Software navigates regulatory minefields (Featuring Compli) | Compli.com

Software navigates regulatory minefields (Featuring Compli)

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Compli and its Dealership Liability Management System (DLMS) were recently featured in an Automotive News article focusing on navigating the minefield of regulatory compliance at your auto dealership.

Find out what you need to know about the increasing burden of compliance, and how Compli's customers are managing the myriad of state and federal regulations without sacrificing the bottom line.

Read the full article here: Automotive News Article Featuring Compli

Software navigates regulatory minefields

Ralph Kisiel
Automotive News -- February 6, 2006

Dave Blewett doesn't want his dealership group to become the subject of the next TV expose.

So he began looking for a way to ensure that all 650 employees in his 16 dealerships in Oregon and Idaho comply with the myriad of federal and state laws and regulations that affect his business.

Blewett, CFO of Kendall Auto Group, of Eugene, Ore., says his Reynolds and Reynolds Co. dealership management system provides some help. But it's not enough.

Blewett turned to a young, growing company called Compli Inc., of Portland, Ore. Founded in 1999, Compli offers auto dealerships a Web-based compliance management system. About 200 dealerships use its Dealer Liability Management System.

It's easy to see why dealers are looking for all the help they can get. The automotive retail industry is heavily regulated. More than 80 major federal and state regulations and laws affect every facet of the typical dealership, according to ADP Dealer Services.

Noncompliance can be costly. For example, dealerships could pay as much as $11,000 per violation of the Safeguards Rule, part of the federal Gramm-Leach-Bliley Act passed in 1999 to protect consumers' privacy. The Safeguards Rule requires businesses, including car dealerships, to develop written policies and procedures to protect customer data. It also requires dealers to train employees to handle the data safely.

Dealerships also must appoint staff members to coordinate the program, which includes auditing the procedures regularly.

New business opportunity

Until a year ago, Compli sold compliance management software to the banking, insurance and health care industries. But then the company decided to focus its marketing on dealerships.

"It really is something that's striking a chord with these guys," says Steve Bryan, Compli's senior vice president of sales and marketing. "They understand they can't continue to do business as usual in an environment of growing and burdensome regulations. Our system really helps to automate and track those things."

Blewett tried to manually monitor compliance across his dealership group, but that didn't work well. The laws and regulations cut across a dealership's new and used sales departments, service and parts departments, F&I operations and even the body shop.

"I had to come up with something to monitor the compliance at 16 different dealerships and I just didn't have anything," Blewett says. Compli's system allows a dealer to identify and distribute policies and procedures - then it can track who has read and signed them. It also can train employees, assess their understanding of policies and document compliance.

"We have 650 employees, and I can tell you which one has signed our sexual harassment policy," Blewett says.

If keeping compliant on these laws and regulations weren't enough, dealers feel that there is a growing cottage industry of trial lawyers who target dealers because it is an easy thing to do.

Dealers are generally not aware of all the legislation that impacts their operations, and their paperwork is generally not in the best shape.

"That's absolutely correct," Blewett says of the notion that some trial lawyers are targeting dealers. "That's the risk that I'm trying to mitigate with Compli. It's class-action consumer-type stuff."

Blewett's Kendall Auto Group, which includes Ford, Chrysler, Chevrolet, Honda, Toyota and Lexus franchises, has been using the Compli software since June 2004.

Compli seems to have found a largely untapped business niche in the retail automotive space.

"It's getting overwhelming," says Sandi Jerome, of Sandi Jerome Computer Consulting in Eugene, Ore. "I think that this is something new, that they have found a need."

Jerome expects that many dealerships will have to hire someone to monitor and ensure that they are complying with all the regulations.

Competition and choices

Compli's software isn't intended to replace a dealership's attorney but to complement what the attorney does, says Compli CFO Lon Leneve. In July, Compli partnered with PreventionPoint, a subsidiary of Atlanta law firm Fisher & Phillips. The firm concentrates on labor and employment matters.

Dealers pay an annual subscription fee of about $7,000 per dealership location to use Compli's software.

Compli's most direct competitor is HotlinkHR Inc., a subsidiary of the employment law defense firm Fine, Boggs, Cope & Perkins, of Half Moon Bay, Calif. HotlinkHR automates procedures including drug and background reporting, Web-based employee handbooks and electronically tracked employee training.

There are also scores of companies that call on dealers offering them consulting and training for a particular law or regulation, such as sexual harassment or the federal Do Not Call list. These are typically known as point solutions because of their narrow focus.

"For the most part, those are consultant-type people, not technology products, although they will sometimes have a Web site or a tracking system for training or something like that," Bryan says.

But Compli's chief competitor, Bryan says, is the status quo.

"It's often a challenge," Bryan says. "Dealers will say, 'Yes, I understand it. Yes, I know I could get in a lot of trouble. Yes, I know my insurance rates are rising and people are telling me that I've got to get this stuff under control. But you know what? I got Sally in the back room, and she seems to be able to handle it. Yes, she's being crushed by paperwork, but until she screams at me, I'm not going to do anything.' "

Meanwhile, ADP and Reynolds, the two largest vendors of dealership management systems, also have been trying to provide compliance tools.

ADP three years ago looked at how it could help dealers become compliant throughout their operations, says Kevin Henahan, ADP's senior vice president of marketing.

"It's a very important issue for the dealers," Henahan says. "We've listened to them, and we've systematically been providing them with the tools, the data and the services available to help them become compliant. I think everyone would say that we're on the right track."

Through its dealership management system and support services, ADP helps dealers with compliance by encrypting passwords and Social Security numbers, refreshing customer contact information and checking it against Do Not Call lists. The system can determine during credit checks whether a customer appears on any terrorist or terrorist organization lists.

Reynolds provides similar help and services, and its customers are looking to Reynolds to "build a lot of that into the core system," says Scott Collins, vice president of marketing at Reynolds.

Dealers are most concerned, Collins says, about properly complying with the Safeguards Rule, checking customers against the Office of Foreign Assets Control watch list, and Occupational Safety and Health Administration regulations in the service and parts operations.

You may e-mail Ralph Kisiel at rkisiel@crain.com

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