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TrueCar - Who is responsible for personal information? Are the authorities missing the point?

I profess to being one of the "lurkers" who mostly skims these automotive blogs to stay on top of today's automotive news and catch up on the latest and greatest vendor offerings. Today I am making an exception and making this post to highlight that this issue is VERY TECHNICAL. Maybe too technical for the automotive, state and national authorities that are currently getting involved. Based on posts from our friends Jim, Ralph and the like, I am seeing advertising and improper sales (bird dog) penalties being threatened, but there is still the main issue.

The crux of this issue (in my opinion) is; (1) The consumer information privacy violations and (2) The illegal contracts that TrueCar is having dealerships sign.

First, (1) Consumer Information Privacy Violation(s)... No business has the right to re-use / re-purpose a consumer's private information without their permission. There are existing laws for this. 

Second. (2) It has been more years than I care to disclose since I graduated from college, but, if my memory serves me right, a written contract is not enforceable if it proposes or includes a statement that is illegal. That, would seem to be a smoking gun that lawmakers could use to hold TrueCar and ALL DATA MANIPULATORS accountable when they pull out their signed fine print techno babble dealership contracts to hide behind. 

I admire the efforts everyone has put forward to reign in this unacceptable behavior. To those of you who have the power and connections to make a difference, PLEASE take more than a few minutes to examine and better understand the technical side of this issue.

Who owns a consumer's data that is required to be given at the time of an automotive transaction? (the consumer)

Who is responsible for the protection and safe keeping of that data? (dealership, DMS providers, any individual that touches that information once secured by the first two)

What privacy laws are being broken in your state when a consumer's information is disseminated without their permission?

Can you add more to this post to help authorities better understand the technical issue(s) at hand?

Good Selling All!

DTG

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Comment by James A. Ziegler on December 21, 2011 at 4:32pm

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 David T. Gould on December 21, 2011 at 6:53am

http://www.bgr.com/2011/11/29/facebook-settles-privacy-suit-with-ft...

11/29/2011

"Facebook settled a privacy lawsuit with the Federal Trade Commission on Friday and agreed to submit independent audits for the next 20 years. The FTC had accused the social network of being deceptive in its privacy practicesReuters explained. ”Facebook’s innovation does not have to come at the expense of consumer privacy,” FTC Chairman Jon Leibowitz said. Facebook will create two positions dedicated to privacy, including a chief privacy officer. In addition, Reuters said the social network must be transparent about what it does with personal user data in the future and it must receive user permission before changing how it shares private user data. Facebook CEO Mark Zuckerberg said he “is committed to making Facebook the leader in transparency and control around privacy.”"

Here it is. Anyone with FTC connections?

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