Texas Dealer February 2021

Also in this issue:

– Michael W. Dunagan on Odometer Problems – Deterring Dealership Crime – Employee Theft – Protect Your Dealership from Cyber Risks

TIADA Board of Directors PRESIDENT Robert Beck/Stop N’ Drive Motors 711 N. General McMullen Dr. San Antonio, TX 78228 PRESIDENT ELECT Mark Jones/Mike Carlson Motor Company 264 Exchange Burleson, TX 76028

Vo l u m e X X I / I s s u e 2 / Fe b r u a r y 2 0 21

TexasDealer contents

CHAIRMAN OF THE BOARD Juan Sabillón/Mi Tierra Auto Sales 7935 Gulf Freeway Houston, TX 77017

5 Officers’ Message

SECRETARY Ryan Winkelmann/BJ’s Autohaus 5005 Telephone Road Houston, TX 77087

9 News & Notes 10 On The Cover: How to Deal With an Unruly Customer

TREASURER Eddie Hale/Neighborhood Autos 1717 US 287 Decatur, TX 76234 ICE PRESIDENT, WEST TEXAS V (REGION 1) Brad Kalivoda/Fiesta Motors 2599 74th Street Lubbock, TX 79423 ICE PRESIDENT, FORT WORTH V (REGION 2) Chad Lancaster/Chacon Autos 11800 E. Northwest Hwy Dallas, TX 75218 ICE PRESIDENT, DALLAS V (REGION 3) Greg Reine/Auto Liquidators 39670 LBJ Freeway Dallas, TX 75237 ICE PRESIDENT, HOUSTON V (REGION 4) Vicki Davis/A-OK Auto Sales 23980 FM 1314 Porter, TX 77365 ICE PRESIDENT, CENTRAL TEXAS V (REGION 5) Greg Phea/Austin Rising Fast 8024 IH 35 North Austin, TX 78753 ICE PRESIDENT, SOUTH TEXAS V (REGION 6) Armando Villarreal/McAllen Auto Sales 4215 S. 23rd Street McAllen, TX 78503 ICE PRESIDENT AT LARGE V Robert Blankenship/Texas Auto Center 6809 N IH-35 Austin, TX 78744 ICE PRESIDENT AT LARGE V Russell Moore/Top Notch Used Cars 900 East Davis Conroe, TX 77301 TIADA EXECUTIVE DIRECTOR Jeff Martin 9951 Anderson Mill Rd., Suite 101 Austin, TX 78750 Office Hours M-F 8:30am – 4:30pm 512.244.6060 • Fax 512.244.6218 jeff.martin@txiada.org

by Eddie Hale, TIADA Treasurer

by Erik Wilson and Sgt. Darren Schlosser

12 Upcoming Events 13 TIADA Scholarship Application 14 TIADA Auction Directory 2021 16 Legislator Spotlight 19 Legal Corner: Odometer Problems Don’t Go Away With “Exempt” Status

by Michael W. Dunagan

25 Deterring Dealership Crime with Remote Video Surveillance

by Jeremy White

27 TIADA Member Application 28 Employee Theft: More or Less

by Bob Cumberworth

31 Board of Directors Meeting Minutes 33 You’ve Been Hacked! Are You Covered?

by Rich Stazzone

36 Local Chapters 36 New Members 37 Surveying the Best & Worst Drivers in America

by Empire Covers

40 Car Dealership Advertising Ideas to Drive Success Despite the Pandemic

by Zach Klempf

42 Behind the Wheel

by Jeff Martin

Did You Know? There are scholarship opportunities for high school seniors and college students being offered by TIADA and NIADA. Turn to pg. 9 for more details.

Notice to all members concerning services and products: TIADA was established in 1944 to develop professional standards of service and conduct for the independent auto industry. Opinions expressed herein are not necessarily those of the TIADA management, the Board of Directors or the membership. Likewise, the appearance of advertisers or their indemnifications of TIADA does not constitute endorsement of the products or services featured.

Editor: Teresa Orkun

Magazine Ad Sales: Patty Huber, 512-310-9795

Save the date.

July 25-27, 2021

Round Rock, TX

officers’ message Staying on Top of Compliance

P

rior to our quarterly meeting, we ask each officer of the association to call at least two members and spend some time visiting with them about the industry. By doing this, we want to ensure we are addressing their needs as an association. As elected officers we feel it is important to make sure we are representing the members of this association, and what better way to do that than to find out what the members are thinking.

The names of members to be called are selected randomly by the TIADA staff and provided to each officer about two weeks prior to the meeting. During the board meeting, each officer reports back to the full board on their phone calls. This gives us a chance to hear from 26 different members; it is sort of our state of the industry report.

I was thrilled to hear how well dealers were doing last year. With all the uncertainty in the world I assumed most of my phone calls would be doom and gloom, but outside of finding inventory and wholesale prices, the industry seemed to be fairing quite well. I was also excited to hear the feedback on the great job the association was doing supporting dealers and addressing industry concerns.

As wholesale prices are starting to adjust and we all become more accustomed to finding inventory online,

by Eddie

Hale

Neighborhood Autos (Decatur) TIADA TREASURER

I am hearing a new concern: What should we expect from the new administration in D.C. related to industry regulation, namely the Consumer Financial Protection Bureau and the Federal Trade Commission? As someone who has been in the business for some time, I can tell you the only certainty is that things are going to change. I don’t know if things will be better or worse, but things will definitely change; they always do and they always will.

When I talk to dealers today about the concern of new regulations, or a more aggressive regulatory environment, I emphasize that every dealer must have someone at the dealership who is committed to overseeing compliance. This doesn’t mean to delegate and forget about it. If you are the owner or the GM and you are not the compliance person, you need to meet with your compliance person regularly. Make sure they not only have the tools they need, but also access to the appropriate people to address compliance issues.

This could include online and in person education, blogs, compliance emails, websites, etc. TIADA sends a fantastic industry update email the first and third Thursday of every month. Make sure your compliance person is receiving that email, reading it, and sharing it within your organization.

We have been focused on compliance for years at

TIADA has been one of the many resources we use to stay compliant and I encourage you to do the same.

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5

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BETTER.

$10 000 ’

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now

Additional savings up for grabs!

Tap on Texas IADA Vendor Coupons for non-auction discounts.

*Coupons range from $75 to $500 each on buy-sell fees.

Don’t have the mobile app?

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Officers’ Message (cont’d from pg. 5)

our dealership, and we didn’t let our guard down over the last four years. We continued to attend industry conferences and strived to stay abreast of best practices. TIADA has been one of the many resources we use to stay compliant and I encourage you to do the same. Use your association to help you stay compliant. The Compliance Consultation Service is one of the most used benefits and it only takes a few minutes to submit your question online through the website or to pick-up the phone and give them a call at the office. And if we aren’t addressing your needs, the phone works both ways so feel free to give one of the officers a call — we would love to hear from you.

635 Fritz Dr. Ste 210 Coppell, TX 75019 469-637-0150

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news & notes

Happenings in the Industry…

TIADA’s Marvin Norwood Scholarship

I

n 2015, TIADA’s academic scholarship was formally renamed the Marvin Norwood Scholarship in honor of Hall of Fame inductee Marvin Norwood from Abilene Auto Sales. Marvin, who passed away in 2013, was an avid supporter of the scholarship program. $1,000 in financial assistance will be awarded to a deserving applicant who is entering or currently enrolled in an accredited college or a trade school. Application (see page 13) and required documents must be received

by May 10, 2021.

Meet Earl Cooke

T

IADA is happy to introduce you to Earl Cooke who joined the TIADA staff as the Director of Compliance and Business Development at the beginning of the year. Earl joins us from the West Virginia Legislature where he audited state agencies and worked as committee counsel. Prior to earning his law degree from

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NIADA Foundation Scholarships

T

he NIADA Foundation promotes the academic growth of youth throughout the United States and awards scholarships annually in June at the NIADA convention. The competition for all students is judged by Northwood University, who narrows the field of competitors down to four candidates representing each of NIADA’s four regions for the regional scholarship and also selects the national scholarship recipient.

Application is available at NIADAFoundation.org and must be postmarked no later than March 9, 2021 and received no later than March 26, 2021.

the University of Georgia, Earl spent almost two decades working at car dealerships holding various titles including Finance Manager, Finance Director, Sales Manager, and Salesperson. During law school, Earl focused his practical training on the automotive industry by interning with the National Automobile Dealers Association’s Regulatory Affairs Division, the Florida Automobile Dealers Association, Asbury Automotive Group’s legal and compliance department, and working as a law clerk with Kurkin Forehand Brandes LLP, a small boutique law firm that specializes in representing automobile dealers.

Having Earl on staff will strengthen TIADA’s ability to address compliance issues to better serve our members.

9

on the cover

by Erik Wilson

Attorney, Erik Wilson and Associates

“It is almost inevitable that a business will experience an unruly customer, or even a disgruntled employee, at some point in time.”

Sgt. Darren Schlosser Houston Police Department Auto Theft Division – Vehicle Fraud Unit 10

with contributions from Sgt. Darren Schlosser

Houston Police Department Auto Theft Division – Vehicle Fraud Unit

T

he past year has made all of us face extraordinary challenges and business disruptions, from a worldwide pandemic and the economic fallout, to natural disasters such as forest fires, hurricanes and mass flooding. In all this, consumers, some now suffering from lower incomes or no income and/or lower credit scores have likely been hit the hardest with the most immediate and detrimental impacts being felt to their families’ safety and well-being.

Of course, those same people are your customers. Consequently, it should come as no surprise that

stress levels in your customer base are at an all-time high. Further, the effects of 2020 have spread throughout almost every industry at all levels which has led to a snowball effect all of us are trying to recover from with multiple disasters hitting all at once. Currently, in our industry this has been a recipe for high tensions and confrontations with customers. There are many things that can be done to help dealers deal with the unruly customer that range from little things done around the dealership that improve the customer experience, to the most extreme of responses T e x a s

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February 2021

involving the courts and temporary restraining orders and or police intervention on site.

First, it is important to realize that we currently live in the digital age and a dealer should expect that there is always someone recording a heated interaction. “With the increase of social media videos, there seems to be more instances of people causing scenes inside of businesses,” said Sergeant Darren Schlosser from the Houston Police Department Auto Theft Division, “While this is not a new phenomenon, it does gain more attention with the capturing of the situations on cell phone video. It is almost inevitable that a business will experience an unruly customer, or even a disgruntled employee, at some point in time.”

It is best for the dealer to try and diffuse the situation calmly and as quickly as possible. To that end, likely one of the best and easiest

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ways to handle an unruly customer is to simply ask them to calm down, and, if the customer cannot calm themselves, you have the authority to ask them to leave your business.

This is your fist line of defense, as once you have asked someone to leave your business, they are now considered a trespasser by law.

The Texas Penal Code states that (summarized): A person commits an offense if he or she enters or remains in or on the property of another without effective consent and the person has received notice to depart but failed to do so.

Effectively, a person is only allowed on your property while you have consented to their presence.

Once you no longer consent, for whatever lawful reason, that person must leave your property. If they fail to do so, you now have several legal remedies including, but not limited to, calling the police to have the person removed.

Sgt. Schlosser adds that “When situations become volatile, it is imperative to maintain a calm demeanor during the situation for two reasons: 1) It does not help the situation when both sides are escalating the situation with angry words; and 2) If someone is video recording the situation you can bet the only side shown on social media will be the negative clips of the dealership.”

Here are some suggestions Sgt. Schlosser provided for how to handle unruly people in the dealership: Have one level-headed employee

address the unruly person and don’t have multiple people attempting to engage in the incident. This will only result in chaos and will likely cause the situation to escalate. Other employees should remain clear of the situation, but ready to respond if needed.

Keep an acceptable distance

away from the person to ensure

11

Upcoming Events 2021

April 19 Board of Directors Meeting Austin, TX

July 25 Board of Directors Meeting

Kalahari Resorts & Conventions Round Rock, TX

25-27 TIADA Conference and Expo Kalahari Resorts & Conventions Round Rock, TX

12

there is no physical contact.

Make a clear statement of what you are expecting to happen. An example would be “I am asking you to leave the dealership now.”

Calmly repeat the instructions to the person several times for clarity.

If the person becomes more ani mated or belligerent, have someone use his or her cell phone to record the encounter and document what is occurring. The mere knowledge a video is being taken may diffuse the situation when they realize their actions are being recorded but should not be done in a confrontational manner.

It is always advisable to handle

the incidents without police involvement if possible. At some point, a clear statement needs to be made such as “If you refuse to leave, I will call the police.” While there is no clear amount of time you should give before calling the police, adequate attempts to let the person leave on their own should be given.

If the police are needed, one per son should continue to calmly address the person while another employee calls 9-1-1 for assistance. It is very important to communicate the business address, what the situation is, suspect description (race, sex, height, weight, hair color, clothing description), any suspect vehicle description if relevant (make, model, color, license plate), and any other pertinent information responding officers may need. Understand dispatchers may have a set of questions they are required to ask, make sure to cooperate and let them lead the conversation.

Physical confrontation should

be avoided at all cost, but the actions of the other person may change the situation. Just make sure to think about how your actions will be viewed in the future,

were they justified?

When officers arrive on scene,

calmly explain the situation upon arrival and let them handle the incident based upon their training and experience.

If the disruption is repeated over time, you can get a restraining order from a judge to keep them off the property for a set period of time. Obviously, the court order is one of the more extreme orders and the most expensive of all the remedies, but it may be a necessary alternative depending on the amount of disruption the customer causes.

To finish up, Sgt. Schlosser reminds us that “while no one can fully prepare for a belligerent person causing a disturbance in the dealership, always remain calm, clearly communicate with the person, call the police only if necessary, and don’t antagonize the situation.

Remember, what works for one situation may not work in another.

Always be prepared to change tactics according to each unique situation.”

Contacting a licensed attorney can aid you in coming up with a preventative plan and to know your full rights in a tough situation that puts you and your business against an unruly customer that may or may not be able to cause harm to your business.

Erik Wilson is a licensed attorney in Texas and a partner at Erik Wilson and Associates and has worked with TIADA to address member concerns for the past 5 years. He participated on the Legal Panel at the 2018 TIADA Conference & Expo.

Sgt. Darren Schlosser has shown a commitment to educating dealers on spotting customer fraud. He was a speaker at the TIADA Conference & Expo in 2018 and 2019 and has presented at various local chapter meetings.

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February 2021

ATTENTION STUDENTS!!!

$1,000

Marvin Norwood Scholarship DEADLINE

May 10, 2021 {Applications and/or any required documents received after May 10, 2021 will NOT be accepted.}

SCHOLARSHIP APPLICATION Date: Name:

DOB:

Address: City:

Criteria and Guidelines 1. Each applicant must be entering or currently enrolled in an accredited college or a trade school. Proof of enrollment must be included with this application.

State:

Email: (You will receive email confirmation of receipt.)

Telephone Number: High School Last Attended:

2. Each applicant must provide a letter from their TIADA member sponsor that includes the sponsor’s address and phone number.

Address:

3. Each applicant must complete the application form.

Date of Graduation:

4. A copy of high school transcripts is required for applicants who are college freshmen. If applicant is currently enrolled, provide college transcripts with official university imprint.

Other High Schools Attended (Names and Addresses):

5. Provide a detailed description of participation in any academic, honorary, civic or extracurricular activities in college. In addition, a detailed description of high school activities is required from college freshmen along with a college acceptance letter.

6. Compose an essay of no more than two typed, double-spaced 8 ½” x 11” pages. The essay should discuss the applicant’s relationship with their TIADA scholarship sponsor, current education goals and future aspirations as it relates to the applicant’s subject/training area.

7. Provide at least two (but no more than three) letters of recommendation, no older than one year, from college/high school faculty, employers or other appropriate sources (not related).

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Zip:

City:

State:

Zip:

Dates of Attendance:

College(s) you are attending or plan to attend for admission:

Parents Name(s): TIADA Member Name (Sponsor): TIADA Member Company Name: TIADA Member Address: City:

State:

Zip:

Sponsor Signature Should you have any questions, please contact TIADA at 512.244.6060. Please return the completed application with all required documents to: TIADA Attention: Scholarship Applications 9951 Anderson Mill Rd. Suite 101, Austin, TX 78750

13

TIADA Auction Directory 2021

Save thousands on buy or sell fees at these participating auctions! * VALID FOR SELL FEE ONLY AT INSURANCE AA LOCATIONS ** ONLINE AUCTION AVAILABLE

Abilene ALLIANCE AUTO AUCTION ABILENE

www.allianceautoauction.com 6657 US Highway 80 West, Abilene, TX 79605 325.698.4391, Fax 325.691.0263 GM: Brandon Denison Friday, 10:00 a.m.

$AVE : $200

C.M. COMPANY AUCTIONS, INC. www.cmauctions.com

2258 S. Treadaway, Abilene, TX 79602 325.677.3555, Fax 325.677.2209 GM: Gregory Chittum Thursday, 10:00 a.m. $AVE : $200

IAA ABILENE*

www.iaai.com 7700 US 277, Hawley, TX 79601 325.675.0699, Fax 325.675.5073 GM: Terrie Smith Thursday, 9:30 a.m.

$AVE : up to $200 Sell Fee

Amarillo IAA AMARILLO*

www.iaai.com 11150 S. FM 1541, Amarillo, TX 79118 806.622.1322, Fax 806.622.2678 GM: Shawn Norris Monday, 9:30 a.m.

$AVE : up to $200 Sell Fee

Austin ADESA AUSTIN

www.adesa.com 2108 Ferguson Ln, Austin, TX 78754 512.873.4000, Fax 512.873.4022 GM: Rich Levene Tuesday, 9:00 a.m.

$AVE : $200

ALLIANCE AUTO AUCTION AUSTIN

www.iaai.com 2191 Highway 21 West, Dale, TX 78616 512.385.3126, Fax 512.385.1141 GM: Geoffrey Rabb Tuesday, 9:00 a.m.

$AVE : up to $200 Sell Fee

METRO AUTO AUCTION AUSTIN www.metroautoauction.com 8605 Cullen Ln., Austin, TX 78748 512.282.7900, Fax 512.282.8165 GM: Brent Rhodes 3rd Saturday, monthly

$AVE : $200

Corpus Christi CORPUS CHRISTI AUTO AUCTION

www.corpuschristiautoauction.com 2149 IH-69 Access Road, Corpus Christi, TX 78380 361.767.4100, Fax 361.767.9840 GM: Hunter Dunn Friday, 10:00 a.m.

$AVE : $200

IAA CORPUS CHRISTI*

www.iaai.com 4701 Agnes Street, Corpus Christi, TX 78405 361.881.9555, Fax 361.887.8880 GM: Patricia Kohlstrand Wednesday, 9:00 a.m.

$AVE : up to $200 Sell Fee

Dallas-Ft. Worth Metroplex ADESA DALLAS

www.adesa.com 3501 Lancaster-Hutchins Rd., Hutchins, TX 75141 972.225.6000, Fax 972.284.4799 GM: Allan Wilwayco Thursday, 9:30 a.m.

$AVE : $200

ALLIANCE AUTO AUCTION DALLAS

www.allianceautoauction.com 1550 CR 107, Hutto, TX 78634 737.300.6300 GM: Brad Wilson Wednesday, 9:45 a.m.

www.allianceautoauction.com 9426 Lakefield Blvd., Dallas, TX 75220 214.646.3136, Fax 469.828.8225 GM: Chris Dean Wednesday, 1:30 p.m.

AMERICA’S AA AUSTIN / SAN ANTONIO

AMERICA’S AA DALLAS

$AVE : $200

www.americasautoauction.com 16611 S. IH-35, Buda, TX 78610 512.268.6600, Fax 512.295.6666 GM: John Swofford Tuesday, 1:30 p.m. / Thursday, 2:00 p.m.

$AVE : $200 14

IAA AUSTIN*

$AVE : $200

www.americasautoauction.com 219 N. Loop 12, Irving, TX 75061 972.445.1044, Fax 972.591.2742 GM: Ruben Figueroa Tuesday, 1:00 p.m. / Thursday, 1:00 p.m.

$AVE : $200

IAA DALLAS*

www.iaai.com 204 Mars Rd., Wilmer, TX 75172 972.525.6401, Fax 972.525.6403 GM: Joshua Boyd Wednesday, 9:00 a.m.

$AVE : up to $200 Sell Fee

IAA DFW*

www.iaai.com 4226 East Main St., Grand Prairie, TX 75050 972.522.5000, Fax 972.522.5090 GM: Robert Brown Tuesday, 9:00 a.m.

$AVE : up to $200 Sell Fee

IAA FORT WORTH NORTH*

www.iaai.com 3748 McPherson Dr., Justin, TX 76247 940.648.5541, Fax 940.648.5543 GM: Jack Panczyk Tuesday, 9:00 a.m.

$AVE : up to $200 Sell Fee

MANHEIM DALLAS**

www.manheim.com 5333 W. Kiest Blvd., Dallas, TX 75236 214.330.1800, Fax 214.339.6347 GM: Rich Curtis Wednesday, 9:00 a.m.

$AVE : $100

MANHEIM DALLAS FORT WORTH**

www.manheim.com 12101 Trinity Blvd., Fort Worth, TX 76040 817.399.4000, Fax 817.399.4251 GM: Nicole Graham-Ponce Thursday, 9:30 a.m.

$AVE : $100

METRO AUTO AUCTION DALLAS

www.metroaa.com 1836 Midway Road, Lewisville, TX 75056 972.492.0900, Fax 972.492.0944 GM: Scott Stalder Tuesday, 9:00 a.m.

$AVE : $200

El Paso EL PASO INDEPENDENT AUTO AUCTION www.epiaa.com 7930 Artcraft Rd, El Paso, TX 79932 915.587.6700, Fax 915.587.6700 GM: Luke Pidgeon Wednesday, 10:00 a.m.

$AVE : $200

IAA EL PASO*

www.iaai.com 14651 Gateway Blvd. W, El Paso, TX 79927 915.852.2489, Fax 915.852.2235 GM: Jorge Resendez Friday, 10:30 a.m.

$AVE : up to $200 Sell Fee T e x a s

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MANHEIM EL PASO

www.manheim.com 485 Coates Drive, El Paso, TX 79932 915.833.9333, Fax 915.581.9645 GM: JD Guerrero Thursday, 10:00 a.m.

$AVE : $100

IAA HOUSTON NORTH* www.iaai.com 16602 East Hardy Rd., Houston-North, TX 77032 281.443.1300, Fax 281.443.4433 GM: Aracelia Molina Thursday, 9:00 a.m.

$AVE : up to $200 Sell Fee

Harlingen/McAllen

MANHEIM HOUSTON

IAA MCALLEN*

www.iaai.com 900 N. Hutto Road, Donna, TX 78537 956.464.8393, Fax 956.464.8510 GM: Ydalia Sandoval Tuesday, 9:00 a.m.

$AVE : up to $200 Sell Fee

BIG VALLEY AUTO AUCTION**

www.bigvalleyaa.com 4315 N. Hutto Road, Donna, TX 78537 956.461.9000, Fax 956.461.9005 GM: Lisa Franz Thursday, 9:30 a.m.

www.manheim.com 14450 West Road, Houston, TX 77041 281.924.5833, Fax 281.890.7953 GM: Brian Walker Tuesday, 9:00 a.m. / Thursday 6:30 p.m.

$AVE : $100

MANHEIM TEXAS HOBBY www.manheim.com 8215 Kopman Road, Houston, TX 77061 713.649.8233, Fax 713.640.6330 GM: Darren Slack Thursday, 9:00 a.m.

$AVE : $200

$AVE : $100

Houston

Longview ALLIANCE AUTO AUCTION LONGVIEW

ADESA HOUSTON

www.adesa.com 4526 N. Sam Houston, Houston, TX 77086 281.580.1800, Fax 281.580.8030 GM: Angela Williams Wednesday, 9:00 a.m.

$AVE : $200

www.allianceautoauction.com 6000 East Loop 281, Longview, TX 75602 903.212.2955, Fax 903.212.2556 GM: Chris Barille Friday, 10:00 a.m.

$AVE : $200

AMERICA’S AA HOUSTON

www.americasautoauction.com 1826 Almeda Genoa Rd, Houston, TX 77047 281.819.3600, Fax 281.819.3601 GM: John Swofford Thursday, 2:00 p.m.

$AVE : $200

AMERICA’S AA NORTH HOUSTON www.americasautoauction.com 1440 FM 3083, Conroe, TX 77301 936.441.2882, Fax 936.788.2842 GM: Buddy Cheney Tuesday, 1:00 p.m.

$AVE : $200

AUTONATION AUTO AUCTION - HOUSTON www.autonationautoauction.com 608 W. Mitchell Road, Houston, TX 77037 822.905.2622, Fax 281.506.3866 GM: Juan Gallo Friday, 9:30 a.m.

$AVE : $200

HOUSTON AUTO AUCTION

www.houstonautoauction.com 2000 Cavalcade, Houston, TX 77009 713.644.5566, Fax 713.644.0889 President/GM: Tim Bowers Wednesday, 11:00 a.m.

$AVE : $200

IAA LONGVIEW* www.iaai.com 5577 Highway 80 East, Longview, TX 75605 903.553.9248, Fax 903.553.0210 GM: David Cooper Thursday, 9:00 a.m.

$AVE : up to $200 Sell Fee

Lubbock IAA LUBBOCK* www.iaai.com 5311 N. CR 2000, Lubbock, TX 79415 806.747.5458, Fax 806.747.5472 GM: Lori Davee Tuesday, 9:00 a.m.

$AVE : up to $200 Sell Fee

TEXAS LONE STAR AUTO AUCTION** www.lsaalubbock.com 2706 E. Slaton Road., Lubbock, TX 79404 806.745.6606 GM: Dale Martin Wednesday, 9:30 a.m

$AVE : $75/Quarterly

Lufkin

Midland Odessa IAA PERMIAN BASIN*

www.iaai.com 701 W. 81st Street, Odessa, TX 79764 432.550.7277, Fax 432.366.8725 GM: Christopher Rogers Thursday, 11:00 a.m.

$AVE : up to $200 Sell Fee

ONLINE ACV AUCTIONS**

www.acvauctions.com 800.553.4070

$AVE : $250

E-DEALERDIRECT**

www.e-dealerdirect.com chris@edealerdirect.com

$AVE : Up to $500/month

San Antonio ADESA SAN ANTONIO

www.adesa.com 200 S. Callaghan Rd., San Antonio, TX 78227 210.434.4999, Fax 210.431.0645 GM: Clifton Sprenger Thursday, 10:00 a.m.

$AVE : $200

IAA SAN ANTONIO*

www.iaai.com 11275 S. Zarzamora, San Antonio, TX 78224 210.628.6770, Fax 210.628.6778 GM: Brian Sell Monday, 9:00 a.m.

$AVE : up to $200 Sell Fee

MANHEIM SAN ANTONIO**

www.manheim.com 2042 Ackerman Road San Antonio, TX 78219 210.661.4200, Fax 210.662.3113 GM: Mike Browning Wednesday, 9:00 a.m.

$AVE : $100

SAN ANTONIO AUTO AUCTION**

www.sanantonioautoauction.com 13510 Toepperwein Rd. San Antonio, TX 78233 210.298.5477 GM: Brandon Walston Tuesday, 10:00 a.m. / Thursday, 1:30 p.m.

$AVE : $200

Tyler GREATER TYLER AUTO AUCTION www.greatertyleraa.com 11654 Hwy 64W, Tyler, TX 75704 903.597.2800, Fax 903.597.3848 GM: Wayne Cook Tuesday, 5:00 p.m.

$AVE : $200

Waco

IAA HOUSTON*

LUFKIN DEALERS AUTO AUCTION

ALLIANCE AUTO AUCTION WACO

$AVE : up to $200 Sell Fee

$AVE : $200

$AVE : $200

www.iaai.com 2535 West. Mt. Houston, Houston, TX 77038 281.847.4700, Fax 281.847.4799 GM: Alvin Banks Wednesday, 9:00 a.m.

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www.lufkindealers.com 2109 N. John Reddit Dr., Lufkin, TX 75904 936.632.4299, Fax 936.632.4218 GM: Wayne Cook Thursday, 6:00 p.m.

www.allianceautoauction.com 15735 I-35 Frontage Road Elm Mott, TX 76640 254.829.0123, Fax 254.829.1298 GM: Carmen Robinson (Sales Manager) Friday, 10:00 a.m.

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legislator spotlight Representative Will Metcalf is a mem-

ber of the Texas House of Representatives for District 16.

As a businessman himself he has been a reliable advocate for small businesses, fighting to stop over-regulation and voting to eliminate unneeded bureaucratic obstacles for those trying to grow a business.

He is a sixth generation resident of Montgomery County and an accomplished business leader.

His experience in the financial sector gives him the skills to be a knowledgeable and a conservative voice on behalf of the people of Montgomery County.

Representative Metcalf was raised in Conroe and is a graduate of Conroe ISD and Sam Houston State University, where he earned a Bachelor of Science in Criminal Justice. Rep. Metcalf and his wife Megan have been married for 14 years and are the proud parents of beautiful nine-year old twin daughters, Amelia and Elizabeth. Texas Dealer recently had an opportunity to visit with the Representative from the fast-growing area just north of Houston.

Texas Dealer: What inspired you to run for public office?

Rep. Metcalf: In 2013 after the previous member chose

not to seek re-election, my wife and I began to receive many calls from people all over our community asking that I consider running for state representative. At the time, our twin daughters were still toddlers and I had no intention of leaving them to run for office. However, the calls kept coming and my wife and I found ourselves seriously contemplating running to serve our neighbors at the state level. My family has very deep roots in Montgomery County, and I was raised with the belief that we must give back to our community and be active and engaged in our local governments and civic organizations. It became clear that this was the capacity we were 16

being called to serve in, and I was second to last to join the race in a primary of six people.

Fast forward to the spring of 2014 — we won the primary and moved on to the general election that fall where I faced a Democrat and Libertarian opponent. We defeated them and I was sworn in for my first session in January 2015 for the 84th Legislature. I continue to serve House District 16 because my community has called on me to represent our values in the Texas Legislature, and I want to leave our district and our state better than I found it for my daughters’ generation. It is a great honor to serve my community at our State Capitol.

Texas Dealer: What skill(s) do you utilize most frequently on Capitol Hill?

Rep. Metcalf: The skill I have found to be most

useful at the Texas Capitol is relationship building. I would say the biggest difference between Washington, D.C. and the Texas Legislature is the fact that Texas has a long history of productive bipartisanship. If you look at the desks in the House Chamber, they’re not separated by Republican vs. Democrat. We all sit together, our offices are together, and that’s the Texas model for how we get things done in the legislature. In fact, the vast majority of debate in the Texas legislature is not “Republican vs. Democrat,” but instead urban vs. rural in many cases. You need votes to pass a bill, so it’s important to foster working relationships with colleagues on both sides of the aisle if we’re going to get things done in Texas. I may not share the same political ideology with my colleagues across the aisle, but at the end of the day, we can converse about our families, our hobbies, and being proud Texans.

Texas Dealer: What is your favorite aspect of the Texas House District 16?

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Rep. Metcalf: I don’t think I can only name one!

House District 16 is blessed with an abundance of natural resources, like the Sam Houston National Forest and our beautiful Lake Conroe. We’re also a short distance from downtown Houston, but enjoy the suburban lifestyle of Montgomery County. Conroe, which is the county seat, is in the heart of my district and boasts an impressive live music scene and was ranked the fastest growing city in America in 2016. If I had to narrow it down to one aspect, however, it would probably be the people of HD-16 that make our district so special. Our unique small businesses, our incomparable volunteer organizations, our schools and our engaged community members are what make House District 16 a truly remarkable place to live.

Texas Dealer: What problem or policy issue do you

that economic shutdowns do more harm than good.

Governor Abbott has indicated that Texas will not shut down our businesses again, as was done in the early days of the pandemic. I think these policies will be one of the central focuses of the 87th Legislative Session so we can consider best practices moving forward. We cannot cripple our small businesses here in Texas. They are what make the Texas economic climate so wonderful. It is imperative that we get our economy back up and running at full steam, and we can do that while taking necessary precautions to slow the spread of the virus without shutting down our small businesses and destroying people’s livelihoods. #TXLegislatorSpotlight

think deserves more attention?

Rep. Metcalf: I believe the state needs to take a

harder look at how we can roll back standardized testing. Standardized testing places undue stress on our teachers and students. We need to let our teachers get back to teaching and allow our students to focus on actual material instead of placing priority on how to pass a test. Not all children are good test takers, but they know the material. I’ve co-authored legislation every session to allow for graduation committees for our students who may not have passed their end of course exam, but can be vouched for by their teacher, principal, counselor and parents to move on to graduation. I will continue to support that legislation as well as advocate for reducing standardized testing.

Texas Dealer: What was your first vehicle?

Rep. Metcalf: Chevrolet 1500 Z71 extended cab.

Texas Dealer: What is the biggest challenge facing small business owners today?

Rep. Metcalf: Obviously at this time the biggest challenge facing small business owners is navigating the COVID-19 pandemic. The last ten months have been extraordinarily difficult for our small businesses with the countless restrictions now burdening business owners. Fortunately, state leadership has acknowledged February 2021

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legal corner

Odometer Problems Don’t Go Away With “Exempt” Status

by Michael

Dealer Question: I’ve re-

ceived an attorney-demand letter involving an issue of the true mileage of a vehicle I sold that fell under the mileage “exempt” rule because it was over 10 years old.

Doesn’t the “exempt” status remove any potential liability for mileage discrepancies?

Answer: No. “Exempt” means the vehicle is not subject to the federal odometer law disclosure requirements of placement of mileage on the title certificate. But that doesn’t necessarily affect the possible implications of the Texas Deceptive Trade Practices Act (DTPA) prohibitions on misrepresentation of the characteristics and qualities of a product sold or leased.

I

t is a fact of life that purchasers of motor vehicles consider the number of miles a vehicle has travelled to be an important piece of information in determining the value of that vehicle. And, when a buyer finds out after the purchase that the vehicle has more miles than appeared on the odometer or more than was otherwise disclosed, that buyer feels cheated.

Certainly, the value of low mileage was known to thieves who have rolled back odometer mileage on vehicles to increase the prices they can sell them for. And this information was known to congress when it passed the federal odometer tampering and disclosure laws. Consumer groups and plaintiffs’ attorneys are well aware of the opportunities for litigation

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that odometer issues give rise to.

The importance to vehicle buyers of having correct information on a vehicle’s mileage is also brought home to dealers and vehicle auctions when mileage discrepancies arise after a sale.

Federal odometer law prohibits disconnecting, resetting, or altering an odometer with the intention to change the mileage registered by the odometer, and operating a vehicle with the odometer disconnected, with the intent to defraud.

Also, the law requires that a seller of a vehicle disclose the cumulative mileage registered on the odometer, or, if the seller knows that the registered mileage is incorrect, disclose that the true miles are unknown.

The federal disclosure can be made as “exempt” if the vehicle falls under the exemption for older vehicles depending on its model year. Prior to January 1, 2021, the exemption applied to vehicles 10 years old or older. A new rule from the National Highway Traffic Safety Administration (NHTSA) now changes the exempt age to 20 years, reflecting the increasing average age of vehicles still in operation. The

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Federal odometer law prohibits disconnecting, resetting, or altering an odometer with the intention to change the mileage registered by the odometer, and operating a vehicle with the odometer disconnected, with the intent to defraud. new rule requires an odometer disclosure for every transfer of ownership for vehicles up to 20 model years old, beginning with model year 2011 vehicles (thus 2011-year models will be subject to federal disclosure through 2031). Modelyear-2010 and older vehicles remain subject to the previous 10-year rule.

The penalties for violation are fairly steep. A civil penalty can be assessed of up to $2,000 per vehicle involved up to a total of $100,000, plus prison time, in addition to 19

...there is very little debate that the true mileage of a vehicle is a material fact that a buyer relies on. If the information from the seller is untrue or misleading, then the buyer has a potential cause of action. civil damages to victims of three times the actual damages suffered.

Many dealers are of the opinion that a vehicle that is eligible for the “exempt” designation on the area of the title certificate where odometer mileage is typically disclosed — is not subject to any type of mileage disclosure. To these dealers, the term “exempt” removes any obligation to make mileage disclosures of any kind 20

and exempts sellers from claims made by buyers as to mileage discrepancies.

It would thus appear to these folks that if a dealer doesn’t roll back odometers or otherwise manipulate them to make vehicles appear to have less mileage than they really have, and the dealer follows the rules of disclosure, he or she would be protected from odometer litigation. This has not proven to be the case.

A narrow reading of the term “exempt” overlooks an important area of the law. DTPA creates an independent cause of action for misrepresentation by a seller about (among other things) the type, quality, and characteristics of goods sold. And there is very little debate that the true mileage of a vehicle is a material fact that a buyer relies on. If the information from the seller is untrue or misleading, then the buyer has a potential cause of action.

In a suit for misrepresentation under the DTPA, the fact that a vehicle was exempt from the federal requirement that mileage be posted on the title certificate probably wouldn’t provide a defense to the seller.

Under the DTPA, the consumer doesn’t have to prove that the seller knew that the information was incorrect, and, unlike the federal odometer law, doesn’t have to prove that the seller actually tampered with or rolled back the odometer. That is, the DTPA will allow a buyer/consumer to prevail if he or she shows that the seller made a representation of fact, that the representation of fact was untrue, T e x a s

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and the consumer suffered damages as a result of the misrepresentation.

Even dealers who are totally innocent of wrong-doing, and, in fact, themselves victims of fraud, can easily get wrapped up in expensive litigation over mileage on a vehicle.

“Exempt” for federal disclosure purposes does not necessarily mean “exempt” from state misrepresentation laws Many dealers have assumed that if a vehicle qualifies under the federal disclosure rule as “exempt,” the entry of that word on the title eliminates all problems associated with odometers. In actual lawsuits we have seen, the buyers claim that they asked and were specifically told that the miles showing on the odometer were the true miles. In some cases, they simply say that they relied on the mileage on the odometer and weren’t informed by the seller of any discrepancy.

In one case, the plaintiff claimed that the vehicle actually exceeded 200,000 miles at time of sale, but that the dealer led them to believe the mileage was only over 100,000 (the vehicle had an old mechanical odometer that only went to 100,000 miles). Nothing in the dealers’ files indicated, however, that it was specifically disclosed EPI-TIADAhalf FEB2021.pdf

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1/10/21

In a suit for misrepresentation under the DTPA, the fact that a vehicle was exempt from the federal requirement that mileage be posted on the title certificate probably wouldn’t provide a defense to the seller. in writing that the mileage exceeded 100,000, much less 200,000, or that the vehicle was being sold without any actual knowledge of the true mileage.

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If it appears that the vehicle has more miles than was represented to the buyer, take immediate steps to resolve the dispute, even if it means making an adjustment in the price or buying the vehicle back.

Also, in each case, the dealer involved felt that he had no obligation to make any kind of disclosure since (a) the vehicle was exempt from federal disclosure, and (2) he had no knowledge of what the actual mileage was, and (3) on a vehicle that old, the mileage doesn’t make any difference anyway.

All of these lawsuits could have been avoided, or at

least more strongly defended, if the dealer had disclosed in writing that the dealer did not know the actual mileage the vehicle had traveled, and that in all likelihood, the vehicle had over 100,000 miles. A verbal disclosure of this fact, in the face of the buyer’s denial of the disclosure, results in a swearing match.

Dealers should not rely on the word “exempt” to replace written disclosure of excess or unknown mileage.

Fraud committed by prior owner

One of the other sources of odometer-related litigation we are seeing involves vehicles that have had odometers replaced by prior owners. These consumers are trading in their vehicles without disclosing to the dealers that the current odometer doesn’t reveal the actual mileage of the vehicle. In this scenario, the dealer taking the trade sells the vehicle to another dealer, who retails it, relying on the mileage statement given by the consumer who traded it in.

Sometime later, the new retail purchaser determines that the vehicle was repaired years earlier with more miles than the odometer currently shows. Title and repair history research show that the original owner had the speedometer or entire dashboard replaced, with the new odometer starting at zero or an amount less than the true mileage.

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The retail dealer is sued for misrepresentation or for rescission, despite the fact that he can show that he relied on an odometer statement showing the same miles he disclosed. In this situation, litigation can usually be avoided if the retail dealer buys the vehicle back and looks to his seller for compensation. The problem arises when an upstream dealer refuses to make good on the vehicle, usually declaring that “I did nothing wrong.” In those cases, it is often necessary to file cross-actions against upstream sellers, seeking indemnification for our dealer client. These cases often turn into multi-party litigation that run up large amounts of attorney’s fees.

The plight of innocent dealers has also been compounded by a spate of recent federal court opinions that assessed damages under the federal odometer law based on the fact that the dealer “should have known” about an odometer discrepancy even though he had no actual knowledge. The “should have known” standard places a burden on the dealer to do some investigation on mileage and not rely entirely upon the odometer statement received.

Cluster replacements

We’ve seen a recent rash of odometer litigation arising out of the replacement of electronic instrument clusters. Because of a failure of a vehicle’s on-board computing system, entire clusters have been replaced. Often the replacement is a used unit that has an odometer reading fewer miles that the defective replaced cluster.

If this is the case, and no written disclosure of this fact is given, there will likely be litigation when the buyer finds out about the missing miles. A disclosure statement, signed by the buyer prior to closing, informing the buyer that the cluster has been changed out and reporting the mileage on the old February 2021

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one at time of removal, is the proper way to handle this situation. The fact that a vehicle is exempt from federal odometer disclosure will probably not help the seller.

We also know of one Texas dealer who was charged under a federal criminal indictment for violating the federal odometer act by routinely replacing clusters that had high-mileage odometers with clusters that had low-mileage odometers and failing to inform buyers of the changes.

Utilize vehicle mileage and condition databases

Commercial and government services offer vehicle condition, history, and mileage information.

Attaching copies of printouts of such reports to a disclosure statement that is signed by the buyer and included in the closing documents is a good way of establishing (1) that the dealer relied on information from authoritative sources; (2) made a good-faith attempt to provide objective information to the buyer; and (3) disclosed to the buyer that there may be conditions to the vehicle that the dealer is not aware of. A sample “Used Car Condition and Mileage Disclosure” form is available to TIADA members at txiada.org.

Avoiding litigation

I have had dealers tell me that the price for older, higher-mileage vehicles would be the same regardless of whether it had less than 100,000 or more than 100,000 miles. The buyers and their attorneys obviously didn’t agree. And, if that were the case, then making a written disclosure shouldn’t negatively impact the sales process.

Once a discrepancy arises, it is important to promptly review the facts. If it appears that the vehicle has more miles than was represented to the buyer, take immediate steps to resolve the dispute, even if it means making an adjustment in the price or buying the vehicle back. Any loss at that point would likely be small compared to the price of multi-party consumer litigation.

Michael W. Dunagan is an attorney in Dallas, Texas who has represented the Texas Independent Automobile Dealers Association for over 40 years. He has written a number of books and hundreds of articles for trade journals and law reviews. His clientele includes dealers, banks, finance companies, auto auctions and credit unions.

Time to renew your dealer’s license? visit TexasDealerEducation.com 23

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feature

Deterring Dealership Crime with Remote Video Surveillance

by Jeremy White Pro-Vigil

A

uto dealerships continue to be an attractive target for criminals. Not only do they house millions of dollars of inventory, most of their high-value assets are located outside — making them very easy to access.

The cost of crime on auto dealerships adds up quickly.

According to the FBI, the average dollar loss per motor vehicle theft is $8,407. This number goes up astronomically, however, when you remove street crime statistics and focus exclusively on dealerships. Dealerships not only have to factor vehicles and parts into their losses; they also have to consider the costs associated with repairing property damage inflicted during the crime (broken fencing, smashed windows and doors, vandalized vehicles, etc.), as well as indirect costs, such as insurance premium hikes, attorney fees, lost productivity, and even damaged reputation.

Keeping your vehicle inventory safe from thieves, vandals, and other criminals is critical, but not all security strategies are equally successful.

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Move from Passive to Active Security

Some dealers opt to use some combination of fences, alarms, and basic “record-and-store” video surveillance as their security solution. While these approaches can certainly serve as a first line of defense, they are passive systems with inherent limitations. Fences can be easily breached, alarms can be circumvented, and simple security cameras only provide after-the-fact evidence.

To add a proactive security component, some dealerships will invest in security guards. But this is the most expensive approach to security, and guards bring their own set of limitations (fatigue, distraction, absenteeism, etc.).

An efficient and cost-effective way to deter crime is to use a remote video surveillance system. These systems provide 24/7 live monitoring and proven criminal deterrents, such as alarms, sirens, strobe lights, and recorded 25

verbal warnings. With remote video surveillance, auto dealers can move beyond passive security, to a proactive approach based on real-time detection and active deterrence.

Here’s a look at five additional benefits of remote video surveillance systems.

1

360-Degree Property Surveillance

Remote video surveillance systems can monitor every inch of your property to identify intruders, deter crime, and capture footage of incidents in progress — if they ever get that far.

2

Virtual Guards Many remote video sur-

veillance systems offer the services of virtual guards, or a team of live humans that monitor your dealership 24/7. Virtual guards have eyes on your property at all times, take appropriate action whenever a threat is detected, and cost a fraction of what live security guards cost.

3

Physical Safety A remote video surveil-

lance system is a safer choice for protecting your business than using live security guards, because

it reduces the chances of physical confrontations that could cause harm to perpetrators, guards, or police.

This is important from both safety and potential liability perspectives.

4

Remote Monitoring With a remote video

surveillance service, you have a team monitoring your property on your behalf. But, occasionally, you might want to “check in” on your dealership, too. As the name would suggest, remote video surveillance gives you this capability. You can pull up live or recorded footage with just a few clicks on your smartphone, so you can see site activity from any location, at any time.

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Improved Operations Remote video mon-

itoring also can be used to improve operations.

For example, you can see what vehicles and displays are most effective with customers, or evaluate live employee-customer interactions to ensure superior customer service. Most importantly, using a remote video monitoring service to secure your dealership will help you adopt a proactive security strategy based on deterrence. And, with deterrence, you’ll no longer need to worry about the cost of crime.

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feature

Employee Theft: More Or Less

by Bob Cumberworth Retired CPA

S

uper Bowl Sunday finally arrived. I was anxiously awaiting the kick-off and the commercials. With only five minutes to go, the phone rang. Should I answer it or let the answering machine take it? On the final ring, I decided to grab it. I knew I could get rid of this person quickly and not miss the kick-off.

That phone call was disturbing news about a person from my past with whom I‘d grown up.

Had I heard that he and his wife were charged with stealing from their company? I hadn’t seen or heard from this person for over

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By taking some simple precautions... you can decrease the likelihood of becoming a victim.

15 years and they lived in a state far from me. But that call, which caused me to miss the first quarter of the Super Bowl, intrigued me. With the information I’d been given, I searched the internet. I discovered that this person had destroyed a company and caused over a hundred innocent employees to lose their jobs through his fraudulent actions.

He was given the maximum sentence of seven years in prison and required to repay $750,000.

His thievery cost the county in which he lived and worked nearly $2,000,000.

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Don’t think this could happen to you? Think again. I wouldn’t have suspected my old acquaintance of being a fraudster.

Unfortunately, neither did his employer. Read on and you can learn what you can do to prevent fraud from happening to you.

Fraud — the Elements

To prevent fraud in your automobile dealership, it is essential to understand the elements that comprise it. Often called the fraud triangle, an acronym known as MORE may better define the elements — after all, the common fraudster wants MORE of what belongs to you.

M stands for motive — and the motive of every fraudster is financial. Their reasons are varied and may include debt or substance abuse issues. It could also be that they simply like living the high life. One key to prevention in your own dealership is to keep your eyes open. Make background and credit checks a standard part of your employment process. Also, beware of the employee that seemingly spends beyond their means.

O stands for opportunity. Who has access to your dealership’s assets? These individuals, more than any others in your organization, have the opportunity to steal, should they choose to do so. But, of course, as an employer, you would not hire someone you do not trust implicitly — especially if they are going to have access to your assets! So, just in case you hire someone with a hidden agenda, it is essential to have good internal controls in place. Internal controls serve to limit access to dealership assets and establish a system of checks and balances. Of course, it is important to remember that many fraudsters are quite cunning. Even with the best controls in place, they may just find a way to get around them — thereby February 2021

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making it your responsibility to keep a close eye on things.

R and E stand for rationalization and excuse. The typical fraudster has to rationalize and excuse his or her criminal act on the front end, and the back. It is almost like balancing scales.

But, once they rationalize their heinous crime and excuse it a few times, they become hardened and fail to hear their conscience anymore.

Now, you have a basic understanding of the mind of a fraudster. The question is, how do you prevent your dealership from falling victim?

Fraud Prevention

The key to preventing fraud is to attack the elements. If you dismantle and disengage MORE , you will LESS en the chance of falling victim to fraudulent behavior. What comprises LESS ?

L stands for leadership. Setting

.

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a good example is essential.

Employees notice when their superiors operate with integrity. In fact, when employees witness good leadership practices, they often attempt to emulate them. The opposite is true, as well. If your dealings with customers, employees, vendors and others are lacking in integrity, your employees may choose to adopt the same methods of behavior.

E stands for education. No matter what business you are in, employees need to be subjected to routine ethics classes. Yes, instilling values was their parent’s job.

Unfortunately, with the number of single parent families or dual income households, the media raises a fair amount of our youngsters.

So, do yourself and your dealership a favor — train your employees. Be sure to include case studies like the one in this article. It is important for them to understand the consequences of inappropriate behavior.

Finally, your own employees can help you keep a watchful eye out for fraudulent activities. Provide them with a discreet way to report any unethical behaviors. After all, they may know long before you do.

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The most unlikely people can be involved in fraudulent activities, and just one fraudster can ruin the business you have worked so hard to build.

S stands for systems. As men-

tioned previously, establish systems, or controls, in your dealership. This will not only reduce access to your assets but, by keeping a close check on your controls, you may just be able to prevent a fraudster from

skirting them.

S also stands for surprise.

Checking transactions, balances, reconciliations, test counts of parts, cash and other assets on a surprise basis, can be a major deterrent to a fraudster. Utilize a CPA firm with dealership experience to make those unexpected visits either in person or electronically, or both. If your employees know someone is watching, they’ll think twice before stealing.

The most unlikely people can be involved in fraudulent activities, and just one fraudster can ruin the business you have worked so hard to build. By taking some simple precautions, however, you can decrease the likelihood of becoming a victim. Remember, attack MORE with LESS! Bob Cumberworth retired after many years of working at LGT. With a team of dedicated professionals, LGT’s Dealer Services team provides a wide range of services for independent dealers. For more information visit lgtcpa.com or contact Collin Kanelakos at 214.418.1428 or via email at ckanelakos@lgt-cpa.com.

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board of directors meeting minutes January 25, 2021 | Courtyard by Marriott, Pflugerville

by Texas Dealer staff

Board Members in Attendance

Robert Beck, Mark Jones, Robert Blankenship, Brad Kalivoda and Juan Sabillón joined in person; Chad Lancaster, Greg Phea, Ryan Winkelmann, and Greg Reine joined via Zoom.

TIADA Staff in Attendance: Jeff Martin, Earl Cooke, and Sheila Andrews joined in person; Teresa Orkun, Patty Huber, and Claudia Rojo joined via Zoom.

Jeff Martin and staff updated the board on the association’s progress on the Five-Year Strategic Plan.

Barrett Scott with DiMeo Schneider & Associates presented a proposal to serve as the association’s investment consulting firm.

Director of Associate Member Relations Patty Huber presented a report on Associate member activity.

At its meeting on Monday, January 25, 2021, TIADA took the following actions:

Jeff Martin presented the FY21 budget on behalf of absent Treasurer Eddie Hale. A discussion took place regarding the Reserve Account.

President Robert Beck called the meeting to order at 1:03 PM

Old Business

Minutes of Last Meeting

President-elect Mark Jones presented the minutes of the last Board of Directors Meeting.

A motion was made to accept the minutes.

Moved by Brad Kalivoda, seconded by Juan Sabillón — PASSED

Treasurer’s Report

Mark Jones presented the treasurer’s report on behalf of absent Treasurer Eddie Hale.

A motion was made to accept the report.

Moved by Brad Kalivoda, seconded by Robert Blankenship — PASSED

President’s Report

Attendees reported on their member outreach calls.

Executive Director’s Report

Executive Director Jeff Martin reported on staff changes at TIADA and gave a brief update on Conference.

Director of Compliance and Business Development Earl Cooke provided a legislative update.

Mark Jones presented a report on the new CPO program.

Special Projects Manager Teresa Orkun presented a report on membership renewals and Auction App.

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A motion was made to move $250,000 from the Operations Account to the Reserve Account. Moved by Juan Sabillón, seconded by Greg Phea -PASSED President Robert Beck appointed a Financial Investment Committee to review options to invest funds in the Reserve Account. Committee is formed by Chad Lancaster (chair), Mark Jones, Eddie Hale and Greg Phea.

A motion was made to allow the Financial Investment Committee to direct TIADA staff on how the funds will be invested per the investment policy. Moved by Brad Kalivoda, seconded by Greg Phea — PASSED

New Business

A motion was made to accept Buckeye Dealership Consulting in the business partner program. Moved by Mark Jones, seconded by Juan Sabillón- PASSED A motion was made to adjourn the meeting.

Moved by Greg Reine, seconded by Brad Kalivoda — PASSED Robert Beck adjourned the meeting at 5:30 PM. Respectfully submitted, Ryan Winkelmann, Secretary A complete copy of any reports referenced in this document and more detailed notes from the meeting are on file at the TIADA office and available upon request.

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WE ARE OPEN! WELCOMING DEALERS & DRIVING VEHICLES THROUGH THE LANES!

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feature

You’ve Been Hacked!

Are You Covered?

by Rich Stazzone

Williams & Stazzone Insurance Agency

C

ybercriminals are everywhere stealing personal information about you, your business and your customers.

It is not a matter of IF but WHEN you will be affected by a Cyber Attack. Since 2015, the number of businesses reporting a breach is on the rise, large business victims have increased 73%, medium business victims have increased 100% and small business victims have increased 200%. Is your organization next? Are you protected? How will you pay for this if you are hit?

Our world today is data driven and sensitive information is stored and transferred electronically.

Protecting that information is a priority for all organizations.

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Cyber liability does not just come from a computer; there could be a theft of data from an external hard drive, smart phone or tablet.

The most common areas of concern are claims arising from unauthorized access to data containing both personal and business identity information and then determining and notifying those whose information was accessed. These concerns also include computer fraud for loss of money or securities due to fraudulent transfer instructions. Cyber liability does not just come from a computer; there could be a theft of data from an external hard drive, smart phone or tablet. The threats are not always from unknown persons — it could be from an unhappy vendor or employee.

Emerging Cyber concerns are extortion/ransomware and social engineering scams. Ransomware is 33

Reporting C yber C rime

by the National Cyber Security Alliance Cybercrime can be particularly difficult to investigate and prosecute because it often crosses legal jurisdictions and even international boundaries. The good news is that federal, state, and local law enforcement authorities are becoming more sophisticated about cybercrime and are devoting more resources to responding to these threats. However, law enforcement needs your help to stop the nefarious behavior of cybercriminals and bring them to justice.

Who to ContaCt

• Local law enforcement: Even if you have been the target of a multijurisdictional cybercrime, your local law enforcement agency (either police department or sheriff’s office) has an obligation to assist you, take a formal report and make referrals to other agencies, when appropriate. Report your situation as soon as you find out about it. Some local agencies have detectives or departments that focus specifically on cybercrime.

• The Internet Crime Compliance Center (IC3): IC3 will thoroughly review and evaluate your complaint and refer it to the appropriate federal, state, local or international law enforcement or regulatory agency that has jurisdiction over the matter. IC3 is a partnership between the Federal Bureau of Investigation and the National White Collar Crime Center (funded, in part, by the Department of Justice’s Bureau of Justice Assistance) Complaints may be filed online at https:// www.ic3.gov/.

additional resourCes

• Anti-Phising Working Group (apwg.org) • Financial Fraud Enforcement Taskforce (StopFraud.gov) • U.S. Computer Emergency Readiness Team(us-cert.cisa.gov) • U.S. Postal Inspection Service (uspis.gov) • Texas Attorney General (texasattorneygeneral.gov)

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evolving and becoming more advanced with infections up 40% within the past year. Extortion events can have a significant impact on business’ operations and often require payment of ransom to regain access to data and systems. (Editor’s note: See the July 2017, Texas Dealer cover story to read about a Dallas dealer and TIADA Past President who experience the extortion firsthand.)

Now is the time to evaluate the security of your system and procedures to help you fight fraud. Beginning to train employees to recognize and report suspicious emails can help prevent a ransomware event. Most businesses can strengthen controls over privileged access at little cost, by requiring privileged users to use stronger passwords and separate admin accounts and by prohibiting regular users from having local administrative privileges. Also, businesses need to make sure that they are backing up critical network resources, as well as proprietary software and databases that cannot be easily replaced. Finally, it is critically important for businesses to test their backup and recovery capabilities at least once a year, to be sure that the backups will be available when needed the most.

Cyber Risk insurance is now a necessity in our modern-technology driven-electronic communication world. The cost of dealing with a data breach goes beyond repairing databases, strengthening security procedures or replacing lost laptops. Regulations requiring notifications of affected customers also drive-up costs for companies in which a data breach compromises personal or confidential data. Depending on the terms of coverage, a dealer can get a standard milliondollar policy for around $2,000 annually. There are some smaller policies in the market too, even as low as $250,000, but cleaning up a data breach can get expensive in a hurry. It is recommended a dealer purchase a basic policy with a $250,000 limit at an annual cost of $300 annually vs. having no coverage at all.

Different underwriters may use different factors to rate the potential customer, but most underwriters use revenue when measuring the overall risk. $15 million in revenue is the separation line between small and large dealers for some underwriters; the Cyber Risk policies premiums start to increase at that point. To determine the appropriate policy for your dealership you will need to visit with your agent. Traditional business insurance may not be enough to protect companies from cyber-crime. It is important to note there are many coverage options to Cyber Risk insurance to help cover you for the cost associated with getting hacked and also to protect your business against potential liability.

Rich Stazzone is a Dealer Insurance Specialist at Williams & Stazzone Insurance Agency — A Preferred Business Partner of TIADA. T e x a s

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www.WSins.com February 2021

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Local Chapters CORPUS CHRISTI G.R. Moore The Car Shack (dates announced at www.txiada.org)

EL PASO Cesar Stark S & S Motors Meeting – 3rd Friday (Monthly)

Please Welcome Our Newest TIADA Members DEALER MEMBERS 29 Motor Company Paden Crow . . . . . . . . . . . . . . . . . . . 13800 State Hwy 29, Liberty Hill, TX 76842 Austin eAutos, Inc Justin Fosbury . . . . . . . . . . . . . . . 501 Louis Henna Blvd., Round Rock, TX 78664 Benz Auto Sales Marius Dura . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13541 Needham Pl, Willis, TX 77318 Bilo Lux Group, LLC Charlotte Besong . . . . . . . . . . . . . . . . 9701 A Honeywell St., Houston, TX 77074 BW Autos LLC Ihechiluru Osueke . . . . . . . . . . . . . . 3820 Vitruvian Way, Apt. 534, Addison, TX 75001 Dallas Skyline Auto Sales Silvano Mora . . . . . . . . . . . . 4613 E RL Thornton Fwy, Dallas, TX 75223 Fercan Enterprises LLC DBA Luna’s Auto Shop Riza Ercan . . . . . . . . . . . . . . . . . . . . . . 1410 College Ave., Houston, TX 77587 Frank’s Lobo Tire Johnathan Flores . . . . . . . . . . . . . . . . . . . 100 Pine Tree Road, Longview, TX 75604 Ipex Import LLC Fred Samiei . . . . . . . . . . . . . . . . . . . . . . . . . . . 8500 Sovereign Row, Dallas, TX 75247 Rapido Motors Danielle Baines . . . . . . . . . . . . . . . . . . . . . . 1405 N Union Bower Rd., Irving, TX 75061 Ron Montgomery Motors Scott Montgomery . . . . . . . . . . . 3325 S Shiloh Rd., Garland, TX 75041 Skylane Motorcars Jack Tong . . . . . . . . . . . . . . . . . 3227 Skylane Dr. Ste. 200, Carrollton, TX 75006 ASSOCIATE MEMBERS

FORT WORTH Chris Templin Auto Land Meeting – 4th Thursday of Jan–May and Sep–Oct

Car Capital Guy Cesario . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9231 Willow Street, Orland Park, IL 60462 Lot2you Finance Eddie Green . . . . . . . . . . . . . . . . . . . . . . 9111 Jollyville Rd., #245, Austin, TX 78759

resource guide The TIADA Website: www.txiada.org

HOUSTON April Hanson Coast to Coast Motors Meeting – 2nd Tuesday (Monthly)

SAN ANTONIO Jose Engler Irving Motors Corp (dates announced at www.txiada.org)

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Members can log in with their username/password and access our Dealer Member Directory, Legislative Action Center, Compliance Consultation Service and much more. Register for all upcoming TIADA events online through the Calendar of Events, access our online membership application, find contact information for all our Local Chapters, and access many additional resources through our Knowledge Base.

License Renewal Certificate

TexasDealerEducation.com

Texas Department of Motor Vehicles 888.368.4689 www.txdmv.gov

Office of Consumer Credit Commissioner 800.538.1579 occc.texas.gov

Texas Comptroller

800.252.1382 www.window.state.tx.us

NIADA

800.682.3837 www.niada.com

REPOSSESSIONS American Recovery Association

972.755.4755 www.repo.org or contact TIADA state office

FORMS

Burrell Printing

800.252.9154 www.burrellprinting.com

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feature

Surveying the Best and Worst Drivers in America This article was originally published by the EmpireCovers Blog and is shared with permission

D

riving is a part of everyday life for many Americans. As of 2018, there were over 225 million licensed drivers in the United States, meaning over two-thirds of the country are legally allowed to get behind the wheel and drive. Of course, just being licensed to drive doesn’t actually make someone a good driver.

Anyone who drives regularly has experienced bad drivers while on the road, with the worst offenders often becoming long-term reminders of what not to do while operating a vehicle. Recognizing that driving is a skill, and some people are better at it than others, the team

at Empire Covers wanted to explore how driving ability and driving records correlate to the kinds of cars people own and the states where they learned to drive.

To do this, we conducted a survey of over 2,600 licensed drivers from around the country, anonymously asking them to tell us what kind of car they drive, where they are from, how many points have been taken off their licenses, their accident and ticket history, and more. Once we evaluated the results, we found some very interesting trends and insights, which we turned into a series of graphics and maps. Read on to see all that data!

THE AVERAGE AMERICAN DRIVER BASED ON A SURVEY OF 2,600+ U.S. DRIVERS Average Number Of Points Taken

Percent Chance They Have Had

Off Their License: 2.51

Their License Revoked Or

Average Number Of Times Pulled

Suspended In The Past: 22.23%

Over (For Any Reason): 2.85

How They Rate Themselves As A

Average Number Of Tickets

Driver (1-10 Scale): 7.90

Received: 2.33 Percent Chance They Have Gotten Into An Accident While Driving: 57.17%

n. 6.

Percent Chance That They Were In An Accident Where They Were At Fault: 22.61%

As a baseline to help contextualize the rest of the data, we looked at the total survey responses to find what the average driving record looks like. We found the average driver has been pulled over just under three times and received 2.33 tickets from those encounters, resulting in an average of 2.51 points taken off of their license. We February 2021

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also found that over 57% of drivers have gotten into an accident before, while 22% of drivers have been at fault for an accident in the past. A similar 22% have had their license suspended or revoked before. Finally, the average driver gives themselves a score of 7.90 out of 10 in terms of how they perceive their driving ability.

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Best And Worst Drivers By Brand Of Car They Drive

HOW DOES TEXAS FARE? THE REPORT ALSO TURNED TO STATE-BY-STATE DATA IN DIFFERENT METRICS. HERE ARE THE RESULTS BASED ON 166 TEXAS RESPONDENTS: Average # of Tickets Received: 2.57 Average # of Times Pulled Over While Driving: 2.99 Average # of Points Taken Off Record: 2.71 % Who Have Been At-Fault for An Accident Before: 31.37% % Who Have Gotten into An Accident of Any Kind Before: 61.45% % Who Have Had License Suspended or Revoked Before: 28.31% How Texans Rate Themselves as a Driver on a Scale from 0-10: 7.88

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Having found what the average driver overall looks like, we wanted to find data on the average driver of different car brands. In the table above we highlighted the “best” brand in each column green and highlighted the “worst” in red.

One thing that caught our eye was the fact that Volvo drivers were the “worst” in three different categories, indicating to us that Volvo drivers are some of the overall worst on the road. This is even more interesting considering U.S. News and World Report ranked Volvo second on their list of safest car brands of 2020, meaning the safety record of Volvos has to fight against user error in addition to everyday driving dangers.

While Volvo drivers were consistently ranked near the bottom of almost every category and recognized that in their self-assessments, we found a few instances where driving records and self-perception didn’t match up quite as consistently. We found that BMW drivers are near the bottom in multiple important categories, including having the MOST average number of points taken off their license, yet they still rate themselves as the second-best drivers among all car brands. We found similar disconnects between drivers in Nevada and Nebraska, where they finished with the worst results in major categories but still ranked themselves in the top-five overall. Conversely, Subaru drivers have largely excellent driving records, yet appear to doubt their skills behind the wheel, ranking themselves second worst.

No matter where you live or what kind of car you drive, safety on the road is no accident. Taking steps to be a better driver can help keep yourself and others safe while behind the wheel.

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FORKS IN THE ROAD HOW DRIVING RECORDS & PERCEPTIONS OF DRIVING ABILITY DIFFER

BY CAR BRAND ON AVERAGE, BMW DRIVERS HAVE: The highest number of points taken off their license Been issued the second-highest number of tickets Been pulled over the third-highest number of times Still ranked themselves as the second-best drivers of the 17 car brands in the survey

ON AVERAGE, SUBARU DRIVERS HAVE: Had their licenses suspended/revoked at the lowest rate The fourth-lowest number of points taken off their license Been pulled over the fewest times Received the lowest number of tickets Still rate themselves as the second-worst drivers of the 17 car brands in the survey

BY STATE NEVADA: Nevada drivers have had the highest number of points taken off their licenses on average...

And still rank themselves in the top five in overall driving ability.

NEBRASKA: Nebraska drivers have gotten into accidents at the highest number of any state...

And still rank themselves in the top five in overall driving ability

BASED ON A SURVEY OF 2,600+ U.S. DRIVERS

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feature

Car Dealership Advertising Ideas to Drive Success Despite the Pandemic

by Zach Klempf

Founder and CEO, Selly Automotive

W

ith COVID numbers continuing to stay high across the nation, many consumers are still shopping from home, and although e-commerce has been around for many years, the pandemic has accelerated the shift to digital marketing and digital shopping. You may already be posting customer-centric content to your website’s blog. That’s a useful starting point, but in this newer landscape, what will be the most efficient use of time and have the best ROI for your auto marketing strategies?

Although some of the platforms for marketing are changing, the good news is that the foundation remains the same. Relationships and going to where the people are is still everything. With that in mind, let’s take a look at some of the top car advertising ideas that are both actionable and timely.

Facebook Marketplace, Instagram, and More

Did you know that more than 20 million people click on vehicle listings in Facebook Marketplace every month? Additionally, more than 1 out of every 3 people on Facebook in the United States use Marketplace to buy and sell things.

Facebook Marketplace is an invaluable resource for auto dealers, whether you are posting listings or posting ads to find inventory for those sub $10,000 vehicles.

Marketplace isn’t the only way to utilize Facebook for your auto marketing. A Facebook business page offers a megaphone for sharing valuable and relevant content with your 40

customers; if a particular blog post does well, you can boost its reach by creating an advertising campaign where the post appears as a sponsored post in customer’s timelines.

Another way to use your Facebook business page for auto marketing is video promotion, for example video test drives and vehicle walk arounds.

Shooting the video doesn’t have to be complicated: you can use your phone to record and upload it, in fact. Customers like to see salespeople, and video helps foster familiarity so that when they do come into the dealership, they feel like they already know you. There are many types of content you could use for your videos. One useful thing would be to record your cleaning measures; this reassures customers that they’ll be safe when they do come in.

Another example of a way to drive interaction would be to post a video contest showing three different vehicles on your lot and invite people to vote on which car they’d like to see the inside of. This question offers insight into what interests your potential customers and drives engagement, which will boost the post organically.

Set a deadline for when voting stops.

When that deadline passes, record an interior tour of the vehicle that won.

Think about what types of prizes your customers might enjoy or need, such as a free gas card. Besides asking people to comment to enter the drawing, consider inviting people to like your post and share it with their network to earn extra entries. This incentivizes shares and participation to boost visibility. Facebook’s still one of the most popular social networks, and T e x a s

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having people share with their networks expands the eyes on your post and business, without you having to pay for anything other than the prize.

Facebook’s integration with Instagram makes it simple to share video content so that your content reaches customers across various channels. As you repurpose content, consider some SEO research to explore keywords and bring more customers to your content organically.

Staying informed of where your customers are spending time may lead you to shift the platforms where you’re posting.

YouTube’s sponsored ads might be another good option to explore, instead of using ads on television.

Many people have stopped paying for cable and now watch their favorite shows using streaming services and YouTube.

If you don’t want to purchase ads on YouTube, consider recording your own YouTube content. Offer people tips on how to check their oil levels, how to change their windshield wipers, and similar basic car maintenance. At its core, however, your content should offer value to the customer. The focus is to build their trust in you as a source for car information.

You can mention your dealership, but instead of telling them how much you can help them, demonstrate that you are helping them.

use some of the tools mentioned above for your car advertising that connects to prior customers. For example, send a “Car Anniversary” text to a past client or a text asking if the client has any referrals and the fact your dealership has a paid referral program. These sorts of texts are simple — but meaningful — with the right tools, templates, and integration.

Leveraging digital tools to execute your car dealership advertising ideas doesn’t have to be overly complicated

or require loads of additional time.

Some apps can help streamline posts to Facebook and Instagram so that they are prescheduled, and there are dealer-specific systems as well. In fact, if you combine your CRM with automation, you can easily send text messages, timely and relevant emails, and more — all while saving time and energy on your marketing and communication and maintaining the personalized touch that strengthens customer relationships and facilitates closed sales.

Stay Connected to Your People and Leads Who Are Already There

Your advertising ideas shouldn’t only reach out to new people who haven’t purchased from you before; they should also include contacts and leads you’ve already gathered and stored in your CRM. This may be individuals who’ve purchased cars in the past, or it might be leads that you are nurturing. A robust CRM will allow you to create campaigns to target these customers or leads to reengage them.

It’s much easier to keep a lead than it is to get a new one. You can February 2021

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behind the wheel

Martin

TIADA – LIVE from the Kalahari

I

t has been a full year since Texans were first introduced to COVID-19 and started living with the Coronavirus.

Every industry in the state has been affected, some certainly more than others. The independent automobile industry is no exception. We have had our challenges, but as I always say, independent auto dealers are one resilient group.

I always knew our dealers would survive if not thrive in the face of adversity. Like everyone else, TIADA had to work through some new norms and we heard many new questions from our members. Below you will find a list of the top ten questions we have received over the last twelve months: 10. What do we do if our tax office is closed?

9. Are used car dealers an essential business and how do I know which order I should be following, the city, county, or state?

8. Do you know if I qualify for the Paycheck Protection Program and do you know where I can apply?

7. Have the laws changed related to repossessions and can our collectors work from home?

6. What are other dealers doing when an employee tests positive for COVID? 5. If an employee tests positive for COVID and they have been at work around other employees what is the dealership’s liability?

4. Any idea when the wholesale prices are going to come down and where are other dealers finding inventory?

by Jeff

TIADA EXECUTIVE DIRECTOR

3. Can I have a customer sign everything electronically and can I deliver vehicles to my customer’s home?

2. Insert any question related to a Zoom call here: How do I turn on my camera? How do I turn on my microphone?

Can you hear me now? Can you see me now? etc.

1. Will this year’s TIADA Conference and Expo be live or virtual?

Thanks to the help from state agencies, tax assessors, mayors, judges, legal scholars, experienced dealers, and IT professionals, we addressed each of these questions as they surfaced and evolved. That is, all but question number one, “Will this year’s TIADA Conference and Expo be live or virtual?”

Let me answer that question by telling you we have an all-new conference logo for 2021, we completely redesigned our conference website, we are already selling conference sponsorships, we secured the return of our all-time most popular keynote speaker — Roy Spence, and we signed a contract with the brand-new Kalahari Resort and Hotel to host our event on July 25–27, 2021.

Next month we will open conference registration and we will continue to make special announcements about education speakers, the expo, legislators who will attend, networking opportunities, and much more. I do not know what “normal” is, but having a live conference in 2021 feels pretty normal to me. See you in July!

Like everyone else, TIADA had to work through some new norms and we heard many new questions from our members.

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