LIVE
Hey, everybody, welcome to the Car Dealership Guy Industry
Spotlight.
I'm your host, Sam Dark.
And coming up today, learn the most dangerous transaction
in all of automotive, how to protect against off-site deliveries,
and more importantly, how to level the playing field
with Carvana, CarMax, and yes, even Amazon
as they go into used car deliveries.
Joining me today is Preston Stewart, National Variable
Opst Director, Napelton Auto Group, and Rudy Nieto,
CEO, MavSign, props to MavSign for supporting today's show.
Let's get into it.
Hey, so Preston, before we go into the best practice
you're here to share, tell us a little bit about yourself
and the auto group you work for.
Well, I've been with the Napelton Automotive Group
for the past five years.
Before that, I was with the Vantau Group for about 21.
Vantau, Berkshire Hathaway.
Currently known as Berkshire Hathaway, yes.
Did you ever meet Warren?
I did, I got the opportunity.
What was it like?
I mean, he's iconic in finance.
He's a legend.
Yeah, he's a legend.
He's just about as real as you'd think he is.
Yeah, yeah.
So it's interesting, you've worked for two large organizations,
then Vantau first, Berkshire Hathaway second.
What's one thing you learn from both
that have helped you be successful today
an automotive others could learn from as well?
Consistency.
Okay.
Have a process, take care of your people.
Everything comes with that, right?
Yeah, yeah.
Well, again, Warren Buffa, iconic.
So today you head up National Variable Operations
Director for Napelton.
How many stores is Napelton?
We have 50.
Okay, and primarily located Midwest.
We actually have stores in seven states.
Okay.
So it's Pennsylvania, Florida, Indiana, Missouri.
Yeah.
A little bit all over the place.
You've got all the OEMs.
Pretty much.
Yeah, and it spans all of them.
And you work with all the different stores.
Is there any area of focus or expertise that you bring?
Mine would be more so in finance and compliance.
Okay, okay.
Well, let's talk about that then.
So it's interesting, you and I share some geography
in the Chicago land.
And one of the things I think that's great about automotive,
we talk about on the Daily Dealer Live a lot,
is how we are able in automotive to both compete,
but then also collaborate to achieve
an accomplished great result.
We've shared misery over stolen vehicles
and fraud and theft.
Tell us a little bit about how fraud,
theft and stolen vehicles have impacted you and your world.
Well, I'd say it's been a part of our business
and a challenge for all of us my entire career.
But it's been an ever-moving target.
I would say these last few years
have been some of the tougher.
Yes, because again, the AI, the deep fake,
the fact that these guys are just getting smarter,
technology's catching up.
And really just the old days of one simple ID verification
isn't enough anymore.
So at first it was physical theft, right?
During COVID, the deep dark days
when things were closed, to your point,
people would come in, they'd break in,
they'd steal the vehicles off the lot.
And then if you happen to be in a great state
where they went and prosecuted
and they actually went and tried to find and pursue,
that theft would be reduced because of the consequence.
If you're in a state where that didn't exist
and you and I shared that geography,
particularly in the Illinois area,
they had the upper hand.
We had to implement tools like GPS tracking.
We, at the Zygla Auto Group in the Lodz Act,
did you guys explore any options like that?
We actually utilize similar technology, yeah.
Okay, so it's in the vehicle,
you're able to track it, you're able to recover.
And then it seems like after COVID ended,
that theft transitioned from physical theft
into what you're talking about, right?
It's identity theft, it's income fraud,
it's all sorts of different things.
But they come up with new terms every day.
Yeah, yeah.
Are you able to quantify like,
what's been the cost of the organization
of that sort of fraud?
Man, it's hard to put a number on that.
I say probably to me, it's the reputational damage
that can be had from just again,
as a consumer, I've been somebody who's experienced
having your information taken.
It's terrible.
It really is.
And it's a big part of why I take it as serious as I do.
Yeah.
There's really three prongs to it, right?
So there's us as a dealership,
we sell to somebody and there's identity fraud,
we have a relationship with the lender.
We've got to protect the lender,
we've got to protect the dealer group,
we've got to protect the dealership.
And then ultimately we have to protect that consumer
to your point who was defrauded, right?
And so we have an obligation to protect everyone.
You mentioned your background in finance,
finance seems to be kind of that pivot point.
Like you've got to attack it,
you've got to find it, you've got to uncover it.
Gone are the days 20 years ago
where you kind of put a deal together,
hoped it would stick,
and then you try to deal with the challenges later.
We have to be furious, fast and furious
to borrow a line from the movie
in rooting out potential fraud and red flags of theft.
So would you say the cost is in the hundreds of thousands
and the millions?
Man, really hard to put a number on that,
but I will say this,
I mean 7.8 billion for the industry.
Yeah.
I think we're tracking over 9 billion for 2025.
So I'd say it's not a problem that exists just with me.
It's one that we all live on a daily basis.
Yeah, and I think that the best auto groups
end up being forced to come up with a strategy
of how do we identify, how do we route it out
and how do we protect all parties involved?
One area that you and I talk about often,
and it's the best practice we're coming here to today
is out of state.
So there are a lot of retailers today
that will deliver online,
that will deliver out of state.
So Carvana, I think of CarMax,
I think of a lot of the other retailers,
Amazon's even getting into the game.
They started at Hyundai, now they're in the used car game.
And more than ever, we have the opportunity
to sell cars out of our geography.
And that has challenges.
What are some of the biggest challenges
with delivering out of state?
It's a beautiful thing to be able to deliver a car
to somebody across country.
Yeah.
It's just being able to do it efficiently
and making sure that that person,
the verification of who's on the other end of that
is paramount.
Yeah.
So in the past, before a year or so ago,
if you did a remote delivery,
how would you verify the identity?
Well, oddly enough, my entire career,
it's been, I've worked with a company called MavSign.
And it's, in fact, even one of those
with Vantau, Berkshire Hathaway,
that was our number one partner
as far as for off-site deliveries.
Okay.
It's a peace of mind.
It's knowing that somebody on the other end
is there to catch it,
make sure they've actually met somebody.
They shook their hand, they got the thumbprint.
I mean, one of my favorite phone calls
comes from one of his MavSign employees
called me to tell me that's a second
they asked for the thumbprint right here.
Yeah.
The guy just ran right out.
Yeah.
Well, that seems pretty effective to me.
Yeah.
So, but before we go into that,
because this is the best practice
and this is what we brought here,
let's lean into a little bit of what you're experiencing
or what dealer groups might experience out there.
You know, it's interesting.
You get a customer says,
hey, I want to buy a car.
Your dealership, let's say, is in Iowa
and they want that car delivered to Texas.
You do all the paperwork remote,
maybe in the old world, you got a notary.
You were proud because you got somebody to do the notary,
sign the paperwork, send it back
and you send it off for funding.
What's the problem with that though?
I mean, you're just, you're again,
assuming you have a notary
because a lot of cases, a lot of groups
and I think everyone you're watching
would be able to admit this
that there's really not a great grasp on the process.
Yeah.
So, you know, with eSign,
you now have the digital sign with Route 1,
dealer track, even with Darwin, Darwin one sign.
There's so many digital ways
to be able to communicate with a customer,
but really not very many to be able to verify
the other person who's clicking that box
on the other side of the screen.
Yeah.
That's the biggest challenge I see for us.
Yeah.
How in the old world, how do most folks verify
who's on the other side?
So again, we got a ton of dealers,
ton of general managers watching.
Chances are you're probably using
one of these methodologies to verify today, right?
It's either a notary,
which I don't know what the limit
of the liability for a notary is,
but a notary is basically just saying,
hey, there was this person who showed me
a driver's license on the other side signing it, right?
Yeah, there's no guarantee.
That's the extent of it.
Or you shipped it out
and you kind of relied on the FedEx delivery address
to be accurate.
And so you're hoping that person on the other side
that picks it up is the one that signs it,
but you don't really have proof.
Like it is a custody care control challenge, right?
And you saw that probably when you were at Vantile.
You said we need a better way, right?
It was actually,
and we were one of the earlier adopters.
Yeah, to be honest.
And that was because of that exact fear of,
we had multiple stores that,
this is way before COVID.
I mean, it's been 15 years ago.
It was a problem we saw ahead of time
because we realized you can't solve fraud
by just having one point of contact.
You can't have ID one or other flag.
You can't just have one layer of protection against fraud.
It has to be multiple.
You have to have a multiple layer of defense
when it comes to this.
We've got to make sure we're really aiming at
the areas of biggest part of risk.
It's verifying the identification, the address,
the employer, a lot of onus is on us, right?
Yeah, yeah.
So you turned to MavSign.
So, and a Rudy, CEO, MavSign, welcome.
Thanks for having me.
Appreciate having you here on the show today.
So how does MavSign help validate
who that person is on the other side
and reduce theft and fraud?
Yeah, I think, I would say first and foremost,
we've been doing this for 18 years.
So we've got the scars.
Yeah, you've learned the lessons, right?
Battles, right, and we're seeing what happens
when a dealer tries to source their own notaries
or tries to do it their own way.
And the way we look at preventing fraud is that,
to what Preston said, it's not just one thing.
Oh, I did an ID check.
I did this or did that.
Well, the problem with the way a lot of dealer text-to-text
work is all those functions exist in separate places
and they don't talk to each other.
They're not, it's kind of this binary yes-no
that happens 10 different times
but nobody else is keeping score.
And so what we've learned over 18 years
is kind of the concept of a step-up verification process.
So we take all the things that need to happen
to be 100% certain that there's absence of fraud
and we put that into a tech-enabled service.
So we do have notaries in our network.
Matter of fact, we have close to 10,000.
We have access.
And there's nothing wrong with notary.
They're great.
But notary in and of itself doesn't suck, right?
Well, for starters, making sure they're good notaries.
They're sure and bonded and sort of fine.
And we go to jail.
And so we use that as a piece at the last mile
and we have found that as a huge value
and a big differentiator
but that is a complement to the full process.
So we do all the other things.
So if step 10 is, hey, if I've never seen this person
in person, it's a two-dimensional,
really it's just two senses, sight and sound, right?
You're going to five senses and three dimensions.
We have a lot of deals fall apart at that last minute
because of what Preston said.
I'm not doing a thumbprint.
We showing up in my house.
Yeah.
We catch plenty that will show up in an Uber
and say, yeah, I'm ready to sign.
So what are the instances,
how much fraud have you seen on identity fraud,
remote deliveries since you implemented this?
As far as remote deliveries, not very many.
Yeah, yeah.
Cause you're able to root it out with the process.
So let's talk about how it bolts in.
So you have a customer calls up.
Let's say I'm in Iowa.
Let's say the deal's in Florida.
Customer says, I want to buy the car.
You go through your normal process in the very beginning.
At what point is this product bolted into the process?
Like where do I start to engage with MavSign?
You know, there's a couple of places
where you could start it.
I would recommend at that point
you probably have the deal in your credit app software.
Yeah.
And you know.
Credit app software, so route one.
Yeah, so route one, for example,
you would initiate from that credit application.
Okay.
First and foremost, I would hope
that somebody at the dealership knows
that that's an offsite, right?
I mean, you can look at the address.
Now, sometimes people get creative with,
oh yeah, I'm tiling in here, but I'm buying it here.
Yeah.
Wait, so how do you define an offsite for the purpose?
An offsite is if they are signing,
not in the dealership.
Perfect.
I agree.
Because we've got our security perimeter,
I would say much better secured
at a dealership than offsite.
I think everybody would agree with that.
Yeah.
You've removed the anonymity, right?
Yeah.
Well, plus in automotive,
you actually have more protections
if you deliver on-site than you do off-site
in most states.
Correct.
So if you deliver off-site,
there's a lot less protections.
Identity fraud is one of those, right?
Also, returning the car and some other things.
This is different by state.
Recourse is different by state, yeah.
And so we would recommend initiating it from there.
And from that point,
there's not a whole lot the dealer needs to do.
Other than communicate,
we have a secure signing service
that is gonna take it from here
so you can take delivery at your door.
Yeah.
Once the consumer is prepped for that,
and they know that they're gonna do
a remote identity verification
and we're gonna have somebody sign,
we handle all the brain damage behind the scenes
of helping the F&I manager get the docs,
which ones need to be noted.
So finance still does the transaction.
It's finance still participates
as a matter of fact in the process.
Once they complete their identity verification online,
we can immediately engage the consumer
in a video ceremony without having to log in to Zoom
or Google or any of that and sell F&I products.
Who's we?
So do you sell the F&I products or does the store?
I've been an F&I.
I wouldn't mind helping right now on that.
I just wanted some help,
but no, we encourage the F&I manager to have,
I think they're still involved.
They should absolutely be involved.
And most people don't realize
video is part of the verification process.
Like why would I not have a conversation with you
and make it as real that I've never met you in person?
It's better than being on a phone or over a lead.
So we engage in the video process,
sell the F&I product.
At that point, our notary or some states
their signing agents are a little more advanced
than notaries could receive the docs
that need to go get done.
And, you know, we still encourage.
And when you say receive the docs,
how do the docs get transmitted?
They're just an upload into the,
we have a deal jacket in our software
that looks at what docs get signed.
And, you know, we do encourage you signing.
So if you have a process to e-sign,
yeah, great.
I mean, the less you have to go have paper the better.
It still doesn't eliminate the need
to have that physical in-person verification.
All right, so let's talk fraud
and let's talk e-sign for just a minute.
So one of the things I think that's interesting
about e-sign is just because it's digital
and it's got all the footprints of the digital piece,
it doesn't necessarily mean that the person who signed it
is the person who signed it, right?
It can still be games, right?
Yeah, well, I would tell you, you know,
this is something I think is, I would predict is coming.
And if anybody's done mortgages lately,
there's a lot of people got burned in COVID
with title fraud and mortgages.
And so what a majority of the mortgage companies
the lenders do is even if they're electronically
signing everything on an iPad or would have you,
they're still having a signing agent show up in person
to visually validate and confirm identity
that you're signing and it's not somebody
in the Philippines in a shot.
So part of MavSign, I sell a car from Iowa to Texas.
Part of your process is you have a physical person
that shows up at that delivery point
to actually accompany the paperwork.
Yeah, we control that last mile
and we flush out a lot of frauds
that even get to that point.
How on earth economically can that possibly make sense?
Like you couldn't Preston afford to send a porter out.
And by the way, you don't want to send a porter out
because the porter just wants to deliver the car
and move on, right?
The cost to a dealership to have a live person
on a remote deal sitting in front of that person
would be significant, right?
Lost productivity, risk, liability.
But you do enough transactions
that economically it makes sense.
Yeah, and you know, I think we're fortunate
we've had partners like Preston over 18 years
that have helped us curate the product
and he's continuing to help us make the product better.
And we're proud to do a business,
do business with the majority of the large groups,
including the top 10 in the publics.
And so they, for sure, it didn't happen on our own.
We learned through those scars
and we helped them through the problem.
Isn't it interesting that for such a digital remote process
that we kind of have to come back to a little bit of manual
just to make sure the person is who they say they are.
So in automotive, you and I Preston,
we all have a responsibility to make sure
the end user is who they say they are.
There's red flags of fraud, we've all learned that.
And we can ask questions,
we can ask for follow-up documentation.
But man, I agree with you,
nothing beats a living live person sitting in front
of that person in Texas on an Iowa sold deal
to validate that they are who they say they are.
Now, how do you back that up?
Cause like, I don't know, you find a bad notary
whoever's there that you show up to sign,
maybe there's some issue.
Like, is there some sort of a backing or a guarantee?
Yeah, we do have a limited fraud guarantee
on our secure off-site closing, which basically means
if you follow the steps now, we have lots of skippers,
we have lots of dealers that are like, yeah,
I want all that, but can you not have them do that?
We're like, no, that's exactly why.
The fraudsters are waiting for you to skip the steps.
What are some of the most skipped steps?
You know, there's lots of different types of ID fraud.
I mean, people have heard of elder abuse
with elders being a plastic class, military abuse.
So elder abuse, meaning they have to have capacity
to sign a contract and engage in a contract.
And there could be enticement or there could be pressure
by a family member, by someone external to them,
church members, maybe a girlfriend or someone, right?
Like trying to force them into engaging in a contract.
How on earth do you prevent against that?
Well, I mean, again, I go back to the years of experience
but we have a full team of people.
So most dealers have tech, right?
We've all got the tools.
I joke you could shoot a cannon down the hall of NADA
and probably kill 50 ID vendors, right?
So the reality is we have people behind it.
So we have a team that manages the signing agents.
So those are the people that are dealing with the consumer
and making sure things get done, communicating.
I'm not sure if you saw in this affidavit of identity
but we have a whole checklist of behaviors
to look out for.
So these are kind of enhanced signing experiences.
And the person sitting on the other side
needs to go check through to make sure
all those boxes are exact.
They check it off and then we get the thumb print
and we're kind of double triple verifying.
So we have a scheduling team that manages the logistics
of how those things get delivered.
Make sure we've got the right FedEx label
on the deal of word document tampering.
And then we also have a forensic team separately.
So what we've found is the IDs themselves
are very interesting.
But it's amazing how much you could accomplish
with a fake ID.
And I think a lot of them come from China and those areas.
But they can make a driver's license look real.
And there's a secondary step that you can go actually
ping the state DMV.
That's a great step.
But essentially anything that's not all green,
there's that step up process.
So we have forensic agents that are watching
and we catch a lot in the forensic process.
And then on top of that, we also have to remember
that this is not easy for the consumers to do.
We sell cars every day.
It's not every day that they got to go take selfies
and do this on their phone.
So we make sure we have a consumer side assistance
to go help the consumer.
Because there could be frustration and friction there
if you're not able to jump in and say, OK, what browser
are you on?
Turning out of private mode, that kind of thing.
Then make sure they can complete the identification.
And that's usually, again, if I'm a fraudster
and I want to skip a step, I can say, oh,
I can't do it on my phone.
I can or whatever.
Or with elder abuse, they love to say, oh, they
don't have a smartphone.
Well, how do we purify them?
There's lots of little tricks of the trade.
And we just do it because of the velocity and the volume
of customers that we have.
How'd you come up with this?
I mean, if it's 15 years old, it's a veteran company,
a veteran program.
Preston's probably got more stories
about our founders than I do.
Some that we can mention here.
Most we can't.
One of our founders, Daniel, who's a legend,
started the company with some friends from, actually,
they were AutoNation employees at the time.
And they decided to go fix this problem.
And then it evolved from just a old school
they were doing it in Excel to they added technology layer.
Last year, we released our new 2.0 platform, which
is just a modern tech stack to meet today's security needs.
And I think we've been a secret because a lot of times,
the big groups is where we started.
They don't talk as much.
I understand why, because they've got proprietary processes.
And really in the past 10 years,
we've gotten more downstream into the mid-sized groups
and the smaller groups.
The bigger you are, the bigger target you are.
And so that's been the trickle-down effect.
It's interesting that I guess because it's so hard,
there's not a lot of people who choose to go do what we do.
It's hard.
And it's hard having to have the no card, right?
Nobody wants to be the person that says,
everybody else is telling you how you can sell a car.
But we want to be able to tell you you can't sell a car.
And it's OK.
Well, and what you're doing is a heavy lift, too,
because it combines tech and manual, which the manual,
the human element gives, I think, most dealers
peace of mind with a little bit of backing.
So if they follow all the steps, there's a guarantee guarantee is.
We will cover up to $10,000 of actual damages.
That's very cool.
Deductible, recovering the car.
With the vehicle stolen.
And so we're putting our money where our mouth is.
Do you pay out on that often?
We've had a few in our history in the past year and a half
since our new platform, we've done had one.
So that's great.
And especially considering, I think,
fraud was up 50% year over year in Q1,
and it was up another 25% in Q2.
It's rising and people are wondering, where is that coming from?
I'm like, well, there's a lot.
The total damages and losses, a lot of them
are coming from the off sites because by the time you figure
out you lost the car, it's, you know, you're not fine.
You have no idea where it is.
And look, vehicles are expensive right now.
So there's a desperation out there,
both on the criminal side.
They can go resell, they can part them out,
they can do a lot of things.
But then also on the consumer side,
it's harder to afford a vehicle today
than it's probably ever been.
Like the number of weeks that it requires to pay a vehicle
is higher than it's been, I think, in the past.
Well, the average payment's higher than it's ever been.
Your, and also to take it into consideration,
it's also a lot less inventory.
Yeah.
So, you know, again, we got to protect our inventory.
Yeah.
So let's go back to the step because I'm in Iowa.
I sell a car to Texas.
It qualifies as remote.
It's not in the store.
So I send it to you.
You engage with the consumer on the other side.
I still, in my finance office, can present my product,
go through the paperwork.
You've got like a video piece, right?
But you have a person that goes to that address,
the residents, right?
Yeah, the bad guys like to change address.
So we catch that too.
OK.
That's one of their favorite.
Actually, that is a big deal, right?
They'll put down one address.
Maybe they'll show up in an Uber to sign it.
You mentioned that.
Or they'll call them the notary right before and be like,
hey, let's meet at the Starbucks over here versus the actual
out, which, by the way, to a dealer,
do you want a do you want a porter or a sales person
who wants to sell that car faced with that tough situation?
Or do you want someone who's a veteran that knows
how to deal with it?
How do you deal with it in that moment?
Oh, hey, I just got an Uber ride home.
I can't go inside.
Left my keys inside.
I need you to hook me up just for a few minutes.
How do you deal with that?
Well, for starters, if we're going to pull the no card,
we're probably not going to call the salesperson or the finance
manager that initiated that order.
We're going to call the general manager,
or we would encourage dealers to engage us
with their chief compliance or risk officer or security.
Those are the people that I think just the fact
that the store knows that's the level of visibility
ensures that there's no.
We also have to understand there
could be bad actors in the dealership.
So this is why we don't want the SRI manager finding
his own signing agent.
You keep it discreet.
Yeah.
So we keep all that under wraps.
And again, the dealers that use us use us really well.
So the person's on site, they go through the notary process.
They go through this process where they get this affidavit
of identity.
Affidavit of identity at some point
requires a thumb print.
How do you keep what do you do with the thumb print?
We give that back to the dealer.
That's for recovery purposes.
And it's just an easy deterrent.
Because if it is a felon, they are going to be thumb print.
They are going to know that now, I mean, obviously,
you've got new felons.
You have to learn in a few hours.
And they have gotten kind of smart.
They have mules that go in.
We'll do this on behalf of a ring.
But it definitely is an additional deterrent.
So I would say we probably, it's interesting to say,
how many frauds do you catch?
We get that question a lot.
So we catch in the act somewhere between $75 million
and $100 million a year.
And we expect that to continue to go up.
$75 million or $100 million in sales.
It's a transaction.
It's just a lot of money that we see.
But the challenge is it's the orders that drop, right?
So a lot of times they'll just fall out.
And we won't hear back from the dealership.
We won't, you know, if it's a fraud,
a dealer sometimes might be like, oh, OK, good.
But we're not.
It's the stuff you don't uncover.
Through your laps.
Yeah.
It's the stuff you don't uncover that actually
can be the most cost effective because they walk away
at the thumbprint or they walk away at the, hey,
we're going to send somebody to your house.
Usually it's not going to go that far.
But we do see them show up at other dealerships pretty
frequently.
So that does inform somewhere else.
So we might see a lot of times when
we see one that's more of a bust-out attempt,
we might see three of them or four or five of them.
And then we'll post a, we try to post
fraud articles once a week on LinkedIn.
We'll say, hey, if you were in this area.
And a lot of times we'll get a dealer come back, say, hey,
I got that too.
They're not on that sign.
And so there's really not that overall network of, hey,
this was a fraud here.
And where else is it happening?
And, you know, have a flashing light go off.
But we do our best with what's in our network
and check to see what's coming up again.
And law enforcement is another great informer.
If you communicate with law enforcement,
so I live in Houston, we're really tight
with Houston Police Department.
So we get a lot of that information from them
so we can be on the lookout ahead of time.
That is very cool.
So for the dealer that doesn't use a service like this,
what are their top three advice,
tips that you would give them
for conducting an offsite transaction?
Things to watch for as far as fraud?
Yeah, I mean, well, for certain,
they need to be able to compete,
complete a remote identity check with biometrics.
And, you know, that should pass with flying colors.
I would have a lot of confidence
on where that vehicle is being delivered
as far as the place the loan is being originate.
The place that they wrote down on their loan application
is that where they're taking delivery.
If it's not there, why is that?
Oh, if it's at an employer, okay,
well we should verify that employer, right?
And we should verify they work there.
And really it's just having the conversation
and invest in the time to ask questions.
I'm not sure if this has happened to y'all,
but when I was at F&I and back in my JMA&A career,
we had the hardest,
we had a lot of resistance to offsite deals
in the F&I department.
And God love them.
I mean, it was the way we designed their pay plans.
Yeah, they're less effective
at selling their product offsite, right?
And it hurt their numbers.
And so the challenge is, if you went and looked
and most people don't know this,
the major DMSs do have an offsite deal type.
Just nobody knows what to do with it.
But, you know, typically they just use it
to exclude those deals from their numbers.
Or they'll put it under house or something.
And so that in and of itself is a challenge,
is getting them comfortable.
I would say, you asked for some pointers,
getting F&I comfortable with offsite deals,
saying, hey, this is nature of the business.
If we want to be competitive
and we want to keep our price points where they are,
we have to be able to sell to everybody
and have that confidence.
So as a finance manager,
I need to have confidence that I can offer product well,
which today there's a ton of technology out there.
Darwin is what we use.
It has remote sign.
I don't know what you guys have.
Darwin.
Darwin.
Yeah.
So you've got this technology
that allowed me to see that person,
whether it's FaceTime or Zoom or whatever else,
there are similar things.
Pretty neat system.
I have to say we actually just tested this out at Lexus,
so why is that a, I'd say a few months back.
And it's just a very customer friendly F&I manager friendly
screen that's customer to left,
you're to the right, home's in the middle.
It's a great little sign.
So there's the revenue potential,
but the other side is to Preston's point,
like if there's a chance of it being fraud going away
and or it being uncovered as fraud later
and the whole thing gets charged back,
that's a disaster for any finance manager
because you're the last point of protection
for the dealer group.
So it's interesting how a simple step
can give you peace of mind.
I come, like in my mind, Preston,
the best practice is having that person on the other side
that knows everything to watch for
that isn't motivated to just try to put their deal together
and hope it sticks.
How do lenders engage and react with this?
Yeah, you know.
Because it's got to give peace of mind knowing that,
you know, there is that person on the other side
and this affidavit, a guarantee, and the 10th out,
it's like Tommy boy, right?
It's a guarantee on the box.
We are on the box.
We are in the Midwest.
You know, I would say the lenders are very aware
of the challenges and, you know, it's unfortunate.
I think you've read your lending agreement.
They're aware of it, but we have the risk.
Correct.
And so if I don't do it to your point about your,
like if I don't check every single little box
in the step in the path, it's back to me.
And that's why as a finance guy,
as an operator, I, in today, in 2025,
I got to check every single step
if I want to have that deal and have a hold.
Because guess what?
What do the lenders do after the deal delivers anyway?
They're going to call them.
They're going to make a phone call.
And they're going to kill my deal.
They could or they kick off.
Back to Tommy boy, right?
Like I got my deal, right?
And that's where a lot of deals unwind, too,
is on the lender verification.
Not because it's fraud, but because they get frustrated.
Does this help with a lender to have the affidavit?
Yeah, 100%.
And I think we could do a better job informing the lenders
when the deals are happening.
There's an information process where a lot of times
the lenders don't know it's an offsite
until the fraud happens when they make the phone call.
And I think that frustrates them.
It's like, hey, it'd be nice to know
that this was a different kind of risk.
We'll need to prove in the loan.
So there's only three major banks
besides the captives that allow for offsite.
Yeah, that's what I was just going to say.
And most dealer agreements, you're supposed to do an onsite.
Yeah, who are the three?
The ones that I know of, and this is partially just
going back to my F&I background, but US Bank,
Bank of America, Wells Fargo.
And there's one other that escapes me right now.
But I know those are the big three.
And I think maybe CAP1, but CAP1's got some other rules.
And the captives do allow it.
And obviously the Highline captives
are very aware of what we do.
Porsche, Mercedes-Benz, BMW, Audi.
They're all very aware of what we do and promote us.
And I would say, think of the concept of safe harbor.
So the way they promote us is, hey,
if you're going to do an offsite, use MathSign,
otherwise it's kind of a casino on the risk.
So you have to just decide if you want to take that risk
in doing it.
You know, hearing this and again,
I just go back to that having a live person
on the other side to validate it all.
Why don't the OEMs just say, hey,
we're going to require this?
I would love it.
No, I'm kidding.
But we don't need additional requirements or expense,
but it would give everybody peace of mind
and then it would put the onus back on them a little bit.
What does it cost to have that live person
on the other side?
What's the fee you charge?
You know, the average cost with all the pieces
is somewhere between $202 and $50 per delivery.
Based off the state and based off a year of practices
that can be passed on to the consumer.
Okay, what's the best practice for doing that?
Do you charge it as a remote delivery fee
or what do you do?
Yeah, I mean, the dealerships that do it, they do.
Some of them will combine it with the shipping
and call it an interstate delivery fee.
And it's not always in outside of the state.
It's sometimes it could be Houston to San Antonio.
What do you guys do, Preston?
It varies.
Okay.
Yeah, very state by state.
Some states say you can do that or some,
but the interpretation is it's not a doc fee
because it is a non-standard service
that dealerships provide to go do an offsite.
And I think it's just about disclosure at that point.
So it's interesting about disclosure.
It's interesting because a lot of groups
are focusing on offsite out of office delivery.
So Carvana, CarMax, and others,
Amazon is getting into used delivery, right?
Through dealerships.
Who's better, Carvana, CarMax, or you guys,
a franchise dealer like Preston,
remote delivering through you?
I think from a technology perspective,
there's, you know, we actually have some advantages
because we've got more experience through an offsite.
Yeah.
More advantage than Carvana and CarMax.
In our process because if you've ever sold a car to Carvana
or you bought a car, you're like,
this is messed up and they don't know it yet.
They have an army of people stitching things back together.
Yeah.
It feels like they're super tech savvy,
but they're not necessarily.
Yeah, they've got a great UI.
It looks cool.
You know, I've worked with them in some other businesses
that help prevent loss.
And they have a lot of people behind the scenes
stitching it together.
And so I think that's how they connect
all the dots behind the scenes.
But, you know, I don't see any reason why a car dealer
can't go toe-to-toe with those folks.
And I think it's a differentiator.
So I would rather buy from a person.
I mean, this is just me.
I'd rather buy from the right person
than buy from the computer.
I don't have as much trust in that.
That could just be me and them old,
but a lot of people say they like to do the technology.
At the end of the day, you know,
even they have somebody at the end verifying identity.
They do practice that process.
And, you know, Carvana has their own trucks.
I think CarMax has their own people now
if they're delivering to your house.
So they are doing an identity verification
as part of the process at the end with a person.
Now, how well they check it,
I think they've got some gaps just based off my experience,
but they are doing that process and it's consistent.
So, Rudy, with all this technology
and the people behind it,
how do your dealerships rate against Carvana, CarMax,
and coming up Amazon as they do remote deliveries?
That's a lot of pressure, huh?
Yeah, it is.
You know, I think there's a lot of dealers
out there kind of taking their ball and going home with that.
And we would tell you the opposite.
They don't even want to do a remote delivery
because of the risk, right?
Yeah, exactly right.
And what I would tell you is, you know,
what our process is designed to do
is allow dealers to sell location agnostic
and level that playing field with them
because, you know, there's a lot of advantages
to being a dealer in a remote process.
We just have to help with those few pieces
that, you know, they might be getting
outmaneuvered in today.
And so, you know, the way Preston store sell
and part of the reason they have such success
with their internet department is
they don't have to think about location
when they're selling a car.
They're selling it the same way anywhere.
It's just different taxes in different locations.
It is interesting, because as I think
about a remote delivery, one of the disadvantages we have,
besides all the protections you have delivering
something in your brick and mortar,
is you've got a ton of people backing you up
sitting inside the store at the moment
that transaction happens inside the store.
You deliver a car from Iowa to Texas.
I don't have anybody in Texas.
Now you bring someone, you bring that person
that helps verify that identity live on the spot.
It can be a pain, but it protects everybody.
But then you've also got a team of people
behind that person supporting the dealership,
both remote as that deal gets signed,
but also in the brick and mortar to teach
and train how to do it.
Tell us a little bit about that team behind the scenes.
Yeah, so we have a team that not only supports
the signing agents that are in person with the consumer
because they have questions.
A lot of times if they see a fraud
or they see something happen
they need somebody to talk to
and bounce that information off of.
We're supporting the consumers as well as we discussed.
We have a team doing that.
And then we have a team supporting the FNI department
in the deal as they're going through.
There's always gonna be a, hey, how do I do this?
Not every dealer does 20 of these a month.
They do two or three or four,
so they just need us to help get them unstuck
and be there to advise on the right way to do it.
So we have not only our forensic team
that really is looking for the fraud,
we have the utilization, we call it dealer success
that is working with the FNI departments
to get the transactions completed as quick as possible.
That's crazy.
It does, it is interesting.
I mean, Preston, it's smart for you guys to have done that
because you can, whether it was with Fantile
back in the day, whether it was working for Warren
as part of Berkshire today in your Chicagoland stores,
you can, you can treat the whole country the same.
You can deliver a deal to California or Florida
as easily, you know, that's pretty cool.
I mean, our fraudsters, they're not amateurs anymore, man.
They're really not, they're well-organized,
they're well-funded, you know,
and they're using AI against us.
Yeah.
So, you know, we just gotta come back at it.
Yeah.
So, so it's interesting, you know,
Preston, since you implemented this,
very seldom has anyone successfully stolen a vehicle
from you or perpetrated a fraud remote offsite.
When you use this, are you able to get
100% utilization with teams across the group?
Yeah, that's the challenge in everything we do, right?
Why is that, by the way?
If something works, what's the challenge in automotive?
You know, we have these processes sometimes
where we know it works, they're people driven,
and it's tough to get to 100%.
If it works, why don't we just do it 100% of the time?
That's all in the executions
about training your people to understand it.
I think that's been one of our biggest challenges
is making sure everyone's trained.
Yeah.
You know, we actually engage with their team.
They do an incredible job training with our staff.
I think we do it at least once a month.
You know, teaching the new guys how to do it,
how to get on the website, on the app,
make sure they understand the ID verification.
But again, education is the first step to getting there.
The second step is making sure your GMs
and they understand if fraud doesn't attack
where you're strong, it attacks the perimeter.
Yeah.
Okay, and making sure they understand
that they share in that, that they can avoid it too
by simply just doing one extra task.
I'll add one thing to it.
I think one of the challenges we have in automotive
is we're super, super hopeful.
We want to sell the deal.
We want to believe sometimes we love to be sold
more than the customer loves to sell.
We want to believe that customer
is everything they say they are.
And we want to create a great experience.
And one of the toughest things in our world today
is we do have an obligation to verify
the person's identity, make sure they are who they say they are
and defend the auto dealership, the lender,
and the consumer against fraud.
And it is an interesting position for us all to be in.
We preach it left and right with finance
and every role in the group.
Like you've got to go after this.
It's not the favorite thing to do,
but it's required because at the end of the day
we're held accountable for it.
And so the quicker we get to that point
where it's like, I've got to validate it for your own good
and we need to do it, we can get to 100%.
But I'm with you, like, if a process is skipped
to help defend against identity theft,
it ends up being, wow, this is a different situation
because, and then everything that happens
after the because ends up being a great story,
but it doesn't matter, right?
I have to say, I mean, even the eSign plus the ID verification
for a dealer that's just doing those two tasks,
I mean, it still doesn't equal security.
No, it doesn't.
Well, eSign is fascinating in and of itself.
I've seen that myself.
I'll try to like validate who signed what when
and there's absolutely the custody chain.
There's absolutely time and signature.
And you can point back to time, place,
where the customer was,
but at the end of the day,
who put that ink to pen that digital signature to the pad?
Nothing beats, actually, maybe that's the question.
We put a man on the freaking moon.
Why can't we just like without a person involved,
validate, start to finish and avoid identity fraud?
I mean, we do need a physical person.
It's better for now.
I mean, that's what we've learned with DeepFake AI
and what that's capable of.
I mean, it's getting worse.
Well, yeah, I don't know if y'all remember
somebody did a DeepFake of Marco Rubio
and I think he ran the government for half a minute.
I mean, that was funny.
Social media almost isn't interesting anymore
because there are so many fakes out there right now.
And it's even more terrifying to realize
that now there are companies
that will leave the name of the company out,
but I just did a demo the other day
where they actually have a service
that allows you to clone yourself,
your voice, your visual.
Oh yeah, that's all.
That's old school.
But the fact that you can now instigate
an automatic AI that goes and talks back to your customers,
well, you don't think that they're going to do that
the other way around?
Yeah.
You know, that's the fear, man.
You really, you have to have a process
that's people layered on top of tech.
You have to have that still, that piece
because that's how we survive for a really long time.
I love your message, Preston,
because it doesn't take one thing.
It takes multiple things.
We believe that here at our auto group.
We've got a head of security, Carrie Ann Thomas.
She combines the human element
with all the digital tools we could possibly have.
And then you pile on top of it things like GPS
to track the vehicles.
Sometimes it gets ripped out.
Sometimes it doesn't.
Sometimes it's secondary.
Sometimes it's primary.
But I'm fascinated by the idea of a live person
to help validate and back up a very remote process.
You know, and I'm fascinated by what it takes
from an accountability standpoint
in the organization to get to 100%, right?
Do you have any tips and advice
on getting 100% buy-in from finance GMs
and everybody else to follow this?
Any time a deal is not delivered in dealership?
Yeah, well, I mean, I think that this is,
shouldn't turn into an F&I bash thing here
because I think we forget, and you know,
all of us have been in some capacity in F&I.
They have a lot of things.
Oh, yeah.
It's like, who are the best drug owners in a dealership?
It can be the F&I management.
They're doing a lot of different things
and plus they have to sell.
So I do think, you know, we wanna just,
we wanna provide that additional backstop
to assist them to, you know,
we understand mistakes are gonna happen
and we understand things
are gonna get pulled different directions.
So we remove that emotional bias, right?
From the salesperson of the GM or the finance person
and we provide that added layer.
And, you know, we catch, we actually, you know,
are not supposed to catch certain other things
that they should catch upstream,
but we'll ask them because, you know,
maybe that got missed too.
And so I think in general,
the industry has made it easier to do the wrong thing
than the right thing in the F&I department
and yeah, it's incumbent.
There's a larger conversation to have
that includes the DMSs and the credit app softwares
that I would love to have at some point
on what we can do to make that more autonomous
and more foolproof.
But as far as buying,
I think it has to go back to the pay plan.
I mean, we are performance based
but we are a pay plan base.
So the dealerships that tie fraud to a pay plan
to say, hey, if you don't follow the process
and you lose a car, just like, I mean,
they're basically-
You're on the hook.
The same rules as a bank.
It's not just the chargeback of the profit.
It's a chargeback of the full loss.
I love it.
I do see that work.
It's got teeth.
Yeah, that kills the hope, which is good, right?
Yeah, so I think that that's like rule number one.
And then, you know, number two is
it's got to come from the top down.
This is not a convenience feature.
This is, you know, a requirement for compliance.
So do you have a report within the tool
that would show how many are quote unquote remote
and how many, because you and I had that conversation
like if dealership sells a hundred units
and if they say, hey, we do 10 remote,
chances are it might actually be closer to 20
because there's 10 that technically got signed offsite,
but they got kind of talked into offsite
and it kind of happened slowly.
And that's a fraud tactic as well, right?
So shifting last minute from onsite to offsite, right?
Yeah.
Well, think about just even, you know,
the straw purchase buyers with cosigner
somewhere else and all that.
So-
Do you do anything on straws?
We do catch some, but that's not necessary.
Exactly how we do it.
I mean, there's other ways to catch that.
We'll see.
We'll flush some out indirectly.
Just because we ask a lot of questions,
our forensics team, you know,
is looking for something that doesn't look right.
And so we do catch those things.
So if your company does the offsite
and we call you up and say, hey, we have a problem.
We think there was fraud.
Lender wants to charge back.
Will you engage in a conversation with the lender
and review all the stuff she does?
Yeah, we'll get involved with the PD and the lender
and we'll support, you know,
hey, these are all the things that we did.
It's pretty cool.
And, you know, the dealers that have used us
versus not end up much happier in that conversation, you know,
because they're like, well, I use MavSign
and there's enough of an awareness
in the police departments and the lenders like, okay, well,
they're good.
When you can tell a lender that, hey, here you go,
here's this on top of synthetic fraud alert,
ID 1 clearance, all the different systems we have,
we can actually kind of uphold our end
of the dealer agreement, right?
We're into the truly the best of our ability
to ensure that consumer was who they were.
Yeah, I love that thought.
We do a preferred lender program here at our auto group
and we have a very tight and close relationship
as you do with lenders and you have to have that
and part of upholding the promise to the lender
to your point Preston is delivering on tools
and tactics like this that helps them feel more comfortable
that when we deliver a deal offsite,
we know that it's a real deal.
They don't need to do a second layer
because the charge off rate is so low on those.
Yeah, I mean, and we would love to get further downstream
and help them with some of their underwriting.
If we're already doing all these validations,
all right, so that's a call to the lenders.
Reach out to these guys.
So last question, what's next?
What are you guys working up next as you innovate?
What's the next big problem, next big risk?
Our belief is that this kind of transaction is gonna grow.
So then the fraud risk is gonna increase exponentially
along with that.
We feel like we have to answer that call.
I would say what's next,
we're learning what is happening
with what the fraudsters are doing.
There's new types of fraud popping up all the time.
But I do think there's more types of verifications
that we can provide in that driveway experience.
So do we need to help them with insurance verification?
Do we need to help with actually a visual inspection
of the collateral to make sure that the collateral
is what they say it is.
And we've got some ways that we're working on doing that.
I think a lot of people have asked,
hey, why aren't you working
with the out-of-state tax and title companies?
So we have that in the work.
So I think there's just lots more pieces to that workflow
to make it a more lights out transaction
than what it is today.
So I wish you luck in that.
I mean, one of the biggest challenges in automotive
is there's so many fragmented systems
that just don't play well with other, don't talk to each other.
We talk about it all the time on the weekly show,
the Daily Dealer Live,
but also here as well that,
between your dating, your DMS, your CRM,
your Route 1 dealer,
like there's so many different forms and formats.
And one of the challenges in identity fraud
is bringing all those together.
And you're the closest I've seen to be able to do that.
But the industry really needs to get together
between lender and dealer and OEM and figure out,
how do we bring this all together
to best protect everybody,
but then also deliver the best experience
to the consumer going forward.
Yeah, well, Preston, we appreciate you bringing this
into the Card dealership guy network
as a best practice from Vantile Berkshire Hathaway,
you brought it to Napleton as well.
This simple idea of having a live person on the other side
to validate, to uncover fraud theft
and really providing that additional peace of mind
to yourself, to your lenders,
that they are who they are.
So thanks for being on the show today
and thanks for bringing this best practice.
Happy to come on.
Awesome.
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