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Why Am I Under Investigation?

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It’s truly amazing getting an FTC letter about potentially “agreeing to refuse to deal with TrueCar.”

No challenge in life ever seems to show up at a convenient time. In my case, when you’re scrambling 200 days a year doing speaking engagements, as well as writing and consulting, you’re already spread thin.

Never one to whine, the only answer has always been to deal with it, whatever it is.

I just came off an intensive summer schedule. I produced several successful conferences and I was a featured presenter at the National Speakers Association convention in Philadelphia.

During all of these appearances and heavy schedule, I was in intense pain. In actuality, I needed knee surgery immediately back in June when the condition became acute overnight. Honor, commitments and professional reputation mean a lot to me.

So, I made a calculated decision to schedule the surgery for September 9 after I returned from a road trip. I had been taking wheelchair rides in airports and driving electric power scooters thorough the hotels.

Two days before the surgery, I received a registered letter from the Federal Trade Commission informing me that I was involved in a non-public investigation to determine whether “firms in the retail automobile industry” may be engaging in illegal activity “by agreeing to refuse to deal with TrueCar Inc.”

This stems from some dealers, state associations and others previously advising against dealing with TrueCar.com because of the feeling that the sales lead provider was, among other things, creating a race to the bottom in retail vehicle pricing.

TrueCar CEO Scott Painter ultimately acknowledged that when he announced last year the company was changing its business model so that it didn’t cause so much hyper competition among dealers.    

The FTC letter said “Ziegler SuperSystems, its Board of Directors, President, Officers, agents, affiliated organizations, and all staff and employees should take affirmative steps to preserve from destruction all documents that are relevant to this investigation…”

My mouth dropped as I read this at my home office. Not home office as in company headquarters, but the office in my home where I run my 1-man business.

Of course, the main question that immediately came to mind was, “Why now?” The TrueCar controversy was over, resolved and repaired long ago. Truthfully, most of us have become friends with TrueCar. It changed and we all moved on.

After getting the FTC notification, I began receiving emails, messages and calls from dealers, other bloggers and industry people saying they had received the same letter. OK, now it’s on!

One of the first calls I made was to Mike Timmons, senior vice president at TrueCar. It was one of those WTF calls. He spoke to Painter and got right back to me.

TrueCar’s official statement is it didn’t complain to the FTC and doesn’t know who did. Painter was quoted as saying it is like sending the reinforcements in after the war is over.

Next, I called a friend, attorney Len Bellavia who specializes in dealership matters, just to get his take on what he thought was happening.

Everyone I spoke to couldn’t figure it out. It doesn’t make sense. TrueCar has changed its business model and most formerly miffed dealers are working with it again and are using the online sales leads it sends them.

Its business is stronger than ever as its dealer relationships have improved. It doesn’t make sense it would do this now.

I have had dinner with Timmons on several occasions. Painter flew to Atlanta and had dinner with my wife and me. They have asked my advice on dealer issues and generally have been very responsive to my suggestions. One of my new prized possessions is a photo I took of Painter wearing one of my Alpha Dawg hats.

I have spoken to many dealers and industry executives who think TrueCar is behind any treachery arising from the investigation. I don’t see that at all and would be highly disappointed if that proved to be the case.

I’ve seen and heard too many things at high levels that TrueCar is working hard to balance consumer-friendly and dealer-friendly practices.

Next, I called Melissa Westman-Cherry, the FTC attorney who sent the letter. It was a pleasant conversation, not cordial but certainly non-threatening or intimidating.

I told her we are a home-based business. As far as visions of an army of clerical employees and company officers feverishly shredding reams of documents, it’s just me and Debbie and our dog Sadie. I don’t even know if our shredder works. I am a 66-year-old man who delivers speeches and writes blogs and magazine columns.

I won’t have a clear explanation or a bigger picture of what this is all about until I hear more from the FTC.

There certainly was never intrigue and deep conspiracy that an investigation of this type might suggest. It was a groundswell movement of action and discussion by a bunch of disassociated individuals within the industry coming together to share information and educate others on the situations as we saw them.

I don’t know if this is a free-speech issue. I do know that many times on the blogs different contributors, including myself, expressed opinions, and there was one statement that was repeated frequently that we (bloggers and contributors) never intended to put TrueCar out of business. Our goal was to reform its business practices.

Many states concluded TrueCar’s business model was illegal in their states. So, in effect, the TrueCar critics were protesting illegalities.

There were state dealer associations who criticized TrueCar and said so in letters to their members. There were bloggers and journalists who wrote about TrueCar creating a reverse-auction situation. There were dealers who ultimately canceled their TrueCar lead-providing agreements.

There were legitimate issues at that time of TrueCar acting unfairly and there were questions about the way it collected transaction data from dealer-management computer systems.

The puzzling questions are why now with this potential investigation and why are the whistle-blowers being investigated?

As I write these words, I am still in intense pain as I recover from my recent surgery. There is no Louis XIII Cognac to celebrate the completion of another column, as has been my tradition for 25 years.

Instead I am taking another scheduled dose of Percocet for the pain that is with me 24/7 right now. I am walking with a cane. Soon, I’ll put that away as my physical therapy makes me stronger each day. Please keep those calls, emails and comments coming.

By the way, it’s a beautiful cane. It’s crafted ebony with a sculpted handle and fittings. It’s a work of art. You know what’s ironic? It was a gift I received from my friends at TrueCar before the surgery. It arrived the day before I got the FTC letter.

Jim Ziegler is president of Ziegler Supersystems as well as a trainer, commentator and public speaker on dealership issues. He can be reached at zieglerss@aol.com. WardsAuto readers also may comment on this article by logging in or registering below.

Discuss this Blog Entry 1

on Oct 7, 2013

IF I were to guess, I'd say a complaint was lodged by some kind of consumer advocacy group. I've stumbled across a concentration of them over on "The Truth About Cars" blog, where I've managed to stir up a hornets nest. These folks hate car dealers with a passion almost unimaginable and resent any gross profit a dealer might make. In their mind, any tool a consumer can get to screw a dealer is something righteous. It wouldn't be a stretch to think they filed a complaint based on their perceptions. But the larger question to me is why the FTC would even entertain such nonsense. Don't they have REAL issues to pursue?

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What's Retail Front?

Blogs about automotive retailing, commenting on news impacting the business of selling vehicles.

Contributors

Steve Finlay

Steve Finlay is the editor of WardsAuto Dealer Business magazine and a senior editor for WardsAuto.com. His journalism career started 42 years ago as a crime reporter. A Michigan native, he likes...

Jim Ziegler

Jim Ziegler, president of Ziegler Supersystems, is a trainer, commentator and public speaker on dealership issues.
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