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Will Truecar Draw The Ire Of State Regulators?

This is not a teaser.  

 

I have first hand knowledge that State Automotive Associations are preparing memos to their members that the TrueCar.com platform may violate a number of state advertising laws.

 

 

I bring this up because a number of State Dealer Associations have commented off the record that their legal advisors are concerned that TrueCar.com may violate a number of State automotive advertising laws.  

 

 

I've been told that they are preparing a formal statement and legal response.

 

 

In the coming days, you will start to see State Dealer Associations start a dialogue with their members about their concerns with the TrueCar business model.

 

 

The laws in question in some states involve price disclosures, licensed brokerage regulations, and delivered price quotes.   

 

I bring this up only because I know there are emotional responses to TrueCar.com on the ADM forum.  However,  when State Regulators and State Dealer Associations are concerned about legal violations, the whole TrueCar business model may comes under scrutiny.

 

Let's take note of the States that issue advisory warnings this month.  They are coming for sure.  

 

I hope that ADM members will post links to advisories that their State Associations send to them so that we can see what each state has to say about this business model.

Brian

 

 

Brian Pasch CEO of PCG

 

Brian Pasch, CEO
PCG Digital Marketing
Text PCGedu to 75674 get information on our upcoming conferences
Brian Pasch

Views: 1253

Tags: advertising, digital marketing strategy, third party leads, truecar, truecar.com

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Comment by James A. Ziegler on December 23, 2011 at 5:33am

I apologize to everyone that I broke one of my own rules and fired back at Michael Timmons the TrueCar executive.

Also I put up a Pinocchio Photoshop picture, which I also took down, that too is ordinarily not my style, although it was funny.

I feel bad because I know the only reason a TrueCar representative would show up here is to engage us. There's an old saying... "Never wrestle with pigs. You'll only get dirty...and the pig likes it." 

BUT, when Timmons surfaced briefly I saw something that bears a lot of renewed attention...

Taken from Mr. Timmon's job description he posted on his LinkedIn page.

~The next milestone will be the launch of TrueTrade, a division dedicated to empowering consumers with valid trade values and assisting with the disposition of their current vehicles. Our vision is to help empower both the consumer and the marketplace by providing clarity through price transparency so that people can buy and sell cars with confidence.~

He's an ex-AutoNation top executive still living in AutoNation headquarters town... Mike Maroone president of Autonation, still on the board at Truecar? Notice the introduction of the next step in Truecar evolution he mentions "TrueTrade" launch coming? 

In the beginning there was speculation that TrueCar might be an AutoNation grab for the entire retail business, are we revisiting that now? 

Comment by James A. Ziegler on December 23, 2011 at 5:03am

Before this is over...I predict government regulators will lock down many sources of loose data floating around. TrueCar data comes not only from our dealers DMS but from other sources that originally lifted the data from a dealers' DMS. I don't want to name those sources now because it would take the focus off of TrueCar and start too many side fragmented conversations. Just remember I said this.

Comment by Keith Shetterly on December 21, 2011 at 7:53pm

Parody, I think.

Comment by Brian Pasch on December 21, 2011 at 7:50pm

Jim,

Thanks for posting this latest update from Kansas!!

Comment by James A. Ziegler on December 21, 2011 at 4:35pm

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 20, 2011 at 1:58pm

Taken from Cnn Money Magazine article today

http://tinyurl.com/7wy2fno

Painter says the average savings for a TrueCar buyer is 9.7% off sticker price. Sometimes, where dealers have too much inventory, many buyers have paid less than dealer cost. "There's an average 25% range from top to bottom on what people pay for a commodity -- the exact same car," Painter says. "Buying a car should be more transparent. You don't have to trust the dealer anymore -- trust the data."

Comment by James A. Ziegler on December 20, 2011 at 1:46pm

Wisconsin and Ohio have shut them down for the time being, watch Maryland, Virginia and Texas maybe next...

Comment by James A. Ziegler on December 20, 2011 at 1:45pm

I think Scott Painter was sort of right... He said dealers have to embrace change...well maybe TrueCar is going to have to embrace change. :) smiling

Comment by James A. Ziegler on December 19, 2011 at 9:33am

Watch for others to come right behind... possibly Louisiana and Maryland soon.

Comment by Brian Pasch on December 19, 2011 at 9:07am

As promised, Colorado comes out swinging on TrueCar:  http://www.dealerrefresh.com/colorado-department-of-revenue-cities-...

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