TRUE CAR and ZAG Cyber Bandits, Parasites or Good for the Car Business?

Jim Ziegler asks...

I am hearing a lot of discussion about True Car and ZAG. I continually scratch my head and wonder if desperate dealers are doing the marketing limbo "How Low Can You Go?"

Are we so bad at what we do that we have to line up and pay vendors to lose money? AND, who is giving these people access to your data that is used against you?

Who owns these companies and what might be their ulterior motive? Sometimes I ask questions to which I already know the answer.

Am I wrong?

What do you think... JIM

Jim Ziegler's Guidance and Recommended Action Plan:

Ten Areas We Need to Concentrate on to Bring This Monster to It's Knees...

Government investigation of ALL Data Aggregators taking consumer information from dealers' DMS. Sadly enough, dealers who do business with TrueCar are exposed to liability charges. Cut off all access to unecessary data, no matter who takes it from the dealers DMS and make it illegal to "resell identifiable consumer data" and "transactional data".
Educate Your Fellow Dealers; If anyone takes financial transactional data, they expose the dealer that allowed it to violations, especially if it is passed on to other vendors or shared.
Educate Consumers to what they're doing with their information...
a. You buy a car from a dealer, do you really want your personal information, and maybe even your financial information, passed along and sold and shared by "God knows who?"
b. These People Charge the Dealer $300 which the dealers have to build into the deal
c. Your Privacy and the Security of your Information could theoretically compromise your identity if you do business a company that takes data from the dealership.
Educate Investors and potential investors they could possibly be mislead if anyone is telling them this is a safe investment because of all of the dealers pushing back, associations pushing back, and government regulators in many states coming after TrueCar's business model as NOT compliant, in some cases they're saying it is Not Legal.
AMEX, USAA and all of their affiliates do not want the bad consumer relations this push back is creating with their members and customers.
Cancel your dealership's Affilation with TrueCar. Tell people with TrueCar certificates that YOU don't honor TrueCar and you feel the company is NOT reputable. Educate consumers as to perceived data exposure if they buy from a TrueCar dealer. Make sure that each consumer knows that using TrueCar actually increases their vehicle cost by $300 to $400.
Make the dealers selling at huge losses take all of those deals. Big problem right now is too many Nissan Dealers and others are taking huge losers to get the factory money. The TrueCar reverse-auction business model will continually push those numbers down until the factory money is non-existent. Consumers need to hear from many dealers, "We don't do TrueCar"
Keep calling your National and State Dealer Associations demanding they get involved and stay involved... No excuses.
Get the Manufacturers into the game. If GM, Ford, Toyota, and other majors change the rules about how we advertise and do business to protect the dealers, we can cut off their ability to set pricing. So keep it up at every dealer meeting. Call your Dealer Council Members and protest to your factory reps. Tell the manufacturers, if they want showroom and facility improvements, we need the ability to make fair profits.
Tell everyone you know. Educate other dealers and industry people. Watch the Painter interviews... I believe this is the first time a vendor has publicly announced they intend to bring down the dealers and hijack our business, taking our profits and starving us out with our own data. Painter has said manufacturers and dealers should go bankrupt and he, in his God-like way "will control distribution..."
When the TrueCar-Yahoo Deal kicks in we need to stand firm and "Just Say No" we don't honor TrueCar deals.

Read this article as a reference: http://www.autonews.com/apps/pbcs.dll/article?AID=%2F20110831%2FFIN...

AND, if you doubt the mission... read this... http://www.zag.com/websiteASSETS/whitepapers/ZAG-WhitePaper3.pdf

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Comment by James A. Ziegler on January 9, 2012 at 4:31pm: Uh-Oh, evidently this must be something California attorneys said about TrueCar

Comment by James A. Ziegler on January 9, 2012 at 4:30pm: MANNING, LEAVER, BRUDER & BERBERICH
ATTORNEYS A T L A W
S U I T E 6 5 5
5750 WILSHIRE BOULEVARD
LOS ANGELES, CALIFORNIA 90036-3637
TELEPHONE (3 2 3 ) 9 3 7 - 4 7 3 0
F A C S I M I L E ( 32 3 ) 9 3 7 - 6 7 2 7
www.manningleaver.com
J O S E P H E . B E R B E R I C H
R O B E R T D . D A N I E L S
B R E N T W . S M I T H
P E N N Y L . R E E V E S
H A L B E R T B . R A S M U S S E N
T I M O T H Y D . R O B I N E T T
Y E N Y A O H S I E H
G A R Y H . P R U D I A N
W A D E R . K A C K S T E T T E R
F R A N J O M . D O L E N A C
A R J U N P . R A O
C R Y S T A L S . Y A G O O B I A N
D E WI T T M . M A N N I N G
( 1 9 0 9 - 1 9 9 2 )
G E O R G E E . L E A V E R
( 1 9 2 9 - 2 0 0 3 )
W A L T E R F . B R U D E R , J R .
R E T I R E D
Manning, Leaver, Bruder & Berberich
Executive Summary of TrueCar Memorandum
This is an Executive Summary of our memorandum to the California New Car Dealers
Association in response to the Association’s request that we (1) review the occupational license status of
TrueCar, Inc., and affiliates, Zag.com, Inc., Zag Automotive, LLC and Drive Your Dream (hereinafter
collectively referred to as “TrueCar”); and (2) comment on potential occupational licensing and/or
advertising issues associated with TrueCar’s brokering program and its websites. This memo is not
intended, nor should it be received, as legal advice or a substitute for legal advice to California vehicle
dealers. Dealers should consult with their own legal counsel for legal advice that may pertain to their
situation.
CONCLUSION
TrueCar is an autobroker and vehicles displayed and offered for sale on TrueCar websites are
advertisements to the public and must comply with California law. It appears that many facets of the
TrueCar/Zag broker program fail to comply with California law and such non-compliance could expose
both TrueCar and participating new motor vehicle dealers to legal liability and/or license action.
DISCUSSION
Zag.com is an Autobroker: Zag.com, Inc. (“Zag”) is licensed by the California Department of
Motor Vehicles as an autobroker (License No. 67692). On its website (www.zag.com), Zag holds itself
out to the public as “a TrueCar Company” and members of the public that visit the Zag homepage can
click on a “Buy A Car” icon which will automatically transfer an internet user to the Drive Your Dream
website (www.driveyourdream.zag.com) – which also indicates that it is “a TrueCar Company”.
Likewise, the TrueCar website (www.truecar.com), although it has a different interface, operates in a
similar manner as the Zag/driveyourdream website. (The above websites are referred to herein as the
TrueCar websites.)
Dealers that participate in the TrueCar program are required to sign a Zag agreement which,
among other things,

Comment by James A. Ziegler on January 9, 2012 at 4:29pm: “Brokering” is an arrangement under which a dealer, for a fee or other consideration,
regardless of the form or time of payment, provides or offers to provide the service of arranging,
negotiating, assisting, or effectuating the purchase of a new or used motor vehicle, not owned by the
dealer, for another or others.
The manner in which TrueCar operates clearly falls within the Vehicle Code definition of
“brokering”. TrueCar arranges and effectuates vehicle purchases for consumers, assists consumers in the
purchasing process, obtains negotiated prices for consumers from selling dealers, and obtains a fee for its
brokering services. TrueCar websites make the following statements to the public: “We secure a price
guarantee for you.” “We provide you with a custom certificate that guarantees your deal.” “We search
your local area to find dealers with no haggle prices.” TrueCar’s operation is unlike non-broker
companies (e.g., Edmunds, Kelly BlueBook, etc.) which operate websites that contain generic vehicle and
price information and may generate simple contact leads for dealers to pursue.
Non-Compliance with California Autobroker Law: Other than maintaining an autobroker
license endorsement, we find no evidence that TrueCar is complying with a number of autobroker
licensing requirements. Specifically, there is no evidence that: (1) there is a written broker agreement
entered into with each consumer for whom TrueCar brokers a vehicle sales transaction and that a copy of
it is provided to the consumer and selling dealer. [See Vehicle Code Section 11736(a).]; (2) TrueCar
discloses to the consumer that it is an autobroker and that it receives a fee from the selling dealer for each
vehicle for which it brokers a sale [See Vehicle Code Sections 11736(f) and 11738(d).]; and (3) that there
is a disclosure on the face of the retail sale contract that a fee was paid to an autobroker and the name of
the autobroker. [See Vehicle Code Section 11713.1(x).]
Advertising Issues:
1. The Statements and Information on the TrueCar Websites are Advertisements under
California Law: Whether statements, representations, and other content contained on TrueCar websites
are “advertisements” governed by the California Vehicle Code and DMV Regulations depends on
whether they are “intentionally communicated to the public generally for the purpose of arousing a desire
to buy or patronize”. [See section 255.00 of Title 13 of the California Code of Regulations.] It is our
opinion that enforcement agencies will most likely take the position that most of the content contained in
TrueCar webpages are advertisements which must comply with California law. This assessment is made
because the TrueCar websites are available to the public by simply entering the TrueCar website
addresses into one’s web browser (much like web browsing an e-version of a newspaper). Some of
TrueCar’s subsequent webpages are only accessible after entering a name, address, telephone number,
and email address. However, any member of the public can do so and entering fictitious information will
also permit an internet user to access those subsequent webpages. Moreover, it appears that an unlimited
number of members of the public can enter a name and email address and obtain a Price Protection
Certificate to use with the same dealer with regard to the same vehicle each con

Comment by James A. Ziegler on January 9, 2012 at 4:28pm: TrueCar has initiated a national media campaign to
drive members of the public to its websites for the purpose of effectuating vehicle sale transactions – for
which it receives a fee of $299 or $399 from the selling dealer per vehicle sold. It is doubtful that any
enforcement agency will take the position that TrueCar’s synchronized media campaign and websites are
not intentionally communicated to the public generally for the purpose of arousing consumers to buy
vehicles through its brokerage operation. For purposes of the discussion below and the conclusions
concerning advertising law violations, we assume that representations and offers made on the TrueCar
websites are advertisements made to the public generally. Also, as noted below, Business and Professions
Code Section 17537.7 is an outright ban against invoice advertising and not subject to the to the public
generally requirement of DMV Regulation 255.00.

Comment by David T. Gould on January 9, 2012 at 4:22pm

Ohio Automotive Dealers Association. Click for web site.

TCSTODAY

Please click the links below for a memo from OADA President, Tim Doran and BMV Correspondence regarding TrueCar.

Memo from OADA President Tim Doran

TrueCar

Comment by James A. Ziegler on January 9, 2012 at 4:12pm: Joshua at the Battle of Jericho--Jericho---Jericho

Joshua at the battle of Jericho- And the walls came tumbling down...

Comment by James A. Ziegler on January 9, 2012 at 4:09pm

California New Car Dealers Association

Dealer Alert

                                           ZAG / TRUECAR

          In response to a large number of inquiries received from dealer members, we requested outside legal counsel, Manning Leaver, Bruder & Berberich (who also authors the California Auto Dealer Advertising Law Manual), to research the occupational license status of TrueCar, Zag.com, Inc. and affiliates and opine on a variety of DMV licensing and advertising issues associated with the TrueCar program. Attached please find a copy of an Executive Summary of a Memorandum prepared by outside counsel.

            The Executive Summary identifies a number of problems with the TrueCar model that could expose participating dealers to legal and/or licensing liability. Dealers that participate in the TrueCar program, or other similar programs, should individually review such programs with your own legal counsel for legal compliance.

REMINDER: ANY AGREEMENT AMONG A GROUP OF DEALERS NOT TO DO BUSINESS WITH A PARTICULAR COMPANY, OR THE ORGANIZING OF AN EFFORT TO BOYCOTT A COMPANY, COULD BE CONSTRUED AS AN AGREEMENT TO ENGAGE IN A GROUP BOYCOTT OR REFUSAL TO DEAL. SUCH AGREEMENTS MAY VIOLATE FEDERAL AND STATE ANTITRUST LAWS.

Comment by James A. Ziegler on January 9, 2012 at 3:34pm: USAA holds its suppliers and contractors to the highest standards of ethical conduct. Suppliers and contractors are expected to avoid both actual and potential conflicts of interest — those circumstances in which their personal interests influence or appear to influence their ability to act in the best interests of USAA and its members.

In the context of your business relationship with USAA, direct questions and/or report misconduct involving conflicts of interest, the offer or acceptance of gifts, favors, entertainment and other forms of noncontractual consideration, or suspected fraud internal to USAA to USAA's Ethics Program Coordinator or the Ethics Helpline at 1-800-245-6409.

Comment by Heather Graham on January 9, 2012 at 3:22pm: From the Washington (DC) Area New Auto Dealers - on the heels of the VADA:

TO: All WANADA Dealer Members

FROM: Gerard Murphy

SUBJECT: Urgent - WANADA Dealer Members and TrueCar

The Virginia Motor Vehicle Dealer Board, meeting in Richmond today, has just ruled that TrueCar is in violation of Virginia laws prohibiting third party solicitation of motor vehicle sales and related compensation. Accordingly, Virginia dealers utilizing the TrueCar service going forward are subject to legal sanction by Virginia. Please note, the VMDB intends no retroactive prosecution.

The full ruling by the VMDB and guidance to Virginia dealers will be issued later this week. Please stand by.

Comment by Thomas A. Kelly on January 9, 2012 at 3:13pm: @ David, They did indeed...TC's council started to get into how they could do whatever in just a few days and they informed him it will not work that way and that they were there for the purpose of ruling on what was the current model...TC appeared to want to negotiate right there on the spot...to me anyways.

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