How Safe Is Your Data   Identity theft is on the rise, and auto dealerships provide ample opportunity for it. How securely are you storing your customers' personal information?   By Miliss Gravois – Service Group DMS Specialist   "Car Dealers Held Responsible for Identity Theft." It's a recently recurring headline that has likely already caught your attention. Identity fraud is a wide-spread and very serious crime affecting millions of Americans annually to the tune of about $50 billion (yes, billion). Unfortunately, the nature of the automotive retail industry leaves many dealerships exposed to possible security breaches. And if your dealership is found to be in violation of compliance regulations, the dealer can ultimately be held liable.   Think about the exposure to risk in the dealership environment: thousands of customers' personal information stored in paper deal jackets on site; high turnover of employees who have access to sensitive data; and heavy customer traffic on the premises. These are just some of the reasons dealers need to remain vigilant.   In the past decade, more and more measures have been put into place to help safeguard non-public personal information about customers. Among these measures are such legislation as the Gramm-Leach-Bliley Act of 1999, The Safeguards Rule, the Federal Reserve Board's Regulation P, and the more recent Federal Trade Commission's Red Flags Rule. Many of these measures not only help to protect your customers, they also help reduce your exposure to incidents of identity theft.   Strati Papageorge, Director of Credit and Compliance Solutions with DealerTrack, has seen a shift in dealers' perspectives in the last four years: "The big buzz recently is the concern over the Red Flags Rule, but overall, this concern has helped dealers to develop more understanding of broader compliance and security issues. They're paying closer attention to where they stand on the compliance spectrum."   There are already a number of factors to be concerned about when it comes to compliance and data security within the dealership. It is natural for a dealer to have concerns, too, about the electronic files stored in their Dealer Management System (DMS). Fortunately, many DMS providers and integration companies are stepping up their technology to provide advanced security of dealership data. This is one area where most dealers can feel confident their customer data is protected.   Most reputable DMS providers already have reliable security measures built in, such as password-protected access; requirements for passwords to be changed regularly; encrypted data transmission; customized authorities for user roles; and recent implementation of vendor-certified interfaces and processes, just to name a few. If you are unsure of the level of protection provided by your DMS provider or integration company, Papageorge and Brent Allen, President of The StoneEagle Group both advise that you work with providers you are comfortable with.   Allen further recommends that you "read your provider's agreement carefully. If it does not refer to compliance with Gramm-Leach-Bliley or Regulation P, ask why." If you're not satisfied, or want to ensure compliance where your data is concerned, Allen recommends creating your own security document. "This document should be simple and to the point." And of course, "use compliant tools when possible: menus, cameras, or just good processes."   Papageorge points out that dealers must also do their due diligence regarding internal practices and employee training—educate employees about the importance of compliance issues and the possible ramifications of noncompliance. There should be a zero-tolerance policy for dishonest practices. He stresses that "all employees should also only have access to the minimum amount of customer information they need to perform their individual jobs. When an employee is terminated, that individual's access should be removed within 24 hours."   And your electronic data? As a general rule, it's better protected than those deal jackets and financials stored in your dealership's "Secure Document Area." Papageorge says this practice of "announcing" the location of sensitive information seems counter-intuitive. And because most identity theft is the result of smaller data breaches (say, for example, a dishonest employee makes away with a deal jacket), individual dealerships are far less likely to be the target of a larger breach (such as internet hacking).   The transition to electronic records goes a long way toward protecting your customers and your business from the threat of identity theft and non-compliance. A little preliminary research into the DMS provider's security policies is well worth the investment to ensure you are partnering with a company that can certify the safety of your data. Now, with that concern out of the way, you can focus your time on the more critical areas of importance—like that AFIP certification for your employees! ...read more

Finance&Insurance;   What's holding back your ESA production?   By Matt Woods – Director of Service Group Academy   Recently I visited a dealership whose used extended service agreement (ESA) production was down 10% from previous years. When I asked what had led to the decrease, they cited the following factors: Certified Pre-Owned. Most certified pre-owned cars come with a substantial powertrain plan, and some are starting to include comprehensive coverage as well on higher-end models. Cheaper units being purchased. A higher percentage of cars are being purchased at lower prices right now because customers are trying to be more frugal. When a car costs $7,000 and the ESA is $2,500, that's over 33% of the cost of the car to insure against mechanical repairs. Higher prices/less coverage. Any new car qualifies for comprehensive coverage. Some used cars, depending on mileage, might only qualify for the second-tier named component or powertrain plan. But the price is still substantial.   I listened to their feedback but stopped short of validating their excuses for declining performance. Instead I reminded them that most of the issues they referred to, with the exception of certified pre-owned coverage, have been true for years. Instead of giving credence to the reasons that customers object, we must reacquaint ourselves with the benefits of purchasing an ESA on a used vehicle.   A customer is much more likely to use an ESA with a used vehicle than with a new car or truck. On a new ESA, the customer usually won't use it for three to four years or 36k - 50k miles. On a pre-owned vehicle, they could be in need of coverage at the point of sale. This begs the question: Is an ESA more important to a customer on a used vehicle than a new? It's not more important, but it's more immediately relevant, especially in cases where the remaining factory warranty has already expired. If, in these cases, the customer leaves without purchasing additional coverage, they are choosing to self-insure, which can be costly.   We use price as a selling tool on new ESAs. Why? Because we're too often guilty of thinking that price is what sells. We need to remind ourselves: value sells. If value exceeds price, that's when a customer says yes. Naturally, the lower the price, the easier it is to build value. That doesn't happen as easily on pre-owned. So, we have to be better at building value. Showing the customer how the plan fits their specific driving habits is one way to attack their objection.   Speaking of price, can we take a 3-year, 36,000-mile used car plan that costs $2,400 and make it more affordable in the customer's eyes? Yes, and here's one way. What's $2,400 divided by 3 years? That's $800 per year. Still sound expensive? How much do you pay for your full coverage insurance (PDI, physical damage insurance), $90/month, $100, $120? At $90 per month, that's $1,080 per year. Most people pay more per year for full coverage insurance than the annual cost of an extended service agreement. Yet they may never file a claim on their PDI. When was the last time you took your car in for an oil change and the repairman told you it needed some additional work? It happens more often than we like to admit.   Finally, you must believe in the plan you're offering. Realize this used car plan WILL protect the customer and WILL protect your dealership. How does it protect your store, you ask? Ever been back in service when a customer was complaining about the high cost of replacement parts on their car, or the hourly labor rate in your service department? Protect your store from those negative scenarios. Remember, a negative encounter for a customer at your store, even though it's in the service department, will be remembered as a negative experience with the entire organization. The benefits you offer do more than just pad your paycheck. They give your dealership, its employees, and ownership a position of strength with which to handle customers after the sale. ...read more