Safeguard Rule Update by Cesar Augustus

Safeguard Rule Update by Cesar Augustus

Dealer Scanning Panel Segment with Ted Ings, Kara Delaine, Shon Kingrey and Cesar Augustus

(0:00 - 20:43)

Ted Ings: Welcome back to the Fixed Ops Roundtable. It is a great honor to welcome back our friend and founding member of the Roundtable, Cesar Augustus. He's the CEO of Dealer Scanning. They provide document scanning for dealerships all across the country. Cesar, welcome back to the Roundtable.

Cesar: Oh, thank you, Ted. I'm excited to be here. Good to see you. Great to see Cara and great to see Sean. Excited to be here today, man.

Ted Ings: Yeah, great to have you and Cesar. Thank you for all your support from the early days of the Roundtable, from the very first one that we did in New York together. So, you know, here we are, number 20 right? Can you believe that we're here?

Cesar: Amazing, amazing. I can't wait to go back to live events. So, this is exciting, but can't wait to see you all in person, too.

Ted Ings: Yep. All right. And with us this morning as well is Sean Kingrey, Vice President of Kaiser Automotive Group and Cara Delane from the Fixed Ops Roundtable. So, Cesar, here we are, middle of May. I know we got a Safeguards Act coming up in June. Kind of bring us up to speed on scanning the state of the industry on that and then I know Cara's got some questions and we'll let you run with it. But get us going.

Cesar: Yeah, Ted, June 9th, you know, it's the middle of May, guys. And June 9th may sound just like another day on the calendar, but for the auto dealerships, it is an important day to remember because it's a deadline for the new FTC safeguards rule. It's basically the rule that requires dealerships to have a comprehensive information security program to protect customer personal information. So, a lot of dealerships have this in place, but what I see and by being out in the field, there's a big percentage of dealerships that either don't understand what's going on with this safeguard rule or simply don't think it's that important. Now, back in NADA, we were part of, we met with the NADA lawyers, the people that are out there in protecting dealers and I was with a meeting with them, and I asked them, what is this, what does this safeguard rule look like and what does the penalty look like? And the NADA lawyer told us that is $50.000 dollars per incident. Now, I said, wow $50.000 dollars, So, what does that look like? He said, for example, if you go into a dealership and you find a box of ROs or deal jackets just hanging around that it's not securely in a room secured or not visible to customers, that is a violation. But it's not just $50.000 dollars per incident, it's $50.000 dollars per customer, which I thought it was insane. You can have a box of ROs or ROs, you do the math, that could ruin a dealership. Now, that was the lawyer’s explanation or an example. Let's be careful and I think if dealers are not careful, they're gonna make an example out of one dealership and we don't want any of our dealerships to go through that.

Ted Ings: And Cesar, behind you today, I see the scanning unit. I have seen you in a lot of fixed options round table dealers actually doing the scanning, installing it yourself. I know it's very easy to use. and you know, Cesar, a lot of dealers use scanning but it's amazing how many dealers still do not.

Cesar: Yes, yes, like I said, back we're out on the road, we're knocking on doors, we're road warriors. It's still about 35 to 45 percent of car dealers that are not scanning and we offer the best scanning system in the industry. It's easy to implement and we give you a two-month free trial. But Ted, you don't know this, Cara doesn't know this, just for people that are watching this, joining this event, we're giving you a three-month free trial. What does that mean? We're giving you this scanning system and the training so you can kick the tires for three months, no commitment. This is literally the best deal but it's only reserved to you, Ted, because you're the man. Three months, free. It doesn't get better than this. That gives you the opportunity to kick the tires and make sure we're up to par and we provide the best service.

Ted Ings: Sean, I've been a fellow Floridian, okay, in the recent past and there was that big hurricane that went through, I guess, in September of last year and talk to us about scanning because you've seen dealerships that use it and don't and you know the difference.

Shon: You know, Ted, it's funny, I'm gonna use a line that we've used a couple times here in the last, you know, couple days to be honest with you is, and it comes from Tully, it's time to get out of the wheelchair, guys. You got to get out of the past and I know Cesar’s got a great story and hopefully he has time to share today about a hurricane down in Florida. But I don't care if it's a hurricane, if it's a tornado, if it's a fire, guys, you need ROs and I'll wait because I know Cara's got some questions to approach about why I'm so adamant about scanning and I love scanning. There's a reason to scan. The old days are gone. You're not pulling deal jackets anymore, guys, and that's on the fixed-op side. Forget the F&I side and the sales side. You're not going back and pulling the color-coded files anymore, guys. You don't need to. The information's in the DMS. Everything you need is in front of you. You need the file to protect you on the backside. And to Cesar’s point, this fine of $50.000 dollars that we're all gonna end up paying, let's hope we don't, it's kind of like OSHA. You know it's there. You know it can be there and you don't need it until you get caught. And it takes one client or one disgruntled former employee to walk in and say, listen, this is what they're doing and this is how they do it, okay? And I know I don't want to get edited here, Ted, so I won't say this. I have a family member, a brother-in-law, who by the way works for OSHA and he's that guy, okay? I'll be honest with you. He is that guy that would walk in and punch your clock, okay? It takes one person, one time. and to Cesar’s point, we said right before we started talking here, guys, you get hit big enough, you'll close the dealership down.

Ted Ings: Yeah. Karen, I know you've got some questions this morning for Cesar on dealer scanning.

Kara: Yep. So thinking back, because I've seen this too, I've seen dealerships, I've been inside of dealerships that I've seen just rooms and rooms on files and I, number one, I don't think they have any organization. I don't know how you would ever find what you were looking for, but I know so many dealerships still today have those rooms or somewhere they have these files. So if you come into their dealership, Cesar, how long does it take if they had rooms and rooms of files? How long is it going to take for you to scan all of those and implement your process in their store?

Cesar: Got it. So great question, Kara. So our process is extremely simple. People don't believe us, but we come into the dealership in less than two hours. We can have the scanning station set up, we can have the people trained and depending on the volume and this is what's cool about this. The cool thing about our product is that it's so simple. All you literally do and you've seen the demo and we'll show the demo, Ted, is you load up the repair order and you click a button on this touchscreen and it scans the repair order 70 pages a minute. and we use our technology of OCR and barcode to read the repair order number off of the repair order. So what it does is it's simple scanning process. By making it simple, you're allowing more throughput through the scanning. So I've seen dealerships basically hire college students in the afternoons. I was at a dealership out in Anaheim and I remember it was cool because I met a person that worked at Disney World in the morning and then in the evening as a side gig they came and scanned a rose. I have dealerships that bring their kids to scan repair orders because it is that simple. So with our system, we give you the one scanning station and if you need to back scan that file room in the back, we'll provide you a loaner for as long as you need it. So it could take three to six months depending on the effort. but the fact that it is so simple makes it so easy to make the decision. and we've taken dealerships from huge file rooms to no file room and they turn that empty space into BDC rooms, the extra parts storage for inventory. We make it easy.

Kara: And so after you implement all of this and all of the files are scanned, what do dealerships do with the files? Do they need to keep them as a backup? Because I'm one of those people that I'm afraid to let stuff go just in case you know. you never know what's happening with software and technology. What do they do with these files? Are they still keeping them?

Cesar: So it is really up to the dealership. By law, you are allowed to keep and provide a scanned copy of whatever you scanned. So by law you're protected by the Congress and by state law. The misconception is that you have to keep the paper copy for seven years and that's been the law for 40-50 years and it's the truth. but they think they need to keep the paper file. That's no longer the truth. You're allowed to keep the scanned file but that's why it's important to have reporting available with your scanning system. Which is we're the only company in the industry that provides that integration with the dealers, with the DMS that basically tells you, hey for example, very simple, we closed a thousand ROs for the month of March. We only scanned 900 of them. Where are the other hundred? No other system tells you this information, which is the most important thing if you're gonna shred the scanned documents. So we give you everything to make it feel comfortable about shredding your files or sending them off somewhere else.

Kara: Well that's reassuring because I know I've seen so many dealerships and I've heard you talk about some crazy scenarios of where people have these files. So talking about the Safeguard Act and we want to know our customer information is protected. On your side of things, what kind of software protection do you have within this scanning system?

Cesar: Thank you for that question. That's a very important question. I'll keep it in general terms, not to put people to sleep. We have military-grade encryption. What does that mean? I'm not gonna get into the specific technology terms. When you scan one of the repair orders through our system, that gets encrypted. Then it's transported through the internet to our backup to our cloud system and that's encrypted at rest. What does that mean? That if someone takes that information they cannot see it. The only people that can see this information is if you have access to our system at the dealership. So our information is encrypted at rest. It is also backed up in three different locations in the United States. I'm not gonna mention what locations for security purposes, but we keep basically eight copies of your repair order encrypted.

Kara: So much safer than files laying around a dealership.

Cesar: The story I wanted to share is that we have a dealership out in the southwest coast of Florida that signed up with our system about months ago. The hurricane from last year came around, flooded the building, made a mess of the entire thing. And thanks to them scanning for about nine months prior to that, they were able to save lots of headaches.

Ted Ings: Sean, those natural disasters happen and there's all kIngs of things that could affect, you know, the dealership being able to have access to these. And it's not just the first pull of the file, the physical file, Sean. It's that second or third time when we go back and look for it and it's been misplaced or misfiled. That happens a whole lot.

Shon: It does. I tell you, Ted, I'm not saying it's a best practice that I came up with. This actually came from Florida where we got audited in Florida and the OEM went back two years, by the way. And again, I'm no different. I may not be the part of the care, I'm not the hoarder, but I like to have files too. I get it. But the color-coding files, like I said, those are gone. We got to move on from those. But what we do is we scan, okay? We scanned everything. And then we kept the banker's boxes of ROs, not by the number, but by our own number. Because think about it, if you're going to go back and you're looking at Kara's history on whatever she's driving, the Jeep she's driving, and I want our own number one two three four I don't need to go pull Kara's file. And with Cesar s, by the way, knowing that it was scanned because it tells you if it's missing an RO, with her point, I can go back and pull one two three four. I don't need a rocket scientist to figure out that color-coding thing. that by the way, after years, I still haven't figured out, okay? So I can go back and pull one two three four. So to Cesar’s point and to Kara's question, how long does it take? In my practice, what I've always done is you got to start with today. Get today's scanning done. Once you're up to speed, and you got a cashier sitting around doing nothing, or the nighttime cashier from six to nine after service is closed, they can start working on the files and they can start scanning, okay? And then I like to keep personally two years. Again, it depends on the state. Now I'm in a state that only goes back one year. The OEM can only go back and audit you for one year. But if you get the right auditor, or I should say the wrong auditor, and Cesar is right, we know what the laws are. But the last thing you want to do is off the auditor, okay? If they want the true copies, keep two years. Keep five. How long does it take to keep banker boxes full of two years? And when it's done, you scrap those. And it's easy, right? You write the RO numbers, and you know exactly what you've got and what you're up against. You know when the first year started, you know when the second year started, and you just throw them away. You're not purging files, by the way. And Cesar, you're talking about college students. In my past, we've always hired the retired guys to do it, okay? Listen, at the end of the day, they try their hardest. Or you'll hire that high school kid who doesn't really care if it goes in Ted's file or Kare's file or Cesar s file. It was close enough. It's not close enough. If they're in sequential order in a banker's box, RO0 through RO to 1000, you can go back and pull it in seconds. Because that's all you're looking for. By the way, during an audit, they look for VIN numbers. You look at the RO numbers, I can pull an audit. I don't want to get audited. But I can pull an audit guy's trail in minutes. It takes no time, if that's what you want to do. Or you go, again, you go to your Cesar’s solution, and you print them out.

Ted Ings: All right, Cesar, here we are, middle of May, safeguards coming up in just a couple weeks. How do we get started? What's the next step with dealer scanning? How do dealers reach out? And how do they get on board?

Cesar: Well, go to our website, There's a two-minute video that shows you exactly the beginning and the end of the process. It's very simple. Like I said, for the Fixed Ups Roundtable crowd, we'll do the three-month free trial. This is the most, we don't offer this anywhere else. It's all on us to give you the value. And we come in and it's a simple process. We've gotten so much better at this. It takes two or three hours to get this done. And it's easy enough to train your staff. And it just works. So we just want to keep continuing adding value and protecting customers out there.

Ted Ings: I know you've got stores with the Roundtable that have multiple rooftops. And, you know, they started with you with a smaller number, maybe one or two or three. And over time, they've added more.

Cesar: Yeah, no, I have a dealer that has seven scanning stations. They're doing ROs, parts invoices, deal jackets. And basically, one of them is the kids come in and scan deal jackets. And it makes their life easier, so much easier. So we've always talked about the back of the store here. But we scan, like I said, deal jackets and every other document that the dealership can scan. We provide that service. So we're excited. It works.

Ted Ings: So everything, the contract, the sale contract, the finance, everything.

Cesar: Warranty cancellations, accounts payable, everything that you can, human resources. Yeah. It works.

Ted Ings: All right. Sean, any last thoughts on this from the retail side?

Shon: No, guys. Again, I'm gonna start, I'm gonna finish out with the last thing I said at the beginning. Get out of the wheelchair, guys. It's time to think outside the box. And again, not that I care about the variable side, especially I don't care about the finance side, for the record. Just so we're all clear, you have to know what's out there. But guys, you got to get out of the wheelbarrow. You got, and to Cesar's point, pulling parts invoices, guys, it's a real thing. With parts warranties during audits, you don't think about parts invoices. On the fixed side, it's an auditable thing. You have to prove where you purchased it or when the client purchased it.

Ted Ings: And Kara, you've seen firsthand in dealership how those file rooms can overtake other rooms and grow and just take on a life of their own. So, you know, at some point, the dealer has to begin scanning all this data.

Kara: I kind of think it's, you know, eventually if they don't do something like what Cesar's offering the industry, every room inside of a dealership, including the showroom, would just be piles of files. But think about it, honestly. And how secure is that? And no organization will never find what we're looking for. So I think it's an amazing technology that you guys have at dealer scanning and I see its benefit for sure.

Ted Ings: And Cesar, is it a different price for the size of dealership or iCesar:s it a one flat fee?

Cesar: We have one flat fee is a month and then we have dealer group pricing.

Ted Ings: Wow, love it.

Cesar: Yeah, we make it easy. We keep it simple. We want this to be a long term relationship. And I've gone into dealerships where they don't believe it because our pricing is so effective. They think it's not real. And it works. I mean, we could we go up and increase the price, of course. One note, we've been in business for over years, we've never raised prices. And we don't intend to do that. I'm going to hold it. Well, I hope we can do that. But we haven't raised prices in years. And we don't have an intention of doing that. Because we honestly, we keep our mission and our vision is to add value, consistent value to our to our customers. And you can see it on our reviews. And I never thought I could make people happy through document scanning. But when I go into a dealership, the specialist techs and the parts guys, they're like, the scanning man is here. The words might sound a little weird. But I never thought I could make him happy. Because every tech comes up to me and says, we, we used to waste so much time trying to pick up an ORO. But we wrote the notes, we made a recommendation. And now the customers come back six months later. And we have to go find this or this on file room. And most of the times we can never find it. Now we just go to a computer type the RO number, and all the information is there. You save them time, money, and obviously to the dealership, lots of space.

Ted Ings: Everybody, if you don't know already, Cesar Augustus works with a lot of dealers here at the Fixed Ops Roundtable. And what he hasn't told you is that a lot of his efforts are charitable as well. So when you work with dealer scanning, you're also helping to fund a lot of charities that Cesar is behind. He helps underprivileged youth all around the world with sports programs and helping them achieve more. So Cesar is a humanitarian as well. And you'll see his posts on social media. So when you work with dealer scanning everybody, you're doing a lot of good around the world. And you're spreading that message. So we encourage you to reach out. Cesar Augustus is the CEO of Dealer Scanning. You'll see his email in the scroll. And that phone number, Cesar, is that a to you directly?

Cesar: Yeah, he called me directly, man. I can't give out my phone number because our product is so good. I don't get that many calls. So I'm OK with doing that.

Ted Ings: All right. Sean Kingrey, Cara Delane, thank you so much for your time today. Cesar Augustus, great work. And as always, thank you for everything you do for the retail community.

Cesar: Thank you, Ted. I appreciate you, Cara and Sean. Thank you for your time.

Ted Ings: Cesar Augustus, everybody. Dealer Scanning. Reach out now. Documents scanning for dealerships. Here today, back at the 80s at the Fixed Ops Roundtable.

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