SHADY Car Dealers Are DONE! LIVE From Fair Pricing Summit in Washington DC | Episode 1091

It's noon here in Ventner City, New Jersey and our nation's capital Washington D.C., and this is

Carnage Live for Tuesday, June 16th with your hosts, me, Ray, here in my living room in Washington,

and Zach, outside of the Fair Pricing Summit in Washington D.C., bad connection and all,

he's here, he's ready to give us some update, reporting as to what the hell's going on there.

How are you today, handsome? I'm doing fantastic, man. Can you hear me okay? I apologize in advance

for the internet connection. I'm doing the best I can. Today's show, folks, is brought to you by

caredge.com. For those of you that are unfamiliar, me and my dad, or should I say my dad and I,

and our incredible team, have been providing support through the car buying process for six

years now, including grading car dealers nationwide based on how transparent they are,

which dad, if I may, I am sitting here at the Salamander Hotel in Washington D.C. This afternoon,

I will be joined by Senator Bernie Moreno, who is doing a speaking presentation here about

fair pricing in the auto industry. Man, oh man, I was just in the room with a bunch of car dealers.

I got the mic for a second, and the dealers sitting next to me, the owner or one of the operators,

excuse me, of Chevy Chase Acura. Man, it was a breath of fresh air that they have an A grade

over on caredge.com, because that was nerve-wracking, man. I gave them a high five, because holy cow,

I'm in the room today with car dealers, the owners, the operators,

and I've made it out unscathed thus far. But dad, we're talking about the FTC compliance and all

the things related to that, so we'll spend today's show talking about it. Shady car dealers are done,

and wow, am I seeing and learning a lot today, being in the room with all these folks?

Well, what exactly? Not to sound like a professional interviewer, because, well,

that would be impossible, because neither an interviewer nor a professional. But what is it

that you have heard in the conversations that you've been having with some of the dealers there,

as to their thoughts on what the FTC is trying to bring about and enforce?

Yeah, so to set the stage for everyone, and maybe I'll give you the opportunity to do this,

that the FTC is trying to bring about six rules. The biggest one that we're spending time on today

is price transparency, and that price transparency is all about the price that's advertised needs

to be the actual price of the vehicle. There are some other things as well around you can't

advertise cars that aren't actually for sale and things like that, but a big sticking point today

has been around, is it the actual price of the vehicle? And so there have been different... Well,

actually, Deb, before I go on, do you agree that that's kind of the general gist of what the FTC

is trying to do here? Yes, if you'd like, I'll go over the six points real quickly.

Here you go. Advertising a price that does not reflect all required fees. So you can't just advertise

a price and not tell the folks what all the required fees are going to be. Advertising a price

that reflects rebates or discounts that are not available to everyone. So you can't combine in your

advertised price first responder, recent college graduate, whatever other incentives there might

be that maybe one person in 30 million might qualify for. You can't advertise a price that

fails to take into account the amount of additional required down payment. So you can't say the price

is X, but it's X because, well, you as the customer had to put $2,500 down. You can't

conditioning the advertised price on consumers using the dealer's financing.

The price is the price, whether you finance through the dealer or pay cash. However, it is you pay for

requiring consumers to buy additional items, not reflected in the advertised price,

and advertising unavailable were nonexistent or what's known as ghost vehicles. But the primary

aspect of all this is price transparency. You have to advertise the price of the vehicle

plus any dealer fees. For instance, just about every dealer has a dock fee or a processing fee.

So the selling price should be listed plus what the dock fee or processing fee is. And then there's

total price that the customers expected to pay.

Yep. So those are the six rules that the FTC has made very clear that they plan to enforce. And

again, for context, the reason I'm sitting outside today is I'm at an industry event. I had to pay

$1,000 to have to be in this room, which is, you know, I'm very grateful we can expense it to the

business, but that is no small sum of money. And to be clear here, the leaders of the automotive

industry, including one of our US senators, Bernie Moreno is speaking this afternoon,

are here talking about the impacts of the FTC's work. And I will also share yesterday,

the Wall Street Journal, released an article, the FTC cracked down on hidden car dealer fees.

They're still happening. Anyway, car shoppers can face thousands of dollars in opaque fees,

but the industry is working to adapt. I'm incredibly proud, Dad, you know, right here that

car edge is mentioned in this article, Car Edge, another car buying aid, analyzed price quotes

for more than 10,000 new and used dealers that found meaningful differences between the advertised

price and actual price, itemized quotes for nearly 40% of dealers. That is only among the

dealers that provide itemized prices and writing. Most don'ts at Zakshevska Car Edge's chief executive.

There is still endemic price misinformation on the internet. So, you know, there is a lot

of energy around this right now. And the sessions that we've had thus far, Dad,

have been really, really interesting. I'll share with you, you know, these are the sessions that

I've sat in on thus far, and I will just let everyone know. People know Car Edge. Like, we,

as a community, I'm looking at all of the comments that are coming through in the chat here.

You know, me and my dad are the face of this, and we are incredibly humbled by that.

But you, each of you that tune in and participate in what we do here at Car Edge,

you are known. You are heard. You have a voice in this room, which is really incredible. So,

the first session, Dad, the FTC's enforcement playbook, what dealers need to know right now.

I took a lot of footage from this session, and I think we'll make a video on it. You know, it was,

it was, it was actually frustrating for me to listen to this one, because a lot of it was like,

hey, we just got to train people better. And I don't mean that as a slight to the,

to the presenters. But it was like, yeah, a lot of like, we need to train people better.

And I think it's more systemic than that. I think it's like, I think the third party

marketplaces are to blame. I think training people is one part of the equation. But yeah,

so that was an interesting one was like, okay, a takeaway I had was, you know, there was a member

from NADA who, who was a part of this, a man named Bennett, this guy, Brian, excuse me.

Brian. Yeah. So Brian is, is represents NADA. And he was there and he said,

this is real. And it's not going away. You know, they've talked to the head of the FTC,

the head of the FTC's consumer arm, you know, they, he said it's real. And so that really did

stick with me. Like this is, the administration has been very clear with them that this is

something they're passionate about. And they've also, Dad talked about how they've done it in

other industries as well. So that was the takeaway I had from the first one is training

seems to be a hot button issue, which again, I, I agree with and think there's a lot more to it.

And NADA and industry are taking this very seriously. They expect this to be more enforcement

action soon. Well, I will, I will tell you from having spent 43 years in retail automotive,

that every issue that there is, there, there is a consultants firm, consultancy firm out there

that will offer the appropriate training that your staff will be required to go through

to show that as a dealership, you are doing everything that you possibly can to stay within

the guidelines that have been set up for you. And yes, training is important. Every, every

member of the team in a dealership needs to understand this, whether you're working in parts

and service or whether you're in sales. But if I may, it starts a little higher up than that.

It starts with the owner or the dealer principle. And if the dealer principle just thinks that,

okay, well, we'll get everybody trained and we'll continue to do everything we've always done,

that, that's, that's not solving the, the, the issue. That's not, that's not really being

compliant with what the FTC is after. So part of it has to be dealer owners and dealer principles

need to change their thinking as to how they want to treat their customers.

So that was another part of the discussion with this group was, you know, what happens

if an employee does something that the FTC then, you know, finds that they can do an action against

and we fire that employee, are we, are we in the clear? And the answer is no. Like the dealership

will get one of these actions from the Federal Trade Commission. Now, what is interesting,

and one of the things that I was thinking about during this presentation, which again,

for those of you that are just joining the show now, I am sitting outside of a hotel,

I actually don't know where in the hotel I'm sitting, but it's the Salamander Hotel,

this beautiful hotel in Washington DC for the Auto Leadership Summit on Fair Pricing and Compliance.

Yeah, I had an incredible moment during one of the presentations where I did Q&A and I was the

second person to get the microphone and you know me, I can't, I can't help myself but talk.

And the first presentation that I sat in on this morning was, was this one on the FTC's

enforcement playbook, what dealers need to know right now. The other thing that was fascinating

as I listened to this conversation, dad, is I was thinking the FTC is the federal enforcement arm here.

And last time I checked, these actions only take place when a state attorney general also,

a state's attorney general, excuse me, also gets involved, which had me thinking about Pops,

someone that you and I are very friendly with, a woman named Erin Witte, who used to work at a

consumer advocacy nonprofit who is now senior counsel at your home state, the New Jersey

office of the attorney general. She posted this on LinkedIn yesterday, the junk fees era is over

in New Jersey, Attorney General Davenport and Governor Cheryl teamed up today to make it crystal

clear that we are done letting junk fees fuel the affordability crisis, frustrate New Jersey

residents and stifle honest competition. And they had a whole enforcement statement about this on

their website. So the conversation I was listening to, again, with a representative from NADA,

a compliance company and a lawyer up there was like, yeah, the FTC is part of this,

but it's also up to state AGs to decide that they want to take action, which I think for now,

a lot of people are still thinking won't happen that quickly. So there's a little bit of a window

here to become compliant. And that's an energy I'm feeling in the room is an urgency to become

compliant before the state AGs, like for example, New Jersey, do press releases like this one saying,

well, you just froze there young man, I don't know why, but hopefully you get your internet

connection back. I will say this, every it is up, it is up to the consumer affairs division of the

state attorney general's office in every state to enforce the rules and regulations that are

already in place. Now we have seen over the last few years instances where there have been

actions brought Illinois and the FTC brought an action against the Napleton group, I think it was

three years ago, where Napleton was was charging for fees and and taking advantage of of people

that they shouldn't have been. And I believe that was a a $10 million settlement.

We know the passport group in the Delaware, excuse me, DC, Maryland, Virginia area

was fined a couple years ago. We know just recently between an action from the Maryland

state attorney general and the FTC, the Lindsay automotive group that is headquartered in the

Virginia DC, Maryland area has agreed to reimburse the customers they took advantage of

up to $75 million. That's a that's a sizable enough sum to get somebody's attention.

We know that there's a situation in New York with the Nissan dealers and them taking advantage of

people buying out their leases. So there can be and should be more actions than there are,

but the actions that we've seen have been pretty damn successful when you look at it.

I think the actions are absolutely changing behavior within the auto industry. And I think

again, the takeaway for me was, okay, the FTC plays a role here for sure. It will come down to

the state's attorneys generals to actually do the do the actions here. It's fascinating. I'm

sitting outside and evidently the lunch service has begun. So there's some some people now sitting

around me. So this will be a fascinating live show. Then the next session that I sat in on was

the dealer's perspective running a compliance store without killing the deal. What was so fascinating

here is there were three dealer operators up on the stage. Kevin Fry is the marketing director at

Jeff Weiler Automotive Family Dad. He is one of his dealership group is one of the dealerships that

was named in the FTC's letters to 97 dealerships. So it was incredible to hear him talk about what

has evolved at his dealership. And quite frankly, some of the challenges that all of these operators

have noted, which is none of the systems that they integrated into, for example, like websites that

show pricing or things like that, gave them the option to even show this stuff in the past. So

not to not to downplay the challenge of being transparent, but it was so eye-opening to see

someone up there on stage who has been dealing with this, who if I'm not mistaken, said his

general counsel is in the audience with them, which is crazy. But is there trying to figure out

how to become transparent in this marketplace? And that was really interesting. Then the other

gentleman who was sitting next to me, actually, I didn't even realize this, this man, Sam Weaver,

from Chevy Chase Automotive. Again, I had an opportunity to speak a little bit. And I can

just tell you that I was really, really, really nervous when I was talking because I'm in a room

full of dealers. Fortunately, Chevy Chase Acura gets an A grade on car edge. So I gave him a

little high five, like, okay, you're doing things right. But that was interesting to hear these

dealers. And then Brian Benstock, who's really influential in the auto industry, all of them

made it clear. Carvana is a threat to the business. They haven't seen it show up yet in their sales.

But if there was ever a time to wake up and start operating differently, it's now. And so there was

really strong energy from these three to say, okay, let's finally do it. Let's lead with transparency.

So that was really inspiring for me to hear. And it made me feel like our voices as a company has

been heard. Well, it would be nice if it is heard. And it would be... I think it's being heard.

And it would be nice if it brings about action where the dealers finally realize that

they don't have to necessarily compete on price. They have to be transparent in their pricing.

They can't utilize ways of showing an artificially lower price than their competitors.

They'll have to compete on other things. And so it would be nice for the vast majority of dealers

out there to understand that and start figuring out the ways that they can differentiate themselves

from their competitors that will allow them to attract more customers, as opposed to just price,

price, price. And this is what was so fascinating from Roger here. As Pop says,

carrot versus stick, get a large stick out and use it on these, not enforcing or obeying the past

laws. The carrot here is if I lead with transparency, I can maybe be a better, a more profitable,

faster growing dealership and look no further than Carvana, who if I'm not mistaken,

today is opening yet another dealership in Dallas. So I think we're going to get that news tomorrow,

at least the rumblings I've heard is that Carvana is opening yet another dealership. The stick here

is the FTC saying for every day that there's a penalty, it could be $50,000.

Yeah, it's $53,000 per incident.

So again, to be clear here, there's a great carrot, which is okay, we could maybe grow faster,

be profitable, be more efficient by being fair, transparent. Or the stick is we could end up spending

lots of money in an FTC enforcement, which they're saying now and are demonstrating will be real and

is real. So it's a fascinating moment to be in the room with these car dealers up on stage,

hearing them talk about this with sincerity of, okay, it's changed, the industry has changed,

this is an inflection point for auto. We either got to do it or get off the pot and I think they're

Well, I would be thrilled if they did. This is obviously something we've championed for

over the six years we've been doing this nonsense. And what I mean by that is we have

always suggested to those dealers that might want to listen, that if you operate in an open,

honest and transparent manner, that you can actually sell more cars to more people more

efficiently while cutting your costs, so that ultimately you end up being more profitable.

This seems to me to be an indication to many of the dealers out there, especially the ones that

are worried about Carvana, that maybe there's something to that that you really can make more

money if you're open, honest and transparent. I've been sharing with people all day dad,

go on Google, type in, we're here in Washington DC, type in best Toyota dealers in Washington

and scroll on down and you're just going to start to see car edges quoted everywhere.

If I go back to the normal mode, the first link here is that car edge. There is an incentive here

which is this community of us, the people that show up at car edge live, the people that go to

caredge.com. The thing that you and I have spearheaded for six years and represents millions

of people annually, we want transparency. It's really humbling to be here. I can't believe it,

and to be in the room and to have these conversations going on, to feel like I

helped shape some of it or I'm in the process of helping to shape some of it with my dad,

representing people that we love. It's incredible, man. It's incredible.

Have any of the dealers that you've spoken to badmouthed you yet?

No, I have had only positive experiences. I was in the bathroom and I'm washing my hands and a

gentleman says, I love what you and your dad are doing. I said, oh, who are you? Oh, I've run a

CDJR store in upstate New York. Incredible. I've had experiences like that all day long.

Representatives from the National Automobile Dealers Association, incredibly positive

conversations. Hey, can you help me understand your transparency index so that we can understand it?

Wanting to do really creative things with the data that we have to help them inform

why and what would I keep saying? Why it's commercially viable to be transparent? So no,

it's been incredibly positive. And I think as a testament to anyone out there,

put yourself in uncomfortable positions. Sunday, I did a half Ironman. That was pretty

uncomfortable today on that Fair Pricing Summit for Auto in Washington, DC with the biggest heavy

hitters I've ever been around, dad. And it's uncomfortable. And you know what? We belong at

this table and it is incredibly humbling to represent you, me, our family and our business

and our community by being here. There was one more session that I sat in on and then

I should probably go get some lunch. But advertising in the crosshairs,

online pricing, third-party listings and what the FTC is watching.

This was so fascinating because the resentment that I feel towards incumbent third-party market

places like cars.com, car gurus, auto trader, true car, all of them, car facts is that they

have done a disservice to the dealer and to us as consumers by labeling things as great deals

when they're obviously not. And so to be a part of that session and listen to it, it's like, yeah,

everyone hates us. It was so inspiring to me. It's like, cool. So why don't we change it?

And I think that's going to drive the change, dad. People are really in this room fed up

with these marketplaces and how they've supported them or lack their up support

to be more transparent and fair. And people have used the word level playing field a lot today.

And obviously, that rings true with you and me.

Well, yeah, the whole concept of why we started doing what we're doing was to

information asymmetry and your desire to level the playing field for those people out there

so that it could be a little easier when they're navigating the car buying experience.

It's nice to hear that dealers are at least open minded about it.

And it's, you know, one of my major complaints that I had in all the years that I was in retail

automotive was that dealerships and dealership personnel always felt like they didn't need to

actually have a conversation with the customers to understand what it is that the customer wants

or needs or desires. It was always as if these dealership people,

we don't need to ask the customer, we know what they want. Let me tell you what you want.

And it was like they were never open minded enough to try and see the transaction process

through the customer's eyes. They could only see it through their own eyes. And so it's just,

it's heartening to hear that maybe, just maybe they're willing to look at this through a different

set of eyes and figure out a different way of doing things. You know, this is the second most

expensive purchase people make in their lives. And if you polled 100 people, 98 of them would say,

I hated the experience. I hate what I had to go through. Why when I'm spending that kind of money

should it be so unpleasant? And, and if, if that's the case, and we know it is,

then it's, it's really time for the dealers to do something differently.

But again, what was so interesting about that session is a lot of the blame I personally believe

and heard in that room also goes on the ecosystem that supports dealers. I said it out loud. I think

there's a video clip of it in the room. I have yet to call up an owner of a dealership dad or

talk to you and have you or that owner say to me, yeah, I woke up, woke up that morning,

I want to screw customers over. I've, I've yet to meet someone even even dealers I talked to in

Florida. And so do they do that? Absolutely. It happens. We have data that objectively demonstrates

it and it's auditable and traceable and unopinionated. So of course it happens. We have FTC actions

that demonstrate this as well. And I think it is a worthy pursuit to go beyond the name calling and

saying it should be better and build tools and build a platform that actually empowers it to be

commercially viable, to be better, to make it so that these dealers have an incentive

to be better. And so it is super humbling to be here and to hear that there are other people

who think similarly. And it's because of the work I get to do with you dad and have been doing with

you for six years. It's because of our incredible team. And it's because of our community that

inspires me and you to wake up every day and keep fighting the good fight.

Have you run into any dealers who have, who have are aware of our dealer transparency index

have seen their scores, their, their grade and, and have feel as if they've, they've let themselves

and their customers down because they just weren't as transparent as perhaps they could or should be?

Absolutely. And it's been so fun for me to explain to them the grading methodology,

which is just is the price, you know, what the price is that it was going to be.

And then to explain to them that, no, you cannot buy a better grade.

It's so, it's so fun. And everyone gets it. Even the people that have bad grades, they get it.

And they appreciate, that's why everyone appreciates the, the principle of it. And I

think that has a huge potential to bring about change in this industry.

Yeah, because I would say this, if, if our desire was to really, really, really get rich

doing this, well, then selling A grades would be, would be the way to do it, you know, because

dealers would gladly pay to get that A grade. But the fact that they would actually have to

change their, their, the way they do things in order to get that grade, I think that,

that makes much more sense. And, and you know, what, as long as, as long as we're comfortable,

we're all right. I don't even like, I understand it for demonstration purposes,

but I don't even like thinking it bad. It's, it's so unethical and would be entirely

void of our purpose. And yeah, it's, it's so awesome to be in this room and be able to stand on

principle. Well, good for you. I'm, I'm damn proud of you. Thank you, dad. I think you, I think you

should be proud. I'm, I'm proud of us. I'm incredibly proud of us. Yeah, but you're, you're

there representing us. And so I'm, people would ask for you, people would ask for you.

Well, you tell them I'm, you know, lounging in my living room inventor.

Maybe they're going to watch the show. Who knows?

Well, let's hope. Well, we should probably let you get some lunch because you, you have

other sessions to go to after lunch. Absolutely. So A, thank you for spending the thousand

dollars to be there. And B, thank you for setting up outside where it looks absolutely lovely in

DC today. It's gorgeous here, man. Well, enjoy some lunch and enjoy the afternoon sessions.

Absolutely. Thank you, dad. It's my pleasure and privilege to represent our community. So

thank you everyone for trusting me. Thanks for trusting my dad. Thanks for trusting CarEdge.

If we can help you with anything, again, the website is caredge.com. Yeah, yeah, just so proud

of what we're doing. So perhaps enjoy the afternoon. I'm going to go run to the bathroom,

get some food, and I get back in that room and keep shooting some videos so we can, you know,

have some, some further conversations on this. Sounds good to me. Say hi to all my friends down

there that might actually be friends of mine and have a great afternoon, young man. I love you.

Love you too, dad. If you liked the show, please take a moment to rate, review, and subscribe.

It really does help the show to grow. Thank you for listening.

SHADY Car Dealers Are DONE! LIVE From Fair Pricing Summit in Washington DC | Episode 1091

About this episode

Term FTC compliance

Term price transparency

Term required fees

Term rebates or discounts

Term additional required down payment

Concept ghost vehicles

Term dock fee

Term dealer fees

Term processing fee

Term total price

Company Wall Street Journal

Term opaque fees

Brand Car Edge

Term itemized quotes

Concept advertised price and actual price

Concept price misinformation on the internet

Concept third party marketplaces

Concept training

Concept enforcement action

Concept compliant

Concept Federal Trade Commission

Company Napleton group

Company Lindsay automotive group

Term buying out their leases

Company Nissan dealers

Concept compliance store

Concept FTC's letters to 97 dealerships

Term websites that show pricing

Brand Chevy Chase Automotive

Brand Chevy Chase Acura

Brand Carvana

Concept transparent in their pricing

Concept artificially lower price

Concept carrot versus stick

Company National Automobile Dealers Association

Term transparency index

Topic Fair Pricing Summit for Auto

Place Washington, DC

Concept third-party listings

Concept online pricing

Brand cars.com

Brand Auto Trader

Brand CarGurus

Brand true car

Request an Explanation

Want to learn more?

Help improve this episode

More from CarEdge Live