Qore Conversations
Tune in for engaging conversations about the latest technology, innovations, and trending issues in the automotive industry. QoreAi's podcast delivers expert insights, practical tips and problem-solving solutions. Stay informed and inspired with every episode.
Qore Conversations
How AI Can Protect Car Dealerships From Identity Fraud
Learn about the importance of safeguarding your automotive dealership against the
pervasive threat of identity fraud! Join Todd Smith, Founder and CEO of QoreAI, a
leading force in the realm of AI-powered fraud prevention, on the brand new
podcast, Qore Conversations. Todd takes us on a journey through the fragmented
technology landscape of car dealerships, revealing how a seamless operating
system can revolutionize dealership operations. Learn why traditional ID scanners fall
short in the face of sophisticated fraud tactics and understand the importance of a
multi-layered security approach, especially in the wake of the alarming rise in
identity theft since COVID-19.
Explore the cunning strategies behind synthetic identity fraud and the ways
fraudsters accumulate personal information over time. Todd sheds light on the
critical balance dealerships must strike between robust fraud protection and a
smooth customer experience. Discover how AI technology can outshine human
oversight by detecting abnormal behaviors that often go unnoticed. We also delve
into the internal risks dealerships face and the necessity of preventing employees
from accessing sensitive customer information, all while implementing consumer-
centric and technologically advanced solutions.
Finally, Todd shares his insights into the evolving complexities of identity fraud in the
context of DMV processes and the growing threat of remote transactions and voice
cloning. He explains how automating customer onboarding can enhance efficiency,
improve data accuracy, and ensure compliance with regulatory requirements. By
capturing customer information directly into the CRM, dealerships can boost
retargeting efforts while securing data in line with FTC and CCPA guidelines.
Don't miss this essential conversation that equips you with the knowledge to protect
your dealership and provide a secure, seamless experience for your customers.
For more information about QoreAI, visit our website: www.qoreai.com.
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Podcast Directed and Produced by Hired Guns Agency: https://www.hiredgunsagency.com
Welcome to Core Conversations, where we're going to discuss technology advancements and how they're shaping the automotive industry. If you're not already familiar with Todd Smith, he's an automotive industry veteran with deep knowledge and experience from both sides of the fence. That's right. Todd's a multidimensional expert, having spent years in both the retail and service provider environments the retail and service provider environments. Todd's curiosity, paired with his intelligence and his desire to help the automotive industry solve its biggest and real problems, makes his voice one worth listening to, because the last thing he's interested in is wasting your time. Todd is the founder and CEO of Core AI, a brand new cutting edge startup offering the first of its kind OS operating systemkind OS operating system for seamless collaboration and dealership management. Today we're surfing where Todd has extensive experience and critical insights identity fraud protection for car dealers. So enough of the small talk. I want to get right into the messy middle, as Todd likes to call it, and I'm really excited actually to discuss how AI is impacting identity verification in the auto industry. So welcome, todd.
Speaker 2:Great Thanks. I'm super excited to talk today. I'm super passionate, obviously, about automotive technology, especially where identity verification is going and how AI is impacting it.
Speaker 1:Yeah, I don't think it gets spoken of enough, and it's not just a problem for dealers to be thinking about, like should we be fixing it, but it's a huge cost issue for dealers too, and I don't think people understand that. We're going to get into a lot of it. The first thing, though, for people to get a little bit familiar with you in terms of background, is what inspired you to start your new business, core AI.
Speaker 2:Sure, that's a great question. Like every entrepreneur, you go in search of problems and the most interesting thing, the auto industry is full of lots of problems. Interesting thing, the auto industry is full of lots of problems and in 2021, I was having a pretty long conversation with a big public auto group. They really were trying to solve the solution of having too much disconnected technology, and that's a common thing right now. There's been a lot of what I call widgets built that do certain aspects of the sales process, but nothing really connects it together and it causes a lot of friction, a lot of stress. It's customer friction, it's employee friction and then it's data friction. So it's hard to compile a really insightful view 360 view of a customer. It's hard to not only get that view but secure that view, because if you have pieces of customer PII held across many systems, each one of those systems is a vulnerability for the dealership. So I felt like it was a big problem and it was a problem worth tackling. So, as the entrepreneurs do, you kind of jump in, kind of go off the cliff assembling the airplane on your way down, which is fun and scary.
Speaker 2:The technology I peeled everything back to the Elon Musk first principles technique where you know you want to pull everything back to actual fact. And when I looked at all of this we said I said, well, we really need to begin with better data onboarding and customer verification, because if we don't do that, everything kind of breaks downstream. And we looked around to many dealerships and, believe it or not, half the dealerships are just photocopying licenses and a very small percentage one in five actually have a scanner or anything in place and nobody's really doing a lot of verification. Yet I was startled by an FTC statistic that fraud since COVID has grown like 66% identity theft. So there was over 150,000 cases last year in the US alone where people's identity was stolen and processed. Vehicles and all kinds of thefts and car dealers are always going to be vulnerable because you have a very expensive asset class that's highly mobile.
Speaker 1:Yeah, that's fascinating.
Speaker 1:So when we were catching up a few weeks ago, I was fascinated by the concept of an operating system for a dealership, all these disparate systems, and it made all the sense in the world the way that you walked me through understanding how dealers have always had some of those similar problems.
Speaker 1:And obviously, if you do not have a system that is able to not only incorporate all these things and make them seamless, make them properly integrate with each other, it leaves open gaps. And it certainly makes all the sense in the world that fraud protection would be one of those areas where just the simple necessity of having a very, very solid identity verification process the absence of that could cost a dealership more than probably most of them even want to consider. So I wanted to. You mentioned a couple of things there in your answer around scanners and I've always kind of felt like, yeah, that is the simple process. Like you go in, you're going to test drive, they give you, you give them your, or they ask for your driver's license. But I was hoping that maybe you might elaborate a little bit more on some of the limitations of that particular traditional ID scanner system at a car dealership.
Speaker 2:Sure, let's break down, because I think we have a false sense of comfort that the ID scanner is going to validate the license and say, okay, this is a legitimate consumer. I think that's the first thing. We have to kind of peel that back and go. Well, let's break down what ID scanners are actually designed to do. So an ID scanner is there to look at the attributes of the license, so it can check the fonts. It can check is everything in the right place? Are the holograms there? It can compare the barcode to on the back of the license or what we would look at as like the mrz, like number at the bottom, like it can take those comparisons to the front information are the fonts correct, coloring? Uh, there's all these like attributes. So a base scanner is probably looking at like 50 attributes. Maybe the most advanced scanners out there maybe maybe look at a hundred attributes around the license, but all they're doing is looking at the license per se. Does the front meet the back? And the reality is fraudsters have kind of figured that out and we can go on the dark web if we want to get all crazy and go on, open up the Tor browser and go into the recesses of the web and we could buy real identities that are fake, that we can use. That'll pass those scanners for as little as $200. If you want a really good one, like a legit one, maybe $600, $700. There's Telegram groups, whatsapp groups where you can buy these things from today.
Speaker 2:So the license itself, it's just not enough to validate the consumer and we have a false sense of confidence that it is, and there's no one, and let me preference this as saying that there's no one thing you're going to do at the dealership or any business to stop fraud. You're going to have to do a series of events, a series of like strategy and tools to ensure that you're going to catch the fraudsters, and the goal is to catch them as early as possible. So I applaud dealers that have a scanner. It's like a good first step in a process, but it's not a complete step. So, as we just talked, that's one issue.
Speaker 2:With a scanner. Two, we've seen a rise of people starting the transaction or wanting to do it remote. Last time I checked, you're not driving a scanner to their house to put their license through it. Now we run into more problems. You get a copy of the license via text message or something by email Totally unsecure, really bad idea Winds up on our salespeople's personal phones. So that's another nightmare issue that we'll face with this FTC CARS Act and protecting consumers' privacy and data and storing it safely. Obviously, we can't do that on individual devices or through email. So we had to find a better way and that was my thinking to go all the way back to okay, what are we trying to do? And that is as quickly as possible, taking unknown person, unknown consumer, to the dealership and make them a known, identified consumer and then validate that consumer that we know they're not there to commit fraud.
Speaker 1:And this is where AI is now kind of entering this space. That basically gives it some, I guess, higher points of quality. I'm really curious to know more about that AI obviously for those that are paying attention, in the last couple of years it's in and around everything. It's driving, so much Would definitely love to hear you share a little bit about how this AI-powered side of ID verification is addressing some of these things in comparison to traditional ID scanners.
Speaker 2:Yeah, absolutely. So let's break it down. We all talk about AI and machine learning and all these exciting new technologies and, frankly, we're still at the beginning of a lot of it, but we've already seen it making an impact, where AI can quickly look through thousands of small attributes of, like driver's license or any type of identification form. We'll, I'm sure, even talk about your face versus what's on the license and biometrics. This is where AI is going to absolutely accelerate and I definitely believe that we'll see more and more of it to protect a dealer, because the fraudsters are also going to use it more and more inside their bad actor kind of initiative coming out of one of the universities where now, with deep fakes, it was one person, yet it was a completely different person talking, but it showed someone else's face in the video meeting. So it's allowing fraudsters to create almost a false identity that you interact with. That you think is legitimate and though, if you're really good, you can spot it right, and the spots are always around the mouth and the eyes and the nose and the correlation of where they are at.
Speaker 2:But it's very interesting because for an average person, I could just say hey, sean, I'm on a kind of bad internet signal.
Speaker 2:So you would discount those little things that maybe your spidey senses said that looks weird that person talking. You would go, oh, you're on Wi-Fi because we've been in those meetings, right, we've been in a Zoom meeting or Google Meet where your face freezes right and you're like, ah, freezes right, and then you're like, ah, and so I see a whole world unloading onto us where the fraudulent actors will try to continue to work on that technology to give them an extra layer of protection to create fraudulent transactions, and dealerships are going to have to respond to be able to almost combat the AI with AI to analyze documents, analyze faces, look for mismatched behavior. So for things where the great thing about AI is, it can disseminate an enormous amount of data and find and spot patterns that we as humans just are not good at doing. And I mean that's the real key of where this technology will be leveraged is looking for the anomalies that humans just don't have the depth of skill, knowledge and experience to highlight skill, knowledge and experience to highlight.
Speaker 1:Fascinated by that answer Immediately made me think about and tell me if I'm interpreting this wrong.
Speaker 1:But if I'm a dealer and I know that there are a lot of different issues that I need to be solving, but in this particular case I'm tuned in because identity fraud is an issue and I want to educate myself about it Am I getting this wrong?
Speaker 1:But I don't think so. If I'm a dealer, I need to be aware of the fact that the fraudsters, all the people who would intend to use whatever's at their disposal for maybe more evil purposes, nefarious purposes that if you're a dealership and you do nothing, you literally think that the cost of doing nothing is zero, which it definitely isn't, but you should. If nothing else motivates you realize that the bad guys also have access to when new technology, new layers like this are introduced, that they'll use it, like this are introduced, that they'll use it. So you certainly don't want the bad guys to get better at being bad guys and then do nothing in your dealership. So do I have it wrong that if you were to do nothing, that the bad guys now also can advance their ability to defraud dealers because of technology, and so you kind of need to be able to fight fire with fire. I think you said something like that AI both as offense and defense, is that? Am I interpreting that correctly?
Speaker 2:Absolutely. Look. Look at it this way. Think of this, sean how many assets are the value of cars that are highly mobile, easy to acquire, right? Not many. So defrauding like a house. I get caught. I can't pick up the house and move it.
Speaker 1:Yeah.
Speaker 2:Car is a very expensive asset that's highly mobile, so I could defraud a dealer. I could have that vehicle to a port in a container on its way to China, where I'm going to make 400% on the value of that car by the time the bank comes looking for the first payment. So you have an asset class that is highly mobile and fraudsters like it, Believe it or not. It's very interesting that after the pandemic, obviously the fraudsters did a good job of defrauding the government for PPP money. They bilked like billions of dollars out of the US economy for this right and then that dried up. So the fraudsters have to continue to make money. The fraud rings need to continue to make money, so they look around. So what are they looking for? I need to continue to make money, so they look around. So what are they looking for? I need to buy something super expensive. I need to be able to get my arms around it and move it very fast and ultimately cars fit that bill perfectly. And until dealers really start locking down the process, they will be vulnerable. And also to point out that these fraudsters are spending a tremendous amount of time and money trying to figure out how to acquire these assets because it's in their best interest. Right, If I could acquire a $120,000 autograph, all black Land Rover and I can sell that in China for close to half a million dollars. So think about that mathematics and my acquisition. Was what? Some weeks, months with my team figuring out how to perfect a driver's license, walk in, defraud the dealer. I mean it just makes sense.
Speaker 2:What we see is all these synthetic IDs, and the fraudsters have realized they'll play the long game and they'll get a piece of your identity, your social security number, your birthday, piece of your identity, your social security number, your birthday. Once they start to compile that, they create a synthetic think parallel credit report to yours and they'll build it for years until they have this moment, kind of like a breakout moment. They'll buy a few things, a couple thousand dollars here or there, and then they go for the big ticket item, and cars are literally at the top of those type of items that the fraud rings are going after. So for me, I look at it as does the problem dealers absolutely have to solve and there's multiple ways that they can go about doing that, but they want something that provides the least amount of friction to the consumer to do it Because you don't want to penalize the legitimate consumers, but you want to put a process in place that also maximizes the protection back to the dealership. So it's a balancing act, but with technology today it's easily accomplished.
Speaker 1:I'm thinking there's probably and I've actually seen some of the articles that you've written on LinkedIn I've heard you talk about the human oversight, the drawbacks to that in ID verification, and I'm thinking that on the AI side, there's probably some contrasts, some things that help maybe eliminate some of those issues, and it makes all the sense in the world world. We'd love to know your thoughts a little bit about that.
Speaker 1:Just contrasting the fact that we've been doing this basically relying on ourselves, which were, of course, we're not perfect. How is technology kind of helping eliminate some of those issues?
Speaker 2:Yeah. So you know, as I peeled it all the way back to my first principles, thinking, right, the first thing we looked at was well, are the salespeople are currently having to come in contact with the consumer's PII, right? So let's look at the first thought here is you know, the consumer, right, is handing my license to the salesperson, salesperson's going off photocopy and put in a machine. So first challenge there was okay, I think it's probably a bad idea to expose anyone at the dealership to the consumer's pii, meaning like a handoff, this consumer should be able to kind of onboard himself, like, like. So that was the first thinking. Because, and and this got rooted in our thinking was, once we peeled it back and realized that there was a statistic that drove us to that, it was. And everything we're talking about today is fighting fraud from the outside in, but 60% of fraud it's internal side in. But 60% of fraud it's internal. Bad actor works at a store. They're copying licenses and selling them on the dark web through Telegraph or something like that. This is the reality. So fraud's like a. It's a multi-dimensional battle. But today I know we're talking about the front sides and the other side. So we realized we don't want people at the dealership to come in contact with the consumer's driver's license. We had to figure we want to take that step out. That was one to eliminate that potential internal fraud.
Speaker 2:The second part we deal in a world that the salespeople, sales managers, f&i managers what is their goal? Their goal is to sell a car. Their goal is to sell a car that allows everyone to make money, it pays their bills, it puts food on the table, pays for their kids. That is their goal. And the consumer's goal is to buy a car. Right, and the fraudster's goal is to buy a car. So when the fraudster again versus the salesperson and look most stores, I absolutely believe the employees want to do what's in the best interest of the store. But I say the nice caveat. But we also have to deal with human nature, that they do want to sell the car because there's financial meaning behind it for them. So let's say the license looks, it looks good, it's legit.
Speaker 2:Let's say, past the scanner and I'm like this guy can buy a car, I feel a little weird. He's like trying to rush me through the sale or he's just didn't argue on the price or he didn't like he wants to buy the products in the back, everything I'm selling him. These are things that the average person wouldn't do. Yet, in contrast, like AI, might spot and go. This is probably a problem because they're not behaving normally. But as a salesperson, you would be ecstatic because you're thinking in your head I'm making more money. So we have an issue where we are misaligned a little. We have the people who are.
Speaker 2:If you're using your people to be the line of defense to stop fraud, they are stopping something that then stops them from being paid. They don't get paid to stop fraud at the store. So when you layer these things and, as I said, when you peel everything back, it's not just a black and white process answer. It's not like, oh, just plug this in and the world is better, or AI or any other company. You have to consider the existing process, the current battlefield right and what's happening on it right, and whatever solution you end up with again has to be consumer centric. Consumers have to find value in it, like you're protecting their identity too by doing it up front. You got to find something that salespeople will want to do and you have to ultimately have the technology that's best in class. That's stopping the fraud.
Speaker 1:Yeah, and this definitely is also part of and I don't know if this is why you call the messy middle the messy middle but these are not always the fun things for dealers to tackle and they're not the fun problems to solve. It's not like coming up with what's going to be our new tagline for our advertising campaign that's going to make people really interested in us, right? Should we put a giant inflatable whatever outside to draw in? Children not real adults want to buy from a dealership like that. But when you start to talk about identity fraud, when you start to talk about, then, artificial intelligence and how it can improve that, it's definitely one of those areas where there's not enough education about it. So I'm glad we're starting to have conversations like this, because just listening to you on this episode, there's just so much information that I think for a dealer, if I'm putting my dealer hat on, I'm realizing that some of the things that are not maybe as attractive of problems to solve in your business it's not always about what's the most attractive problem to solve. It's about, well, what ones are actually more like parasites that just continue to eat at the fabric and the profitability of all the things that you might be doing that are great. It just seems like you can't have your eye off this ball.
Speaker 1:I did want to go back to cause you mentioned it. It's also in some of your recent writings. Um, but facial biometrics. I had never thought about this in terms of it being another layer of security, but I think it makes all the sense in the world. I'm wanting to dig in a little bit more on your thoughts. There Is this an AI piece. Does it compare? What is it mapping facial features, how does that work and what would be some of the benefits of that for dealers?
Speaker 2:Yeah. So let's think about it. So obviously, you put a license in a scanner, you're not mapping anything right. You're not connecting the person who presented the license to the license as a like hey, let's put the pieces of bread together, right At all, you're just like they're independent still. So we realized that, okay, we need to figure out a way that we can get the front and back of the license do all the normal things like a scanner is going to do. But you have to go beyond that, right? And one of the things we realized was okay, we need to take the picture that was presented on the license. Now we need to take the liveness of the person who presented that license, liveness of the person who presented that license. So, again, this goes back to the very beginning that I said that whatever happens in the dealership also needs to happen outside the dealership. Remote deliveries people aren't ready to come in. You need a process that's universal to create an identity verification process. You can't have one for remote one for the dealership. We see too much of that already and it creates all kinds of internal confliction and issues.
Speaker 2:So, that being said, we really landed on the power of biometrics, which have become pretty much commonplace. Almost all of us use Face ID at this point. It's the fastest way to log into our phones, fastest way to log into our bank accounts, probably, or if you're using it all over the place, your face is a great fingerprint, right. So we built a biometric system that's looking at 360 data points of your face and matching it to the picture of your license. So we didn't want and as we thought about this, we did not want the ability for someone to present a license and then a selfie, right.
Speaker 2:We wanted the license and a liveness test that I'm looking at that biometric face, I'm making the 360 data points, I'm now matching it to the physical license and, again, this is just an additional step in a kind of compliance waterfall process around identity, right, but this ensures that that customer is in possession of that license at that moment while they're going through this process. And that's why we also realize you don't want a system that lets consumers upload an existing picture of a license. You want live capture of the license as well as a liveness of the face. This allows the correlation. Then you run all the attribute tests around the license and then you're looking at all the biometric features of your face and look. Let's be honest, fraudsters don't want their face, most likely put out there to be recognized.
Speaker 2:So, because obviously all that data is captured.
Speaker 1:That's how I feel I try to keep my face off of everything, because it really it has a negative effect on all the fraudster stuff that I like to do. I'm known for that right, I'm not just kidding, hey one. I see that everywhere. It makes sense. I think anybody tuning in, listening and or watching will um be able to relate to the fact that we're using that so much on our phones. But it I love the emphasis of this being, uh, something that happens live with somebody seems like that immediately would have a huge effect on just the quality and process. I do want to ask you about external databases like DMV, and I'm thinking that there's probably integration points there that also can help with accuracy, efficiency and the whole ID verification process. So am I right about that? Can you share a little bit about that?
Speaker 2:Absolutely yes. So DMV is a great source. So when you analyze a driver's license, you analyze the information on the front and then the back, and the back has a barcode. The barcode is the same information that's uncoded on the front, so those things should match. Now, fraudsters have obviously figured that out. They even figured out how to deal with the holograms and everything else on the licenses, which is pretty fascinating in and of itself.
Speaker 2:So they're able to pass a lot of those markers automatically. They even have infrared lights in some of the scanners, like all that able to be bypassed at this point. But one thing you're not bypassing is actually accessing the DNV to verify that that license at that moment is a valid driver's license. So this only works currently in 43 states. A couple more states are about to go online that will have the ability to hit the state database to verify that that is a valid license.
Speaker 2:Sean Raines and I'm working that file over the course of a couple of years and I go into the DMV and now I change your picture to my picture right, and I leave. Now I have a different picture, which is possible. It's getting harder to do because they do reference the previous picture, but if they find someone who looks like you and let's say you have the beard now I have a beard, I have very similar, I just maybe look like I lost a little weight, like I'm most likely going to be able to scan past that and at that point now I have a real license with my picture that will be validated at a DMV. So again, like, as I always say, like any individual aspect of this process, someone's going to figure out a way to create a fake version of it.
Speaker 2:But, that being said, when you create a series of steps, you're going to catch them. Nobody's perfect right and fraudsters will spend a ton of time on a license and it's an actual license so they're going to pass those tests but they don't pass a more upstream test to pair their phone to an actually known identity. That's the same identity of the driver's license being presented, which then goes into additional testing where you can look at synthetic ID information. Obviously, we just talked about DMV information. We can look at OFAC, we can look at other data services as well, and even looking at synthetic ID services, the realization there is what that is. I don't know if you know what they check on as synthetic ID, but it's really looking at your social security number, because your social security number is an identity. It's actually a terrible form of identity, but it's easy to track you because in that social security number, it shows what state you were born and what office that your social security number was issued from, and that is then matched to your birth date and they can say, okay, this is reasonable, this was in three weeks or less than a year that this social security office, this number you were born in this location this correlates.
Speaker 2:Synthetic ID sometimes will spot where the ID will be so far off from the social security number presented and the birth date presented. So that's where synthetic ID catches fraudsters by making that mistake which you know. Is it a great thing by itself? Absolutely not. But stacked in a series of checks, yes, like it's going to catch a more lazy fraudster, I would say. And then after like 2010,. Like everything gets really wonky because they've changed the whole process of how the social security numbers work and how they, because social security numbers are not randomized. So I know it's crazy, like I don't want to go into the wormhole of this, but they made the change starting in 2010. So, as these children right, because, think about it, 2010, you're only 14 today as these kids start driving and then needing to be checked, the synthetic ID process is not going to work in the same way.
Speaker 2:Yeah, I know it's super wild, like like what's going on, you know, and that's why I said it's like a rabbit hole like you.
Speaker 1:Just you keep learning. So, yeah, and you've mentioned a few as we've been having this conversation, I'm wondering if, um, there are some of maybe the top or most common tactics that fraudsters are using. I think that might be interesting to just what would be maybe the top couple of them, and then maybe some of your thoughts on how AI systems are evolving with those threats thoughts on how AI systems are evolving with those threats.
Speaker 2:Yeah, so look, the first thing, going to the dealership for a fraudster is high risk, right? So let's be honest. So they would prefer a remote transaction. So you're going to probably see more of hey, I'm really busy. Can we do it over the internet and let me send you my license? And in a current fashion, you would needed a way to deal with people who wanted to start the transaction from their living room and be able to hire those customers and be able to give the dealership the confidence that this person is legit.
Speaker 2:So, and you hear all the stories all the time where a customer will do it all and it looks sounds so legit. I say you know, sean, I own a pizza place. I don't get out till really late at night. Can you meet me at my house at like 1 am and salespeople want to sell a car. So they're like, yeah, we're going to deliver a car at 1 am tonight. And we go and they deliver a car and it's in front of the person being defrauded's house. So the person who actually lives in that house is the real person and I'm the fraudulent person out front. Sign the paperwork.
Speaker 2:Dealer sales guys are clapping hands. We sold a car in the middle of the night and then that fraudster zooms off into a financial reward. So that begins like you start thinking about those things and fraud. We're going to see fraud in a whole new world, like you 've probably already seen, and I see this happening and I haven't written about it yet, but I absolutely see this happening where I will clone someone at the dealership's voice a manager, owner. I will then call a salesperson and say hey, this guy's my friend, go drop the car in front of his house and leave the keys. And I'm going to go do that because my boss left it on my voicemail. Yeah, that's coming, because you only need about 10 seconds of voice to clone it at this point.
Speaker 2:So, I see all these crazy, probably fraud schemes, and it's funny because that is based on actual fraud. That has happened already. But you see it in, I would say, like Mexico, where they will call and say I have your son or daughter. You need to send me $20,000 now or I'm going to kill your kid and the kid kids upstairs studying.
Speaker 2:And they'll have a kid's voice saying things. So, because that preys on all of us, right, Because we're going to hit a point where it's going to be very hard, and I think, especially this year we're in this political cycle I think it's going to be very hard to believe what you see versus what is real. And obviously fraudsters are going to play that game too and they're going to look for the dealers that have turned. Let's say, I'm not going to say a blind eye, but they're just not putting the effort in. But they're just not putting the effort in. And, as I said, most fraud probably they'll try to start it online. But if it's a ring and they have sophistication and they're going in, they're not buying one car, they're going to end up buying four or five cars. They may do it over a town and hit three or four stores simultaneously. They're going to walk with a few million dollars in inventory. It's worth the risk at that point.
Speaker 1:Yeah, and just the rate at how fast all of these things are not just entering the market, but how sophisticated they're getting. It's amazing, these examples that you're sharing right now, just from a marketing agency perspective, I think we use three or four different softwares that will learn your voice. That will learn your voice or my voice within just a matter of seconds Sounds amazing. It can be used for doing even what we're doing right now, where I could just record you for a number of seconds and then I wanted to add something to this episode that maybe was left out unintentionally All of a sudden. Now it's added, and I have heard and seen many examples that are actually live examples of fraud happening where people are using that.
Speaker 1:I would think that any dealer who's trying to protect their interests as they evolve through, I mean listen, the last five or less years in our industry have been marked with all kinds of different changes and things that we're trying to accommodate.
Speaker 1:Where the customer experience becomes, you know, kind of front and center, the spotlight's on that. How well can we emulate a process provided by other retailers? But it opens yourself up to some of these places where AI and other advanced technologies could also be, you know, causing gaps where it could cost you a lot, and I wanted to tie this back a little bit to the customer experience is something that's just been I probably overemphasized, probably talked about too much. I say a lot where if your customer experience in your service department isn't actually better than your sales, because somebody might forgive you for having a jerk salesperson, but if you burn them in service, they probably are going to look for every way not to ever come back to your store. That as an aside, love to get your thoughts on. Can the customer experience actually be improved in the sales process with, basically, maybe automation or some of these improvements with identity verification? What are your thoughts there?
Speaker 2:Yeah, absolutely, and we're already doing that. And I looked, as I said, as we peeled everything back to these first principles, you said, okay, can we automate customer onboarding? Because we looked at reality. So reality is sales managers spend an awful lot of time telling their salespeople did you get that guy in the CRM? Oh, yeah, he gave me his first name and his email address. Hey, what about that guy who was just out on the lot and salesperson?
Speaker 2:We spent all this time trying to get the information from our salespeople to get from the customer. The problem is, when the customer is out on the lot, it's a little awkward when I say, hey, what is your last name? Sean, great to meet you. And they're like hey, sean, what's your home address? Hey, sean, by the way, what's the best phone number to reach you at if somehow you fall over in this conversation and I need to call you?
Speaker 2:So I look at these things and I was like, okay, let's figure out how to let the customer onboard themselves at the dealership. So we figured we could give every salesperson their own personalized QR code. They just need to hold it up to the customer while they go off to get the keys and the tag. For, let's say, a test drive, customer can onboard themselves, and now, with technology and our partnership with Equifax, we can actually either one of three things happen Once they hit that QR code, it auto understands who that customer is it already knows and it goes.
Speaker 2:Hey, I think I found you. I just sent a code to your phone. Plug it into this messaging point and you plug it in and then it's going to show hey, this is Sean Raines, here's your address. I already verified your phone number, update your email address and hit go. So now I have all this great data that autogos a CRM. So that's the happy, happy path. The still happy path is it goes. I didn't see you or I don't think I have you. Complete Plug in your phone, it pings your phone and does the same process.
Speaker 2:It pings your phone and does the same process and why we did the phone was pairing your identity to your device is absolutely, we believe, one of the best forms to ID you, because your device has history with you. You've had the same SIM card, the same number, for 1, 5, 10, 20, in my case, 25 years, right, and it's a very important thing that. So we wanted to do that. But we also want to ensure that we got all the data into the CRM and we hinged all this on a bias of if I ask you belly to belly for information, you are hesitant to give me that information because your brain goes why do you need that information? But when a computer asks you, we fill in those forms all day, every day. We'll just confirm them, and there's been tons of research around this. So we wanted to leverage how humans behave in this process and we wanted to streamline it, because it's awkward when I have to ask you for your information and I'm not at my computer to plug it in. So, worst case, sales guys are plugging it into their personal device Terrible from an FTC standpoint and a liability standpoint, because the dealer doesn't have access to that device legally. So we wanted to automate onboarding upfront and we've been able to do that and and I think that not only helps the data onboarding and getting the right data into CRM, where I don't have to ask the salespeople anymore did you get them in the CRM? By having that complete profile in the CRM, it allows your downstream retargeting, remarketing to be far more efficient. So where you may have only gotten a first name and an email, now look at 70, 75% we're delivering their full legal name, their home address, phone number. We already have an email address. So having that increases your retargeting capabilities kind of gets clean data going in.
Speaker 2:And that clean data to us, we looked all the way downstream to say, well, if you're a dealer or a group and you're thinking about one of these customer data platforms and warehousing the data, you need to start way back at the beginning.
Speaker 2:For that tool to be effective way down there, you have to onboard clean data upfront. So for us we kind of again went all the way back to the beginning and said we need a way that will automate onboarding, make it super easy, that the salesperson literally just has to hold his phone out like a Heisman trophy and say here, mr Customer, scan this, I'm going to get your keys, or I'm going to get the keys and the tag you can onboard yourself. It'll ask you for your ID and you go through that process. I'll be back in a couple of minutes Takes less than a minute to do that. You can verify the customer. All that data goes to the CRM and in the dealership on the desk they have your ID of whether it's verified or not. So for us, to us, that's the future, right. We want to create that, as I said, minimum friction to the consumer, maximum protection for the dealership, and try to pull the salespeople out of that process to deliver that result.
Speaker 1:Makes all the sense in the world I mean. So we're getting a little bit close to the end of this core conversation. I got a couple other things I want to ask you before we land the plane. But you mentioned a little bit about FTC. So I'm curious around their regulatory requirements in recent FTC guidelines. Ccpa impact, things like that where dealers are trying to figure out how they handle consumer data. You just mentioned a little bit of CDP. That's been a huge topic topic, you know, more interesting to some than others. Some people pretend like they understand it and don't. A completely different episode on that maybe in the future. But I'm curious to know how is core ai helping or what's your focus there on helping dealers around compliance with these regulations?
Speaker 2:right, our Our first thing, sean. It's really heavily focused around keeping this data digital. So we don't want it to be turned into paper, so we don't want it to be photocopied. We want to avoid that. So if we can hold it electronically, we can secure it. So that's rule number one. So we want the minimum amount Because, think about it, if we today walked into a dealership I'm going to say almost every store we're going to go into I will find a folder on some salesperson's desk.
Speaker 2:I'm going to open that folder. There's going to be a driver's license. Or sales manager goes to the restroom. I'm where the sales manager is and it's sitting right there. So, uh, or I go to the salesperson and he says, yeah, I have a customer who's coming in later for his test driver to buy the car. He already texted me his driver's license, so it's on my phone.
Speaker 2:So for us we're looking at all these things are like, okay, we need a system that kind of stop that as best as we can. And how's that going to happen? Right, it's not just building technology. You have to build something that aligns with our existing behaviors, and I think that's the most important thought is looking at what we currently do in the real world. And now how do I build something that complements it, makes the salesperson's job easier, brings more security around, it, helps people do what they're already trying to do instead of forcing them to do something else that is new or different?
Speaker 2:Because, listen, our brains don't like to change. We actually hate change. Change at the most core level of our brain is new. New is potential problem, fear, mistake, death. Right Back in the day. We don't want to change. Every movement counts right and we don't want to make the wrong step.
Speaker 2:So we really wanted to align with existing behavior and we knew that was kind of an anchoring thing for us. Like, hey, how do we just stay the course with the salesperson but also make it easy for the customer and ultimately protect the dealership down that line and I think with the FTC and the additional rules under this CARS Act or whatever comes to light with that, I think dealers are really going to have to figure out organizing the whole customer experience so you could store it in one place and it's not held in nine different systems, because that's going to be a compliance nightmare. So if you have a customer profile and pieces of the transaction like I call that messy middle where I'm interacting through multiple systems during the course of the transaction. When you have that, under the new FTC guidelines, you have to somehow compile all the conversational data around the entire transactional experience, from start to end, and then store it for 24 months.
Speaker 2:So the question is how the heck are you going to do that when you have some data in the CRM, some in some mobile app that you were communicating with the customer, some in the phone system, some in some other texting tool you were using, some that was in a chat widget on the website? The reality is look, everything looks good in legal paper, but when it comes down to like hey, in the real world, not so easy, and so I think the best technology has to be rooted in reality, and it has to align with the behaviors of what people are doing today, not the behaviors of what we want them to.
Speaker 1:That's an important distinction, for sure. Well, listen, we're driving around the parking lot in this core conversation looking for the best spot and all of a sudden, this is the best place to park the car. On this episode, thanks, todd. It's clear. Leveraging AI is an enhancement when it comes to fraud protection. It's clearly streamlining the customer experience. We're always looking for win-wins, so that's a win-win for both the dealers and their customers.
Speaker 1:As the automotive industry continues to evolve. This is an amazing industry. We've both been in it for a long time. Embracing these types of technologies are going to be crucial for dealers, and I've said this a lot. Technology is always moving faster than our ability to keep up with it, and I love the fact that you're a champion on behalf of dealers and their customers, that you understand both sides of the industry, that you care enough to share these types of insights. People listening, hey, thanks. Also, I want to direct you to make sure you check out Todd's articles on LinkedIn. Hit that button to follow him, so then you get all the new stuff he frequently is sharing in-depth information in the LinkedIn environment. Thanks everyone for joining us and guess what? We're going to see you again really soon, right here on the Core Conversations podcast.