ILLINOIS AUTOMOBILE DEALER NEWS Vol. 37 Issue 3 Choosing Words That Lead Deliberate Communication for Effective Leadership
CERTIFIED PUBLIC ACCOUNTANTS CONTACT US TODAY to learn how we can help your dealership THRIVE. 1707 Clearwater Avenue, P.O. Box 1584 Bloomington, IL 61702 woodwardassoc@cpaauto.com • www.cpaauto.com • (309) 662-8797 Serving more than 300 Automobile Dealers throughout the United States Driving Tax & Accounting Excellence in the Automotive Industry EXPERT CPA SERVICES TAILORED FOR YOUR DEALERSHIP’S ROAD TO SUCCESS Tax Preparation & Management Services, Dealership Valuations & Appraisals, Estate & Trust Planning and Succession Planning, Dealership Profitability & Management, Dealership Operations Consulting, and so much more!
CONCENTRATIONS Dealership Mergers & Acquisitions Dealership Franchise Law Business Litigation/Motor Vehicle Review Board Disputes Manufacturer/Franchisor Relations Business & Commercial Law Advertising Compliance Review Consumer Complaints Dealership Succession Add Points Real Estate Law Employment & Labor Law Federal & State Regulatory Compliance BACKGROUND Principal, Private Law Firm Former, IADA Legal Counsel Former, Illinois Assistant Attorney General, Deputy Chief, Consumer Protection Division Drafted Illinois Motor Vehicle Franchise Act Amendments Creating Motor Vehicle Review Board Drafted Illinois Motor Vehicle Advertising Regulations Julie A. Cardosi, Esq. 3040 Spring Mill Drive, Suite B Springfield, IL 62704 (217) 787-9782 jcardosi@autocounsel.com www.autocounsel.com Exclusive. Strategic. Results. Exclusively representing the unique business interests of automobile dealers for over 35 years.
Contents Vol. 37 No. 3 2026 Officers CHAIRMAN Rick Curia (815) 288-4455 Ken Nelson Auto Group 1100 N. Galena Ave., Dixon, IL 61021 VICE CHAIRMAN Ryan Gremore (309) 664-1222 O’Brien Auto Group 1601 Fort Jesse Rd., Normal, IL 61761 SECRETARY/TREASURER Bob Federico (618) 254-1000 Federico Chrysler Dodge Jeep Ram 1875 E. Edwardsville Rd., Wood River, IL 62095 EXECUTIVE DIRECTOR Joe McMahon (217) 753-0220 Illinois Automobile Dealers Association 300 W. Edwards St., Springfield, IL 62704 ©2026 The Illinois Automobile Dealers Association (IADA) | MBR Connect™. All rights reserved. Illinois Automobile Dealer News is published four times per year and is the official publication for this association. The information contained in this publication is intended to provide general information for review, consideration and education. The contents do not constitute legal advice and should not be relied on as such. If you need legal advice or assistance, it is strongly recommended that you contact an attorney as to your circumstances. The statements and opinions expressed in this publication are those of the individual authors and do not necessarily represent the views of IADA, its board of directors or the publisher. Likewise, the appearance of advertisements within this publication does not constitute an endorsement or recommendation of any product or service advertised. Illinois Automobile Dealer News is a collective work, and as such, some articles are submitted by authors who are independent of IADA. While a first-print policy is encouraged, in cases where this is not possible, every effort has been made to comply with any known reprint guidelines or restrictions. Content may not be reproduced or reprinted without prior written permission. For further information, please contact the publisher at (801) 676-9722. Illinois Automobile Dealers Association 300 W. Edwards St. Springfield, IL 62704 T (217) 753-0220 / F (217) 753-3424 IllinoisDealers.com Scan here to check out our interactive website at illinoisdealers.com! 9 6 12 EXECUTIVE DIRECTOR’S MESSAGE 6 Our Fight Continues By Joe McMahon, Executive Director, IADA 7 Avoid Vehicle Title Processing Backlog Pitfalls By John Alviggi, Director of Implementation and Client Operations, CVR 9 Choosing Words That Lead Deliberate Communication for Effective Leadership By Ryan Anzalone, Account Representative, Ethos Group COUNSELOR’S CORNER 12 The Car Dealership Is a Regulated Institution That Happens to Sell Cars By Julie Cardosi, Esq., Law Office of Julie A. Cardosi, P.C. 14 Your DMS Doesn’t Get to Choose Your Payment Partner. You Do. By Dealer Pay 16 Beyond Passwords: Why Smart Lenders Are Asking Questions Your Fraudster Can’t Google By Informativ 4 ILLINOIS AUTOMOBILE DEALER NEWS
EXECUTIVE DIRECTOR’S MESSAGE Our Fight Continues Joe McMahon Executive Director, IADA While this legislative session did not end the way we had hoped, our commitment to protecting Illinois franchised dealers has never been stronger. Once again, Illinois House Speaker Chris Welch refused to call IADA’s franchise protection legislation for a vote on the House floor. We are deeply disappointed and frustrated that this important measure was denied the opportunity to be debated and decided through the legislative process — even after earning the support of 100 of the House’s 118 members. Adding to this frustration, the Speaker continues to enforce an unwritten rule that requires 60 confirmed Democratic votes before any bill is called for a vote. While 60 votes are required to pass legislation in the House, insisting that all 60 come exclusively from Democratic members disregards overwhelming bipartisan support and prevents legislation from receiving the fair consideration it deserves. At the center of this opposition is a small group of about a dozen suburban House Democrats who sided with direct sellers rather than the franchised dealerships operating in their own districts. We have reached out to dealerships represented by these legislators to share our concerns and encourage continued dealer engagement, because your voices matter. By refusing to bring this measure before the House, Democratic leadership denied lawmakers, stakeholders, and the public the opportunity to fully debate and consider this critical proposal. Illinois dealerships deserve a transparent, fair and predictable legislative process. Procedural roadblocks that prevent legislation from receiving a vote undermine confidence in the integrity of the legislative process. To recap our efforts, IADA’s original franchise protection bill, SB 1939, passed the Illinois Senate unanimously, 55-0. Despite that extraordinary bipartisan support, House leadership repeatedly refused to allow the legislation to be considered. This bill would provide essential protections for Illinois’ franchise system by closing potential loopholes that could allow legacy manufacturers to bypass franchise agreements through affiliated entities or corporate spin-offs, such as Volkswagen’s Scout Motors venture, to sell vehicles directly to consumers. It would also ensure that future manufacturers — including potential Chinese automakers — cannot circumvent Illinois’ longstanding franchise laws through similar business structures. Although we are disappointed by this outcome, we are far from discouraged. We extend our sincere gratitude to our partners at the Chicago Automobile Trade Association (CATA) for their collaboration throughout this effort. Their support has been greatly appreciated. We also thank the members of the Illinois Senate and the 100 members of the Illinois House who stood with their local franchised dealerships and supported a fair legislative process. Most importantly, thank you to each of our dealer members for your advocacy, your engagement and your unwavering support. Your efforts helped build overwhelming bipartisan momentum, and that momentum will continue. IADA remains fully committed to protecting Illinois’ franchise system. We will continue fighting for this legislation, advocating on your behalf and holding lawmakers accountable. While this year’s effort was blocked by procedure rather than by a vote, we remain confident that persistence, strong dealer advocacy and broad bipartisan support will ultimately prevail. This fight is not over. We will continue to stand with you, fight for you and protect the franchise system that has served Illinois consumers, communities and dealerships for generations. Thank you for standing with us. 6 ILLINOIS AUTOMOBILE DEALER NEWS
Most people assume the costliest mistakes in dealership and vehicle processing operations come from mispricing vehicles or trade-ins, but often, the biggest losses stem from inefficiency. Vehicle title processing delays, for instance, create hidden costs that ripple across operations, from paperwork piles and manual errors to compliance concerns. These bottlenecks have slowed down title and registration workflows for decades, delaying customer satisfaction and tying up capital in idle inventory. This ineffectiveness is an industrywide challenge, affecting everyone in the ecosystem — new and pre-owned car and truck dealerships, auctions, DMVs, salvage companies and financial institutions, to name just a few. And most have no idea how large their backlog is because inefficiency doesn’t live in just one area of the process; it’s built into nearly every step. What Causes Backlogs in Vehicle Title Processing The traditional vehicle title transfer process is slow and outdated. Manual paperwork and broken digital workflows create friction points at every turn. Manual titling alone takes anywhere from two weeks to two months or more, leaving vehicles stuck on the lot instead of generating revenue. Meanwhile, modern digital solutions can compress that same process to just a few days. Outdated payment methods make matters worse. Many organizations still rely on paper checks, which must be signed and then mailed. Typically, only one or two people within the organization have signing authority, and it’s rarely that person who sends the check. Plus, checks rely on a mail service for transit, which can get lost or delayed. And since checks aren’t immediate payments, they can slow down month-end or quarter-end closing. Why These Bottlenecks Cost You More Than Just Time Delays open the door to costly mistakes. Slow title acquisition means that unknown liens, duplicates or errors often go unnoticed until late in the process, creating liability and lost revenue opportunities. Manual or unintegrated digital processes also often require rekeying information multiple times, increasing the likelihood of errors. When these mistakes occur repeatedly or directly affect customers, they damage both profits and reputation. Ironically, many teams stick with manual processes or physical checks out of an Avoid Vehicle Title Processing Backlog Pitfalls By John Alviggi, Director of Implementation and Client Operations, CVR 7 ILLINOIS AUTOMOBILE DEALER NEWS
abundance of caution to ensure control and accuracy, but those choices often create the very problems they’re trying to prevent. When vehicle titles are delayed — due to mailing errors, inaccurate information or disjointed systems — inventory turnaround slows dramatically. Dealers can’t resell or transfer vehicles, resulting in idle stock and lost profits. Meanwhile, customers who must wait for dealers to process their trade-ins, whether they’re unable to move forward with their purchase or are forced to wait in long lines at the DMV, may lose patience. In an era when satisfaction drives repeat business and online reviews, delays can have lasting consequences. What You Should Look for in an Electronic Title Processing System The industry is evolving fast, demanding speed, efficiency and security. You need a streamlined, end-to-end title and registration solution that digitizes processes, automates compliance and integrates directly with DMVs. These modern solutions can accelerate transaction times, reduce errors, avoid costly penalties and improve the customer experience. But not all digital tools support that process, and many simply replicate outdated manual workflows in digital form. The right solution should: • Identify, prevent, or at least minimize mistakes by preventing users from selecting or entering the wrong information before it becomes a problem. • Track each title’s progress with time stamps of each action and easily accessible copies of paperwork. • Capture additional notes for unique information about a specific deal or title to ensure nothing gets lost or confused in the process. • Integrate with DMS systems to eliminate rekeying information or duplication. By adopting modern digital titling technology, dealerships, DMVs, auctions and financial institutions — any business where titling and registration play a role — can transform a long-standing operational drain into a competitive advantage, accelerating inventory turnover, reducing compliance risks and creating a seamless customer experience that builds loyalty and drives repeat business. Get more information on the CVR vehicle registration solution at cvrconnect.com. John Alviggi is the director of implementation and client operations for CVR. With over 30 years of experience in the electronic vehicle registration and titling industry, John leads state management and field operations, where his teams streamline installations and deliver comprehensive, high-quality training for end users. 8 ILLINOIS AUTOMOBILE DEALER NEWS
“Deliberate speech is not just about choosing the right words; it is about conveying meaning, clarity, authenticity and purpose. Choosing Words That Lead Deliberate Communication for Effective Leadership By Ryan Anzalone, Account Representative, Ethos Group We often discuss the importance of being deliberate with our actions, checklists, goals and vision. However, we rarely pay such close attention to the words we use throughout the day, even though communication is one of the most important skills in our industry. There is great power in the words we use, how we use them and, occasionally, how we choose not to use them. To wield that power effectively, we need to be deliberate with our communication. What Is Deliberate Communication? Deliberate communication means making conscious choices about what we say and to whom we say it. Articulating your message effectively, whether in team building, employee appreciation, feedback, conflict resolution or executing a vision, can be the difference between implementation and frustration. Most people do not communicate particularly well under pressure or “under the influence,” though in this case I don’t mean the influence of substances. Rather, I refer to the influence of frustration, fatigue or fear. In those moments, it’s important to be impartial and remain flexible. Tone matters. Move with people, not against them. Statements such as “I understand that,” “I believe that,” or “Those are all good points,” help reduce defensiveness and create understanding. Focus on the person, not just their current attitude. What people say is less important than what they do. Excuses will always exist, but your job is to redirect the conversation back toward solutions and accountability. When people are frustrated or emotional, they naturally become more defensive. Clear communication and empathy will serve you well. Sometimes you have to forgo being right in order to be effective. The Power of Listening One of the biggest parts of communication, especially in difficult conversations, is listening. Listening is an essential part of another powerful communication tool: paraphrasing. Paraphrasing involves listening to someone else’s thoughts, feelings or ideas, then restating them in your own words while retaining the original meaning. You might start with something like: • “Let me be sure I heard you correctly...” • “Just so I understand...” • “Here’s what I hear you saying...” 9 ILLINOIS AUTOMOBILE DEALER NEWS
There are three primary reasons why paraphrasing is an effective communication tool. 1. It changes the dynamic. You are telling the speaker that their words matter and showing them that you are actively trying to understand them. 2. It is a form of empathic listening. Empathic listening means listening with the intent to understand rather than simply waiting for your turn to reply. 3. It helps regain control of the conversation. Clarification reduces misunderstandings, lowers tension and allows both parties to move forward without losing face. Communicating to Connect How you work with, lead and communicate with others will determine your sustained success in every part of your business. Finding common ground and a shared purpose are key ingredients to trust and team alignment. The truth is that most people are never formally taught what to say, how to say it or when to say it. Then you add perception into the equation, and things become even more complicated because perception is not always reality. People can see the exact same situation in completely different ways. Miscommunication can put others on the defensive. Suddenly, the conversation becomes, “Here’s my side, now defend yours.” A misplaced word can turn the situation into “you versus me” when it should really be “you and me versus the problem.” George Bernard Shaw once said, “The single biggest problem in communication is the illusion that it has taken place.” Deliberate speech is not just about choosing the right words; it is about conveying meaning, clarity, authenticity and purpose. It is about speaking in a way that reflects your values while also connecting with your audience’s values and emotions. Persuasion is most effective when it occurs through connection and understanding rather than force or coercion. While effective communication is largely subjective, there are some phrases that leaders should avoid altogether. Phrases to Avoid “You wouldn’t understand.” That statement immediately creates distance and disrespect. Instead, try saying, “There are a lot of moving pieces to this,” or “I hope I can explain this clearly.” “Because that’s the rule.” (Similarly, “That’s what the dealer wants,” or “That’s how it has always been done.”) People may not always like the answer, but they appreciate honesty and explanation. Always explain the “why” behind the decision. “What do you want me to do about it?” This almost always sounds sarcastic, even when it is not intended that way. At that point, you’ve created a second problem on top of the first one. If the issue is outside your expertise, use your resources to help guide the person toward a solution. Leaders do not need to know every answer, but they should know how to help find them. “Calm down.” Few phrases escalate situations faster than these two words. Instead, say, “Explain to me again how I can help you.” That approach lowers tension and keeps the focus on solutions instead of emotions. “What’s your problem?” Once accusations enter the conversation, defensiveness follows closely behind. Empathy is almost always the better option. “You always…” or “You never…” These statements almost immediately trigger counterexamples and arguments. The focus shifts away from solving the issue and toward defending positions or past actions. Finally, leaders should also avoid using what I call “impulse words.” These are the knee-jerk, reactionary responses that immediately come to mind and sometimes fly out of our mouths before we’ve had time to think them through. Filtering those responses and taking even one or two extra seconds before speaking can completely change the direction of a conversation. Conclusion Choose your words carefully, thoughtfully and respectfully. Words can connect or confuse; they can strengthen relationships or weaken trust. Make sure your words and actions align. Keep your message clear, concise, consistent and above all, deliberate. For more information on how Ethos Group can help your dealership develop more leaders in your F&I office, sales management tower and your sales floor in 2026, please contact Chris Nesseth at cnesseth@ethosgroup.com or (319) 270-4779 or Austin Shane at ashane@ethosgroup.com or (319) 296-8760. 10 ILLINOIS AUTOMOBILE DEALER NEWS
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COUNSELOR’S CORNER The Car Dealership Is a Regulated Institution That Happens to Sell Cars Julie Cardosi, Esq. Law Office of Julie A. Cardosi, P.C. The franchised new-vehicle dealership occupies one of the most heavily regulated spaces in American retail. In evaluating the legal and regulatory landscape over the last decade, a consistent conclusion is obvious: a dealer who thinks of the business as “just retail” rather than as a highly regulated entity will systematically underestimate the dealership’s legal exposure. Caught Between Two Sovereigns The dealer is an independent business answerable to state and federal regulators, yet also contractually dependent on the manufacturer(s) that sets performance standards, controls allocation, and can seek termination of the franchise under certain circumstances. While Illinois law requires an OEM to prove “good cause” before terminating, as we have warned in the past, manufacturers build their cases slowly — through performance letters and reports that, ignored, can become an unanswered record of deficiency. The prescription: respond factually and promptly without admission, in writing, and with counsel’s prior review, documenting where alleged shortfalls actually trace to the OEM’s own conduct, such as allocation deficiencies or improperly drawn territories. The Vehicle Transaction Itself Is Guarded by Consumer Protection Law The Illinois Consumer Fraud and Deceptive Business Practices Act (815 ILCS 505/1 et seq.) governs nearly everything on the showroom floor. The Illinois Motor Vehicle Advertising Regulations (14 Ill. Admin. Code Part 475), adopted in 1991 with substantial dealer-industry input, and their federal counterpart laws and regulations, require accurate, all-in total pricing and clear disclosure. Adhering to these requirements has benefited dealers by building consumer trust and leveling the competitive field. The Illinois Motor Vehicle Retail Installment Sales Act, along with corresponding federal laws and regulations, governs disclosure of finance terms in the finance contracts. Section 2C of the Consumer Fraud Act absolutely prohibits retaining any part of a customer’s down payment when financing falls through, a rule enforced by the Attorney General and by private litigation against dealerships. And F&I add-on products — GAP, service contracts, credit insurance — all draw scrutiny from the FTC, CFPB and state regulators, demanding documented disclosures that the products are genuinely optional, priced separately and offered consistently to every customer. The Data Problem Dominates Because dealerships extend credit, they are “financial institutions” under the Gramm-Leach-Bliley Act and subject to the FTC Safeguards Rule, whose amendments in the recent past require a written risk assessment, a designated Qualified Individual, encryption, multi-factor authentication, an incident response plan, and FTC notification of breaches affecting a specified number of customers. The rule’s requirement that personally identifiable information be encrypted in transit may collide with how dealerships actually operate with deals routinely conducted electronically (including via text and email). As such, dealerships have been required to undertake steps to ensure their compliance. Certain cyberattack incidents involving prominent dealership vendors over the past few years drove home a hard-hitting point: the dealership remains the regulated entity even when the vendor 12 ILLINOIS AUTOMOBILE DEALER NEWS
is the one breached, with notification duties running to both the FTC and, under the Illinois Personal Information Protection Act, the state Attorney General. Recording sales transactions raises further traps under Illinois’s two-party-consent eavesdropping law and the Biometric Information Privacy Act, both of which carry severe penalties. Employment and Structure Illinois car dealerships operate in one of the most heavily regulated employment environments in the country, and 2026 alone brought sweeping changes that make ongoing vigilance essential rather than optional. Amendments to the Illinois Workplace Transparency Act now bar confidentiality provisions in agreements signed or modified after Jan. 1, 2026, from restricting employees’ ability to engage in “concerted activities” like collective bargaining, while broadening the definition of unlawful employment practice to cover wage, hour, and other workplace issues beyond just harassment and discrimination. New AI-related amendments to the Illinois Human Rights Act also prohibit employers from using artificial intelligence that discriminates against protected classes in employment decisions, including a specific ban on using zip codes as a proxy for race or national origin — a real risk for dealerships using AI-driven applicant screening or scheduling tools. On top of that, dealerships must track new leave obligations like the Family Neonatal Intensive Care Leave Act, effective June 1, 2026, which requires unpaid leave for employees whose child is in the NICU, plus updated VESSA and nursing mothers’ protections. Given the rapid pace of change, Illinois dealerships need regularly updated handbooks, manager training, and compliance reviews to avoid the steep monetary penalties and legal exposure tied to falling behind. The Through-Line Responsibility does not travel with delegation — outsourcing shifts work, never liability. Documentation is the mechanism by which legal rights become usable; franchise protections, refusal-of-service defenses, and breach responses all depend on documents and records created before they were needed. Counsel belongs at the beginning of decisions, not the end. The rules will keep changing; several already have. The dealership as a regulated institution must stay ahead of change. © 2026 Law Office of Julie A. Cardosi, P.C. Julie A. Cardosi is an Illinois Attorney and Principal of the private firm, Law Office of Julie A. Cardosi, P.C., of Springfield, Illinois. She has practiced law for over 40 years and represents the business interests of franchised motor vehicle dealers throughout Illinois. Formerly in-house staff General Counsel for the Illinois Automobile Dealers Association, she concentrates her private practice in the areas of dealership compliance matters, franchise law, transfers of ownership, mergers and acquisitions, commercial real estate transfers, dealership employment and other areas impacting day-to-day dealership operations. She also served as Illinois Assistant Attorney General and Deputy Chief of the Consumer Fraud Bureau of the Attorney General’s Office, where she was the primary author of the Illinois Motor Vehicle Advertising Regulations. The material discussed in this article is for general information only and is not intended as legal advice and should not be acted upon as such. Dealers should consult their own private legal counsel for application to their specific circumstances. For more information, Julie can be reached at jcardosi@autocounsel.com or at (217) 787-9782. 13 ILLINOIS AUTOMOBILE DEALER NEWS
“Integrated payments are essential in a modern dealership. But integration should never be confused with obligation. Your DMS Doesn’t Get to Choose Your Payment Partner. You Do. By Dealer Pay There are certain assumptions in automotive retail that become so accepted, nobody stops to question them. One of the most expensive is this: “If we use a particular DMS, we should probably use their payment solution too.” Not because someone evaluated every option. Not because it was strategically selected. Not because it was proven to be the best fit for the dealership. Because it was there. And that’s an important distinction. Because convenience and strategy are not the same thing. When Integration Becomes Assumption For years, dealership technology providers have expanded their ecosystems. What began as accounting and recordkeeping evolved into communications, CRM, digital retailing, customer engagement and payment processing. 14 ILLINOIS AUTOMOBILE DEALER NEWS
On the surface, the proposition is compelling: Keep everything under one roof. And to be fair, integration matters. Dealerships should absolutely expect their systems to work together. Customer information should flow seamlessly. Repair orders should populate automatically. Transactions should post to accounting without manual intervention. The problem isn’t integration. The problem is when integration quietly becomes exclusivity. Somewhere along the way, the industry began treating those two things as if they were the same. They aren’t. The Question Dealers Rarely Ask If your DMS provider offered payroll services, would you automatically assume they were the best payroll company? If they offered floor plan financing, would you automatically assume they were the best financing partner? Of course not. You would evaluate the options. Yet many dealerships never apply the same scrutiny to payment processing, despite the fact that it touches virtually every transaction in the business: • Sales • Service • Parts • Mobile operations • F&I Few operational decisions influence more customer interactions or revenue events throughout the day. And yet, for many dealerships, the payment strategy was never really chosen; it was inherited. The Hidden Cost of Default Decisions The most expensive decisions in a dealership are rarely the ones that leadership debates. They’re the ones nobody realizes are being made. For example: • A workflow gets accepted. • A process gets inherited. • A bundled service gets adopted. Over time, those decisions become part of the operating model, even if no one intentionally designed it that way. Payment processing is a perfect example. Most dealers can tell you what they’re paying in total. Far fewer can explain where the markups live, how the pricing structure works, what flexibility they have or how much visibility they truly have into the economics of every transaction. That’s not a criticism; it’s a consequence of treating a strategic business function like a software feature. Payments Are Bigger Than Payments The conversation isn’t really about credit card processing; it’s about control. The payment moment sits at the intersection of customer experience, operational efficiency, financial reporting and profitability. It determines: • How easily dealership leadership can understand what is actually happening inside the business • How quickly a customer exits • How efficiently employees operate • How accurately accounting reconciles • How effectively customer records stay updated Few operational moments touch as many parts of the dealership at once, which is why the decision deserves more attention than it often receives. The Rise of Connected Commerce The dealerships creating competitive advantage today are not simply adding more technology. They’re creating better connections between the technology they already have. The future of automotive retail isn’t about departments operating independently. It’s about creating seamless connections between engagement, operations, transactions and financial outcomes. Every unnecessary handoff introduces friction. Every disconnected process creates inefficiency. Every assumption left unchallenged becomes a hidden cost. The strongest operators understand that connected commerce isn’t about replacing systems. It’s about ensuring every system serves the business, not the other way around. A Better Question Instead of asking, “What comes bundled with our software?” dealership leaders should ask, “What creates the best outcome for the customer, the employee and the business?” Then work backward. Technology should support that answer, not determine it. The Bottom Line Integrated payments are essential in a modern dealership. But integration should never be confused with obligation. Dealerships should absolutely expect their payment systems to work seamlessly with their DMS. They should not assume those systems have to come from the same provider. That’s not a technology decision; it’s a business decision. And the most successful retailers of the next decade will be the ones willing to challenge the assumptions that everyone else simply accepts. After all, you chose your dealership. You chose your team. You chose your operating model. Your payment partner should be a choice too. 15 ILLINOIS AUTOMOBILE DEALER NEWS
Beyond Passwords: Identity Verification’s Best-Kept Secret: The Little Questions That Stop Big Fraud Let’s set the scene: A fraudster walks into a dealership. They’ve got a convincing fake ID, a manufactured credit history and a stolen Social Security number. They’ve rehearsed their story. They know what they’re doing. Then the finance manager looks up from the screen and asks: “Can you confirm the street address where you lived in 2017?” The fraudster hesitates. They can fake a license. They can forge documents. But they can’t fake a life they never lived. That’s the magic of out-of-wallet questions, and if you work in lending, identity verification or fraud prevention, understanding them is no longer optional. What Are Out-of-Wallet Questions? Out-of-wallet questions are identity verification questions drawn from a person’s credit data, financial records and public data, not from information typically stored in someone’s wallet or easily found online. Unlike traditional Knowledge-Based Authentication (KBA) questions — “What’s your mother’s maiden name?” or “What was your first pet’s name?” — out-of-wallet questions pull from hard data. We’re talking: • Previous home addresses (including apartment numbers, not just cities) • Former lenders and loan servicers • Old vehicle registrations and financing history • Names of neighbors or roommates associated with your address history • Previous employers linked to your financial record • Former phone numbers tied to your identity file • Historical payment amount or loan dates The key distinction: This is information a real person would typically know and that a fraudster almost certainly wouldn’t know, even with a stolen wallet in hand. Why Out-of-Wallet Questions Work: The Psychology of Authentic Identity Here’s the problem with most security questions: They’re either too easy to guess or too easy to find. A fraudster with access to someone’s social media profile can often answer “What city were you born in?” or “What high school did you attend?” without breaking a sweat. Why Smart Lenders Are Asking Questions Your Fraudster Can’t Google By Informativ 16 ILLINOIS AUTOMOBILE DEALER NEWS
Out-of-wallet questions flip the script. They rely on experiential memory, the deeply personal, often mundane details of a real life lived over time. The name of the mortgage servicer on a house you sold in 2012. The exact city where you lived for eight months before relocating. The make and model of a car financed under a previous address. That’s information that lives in data systems such as credit bureaus, property records and financial histories, not in someone’s Instagram highlights. It requires not just having someone’s identity but being them. It’s also why these questions are time sensitive. Fraudsters may eventually acquire enough background data to pass. That’s why smart verification systems rotate the questions, weigh recent history more heavily and layer out-of-wallet questions alongside other verification signals. Who Uses Out-of-Wallet Questions and Why AUTO DEALERS Auto dealerships are ground zero for identity fraud. A vehicle is a high-value, mobile asset, exactly the kind of thing a sophisticated fraudster wants to walk away with. Out-of-wallet questions are increasingly embedded into deal workflows, often triggered automatically when certain fraud risk signals appear during identity verification. When a customer’s ID scan raises a flag (mismatched data, unfamiliar address history, anomalies in the credit pull), out-of-wallet questions provide a real-time second layer of confirmation before the deal goes any further. Dealers who catch fraud at this stage don’t just save themselves a vehicle. They avoid the downstream nightmare: a funded deal that defaults, a lender that won’t buy it back and an FTC audit looking for gaps in their Red Flags compliance program. BUSINESS AND COMMERCIAL LENDERS For business lenders such as SBA loan originators, commercial finance companies, equipment lenders and more, out-of-wallet questions serve a slightly different function. The fraud risk often isn’t just about a fake personal identity; it’s about synthetic business identities, manufactured credit histories and principals who aren’t who they claim to be. Out-of-wallet questions help verify the actual human behind a business application. A legitimate business owner applying for a $500,000 equipment loan should be able to confirm their prior addresses, former financial relationships and employment history without hesitation. Someone who assembled a fraudulent business identity from scratch probably can’t. CONSUMER LENDING: MORTGAGE, PERSONAL LOANS AND CREDIT CARDS Mortgage lenders have used KBA and out-of-wallet questions for years, particularly in digital application flows where there’s no in-person verification. The higher the loan value, the more verification layers matter, and out-of-wallet questions provide a frictionless way to add one without requiring a borrower to send documents or show up in person. Personal loan and buy-now-pay-later platforms have leaned into out-of-wallet questions heavily as digital origination has exploded. When everything happens on a phone in three minutes, the traditional verification signals are compressed. Out-of-wallet questions buy time, flag inconsistency and catch bad actors who’ve assembled just enough information to clear a basic ID check. HEALTHCARE AND INSURANCE Medical identity fraud is one of the fastest-growing fraud categories in the U.S., and it’s expensive for providers, insurers and the patients whose identities get stolen. Out-of-wallet questions are increasingly deployed in patient intake, insurance enrollment and claims processing to confirm that the person requesting care or benefits is the actual policyholder or patient of record. GOVERNMENT AND PUBLIC SECTOR The IRS, the Social Security Administration and state DMVs have all integrated knowledge-based authentication, including out-of-wallet questions, into their identity verification processes. When you verify your identity to access tax records or unlock a government benefit account, there’s a good chance you’ve answered out-of-wallet questions without even knowing it. 17 ILLINOIS AUTOMOBILE DEALER NEWS
The Technology Behind the Questions Out-of-wallet questions aren’t generated by a person sitting at a desk combing through your credit report. They’re produced in real time by identity verification platforms that pull from aggregated data such as credit bureau records, property databases, public records, financial histories and algorithmically select questions that are: • Specific enough to be hard to guess • Recent enough to be relevant and answerable • Varied enough that the same questions don’t repeat for the same person across multiple verifications • A combination of credit-data-sourced questions and non-credit questions The answer options typically come in multiple-choice format with plausible decoys such as nearby addresses, similar vehicle models and adjacent years to prevent lucky guessing. The system scores not just whether you get the answers right, but how quickly and how consistently you respond. What Out-of-Wallet Questions Can’t Do Alone A Red Flags process is not bureaucratic busy work. It is a warning system that pays for itself the first time it catches something real. Whether you’re a dealership financing vehicles, a lender approving commercial credit, a healthcare provider billing after treatment or a retailer offering payment plans, the Red Flags Rule applies to you. The question isn’t whether you need a program. The question is whether yours actually works. The Bottom Line Out-of-wallet questions are one of the most elegant tools in the identity verification toolkit: simple in concept, powerful in execution and built on the fundamental insight that a real person’s life leaves a data trail that’s nearly impossible to fully replicate. For auto dealers, lenders, insurers and anyone else making high-value decisions based on identity, they’re not a nice-to-have. They’re a frontline defense in a fraud environment that’s only getting more sophisticated. The fraudster can fake your license. They can fake your SSN. What they can’t fake is the name of the mortgage company on the house you sold 12 years ago. Looking for identity verification and dealer fraud prevention built into your workflow from the first touchpoint to a funded deal? Scan the QR code to check out Informativ’s Multi-layered Fraud Detection, including real-time identity verification and out-of-wallet questions. https://informativ.com/solutions/fraud-prevention/ 18 ILLINOIS AUTOMOBILE DEALER NEWS
Anticipate every turn In an industry that’s always evolving, your dealership can rely on our Dealer Financial Services team’s 90 years of experience to see what’s around the corner, forward-thinking insights to prepare you, and technology to keep you ahead of the curve. What would you like the power to do?® Ryan Jordan, ryan.m.jordan@bofa.com business.bofa.com/dealer ©2024 Bank of America Corporation. All rights reserved. DFS-699-AD 6942528 Investment products offered by Investment Banking Affiliates: Are Not FDIC Insured Are Not Bank Guaranteed May Lose Value “Bank of America” and “BofA Securities” are the marketing names used by the Global Banking and Global Markets divisions of Bank of America Corporation. Lending, derivatives, other commercial banking activities, and trading in certain financial instruments are performed globally by banking affiliates of Bank of America Corporation, including Bank of America, N.A., Member FDIC. Trading in securities and financial instruments, and strategic advisory, and other investment banking activities, are performed globally by investment banking affiliates of Bank of America Corporation (“Investment Banking Affiliates”), including, in the United States, BofA Securities, Inc., which is a registered broker-dealer and Member of SIPC, and, in other jurisdictions, by locally registered entities. BofA Securities, Inc. is a registered futures commission merchant with the CFTC and a member of the NFA. In an industry that’s always evolving, your dealership can rely on our Dealer Financial Services team’s 90 years of experience to see what’s around the corner, forward-thinking insights to prepare you, and technology to keep you ahead of the curve. What would you like the power to do?® Ryan Jordan, ryan.m.jordan@bofa.com business.bofa.com/dealer ©2024 Bank of America Corporation. All rights reserved. DFS-699-AD 6942528 Investment products offered by Investment Banking Affiliates: Are Not FDIC Insured Are Not Bank Guaranteed May Lose Value “Bank of America” and “BofA Securities” are the marketing names used by the Global Banking and Global Markets divisions of Bank of America Corporation. Lending, derivatives, other commercial banking activities, and trading in certain financial instruments are performed globally by banking affiliates of Bank of America Corporation, including Bank of America, N.A., Member FDIC. Trading in securities and financial instruments, and strategic advisory, and other investment banking activities, are performed globally by investment banking affiliates of Bank of America Corporation (“Investment Banking Affiliates”), including, in the United States, BofA Securities, Inc., which is a registered broker-dealer and Member of SIPC, and, in other jurisdictions, by locally registered entities. BofA Securities, Inc. is a registered futures commission merchant with the CFTC and a member of the NFA.
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