State Laws and True Car

Craig Waikem
It will be interesting to see each individual State get into the True Car discussion. We all know about yesterday's statement from the Colorado Department of Revenue. Surprisingly, I don't think it's that threatening. Most of the violations are correctable. (Stock #, "invoice" wording, doc fee, shipping charges, etc). All of these violations are correctable for True Car. However, in my great State of Ohio, the Greater Cleveland Automobile Dealer's Association is warning dealers and advising them to NOT sign up for True Car for violating "the bird dog law". See the following statement made by them this morning; GCADA wishes to remind member dealers that such an arrangement could potentially violate Ohio Revised Code § 4517.20. The relevant law on this issue is found in Bureau of Motor Vehicle Code, Ohio Revised Code Section 4517.20, which states in part that: “No motor vehicle dealer shall directly or indirectly, solicit the sale of a motor vehicle through a pecuniarily interested person other than a salesperson licensed in the employ of a licensed dealer…nor shall a dealer pay any commission or compensation in any form to any person in connection with the sale of a motor vehicle unless the person is licensed as a salesperson in the employ of the dealer.” If a dealer is found in violation of this section, there are numerous types of legal penalties against the dealer for such practices. In addition to criminal sanctions, a dealer can face a Dealer Licensing Board hearing for revocation and/or denial of a dealer’s license due to such violations. Participation in the sale of a motor vehicle by an unlicensed salesperson is also a violation of the Ohio Consumer Sales Practices Act, a statute carrying penalties of rescission, treble damages, non-economic damages, attorneys fees, as well as potential civil penalties and attorneys fees in an action brought by the Ohio Attorney General’s Office. What State Laws will impact you?
Chris Costner
Thank you for posting this Craig. I am curious to see how all this turns out now that the states are getting involved. Back in September 2010, Virginia's Motor Vehicle Dealer Board determined that dealers paying fees for successful leads they receive from the internet vehicle referral service “ZAG.com,” or any other similar service may be in violation of the state’s prohibition against “bird dog” fees. The MVDB cannot take enforcement action against ZAG.com since it is not a licensed entity in the Commonwealth, but the Board can take action against dealers who do pay ZAG.com in connection with the sale of a motor vehicle.
Craig Waikem
I agree the bird dog fee is the biggest threat to True Car. Hasn't similar lead providers tried this before? Will True Car just start charging by the lead or a flat cost?
Chris Costner
You know Craig, I am not sure how the entire TrueCar story is going to turn out. They are losing clients on a daily basis and I believe unless they change their entire business model, there is going to be constant controversy. After all that I have read from their perspectives, they feel very strong in the stance they are taking and will continue to market tha way. Just my thoughts anyway.
Keith Shetterly
@ Craig: Flat fee doesn't always suffice for the state laws. As well, it begs that important question about DMS access . . . why would you need to allow it with a flat fee? Unless that fee changes with the # of sales . . . which is back to bird dog. TrueCar needs that DMS access to make all this work on their backend--they are very careful to try and position the DMS access as not involved in establishing their pricing. How about in VALIDATION of their pricing and algorithms? Etc. TrueCar needs the DMS access in order to operate, at least for now and in my opinion (which could be wrong, but I don't think so. What do you think?). Which is why they have taken note of the dealer body reaction.
Craig Waikem
Well put...they need us a lot more than we need them!

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