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Dealers, You Do Not Have Control of Your Data!

Exhibiting at the NADA 2012 Convention and Expo in Las Vegas was very interesting. One of the hottest topics was the “third party data access” controversy that has been unfolding over the last few months. From a DMS provider’s point of view, there are certainly ways that we can help dealers maintain control of their data, such as offering a free data protection service. But as I see the state of things right now, I’d be willing to bet that not a single dealer out there truly has control of their data.

To understand why not and what can be done about it, I’d like to clarify the four key issues involved:

  1. Who Owns the Data? Not so long ago this was a controversial subject, as a few DMS providers believed they owned the dealership’s data. Fortunately every DMS provider and vendor have gotten religion on this issue and agree that dealers own their data and have the right to do with it as they please (which is why I am optimistic that this current controversy should eventually work out well for the dealers).
  1. Who Controls the Data? Dealers are in full control of their data, as long as it’s in the DMS. When a dealer signs a contract with a third-party vendor, the DMS provider then has permission to grant access to that vendor. The only exception is if a DMS vendor requires certification from vendors, but that really isn’t a solution for protecting data because a certification only deals with a vendor’s ability to access the data, not what the vendor does with the data once they have it.
  1. Who Grants Access to the Data? This is where things get a little murky. For instance, franchised dealers who are required to sign up for a parts program with their OEM must sign an agreement with the OEM. But the OEM is more than likely sub-contracting the access to a data aggregator. Are dealers privy to these agreements between OEMs and the third-party vendors they use? Are the OEM’s protecting the dealer’s data by including within their agreement with the aggregator that the aggregator will not sell, share or use the data for any purpose but the intended use?
  1. What Happens to the Data Once it’s Pulled? Unfortunately, once data leaves a DMS in whatever format, the dealer is no longer in control of that data. In a recent article in Automotive News, the solution of storing the data requested by vendors on a different server then the one that houses the DMS, or on a separate disc, misses the point. If that vendor has a stipulation in their contract that they can resell, trade or share data with their affiliates, there’s still not a lot the dealer can do about it. Once that vendor has the data, in whatever format, they can still do whatever they please with it.

In conclusion, the way things stand right now, there’s not a single dealer who truly has control of their data. Fortunately, this situation can be corrected.

How To Fix It

My suggestion to dealers would be to start by reviewing all contracts with third-party vendors. Require the language to be very specific regarding the following:

- What type of data is pulled, how often and from which part of the system. This is where DMS providers can offer the most help, by performing monthly audits and providing dealers with the above information. That way the dealer can check and see if vendors are indeed pulling the agreed upon information.

- If possible remove all language that relates to sharing or re-selling information. However if doing so is required for the vendor to do their job, this won’t be an option. Instead, the dealer should know exactly what type of data is shared or sold, and to whom – listing the specific names of all the affiliates.

- The dealer should request to see the agreements between vendors and their affiliates, and demand the same type of language be in their agreements, so they know what the affiliates are doing with the data.

- Dealers have the right to full transparency in terms of what purpose(s) the data is being used for, from both their vendors and the vendors’ affiliates.

- Dealers should review all agreements with OEMs and ask them who is actually accessing the data, then ask to see the agreements between the OEM and any vendors they sub-contract the access to.

Of course you can see how daunting this process would be for both dealers and vendors. One vendor may have half a dozen affiliates, and some of those affiliates may have affiliates. There may actually be up to a dozen parties involved in a single process.

How do dealers know if and when they have regained control of their data? When they know exactly where every piece of data goes and how it’s being used, even as that data moves far downstream from the DMS where it originated.

Unfortunately there are no easy solutions to this controversy. But with diligence and time, dealers can regain control of their data to ensure it never benefits a competitor or is used in some other way that harms the dealer.

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