purchase eligible obligations of their members. The final rule is effective 30 days after publication in the Federal Register.

On September 27, the Office of the Comptroller of the Currency issued Bulletin 2023-30 to announce a revised version of the "Lease Financing" booklet of the Comptroller's Handbook.

The booklet discusses risks and risk management practices associated with lease financing and provides examiners with a framework for evaluating the lease financing activities of national banks, federal savings associations, and federal branches and agencies of foreign banking organizations.

CASE(S) OF THE MONTH Trial Court Erred in Concluding that Used Truck Buyer's Reliance on Dealership's Verbal Representations that Truck's Replacement Engine Was Covered by Warranty Was Unreasonable as Matter of Law: An individual contacted a dealership over the phone to inquire about a used truck for sale, and a salesperson stated that the truck had a replacement engine that was subject to a 2-year warranty issued by the engine manufacturer. The individual went to the dealership the following day, and he contended that the dealership's representative repeated that the engine was covered by a 2-year manufacturer's warranty. The warranty had, in fact, expired. The individual bought the truck.

The individual stated that, at the time of purchase, he was provided with a pamphlet that a representative said was a copy of the warranty. Apparently, the pamphlet was "a blank warranty brochure" and did not, in fact, indicate that the replacement engine was under warranty.

Fourteen months later, the truck's engine failed. The individual sued the dealership, alleging fraud and violation of the Indiana Deceptive Consumer Sales Act. The trial court granted the dealership's motion for partial summary judgment.

The Court of Appeals of Indiana reversed the trial court's decision. According to the appellate court, "[t]he trial court's analysis with respect to the partial summary judgment motion boils down to the idea that [the individual] should have taken a close look at the paperwork he was handed.

If he had done so, or if any reasonable person had done so, he would have concluded that the statements regarding the warranty were untrue, and, thus, it would be unreasonable to rely upon them.

The trial court correctly observes that '[t] here is nothing in the designated evidence to suggest the engine was actually covered by warranty.' There is, however, designated evidence supporting the claim that the Dealership represented to [the individual] that there was such a warranty. The Dealership, of course, denies that fact, so there is no doubt that there is a genuine issue of material fact thereto. The question

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then becomes whether it was reasonable for [the individual] to rely upon those representations, assuming they were made. This is a question for the jury. The trial court at once holds that there is no evidence either way with respect to whether [the individual] examined the paperwork or merely relied upon the Dealership's characterizations of that paperwork, but also that [the buyer] 'did not exercise reasonable prudence' by failing to discover the absence of a warranty. The designated evidence raises more questions than it answers, and many of those questions are factual in nature. Thus, they are questions suited to the functions of a jury. The designated evidence is simply insufficient to allow the trial court to conclude that [the individual's] reliance on the verbal representations of the dealership was unreasonable as a matter of law." See Garrett v. Nissan of Lafayette, LLC, 2023 Ind. App. LEXIS 229 (Ind. App. August 11, 2023).

COMPLIANCE TIP Does your compliance officer (don’t tell us you don’t have one) regularly visit the websites of the CFPB, the FTC, your state’s Attorney General and your state’s motor vehicle and consumer protection agencies to see what they are up to? That’s a really good (and inexpensive) way to head off legal problems before they get started. If that’s not on the schedule, it should be.

Better yet, get press releases and news alerts sent to your compliance officer. You don’t have to “like” the CFPB or the FTC to follow them on Facebook, X (formerly Twitter), or to subscribe to receive press releases and news alerts.

So, there’s this month’s roundup! Stay legal, and we’ll see you next month. n Eric (ejohnson@hudco.com) is a Partner in the law firm of Hudson Cook, LLP, Editor in Chief of CounselorLibrary.com’s Spot Delivery®, a monthly legal newsletter for auto dealers, and a contributing author to the F&I Legal Desk Book. For information, visit www.counselorlibrary. com. ©CounselorLibrary.com 2023, all rights reserved. Single publication rights only to the Association. HC# 4870-84972675.

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