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How Dealers Are Adapting to New Compliance Standards with Kevin Frye · Auto Collabs

• 0:00
  [upbeat music] All right, we're here at the CBT Fair Compli- or Fair Pricing and Compliance Summit. Thank you to our friends at Force Marketing for sponsoring our coverage.
• 0:08
  Next, we have an interview with one of my favorite people in the industry, uh, the one and only Kevin Frye. Kevin, you were just on stage, and, uh, Jim, Jim's a riot, and he's a great, [laughs] great interviewer.
• 0:19
  [laughs] Yes. Um, but, um, we were talking about your compliance officer. It came up- Mm-hmm... you have a compliance officer to kind of keep their eye on things. Can you talk through that?
• 0:28
  'Cause Brian Bensen- Absolutely... was a little bit surprised to hear you say that. Yes. And so tell me about, like, when you brought that compliance officer in- Well, I would say-... and what they're doing...
• 0:35
  first, we're, we're fortunate to be a large group and have the resources to be able to do this. Really, it was driven by OEM compliance, 'cause with 50-plus franchises, the amount of OEM compliance is overwhelming.
• 0:48
  And so we decided we're gonna bring on a full-time person to oversee all of the OEM rules.
• 0:54
  We run all of our, uh, co-op through him as well, all of our ads, and he's also responsible for keeping up with the latest changes with OEM compliance. So he's busy.
• 1:04
  Absolutely, and then this was before any of this FTC stuff went down.
• 1:09
  So we're working with him on FTC compliance, but once again, we're fortunate as a large group that we have in-house counsel, a corporate attorney, that's really helping us out on this FTC end.
• 1:20
  So you just had it from the stage. Uh, your group is one of the groups that did, you know- Yes... get, get the magic letter. Mm-hmm.
• 1:26
  Um, and so can you explain what happened when you got the letter from, like, that point till now? 'Cause you had to make a lot of changes- Yeah... and I know you did really quickly. Mm-hmm.
• 1:33
  Um, so can you talk about some of the challenges that dealers are facing even in having to make changes- Yeah... to be compliant? It was a real big challenge, and I'll explain why.
• 1:40
  So what, the first thing we need, needed to do is identify the primary issue, and for us, that was, uh, breaking out the doc fees.
• 1:47
  So we already broke out MSRP, discount, rebates, incentives, but there's not, like, a simple fee to write a doc fee- Right... that feeds to these. It's not like a modern-day- No... platform where everything...
• 1:58
  I mean, because it's so complicated, you can't just be like, "Add field." Yes. Right? And that's the challenge. So you got these legacy platforms. So for us, we used HomeNet. Mm-hmm. Can we find an empty field?
• 2:08
  All right, let's make this the field. Now we gotta feed the DMS to that empty field, then we gotta map it to the dealership website, then the third-party sites was a whole different bird- Right...
• 2:18
  because they all have different platforms. Working with them, how can we break this out?
• 2:23
  So that's why I made the remark, it's kind of bubblegum and rubber bands right now until hopefully they put in a simpler, more reliable system to accommodate the breakout of pricing.
• 2:33
  Do you feel like, um, as you look across the market, do you feel like most, the majority of dealers are already doing things that would make them compliant, or do you think everyone's got some room in what they're doing to improve?
• 2:44
  Oh, I think everyone's got some room, and, uh, one of the key remarks I heard last night at the networking event, pay plans drive performance, and if someone is getting paid on commission, they're probably gonna do whatever it takes to make the best paycheck, right?
• 2:59
  And that's not necessarily the long-term picture, and I think that's one of the things our industry needs to address, is how to best address compliance while balancing that with fairly compensating our people.
• 3:11
  What would you do at your group, if you don't mind me asking, as far as pay- What would we do?... pay plans and, like, how do, how do those two things sync up? It, it's a mix.
• 3:16
  I mean, it's a traditional commission-based system, but right now the big push is education- Mm-hmm... on the compliance, but then also showing them the benefits of how that will help them. Ah.
• 3:27
  And so if we can build trust, then we build value, and then we can better earn that price that we're asking for.
• 3:33
  So it almost sounds to me, though, like you're almost building value for your internal team in why they should be- Absolutely... uh, compliant with what's going on.
• 3:41
  Because like you said, the pay plan could drive behavior- Mm-hmm... uh, that is not... Like, the pay plan might not be driving compliance behavior- Mm-hmm...
• 3:48
  but if you can show them how compliance behavior actually makes it better for them. So it's like- Mm-hmm... you're selling the internal team on the benefits of compliance.
• 3:55
  100%, because if they don't buy in, nothing's gonna work. So we have to show them how it benefits them as well as the consumer. Okay.
• 4:02
  Well, Kevin, as always, thanks for being so open and sharing everything that's going on. Um, and always, I'm a huge fan of your social media feeds. [laughs] They, they actually put me at peace.
• 4:11
  A lot of peaceful moments in your social media feeds. If I put a smile on your face, then that's a win. You sure does. Well, okay. Well, thanks for giving us a few minutes today. All right, thanks.
• 4:17
  I appreciate it, brother. See you in there.