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True Car and ZAG - Cyber Bandits or Good for the Business?

Jim Ziegler asks...

I am hearing a lot of discussion about True Car and ZAG.  I continually scratch my head and wonder if  desperate dealers are doing the marketing limbo "How Low Can You Go?" 

Are we so bad at what we do that we have to line up and pay vendors to lose money? AND, who is giving these people access to your data that is used against you? 

 

Who owns these companies and what might be their ulterior motive?  Sometimes I ask questions to which I already know the answer. 

 

Am I wrong?


What do you think... JIM

 

 

 

 

 

 

EDITOR'S NOTE: The ADM Professional Community has assigned a short-cut domain name to this blog post by Jim Ziegler to make it very easy for ADM members and readers to refer others to this web page. Please use the following URL:

www.TrueCarDealer.com

 

Jim Ziegler's Guidance and Recommended Action Plan:

Ten Areas We Need to Concentrate on to Bring This Monster to It's Knees...

  1. Government investigation of ALL Data Aggregators taking consumer information from dealers' DMS. Sadly enough, dealers who do business with TrueCar are exposed to  liability charges. Cut off all access to unecessary data, no matter who takes it from the dealers DMS and make it illegal to "resell identifiable consumer data" and "transactional data".
  2. Educate Your Fellow Dealers; If anyone takes financial transactional data, they expose the dealer that allowed it to violations, especially if it is passed on to other vendors or shared.
  3. Educate Consumers to what they're doing with their information...
    a. You buy a car from a dealer, do you really want your personal information, and maybe even your financial information, passed along and sold and shared by "God knows who?"
    b. These People Charge the Dealer $300 which the dealers have to build into the deal
    c. Your Privacy and the Security of your Information could theoretically compromise your identity if you do business a company that takes data from the dealership.
  4. Educate Investors and potential investors they could possibly be mislead if anyone is telling them this is a safe investment because of all of the dealers pushing back, associations pushing back, and government regulators in many states coming after TrueCar's business model as NOT compliant, in some cases they're saying it is Not Legal.
  5. AMEX, USAA and all of their affiliates do not want the bad consumer relations this push back is creating with their members and customers.
  6. Cancel your dealership's Affilation with TrueCar. Tell people with TrueCar certificates that YOU don't honor TrueCar and you feel the company is NOT reputable. Educate consumers as to perceived data exposure if they buy from a TrueCar dealer. Make sure that each consumer knows that using TrueCar actually increases their vehicle cost by $300 to $400.
  7. Make the dealers selling at huge losses take all of those deals. Big problem right now is too many Nissan Dealers and others are taking huge losers to get the factory money. The TrueCar reverse-auction business model will continually push those numbers down until the factory money is non-existent. Consumers need to hear from many dealers, "We don't do TrueCar"
  8. Keep calling your National and State Dealer Associations demanding they get involved and stay involved... No excuses.
  9. Get the Manufacturers into the game. If GM, Ford, Toyota, and other majors change the rules about how we advertise and do business to protect the dealers, we can cut off their ability to set pricing. So keep it up at every dealer meeting. Call your Dealer Council Members and protest to your factory reps. Tell the manufacturers, if they want showroom and facility improvements, we need the ability to make fair profits.
  10. Tell everyone you know. Educate other dealers and industry people. Watch the Painter interviews... I believe this is the first time a vendor has publicly announced they intend to bring down the dealers and hijack our business, taking our profits and starving us out with our own data. Painter has said manufacturers and dealers should go bankrupt and he, in his God-like way "will control distribution..."
    When the TrueCar-Yahoo Deal kicks in we need to stand firm and "Just Say No" we don't honor TrueCar deals.

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Comment by Jim Kristoff on December 22, 2011 at 3:06pm

Ted Smith and the FADA!!!!!!

Ted is good people!!

And the beat goes on.....................

Comment by James A. Ziegler on December 22, 2011 at 2:43pm


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Thursday, December 22, 2011

Attention All FADA Dealer Members

Important Information related to dealers and their use of True Car/ZAG

From: Ted L. Smith, CAE, President  (DD) 850-224-2580

True Car/ZAG is definitely in the news across the country and you should take immediate steps to educate yourself fully on all of the legal and business issues involved in your contract with this vendor.

Most states are focusing on the potential or alleged violations of their state advertising laws and laws concerning brokerage or “bird dog” fees.  Please remember that under Florida law you as the licensee are responsible for any violations with respect displaying and advertising vehicles.  (F.S. 320.27(9)(b)3 -  Misrepresentation or false, deceptive, or misleading statements with regard to the sale or financing of motor vehicles which any motor vehicle dealer has, or causes to have, advertised, printed, displayed, published, distributed, broadcast, televised, or made in any manner with regard to the sale or financing of motor vehicles.)

As important are the issues surrounding the collection of data from a dealer’s DMS system and the issues involving privacy and security of that data.

With so many issues being discussed and the potential for concerns we would urge you to contact your attorney to discuss your options and the impact of Florida law on your dealership’s advertising practices associated with this or any other vendor that you employ to display pricing scenarios.

Florida law requires that the advertised price include dealer pre-delivery service charges and it appears that the True Car web pricing excludes these charges and adds them later on the pricing page.  The Attorney General’s office has not yet, to our knowledge, ruled on whether this methodology is a violation of S.501.976 of Florida statutes.

The states of Kansas and Colorado have issued warnings to dealers about per se violations of brokering and advertising laws.

Please be aware that there are legal issues of privacy, data use and ownership, as well as data access, when you allow an unrelated third party to access your DMS system.

You should pay specific attention to what information is being mined from your DMS system and how that data is being used and/or controlled. Does your new Privacy statement take this sharing into account?   If you are an open portal for data mining, you may also find yourself drawn into a complaint about data misuse.  You must decide for your store(s) whether it is a good idea to give any vendor or business partner access to your DMS.

CLICK HERE to access Florida Advertising Guidelines (login required)

FADA is pleased to provide the advertising guidelines (not all inclusive) to FADA dealers as a means of assisting you as you place advertisements in paper formats and in electronic sources throughout the state and on the Internet.

The regulatory authority for dealer advertising in Florida is the Office of the Florida Attorney General and various others, such as municipal governments that may have local ordinances governing dealer ads.  Our industry has some specific statutes (Florida’s Decep

Comment by Remove on December 22, 2011 at 8:27am

In PA you must have a license, I don't understand how True Car can Advertise Pricing without being a dealer. It looks like they are in violations of the same things as in Colorado.

http://www.pacode.com/secure/data/037/chapter301/chap301toc.html

I have emailed PA Dealer Assoc and have not heard anything. Any PA Dealers please contact them!

 

Comment by David Flowers on December 22, 2011 at 7:49am

Colorado investigates TrueCar sales service

 

"In a statement, TrueCar said it is "addressing technical and procedural questions raised by regulators who may not know what to make of our service...."

 

Sounds like TrueCar is now extending the same level of condescension towards State Regulators that they have been giving to their own customers (the dealers).  TrueCar, PLEASE tell regulators they are too stupid to understand your business model.  That should work out really well.

Comment by Jason Manning on December 21, 2011 at 8:50pm
"Transparency." I learned about transparency working as a Gang Officer in South Central Los Angeles, back in the early 90's. Yeah, I remember the gang members and how transparent they were when they committed their crimes. They would shoot and kill in broad daylight. They didn't wear masks or anything. They would rob victims face to face. They were transparent in the ultimate sense of the definition. I think back to those moments when I read about TrueCar's model for business. I think about data being taken from innocent dealers that support innocent communities. I wonder if dealers understand that TRANSPARENCY DOES NOT CREATE TRUST. It didn't in South Central and it won't in our industry as well.

Trust comes from a great relationship that is built by the little things in life that show precise attention and care. They are built by hard work...NOT BY LIFTING A VEIL. I truly believe the automotive industry will become more intelligent at the dealer level and we will retain our profits. We will harness the amount of transparency that we will use. WE KNOW THAT TRANSPARENCY CAN ROB YOU FACE TO FACE.
Comment by James A. Ziegler on December 21, 2011 at 5:11pm

BUT that's necessary Rob... Vendors  like CarFax, Edmunds, etc  have been taking data and using it to dealers' detriment too long. They use our information and then trash us in their advertising. Let's lock up all date they don't need and make criminal prosecutions for passing the data or misusing it...Federal law?

Comment by Rob Fontano on December 21, 2011 at 5:08pm
These rulings are going to change the entire vendor dealer relationship. Things are going to get more complicated for vendors who require DMS access.
Comment by James A. Ziegler on December 21, 2011 at 4:30pm

KANSAS AUTOMOBILE DEALERS ASSOCIATION
 

 

 

IMPORTANT NOTICE: Brokering Prohibition – True Car/ZAG

 
To:      The Members of the Kansas Automobile Dealers Association
 
From:  Don L. McNeely, President
 
Various models for motor vehicle sales programs have brought increased attention on marketing practices in Kansas and across the country.  Commentators have most recently focused upon such programs as that offered by TrueCar/ZAG though there are many forms under which a dealer may be functioning, particularly in online arrangements.  This comment will focus upon how such programs can actually unwittingly or otherwise set you up for possible violations of the Kansas Dealers and Manufacturers Licensing Act, particularly those declaring motor vehicle brokering illegal in Kansas. 
 
It is KADA’s opinion that the manner in which programs such as that offered by the True Car program as it is currently structured and being offered in our state do in fact violate the Kansas brokering prohibition.  This is particularly so as it relates to a dealership paying a direct marketing fee, which can be likened to a commission, for each vehicle sold. While it is not unlawful to pay an annual or monthly advertising or subscription fee for vehicle leads, it is a violation of the Kansas brokering law to pay a third party a fee—or other benefit--for bringing buyer and seller together.  
 
It is our understanding that a number of Kansas franchised new car and truck dealers are currently doing business utilizing the TrueCar/Zag format.  It is also our understanding that several formal complaints have been filed with the Kansas Department of Revenue’s Division of Motor Vehicles requesting an investigation of those dealers who have been identified.
 
As a reminder, the Kansas broker prohibition statute was enacted in 1990 and was ultimately upheld by the Kansas Supreme Court in 1992 (Blue v. McBride).  K.S.A. 2010 Supp. 8-2404 (q), (r), and (u) which respectively pertain to new and used vehicle brokering describe prohibited and allowed practices and exceptions (display, advertising, soliciting and acting as a broker).  These are also discussed and tempered in the McBride case to allow for the free exchange of information, but one must still keep in mind that brokering practices are squarely prohibited.  
 
You have to pay attention to the laundry list set forth in the law.  It defines a broker to be any person who, for a fee, commission, money, other thing of value, valuable consideration or benefit, either directly or indirectly, arranges or offers to arrange a transaction involving the sale of a vehicle, or is engaged in the business of (1) selling or buying vehicles for other persons as an agent, middleman or negotiator; or (2) bringing buyers and sellers of vehicles together, unless excepted.  (See K.S.A. 2010 Supp. 8-2401(x).)  As you can see the arrangements that are prohibited forms of brokering describe many elements of the TrueCar program which you should review carefully before engaging in such practices. 
 
Another thing we have heard expressed about marketing arrangements are concerns related to legal issues of privacy, data use and ownership, as well as data access, particularly where a dealer has given outside access by a unrelated third party to its DMS system.  The TrueCar/ZAG structure serves as a significant example of the issue.  It collects transactional data from supposedly various sources to determine “the right price” to pay for a car.  Vehicle pricing points aren’t necessarily the only issue, though.  KADA is of the opinion that this can be ve

Comment by James A. Ziegler on December 21, 2011 at 7:51am

Big news about TrueCar in the next few days. remember I said this.

Comment by Rob Fontano on December 21, 2011 at 5:32am

Read Seth Godin's blog on Trustiness. Very Timely indeed. "Trust is built when no one is looking, when you think you have the option of cutting corners and when you find a loophole. Trustiness is what happens when you use trust as a PR tool." Seth Godin

Scott Painter used TrueCar as a "Digital Trojan Horse" against car dealers, then turned around and told the consumer to trust him. Why? "Hey look at me, I broke through your darkest car buying fears for you, LOVE ME!"

http://sethgodin.typepad.com/seths_blog/2011/12/trustiness.html?utm...

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