Your Daily Operations Magazine
Search Close Menu

Dealer Ops

If Employees Steal Data, Customers Bolt

I think by now most Americans have seen the commercials about identity theft. They are funny and quite entertaining. However, identity theft and data breaches are no laughing matter. It can be financially devastating, costing you your customer base. Could your employees be the culprits of such financial disaster?

Employment related identity theft has surfaced as the most prevalent area of identity theft in America. “Workplace identity thefts account for an estimated 70 percent of identity crimes in the US,” according to a study by Michigan State University. It all starts with the theft of personal data by an employee. Instead of stealing merchandise from their employer, many employees steal data and get money.

Over the past few years, as concerns about identity theft grew, Congress stepped in and passed laws like the Fair and Accurate Credit Transactions Act (FACTA) and the Gramm Leach Bliley (GLB) Act. FACTA and the GLB Safeguards Rule are both enforced by the FTC, and the FTC means business. Just as identity theft is no laughing matter, neither are the federal laws. In fact, last year a Florida-based company was fined $12 million after a breach. The reason: “They did not train their employees on handling personal information.” What would that do to your bottom line? Tom Hudson, leading industry attorney, said, “I would not be surprised if as many as 80 percent of dealerships in America are not compliant with federal privacy laws.”

What happens if you have a careless or corrupt employee who causes a breach of customer information? Possibly civil lawsuits, class action lawsuits, and fines by the FTC.  What happens when hundreds of customers/employees find out that their personal information was breached?

According to “The Coming Pandemic,” an article by Michael Freidenberg as published in CIO Magazine, “If you experience a security breach, 20 percent of your affected customer base will no longer do business with you, 40 percent will consider ending the relationship and 5 percent will be hiring lawyers!”

Lawyers? Did you say lawyers?

That’s right, lawsuits filed after a data breach against companies by their customers and employees are on the rise. You would be kidding yourself if you believed that even your most loyal customer wouldn’t sue you if he or she has the opportunity. If they can, they will.  The security of your data is vitally important, so take it seriously. If you have a data breach in your dealership, you can be sure that your customers will take it seriously and perhaps never set foot in your dealership again.

What can you do?

Train your employees and have them sign confidentiality statements. Training your employees on handling personal customer information lets them know that you care about them and your customers. Your employees will know that you will not tolerate carelessness or corruptness when it comes to protecting customer information. To further protect your customers, consider offering identity theft protection in the F&I department. It could serve the dual purpose of providing an additional revenue stream and mitigating your customers’ damages if you have a data breach. It could be a win-win situation.

You should also let your customers know that your employees have been trained and that you are doing everything humanly possibly to protect their good name and credit. Don’t be afraid to bring up the subject. It will give them peace of mind.               

If you want to keep your customers coming back and your referrals coming in, take steps to limit the possibility of a breach. Don’t let a data breach cost you your customer base. We all can agree it is easier to keep customers than find new customers. Remember, security first!


Vol 4, Issue 4
0 Comments

News

Number of EVs to Double by 2021

U.S. electric-vehicle sales forecasted by the Edison Electric Institute would require the...

The number of electric vehicles on U.S. roads will double in the next three years, according to a new report from the Edison Electric Institute.

News

AutoSource Names Brad Walsh CEO

Bradley J. Walsh has been hired as the new CEO of AutoSource, succeeding founder Luke Kjar as chief executive of the Utah-based branded title dealer group.

News

Used Cars Add to Hot Streak

Subcompact cars such as the Honda Fit enjoyed a 0.6% increase in average retained values in...

Black Book’s November Used Vehicle Retention Index finds value and demand have pushed pre-owned prices skyward for the seventh month in a row.

Dealer Job Finder

See more

News

Waymo Rolls Out Self-Driving Taxis

Self-driving, revenue-generating taxis have officially hit the streets of Chandler, Ariz., and...

Waymo has set a new standard for driverless-vehicle proponents and ride-hailing providers by launching Waymo One, a revenue-generating autonomous transportation service.

Photo

2020 Jeep Gladiator

Pricing has yet to be announced for the 2020 Jeep Gladiator, a new vehicle that promises...

Chrysler unveiled the all-new Jeep Gladiator at the Los Angeles Auto Show in late November. Billed as “the most capable midsize truck ever,” the new vehicle marks Jeep’s return to the pickup ranks for the first time since the Comanche ended its production run in the 1992-MY. The Gladiator is due in showrooms in the second quarter of 2019.

News

Cars Outpace Trucks in Lost Value

Pre-owned full-size cars such as the Chrysler 300 depreciated by an average of 0.77% in Black...

Black Book’s latest Market Insights Report finds used cars continue to depreciate faster than light trucks, but strong incentives for new cars indicate sustained demand for some types.