Hi, I'm Greg Yulan with Reynolds and Reynolds and this is connected. We are live at the NADA show in Las Vegas. Uh this is probably the busiest show that
0:12
12 seconds
I've experienced. It is fantastic right now. Uh today I get to sit down with Terry Olaflin. Terry's the director of compliance at Reynolds and Reynolds. Uh
0:20
20 seconds
Terry, always a pleasure to see you and talk with you. Thanks for joining me. My pleasure to be here.
0:24
24 seconds
So Terry, you are a Hall of Famer. You were inducted into the FNI Hall of Fame last year. That was pretty pretty amazing.
0:30
30 seconds
I appreciated that, Grant. I'm I'm quite humbled by it.
0:33
33 seconds
Yeah. I mean, you've been doing this for a while and having an impact for a while. Um 36 years.
0:38
38 seconds
36 years. I mean, congratulations on that. But, you know, it's very impressive, but um as impressive or more impressive is is the impact you've been
0:45
45 seconds
able to have in that 36 years. So, uh I appreciate you. I know the dealers appreciate you and everything that you've done in your team and everybody you've worked with. So, um it it makes a
0:54
54 seconds
big difference. proud to do it and I and I'm committed to protecting dealer rentals on behalf of Reynolds and Reynolds.
0:59
59 seconds
Yep. That's great. Uh so Terry, you were uh I think at ATA their their meetings yesterday was able to interact with some folks there. Um how'd that go? What was what was that environment like?
1:08
1 minute, 8 seconds
They had a terrific turnout. Uh the dealer associations are being very careful about the changing landscape of
1:15
1 minute, 15 seconds
compliance. It's always a top issue. uh dealers are always a big target for uh attorney general's offices uh private
1:24
1 minute, 24 seconds
plaintist council uh there's whole association dedicated to suing car dealers consumer law center for example
1:31
1 minute, 31 seconds
uh so they are they are cognizant of the issues with the CFPB literally being shrunken by the Trump
1:40
1 minute, 40 seconds
administration uh they can't eliminate it Federal Trade Commission also being restrained so the various other state agencies are coming to the four and they
1:49
1 minute, 49 seconds
are trying to fill that void in every way they possibly can. So that's what's going on and the at the executives
1:57
1 minute, 57 seconds
automotive trade association executives at they are very aware of this phenomenon.
2:01
2 minutes, 1 second
Yeah. And it's such an important function because you know they're it's frustrating for probably a lot of us to
2:08
2 minutes, 8 seconds
see some of these lawsuits that come out and you know they feel in many cases frivolous but at the end of the day the
2:16
2 minutes, 16 seconds
law is the law. You have to follow the law and then you have to defend against it if somebody claims that you you didn't follow the law. Um and it can be
2:23
2 minutes, 23 seconds
really frustrating but it's an important part of our business. It's part of doing business as a car dealer because there are so many of these organizations that that are out there.
2:31
2 minutes, 31 seconds
Yeah. And and I think car dealers may be the most regulated industry in the country. Sure.
2:36
2 minutes, 36 seconds
And the the paniply of laws and regulations they have to discharge increases. It never seems to decline.
2:44
2 minutes, 44 seconds
There seems to be no sun setting of the statutes or regulations. Consequently,
2:49
2 minutes, 49 seconds
the burden just grows. And as a industry, a partner in the industry that Reynolds is, we have to help them
2:57
2 minutes, 57 seconds
accommodate that as best we can. And I think we're doing a mighty fine job at that.
3:03
3 minutes, 3 seconds
Yeah, I agree. And and you know, it's interesting you you say it keeps growing and growing. We talk about that a lot. I talked to dealers and and we actually,
3:10
3 minutes, 10 seconds
you know, look at if you printed out a car deal, right? Single copy, you print it out, it's approximately 39 ft of paper. Sure is.
3:17
3 minutes, 17 seconds
Right. Like 39 ft. And and you think about it and there isn't a single car dealer, I don't think, that asked for one foot of that, right? That's all been put on them by regulation.
3:27
3 minutes, 27 seconds
Yeah. And in 1940, it took one document to sell and finance a vehicle. It's
3:34
3 minutes, 34 seconds
1940. Now, think about that. That's probably not that long ago when you think it's now it's 39 ft or more. And with every additional regulation, it's going to grow.
3:44
3 minutes, 44 seconds
Yep. You're right. You're right. So,
3:46
3 minutes, 46 seconds
let's let's dig in. One thing I wanted to really go a little deep with you on is the California Cars Act. Um, you
3:53
3 minutes, 53 seconds
know, obviously passed. it's going to go into effect this year in 2026. Um, you know, maybe just share what the impacts are, what the changes are, and then we
4:02
4 minutes, 2 seconds
can get into some different pieces from that. Sure. Let me put this in perspective.
4:06
4 minutes, 6 seconds
Federal Trade Commission was founded in 1914 and the unfair or deceptive acts and
4:13
4 minutes, 13 seconds
practice UDAP statute was promulgated with FDC in 1938. Okay.
4:19
4 minutes, 19 seconds
UDAP is in every state. UDEP is the primary law that is used to sue car
4:26
4 minutes, 26 seconds
dealers. All class actions, all private plaintiffs council, all attorneys general, they all use UDAP. And the simple premise of UDAP is if something
4:35
4 minutes, 35 seconds
has a tendency uh to deceive a cons a consumer, tendency or capacity deceive a consumer, then it's a violation of the
4:43
4 minutes, 43 seconds
law. Very low bar. It replaces it shatters caviat mtor.
4:48
4 minutes, 48 seconds
That is the whole premise for the cars rule because there's been in and prior to the cars we'll get to in a minute the car buyers bill of rights uh which was
4:57
4 minutes, 57 seconds
in California that was uh passed in in 2005. Uh so what I'm trying to drive the
5:05
5 minutes, 5 seconds
the give the greater view that these laws don't come out of thin air. They are part of a greater scheme of
5:13
5 minutes, 13 seconds
enforcement. they become far more uh distinctive because they add layers much of the cars rule uh the the combating
5:21
5 minutes, 21 seconds
auto cars rule uh you could just use the UDAP which covers probably 70% of that
5:28
5 minutes, 28 seconds
because it sort of uh reinforces the application of UDAP unfairness of trade practice uh but with some distinctions
5:35
5 minutes, 35 seconds
so that's where we are uh now getting back to the u uh rule that that governor Schwarzenegger signed in 2005 Carbar's
5:44
5 minutes, 44 seconds
Bill of Rights that had features in it that were similar to the car show, but they were then struck by very effective
5:52
5 minutes, 52 seconds
lobbying on behalf of the California New Car dealers association. You're watching and I went over that a while back and ironically when I was on the dark side,
6:02
6 minutes, 2 seconds
I worked for the Florida Attorney General's office. I helped draft the car buyers bill of rights for California with their because I was part of a group that sued car dealers in those days,
6:10
6 minutes, 10 seconds
right? Uh so this new law which continues some of that idea of the car buyers bill of rights uh and obviously
6:19
6 minutes, 19 seconds
it calls upon the Federal Trade Commission's rule that was struck last year at this time uh the cars rule the
6:27
6 minutes, 27 seconds
federal cars rule right it tracked that very carefully so that's where we are with this and the key to it all full and fair disclosures because
6:37
6 minutes, 37 seconds
the combat between and that's why it's called combating in the rule pumping fraud uh is
6:46
6 minutes, 46 seconds
the the idea of of a very complex transaction of buying a car financing a car what king how can you help the
6:53
6 minutes, 53 seconds
consumer understand the transaction yeah and that's what it's all about and it just creates this burden of dealers having to explain and now if and a
7:03
7 minutes, 3 seconds
couple of points one of which is that the rule itself really says you've got to show the price of the are
7:11
7 minutes, 11 seconds
total except for tag, title, tag and title and the documentary thing. You know that plus+ tag title and so on. So
7:20
7 minutes, 20 seconds
that's that's really what whether it's advertising, whether it's disclosure,
7:23
7 minutes, 23 seconds
whether it's discussion with the consumer. So full and fair disclosure is what all of this is about. Uh now there are other
7:31
7 minutes, 31 seconds
parts to it as well but that's really if a dealer is making every effort at every juncture when the question arises about how much does this cost what's the
7:39
7 minutes, 39 seconds
financing that triggers this full and fair disclosure. So dealers who make an effort to disclose fully fairly every
7:48
7 minutes, 48 seconds
time the question arises they will solve some of this problem. Yeah. So,
7:54
7 minutes, 54 seconds
I guess thinking about that cuz I I don't know. It's not like to to me and and maybe I'm naive. I really don't think dealers are intentionally hiding
8:03
8 minutes, 3 seconds
stuff. I don't think that they're not disclosing information. Um so, what what needs to change, right? So, and this is
8:12
8 minutes, 12 seconds
California, but we're going to talk about the implications maybe throughout the US in a minute, but um you know, in California, what what are dealers going to need to change this year when this
8:20
8 minutes, 20 seconds
when this law is in effect? Well, they first of all, they're advertising. Okay,
8:24
8 minutes, 24 seconds
all they're advertising they're going to have to uh they can't just show MSRP.
8:29
8 minutes, 29 seconds
They have to really show the sales price they're offering the vehicle for. Okay,
8:33
8 minutes, 33 seconds
without t title taxes cost documentary fee. So, they have to show that in full. They can't show it in any other way.
8:41
8 minutes, 41 seconds
They can't uh show a price that is minus a rebate, for example. Uh they can't show it without any variation. So it the
8:50
8 minutes, 50 seconds
the pricing has in internet pricing. I mean uh brochures they might send out any kind of advertising that they notice
8:58
8 minutes, 58 seconds
to a consumer and advertising a very broad concept. Anytime a price has to be displayed to a consumer it has to be
9:06
9 minutes, 6 seconds
this particular price. And sometimes dealers in other states and California as well they have approached a little differently. Uh I know sometimes I'm from Florida and they'll they'll show
9:14
9 minutes, 14 seconds
the price then in the fine prints it'll say unless a manufacturers provide a rebate. Well California you can't do
9:21
9 minutes, 21 seconds
that. So so this rule they got to sort of change their whole scope of of advertise. So that's now that also applies to the way they disclose it at
9:29
9 minutes, 29 seconds
point of sale. So when they're sitting down with a customer they have to be very careful in how they disclose everything. Yeah. So now
9:36
9 minutes, 36 seconds
Reynolds is in the forms business. We are developing forms in conjunction with the CNCD, the California new car dealer association on various forms to comply
9:45
9 minutes, 45 seconds
with the statute 1784 of the California statutes so that we will help the dealer with those full
9:52
9 minutes, 52 seconds
and fair disclosures. So they should be fine if they follow the protocol that we are providing.
9:59
9 minutes, 59 seconds
Yeah, that's good. That's good. So I want to go back a second to the internet pricing that you mentioned because it it reminded me of something. So, the last
10:06
10 minutes, 6 seconds
car that I bought was for my wife and obviously, you know, looking for a vehicle online across all these different places. And the vehicle we
10:14
10 minutes, 14 seconds
ended up buying actually had three different prices on it depending on what website you went to. Uh, from the dealership's website to, you know, third party sites, it just it it varied. Um,
10:24
10 minutes, 24 seconds
you know, so when I'm a dealer and I have really vendors helping me distribute information, right? Um, how
10:32
10 minutes, 32 seconds
how do I get my arms wrapped around that? That is the the the challenge,
10:35
10 minutes, 35 seconds
isn't it? How do you do that? That's the complexity that really needs to be addressed by dealers. So, I wish I had a
10:44
10 minutes, 44 seconds
simple solution for anybody. I mean, and I feel I feel bad for dealers who are trying to do it right,
10:49
10 minutes, 49 seconds
but I could see where they can make a simple wear, but right.
10:53
10 minutes, 53 seconds
Well, sadly, that's that's a problem they're going to have to figure out.
10:57
10 minutes, 57 seconds
Well, and in a lot of cases, you know, I think really looking at where your inventory is going, right? And at what cadence it's going there. So, you know,
11:07
11 minutes, 7 seconds
maybe your website is pulling from your DMS, right?
11:10
11 minutes, 10 seconds
And so that's going to be up to date in real time or maybe it's batch overnight, whatever it might be. But then maybe a a marketplace site,
11:19
11 minutes, 19 seconds
right? They're getting the feed 24 or 48 hours later because it goes through, you know, kind of a data broker. Um, so if
11:27
11 minutes, 27 seconds
you update a price in one place and it hasn't been updated in another, then what do you do? And and so, you know,
11:32
11 minutes, 32 seconds
most dealers and in the the case that I'm talking about, you know, they we it was a very simple conversation, you know, like, hey, this is what I saw.
11:40
11 minutes, 40 seconds
Show it to me. Sure, we'll honor that price. You know, that's fine. Um, it's it's pretty straightforward.
11:46
11 minutes, 46 seconds
But in California now, even if they do honor that price, they're still breaking the law, right?
11:53
11 minutes, 53 seconds
Potentially. Yes, they are.
11:56
11 minutes, 56 seconds
And I, you know, this is all being studied.
12:00
12 minutes
This is rather embriionic at this point. Uh, but you know, you have a a statement of what the
12:08
12 minutes, 8 seconds
law is and then how do you interpret that? How do you find the the application for it and so forth? So, that's sort of going being fared out. Okay.
12:15
12 minutes, 15 seconds
And the CNC, they should be able to provide assistance on that. uh companies like Reynolds and Reynolds, we certainly can help them with updating
12:23
12 minutes, 23 seconds
appropriately and helping them with the disclosures. Sure. So, that's that's our mission.
12:28
12 minutes, 28 seconds
Yeah. Okay. No, it's it's um it'll be it'll be an interesting road, I'd say, for you know, to say the least.
12:35
12 minutes, 35 seconds
Interesting is a funny way to to describe that.
12:38
12 minutes, 38 seconds
I just, you know, I it's it's almost I don't want to I don't want to use too negative. It just feels annoying almost,
12:45
12 minutes, 45 seconds
you know, as somebody that's that's looking to a dealer and wanting them to be successful and it's like, man, it's just one more one more thing you got to worry about. It's cost of doing business.
12:53
12 minutes, 53 seconds
And uh I attended the uh new dealer day.
12:56
12 minutes, 56 seconds
California has a dealer day and this bill in California was was filed five days before the term was
13:05
13 minutes, 5 seconds
over. I mean, so they were they they thought they were scot-free. Then this this happened and it happened of course because the Federal Trade Commission's
13:14
13 minutes, 14 seconds
uh proposed rule uh was uh overturned uh in the circuit in New Orleans last year at this time. Right. So
13:22
13 minutes, 22 seconds
and where this goes from here, who knows?
13:25
13 minutes, 25 seconds
Yeah. Now, I should add, you know, when you get back the Carb bill of rights,
13:28
13 minutes, 28 seconds
the old law, uh it was anticipated that that law would be copied through all the
13:34
13 minutes, 34 seconds
other states and it really only was uh followed up in Massachusetts and Minnesota to any degree. Okay?
13:42
13 minutes, 42 seconds
You know, the big question now is how will this affect other jurisdictions,
13:47
13 minutes, 47 seconds
right? Unfortunately for other jurisdictions, other states, it appears they are starting to follow this. Smith Massachusettses, Pennsylvania. They've already they've already started to
13:55
13 minutes, 55 seconds
promulgate various rules regulations to sort of and are also creating their own mini CFPBs in some of these states
14:02
14 minutes, 2 seconds
to track this. So, this has caught attention and once again it gets back to all that disclosure and and the other
14:10
14 minutes, 10 seconds
inherent problem is there's part of the the act is maintaining records recordeping. So the record keeping
14:17
14 minutes, 17 seconds
requirement for two years is pretty demanding because you have to keep all the letters complaints coming in all these sorts of things dealers didn't
14:24
14 minutes, 24 seconds
have to keep and keep previously and you're literally providing the rope to hang a dealer with this with all these records to be kept because if you fail
14:32
14 minutes, 32 seconds
to keep the records that's implicated it's evidence against you. So it is it's going to be a tremendous challenge for dealers.
14:38
14 minutes, 38 seconds
Yeah. Yeah. Not uh not one that that seems like um anybody's going to look forward to, but but one that one that needs to be dealt with.
14:47
14 minutes, 47 seconds
No, it's any new law that that of this nature. The plaintiff's council, they're going to be watching us like hawks in.
14:56
14 minutes, 56 seconds
Now, the good news is there's no private right of action. No private cause of action, but that's sort of temporary because California has the unfair
15:04
15 minutes, 4 seconds
receptive trade practices act. So many of these things can be sort of placed into that category. Yeah. And there's also the argument that any uh
15:13
15 minutes, 13 seconds
violation of laws of this nature become a uh incorporated by sort of incorporated by reference in federal law. So private right of action, but
15:23
15 minutes, 23 seconds
still the the Department of Justice, the district attorney's offices, California attorney general's office, Department of Motor Vehicles in California, they're
15:30
15 minutes, 30 seconds
all going to be watching this. They're all going to be making sure the dealers comply.
15:35
15 minutes, 35 seconds
Yeah. And initially, the initial compliance is usually the most dangerous because if dealers are not paying attention, they can really fall prey.
15:44
15 minutes, 44 seconds
Sure. Sure. Okay. Um, boy, I mean, that's why these ADAs are so important,
15:49
15 minutes, 49 seconds
I think, too, right, in the work that they're doing.
15:50
15 minutes, 50 seconds
I was going to say the ADAs play such a crucial role for dealers. I mean, when I speak in front of dealer groups, I have the pleasure of doing from time to time,
15:57
15 minutes, 57 seconds
I always advocate join your AED. They're protecting your interests, right? Um,
16:02
16 minutes, 2 seconds
and some of them may listen to me, some of them don't. Sure.
16:07
16 minutes, 7 seconds
Well, Terry, one other thing I wanted to get your perspective on while I have you here. Um, you mentioned recordkeeping a minute ago and how important that is and and when you think about, you know, the process of getting a deal done.
16:17
16 minutes, 17 seconds
Sure.
16:17
16 minutes, 17 seconds
Um, you know, and in some cases, how many different vendors and systems and pieces of paper can be a part of that
16:25
16 minutes, 25 seconds
process. um wanted to get your perspective on on having kind of an embedded workflow through kind of the sales and FNI process where everything
16:34
16 minutes, 34 seconds
is is in one place, right? It's consistent um and and documented when you think about recordkeeping. Um you know, it's it's not easy to do, but
16:42
16 minutes, 42 seconds
maybe if you can share your perspective on what that sort of embedded workflow can and should be and what impact it has.
16:49
16 minutes, 49 seconds
Sure. Every dealer should have an established protocol order disclosure
16:56
16 minutes, 56 seconds
uh in depth on how every transaction should happen so that the numbers all
17:03
17 minutes, 3 seconds
are organized in a manner that fulfill this full and fair disclosure process.
17:10
17 minutes, 10 seconds
The fact you might think some some things that are in paper other things might be in electronic format that has to be considered in this whole calculus.
17:18
17 minutes, 18 seconds
So the consumer and I'm looking at from a total because when I saw Docupad years ago, my first thought was that's a great
17:25
17 minutes, 25 seconds
consumer tool because it helps the dealer provide a full road map for how uh someone can understand the
17:33
17 minutes, 33 seconds
transaction. So the same thing if if you were just using pencil and paper, how do you organize that progression?
17:41
17 minutes, 41 seconds
Yeah. And uh because unfortunately I went undercover years ago as a finance manager a couple times. Uh I noticed how some finance managers didn't do that.
17:52
17 minutes, 52 seconds
They were misleading and the DR can control that with help from vendors help from rentals and rentals people like that on how to create this uh seamless approach to presenting the transaction.
18:04
18 minutes, 4 seconds
What it'll do of course consumers will understand it better. They'll be satisfied. It'll be faster because you have a regular protocol which is always important.
18:12
18 minutes, 12 seconds
Reducing the complaints because complaints are always the the the basis for uh lawsuits, right?
18:20
18 minutes, 20 seconds
I can't I think that's that's such an important question you raised. So I a protocol follow it carefully and maybe
18:28
18 minutes, 28 seconds
you have to be a little dictatorial with your sales force and your finance managers. Sure. No, and that that's a fair point.
18:33
18 minutes, 33 seconds
um that one that you landed on there is like you can set the expectation but you have to enforce it right absolutely yes and uh you got to inspect it and and you
18:41
18 minutes, 41 seconds
got to make sure that it's being followed and that's the other point you know after the transaction is over how are you auditing that transaction I mean how is everything being filed properly
18:50
18 minutes, 50 seconds
electronically or otherwise do you keep that that recordkeeping once again how are you pre because guys if some of the record gets missed well someone comes in
18:59
18 minutes, 59 seconds
an audit they're not going to audit to look out your interest they're looking for somebody else's interest So that that protocol that you mentioned is very important.
19:05
19 minutes, 5 seconds
Yeah. And the audit's a whole different ballgame, too. You know, you start thinking about that and you know, it's it's so interesting whenever anybody gets um kind of in trouble in an audit,
19:15
19 minutes, 15 seconds
it seems like, you know, it's it's harmless at the beginning, right?
19:19
19 minutes, 19 seconds
It really is. And and you know, maybe you forgot to scan something, maybe you forgot to put something in a file, maybe you took something out to review it,
19:26
19 minutes, 26 seconds
didn't put it back. Um and you have every intention to add it tomorrow. Right.
19:31
19 minutes, 31 seconds
Right. or to put it back tomorrow and then tomorrow comes and you get busy and it doesn't happen and then the next day comes and then it's it's a year from now and an audit comes and it's like well
19:39
19 minutes, 39 seconds
you didn't do this and it you have no defense.
19:41
19 minutes, 41 seconds
No defense at all. Um and that's why some of the product services we offer help dealers accommodate that. Yeah.
19:48
19 minutes, 48 seconds
And you don't realize how important that is until it's too late. Two, three years from now, right?
19:55
19 minutes, 55 seconds
What? You don't have that? And and you know, it's kind of interesting. The the uh when I did my case of attorney general's office, 95% of them were based on documents.
20:06
20 minutes, 6 seconds
Yeah.
20:06
20 minutes, 6 seconds
Auditing the documents. And if they didn't have them or they had them in appropriately prepared and so
20:13
20 minutes, 13 seconds
forth, that was dynamite for the prosecutor. Right. So,
20:17
20 minutes, 17 seconds
Right. No, it's it's uh it just needs attention. It always needs attention course at the end of the day. you know,
20:24
20 minutes, 24 seconds
it's it doesn't have to be scary, but it does it does need attention and focus. So,
20:29
20 minutes, 29 seconds
um well, Terry, I've really enjoyed every time I get to talk to you, I feel like I get a little bit smarter. Um I understand things a little bit better.
20:34
20 minutes, 34 seconds
Um but anything else that uh we haven't talked about that we should or anything that I didn't ask?
20:38
20 minutes, 38 seconds
I'm I'm a paper peddler, right? You know, I believe in the power of paper and the dynamics of documentation and so
20:44
20 minutes, 44 seconds
on. Uh there are laws written for documents where you have to quote something verbatim. Then there are laws
20:52
20 minutes, 52 seconds
that say you have to provide this disclosure. You can choose how you want to provide that disclosure. Then there's sections of documents that fall into the general common law contracts and so
21:01
21 minutes, 1 second
forth. When we draft documents, we very strictly observe the law. How the law has to be followed. There's a lot of
21:09
21 minutes, 9 seconds
area that we draft that meets the requirements of the law. But we have a choice. We can make it more dealer
21:16
21 minutes, 16 seconds
friendly, protected for dealers, and that's exactly what we do. We follow the law explicitly when we draft documents.
21:22
21 minutes, 22 seconds
It's always minded how can we protect dealers from any possible violation because remember there are a lot of lawyers out there that are taking pot
21:30
21 minutes, 30 seconds
shots at dealers every day. Yeah. How can our documents and forms protect dealers from possibilities of that nature? So that's our one of our central
21:39
21 minutes, 39 seconds
missions. Uh and that's why we're very proud of the law document because they attempt that uh objective. Yep. Great stuff. Well, Terry Olen,
21:47
21 minutes, 47 seconds
thank you so much for joining me. really appreciate you taking time out of your out of your I'm sure busy day and can't wait to talk again. Enjoy it. Thank you very much.