#89 - Curbing Curb-stoning w/ Jared Halsted

Hello. Welcome to this episode of the Independent Dealer Podcast. We are here with Jared Halstead out of Arizona. He's going to chat with us. So much great information, a little bit about buy here, pay here models, and a whole lot about some awesome curbstoning laws that Arizona's put into place.

Yeah, Jared, I'll tell you, really, the association out in Arizona went above and beyond and got a law that every state should try to try to get passed. And the biggest thing at the very end of the day, the way you get these things passed is the relationships that we make as individual dealers with our representatives. So thanks for being here with us, Jer.

Thanks for having me, guys. I really appreciate you bringing me on.

You are listening to the Independent Dealer Podcast with hosts Luke Godwin and Jeff Watson. Thank you so much for tuning in. Let's do this.

All right, guys and gals, we have got Jared Halstead here. Jared is out of the southeast corner of the Phoenix Valley. Was that fair to say, Jared? I mean, you're right.

That's probably about as far south east as you can go from Phoenix before you have to go over the mountains to Tucson.

So, yeah, then you're pretty much, you're basically on the border. I mean, I think we've, we've all but given up Tucson to Mexico, so.

Yeah, right.

I don't know if that's.

You nailed it. Yeah.

I don't know if they've officially put the wall in yet, but so, so Jared, real quick, give us, give us kind of your background. I mean, let us, we want to get to know you. How'd you get into the car business? What, what's your business model today? And you just took on some pretty serious responsibilities there in Arizona. Tell us about that.

Yeah, well, I'm born and raised in Queen Creek, Chandler area. But I hear my whole life, my, you know, third generation out here and you know, I grew up working on dairy farms after high school and then I got driving trucks and got moving cars and dealership friend of mine, he had a dealership, he hired me to move some cars on a weekend, accidentally sold a car. He's like, no, you're good. I should come back to that again. Next thing you know, I'm selling cars. And he took off and separated from his partner, opened up a, an Internet based dealership. Back when ebay was huge. It was, I mean, ebay. And we were knocking out 200 cars a month. And I'm in my 20s, you know, just thinking, wow, this is the greatest thing in the world. And of course, that crash and the Internet ebay thing died. So I went to work for a few other dealers and just kind of learned the best from each one of them. And, you know, about. I've been licensed in Arizona between wholesale and being partnered with him for years. But I decided I wanted my own thing. I didn't want to work for anyone else. Want some to steer the shift. We were getting ready to have a kid, and I decided just completely throw everything I had into it. Sold my rental property, sold everything and opened up Double H. And that was seven years ago out here. We're in our seventh year now, and probably the scariest thing I've ever done, but by rubbing elbows with the right people and learning from people, and like you said, you're part of a 20 group and your AIIDAs or IADA state IADAs just kind of got the help from the right people. I have family to teach me this. I didn't have, you know, I didn't come from a car line of people, so just kind of worked into this and, you know, it just kind of happened. It's been a great journey so far. So.

So your current car lot, your current makeup, your, your buy here, pay here. Your retail. What's your. What's your business?

We are buy here, pay here. We are buy here, pay here. Out in Queen Creek, we keep on average about 30 to 40 cars available. All of our cars are priced under 10 grand, unless it's something I was driving. And we just have a really good system going out here, you know, with the company. I met Scott Carlson a few years ago at the national convention and brought AutoZoom in, and there's other vendors that do that, but that was a big impact on how we do business. And, you know, the software we use and rubbing elbows with other buyer care guys who have known me since I was young, long before I started my own dealership, have just kind of watched me grow. They've been instrumental, I have to say, in guiding me in the right way and helping me learn from their mistakes that cost them so much. I've still made a lot of mistakes, but so that's my participation. Our local dealer association here, I've been a member. I've been a member of the association for a long, long time. And I've been on the board of directors now for six or seven years. And for some reason they must like me. I, you know, I'm young and from Queen Creek and all that, but my peers elected me president of the association this year, which is a Huge honor to me, you know.

So yeah, you know, I figured. I found out a while back Jared, that actually they elect you to that position because they don't like you.

That's probably.

Just kidding. I've been president of association. It's a great honor and congratulations on that. And that's the IAD I A AIADA has done a lot it looks like here lately out there in Arizona and man, that's awesome that y' all have been involved so much. So buy here, pay here industry. Is it any different in Arizona than it is in Utah or South Carolina? Or is it all about the same out there?

I gotta assume it's about the same. I've only done business in Arizona. It's about the same. I mean it's, it's where I'm at and especially being this rule out, there's a lot of good credit people out here and unfortunately when I first came out here I was bringing all these newer cars in like business models I'd seen before and you know, three four year old vehicles, low, low miles. The guys with the good credit and money, they pass right by me and driving in town to the new Ford store or whatever and I kept getting customers coming in and want my trade ins. What can I get that for? I got 500 down and this and that. And a good friend of mine, Bobby Schuster and Jeff Wallace, who I've known since, I mean literally since I was like 18 years old, I reached out to them, I said listen, you know, I've been around you guys buy your payer, I've worked for buyer payer guy. But am I making the right choice? I said well how much money you got? And from there they kind of guided me into this and you know, our business model completely changed from everything I'd grown up with. But it works really well. And out where I'm at, you know, I work a mile from my little farm I live on and it's very small town community. So I don't know how everyone else's buy here payer runs. But you know, we treat our customers right, we take care of them, we very rarely. In fact we got customers on our fifth, sixth, seventh car over seven years. So it's my model is more keep them forever and you know you'll never lose them if you take care of them right. So sure.

And how many, how many cars you got or accounts you have on the books?

We keep getting to about 130, you know, ish. And at the time that's kind of where the money was we have room to grow now, but as you know, I'm over smaller areas where as much as I want to increase volume, it's getting people. You're coming from the city, you're past 15 other guys doing what I'm doing with their sales tactics or sales guys, and they're gonna lock you in. So if I'm the last one on there. So we keep it in about the, you know, low to mid hundreds and we keep seeming to scale up a little bit. But just like you guys, I'm sure you experience there's the, the write offs or you get repos here and there, but the, the crash cars and you don't, you don't get the customer back. They're worried about it. That's why we brought in a reinsurance program I'm doing now to kind of help fight that as well and keep customers driving. But seems like every time I get to 130, 100 something, I'll lose three or four and I'll add three or four. But I've kind of hit a plateau. So I think it works well for us.

You had a problem with that last month, right? You had more.

Tax time for me was like reverse. I feel like I had more tax money pay off accounts than actually put new accounts on the books. Tax time, it was weird.

How was your one week tax season there, Jared? Did you feel it or are you still waiting on some money?

Oh, no.

The last week of February, including that extra day in February, that was a nice little extra day there, all the tax money started coming. We've been working with customers we worked with before or were in current cars and brought in. A lot of times we do that, we'll send emails and stuff, you know, upgrade. And all of them were waiting for their tax money. So we had a couple of them come in and put a $200 deposit down or I'm really big on handshake deposits. If I know the customer. They bought a few cars and we put them aside and all of a sudden I'd say the Monday of the last week, the last five, six days of February were just intense. I mean we're for a lot that only does 15 or so cars a month, you know, sometimes hit 20, you know, a real slow month, might do 12 or hit 22. We did like a car a day and then some on Friday and Saturday. I think we had three car. It was just great. And we hit it hard. So.

With some good down payments too, you're.

Saying good down payments? Really good down payments. Now I have some of what you had. I had a lot of customers come, pay off their car, give me two grand towards it, but I'll take money from anyone.

I was surprised by the amount of people that came out of the. Out of the woods with no down payment. So not only, you know, I didn't. I saw a handful of tax people, you know, two, three, four grand down, but I had just as many 200 down, 300 down, 500 down people. And I'm like. And I don't even think it was tax money. I'm like, where were you last month? You know, why did you come in in January when I was slow and had options for you? You come in at the busiest time when I have no options and no time. It's just really interesting.

We got a few of those too. We always have those customers. But I had some customers come in that they just want to see what we could do for them. And I'm sure they maybe had a little more tax money, but I just, I set them up for success and, you know, we throw it out there, and if we, you know how the customer is, they're gonna come in and tell you the lowest that they can afford for down payment when they have some tax money, or we get the ones coming with tax money, just want to buy them outright cash. But I'm sure a lot of them could have put more down, but they can afford their insurance, everything else for their tax money. So it's hard to tell.

For me, what's funny is what I saw and what. What is unusual for us to see is we saw our normal down payments stay normal, and we get a big down payment. I think we average around 1750 or something like that for the year, down payment wise, but that it didn't move. And typically we see a big spike in down payment in tax time, but we didn't this year. Now, that. That might be because I was. I was going two or three days last week buying cars, but I wasn't able to shape the deals a little bit better. But I'm not sure that people. Well, let me. Let me back this up. I think people now have their tax money spent in so many different places that we don't see the huge down payments that we used to see in tax time. We just see a lot more of the normal down payments.

And people are accepting the fact that they can get away with 1000 down or 1500 down. They don't need three or four, you know.

Yeah, for sure. I think that they have a lot of it, Jeff.

We're doing those deals. And to Jared's point, there's. I want to point that out with buy here, pay heres especially, or anything in retail. There's a million different ways to skin this cat. You know what I'm saying? There's a ton of different models. And Jared's model works very well for his neighborhood. I assume he's looking for people that are local that are sticking around. He's not chasing them all over the place. He's not looking just to make some huge gross profit and then have a high charge off or repo rate, which that model also works in some areas. If you've got a high repo rate, you've got to have high gross margins if you're in downtown Atlanta or something like that. So there's many, many models. And I don't want anyone just listening to this or seeing one person's model and thinking that's what I got to do. Because it might not work based off your demographics and your bank account and your, you know, all those things.

Yep. My models adapted different than some of my mentors and friends have gotten me. And I think you kind of grow to your area and you have to learn your environment, your situation, and what models will work best for you and for me. And I'll finance someone that's, you know, 100 miles away or something like that if, if they meet the criteria, you know, in my zoom and all that stuff. And. But we have a very low repossession rate. I think it's the way that we, we treat the customers. Like you said, we, we being so far out, we have to be price competitive anyways. I mean, there's still risk based pricing involved in anything. But we have to be so competitive in pricing to get people to drive from everywhere to get to us. But I think that our customers keep coming back because of the quality of car we provide and how we stand behind them and treat the customers. Now I know guys that just roll a car out, just whatever, just roll the dice. And like they're gambling in Vegas and you know they're repoing 40, 50% of their cars, or especially during tax time, they'll roll out 25 cars. Like, hey, I just hit 25 cars. But next month it's like, yeah, I got 16 of those back already. So it just depends. Like you said, you kind of got to figure out what's going to work best for you.

Yeah. So, Jared, tell us this. I know that let's transition into your responsibilities now. You're very, very involved in the state association and you've been very active and I would say probably a key mover in Arizona's curbstoning laws. Right? Big, big news coming out of Arizona. You guys are the state that actually taken the bull by the horn and done some stuff. Talk to us about that. Maybe first off, give us for dealers that don't know or maybe aren't as involved. What is curbstoning? Why is it bad for us as licensed dealers? I don't think everyone kind of, they're like, oh, it's just the dude that's buying my $500 trade in at the auction and he's selling it. I don't even care. You know, those guys are fine. Let them buy all my junk trade ins. How does this hurt the dealer?

Well, I think it's evolved from a $500 trade in too, because now you're seeing these 10, 11, $12,000 trucks on the side of the road. So our biggest problem out here in Arizona is that the auction became tainted. You've got these dealers that either someone just puts them on their auction access. And at one point we had an auction that you just see one dealer and at the end of the auction sitting at a table and guys are handing money, they're signing titles off. And it just drove me crazy because those are. The guys bin up the cars, the cars that I buy, you know, at the time, my actual cost to be able to go three, four grand. And those guys are running them up to that price or run them up to five, six grand, seven grand on them. And there's, they're able to buy those cars, sell them without having to collect the sales tax or, you know, have the overhead or insurance or bond or license, all the things that we have to do, the employees and everything else. And it, it taints the wholesale market, drives the price up. That was my big problem of it. And then the other problem is you look down the road and the same cars that you have on your lot, some guys got down the road for, you know, a third of the price because he's just, you know, rolling them out and doesn't care. And the customer just, you know, sees on the side of road, thinks they're buying from Peter when they're really buying from Paul. And Paul's an illegal dealer. So it's, it was a huge, and still is a huge problem in Arizona, I'm sure, in all states.

Well, what did, what, how did you.

Put the law together?

What, what was in the law? Tell us. Kind of explain to us a little more what y' all had to put together to stop this because it's.

You know, it was such a long road. So I had to make some notes because I figured I was asked that. So I got on the board of directors back about the time that this was going on, Our former president was a big pusher, Aubrey Strixton, he was a big proponent of doing this. And then Dave, working in our executive director, really got behind it. Dave's got some lobbying history in that. And, you know, about. I'd say it started back about 2013 just for us on the board. We started a curbstoning initiative and got together with different states. And the key factor we found in our state was we had to find a rainmaker. We had to find someone that was really gonna get behind this and push it through the Senate. At the time, it was Arizona Senator Fan, who's now the House president Fan, and she's the director of the Transportation Committee. And we brought to her attention this problem and how it's not a level playing field for all dealers. And she really pushed it through. By about 2015 or so, we were able to pass legislation and get with oig, the Office of Inspector General here in Arizona to really see the value of this and going after these guys that for revenue purposes, too. And that created this snowball effect, I guess you could say that was. I have to attribute most of it to our executive director, Dave. He really got all these people together. But Arizona, I believe, has passed what I consider the most detailed curbstoning enforcement there. And in doing so, we have always have to look. We've got the ADOT enforcement Department of Revenue. That's a big one. When these guys get busted. It's one thing to have ADOT knock your door your dealer licensing, but we all know when the IRS or the Department of Revenue comes knocking on your door, that's not something you want to deal with. So in combination, and our new governor, who hates new taxes but has no problem with level playing fields or fines, he really put this together, that we partnered up the office Inspector General, ADOT deal, License enforcement, and the Department of Revenue together and formed a task force that's required to meet quarterly. It also is required to have at least two members from the state association. Since we sponsored the bill and we get together and really work hard on different ways and solutions that we can track, we want measurable solutions, not just how many guys can get how many guys are out there doing it and that. And they came up with a really good system to do that. And in doing so, I'm sure you guys saw the news. We're catching dealers in other states. It's gotten really big. It's kind of blown up. So.

And how did. What's. So we all know that these dealers are out there that are. That are allowing people to curbstone. And let's define curbstone, because I'm not sure we did that earlier. But curbstone is allowing or the act of a individual who's not licensing, selling cars on the side of the road. And that's the reason it's called curb stoning, because it's, you know, it's on the curb. But. So how did y' all know that someone in Arizona was allowing other dealers to do what they did? I think there was 1200 license under this one dealership. Is that correct? I mean, how'd y' all figure that out?

That's right. They were out of other states. Right. Without giving too much away because of how they investigated. And again, like, when we all got the press release, Dave and I don't find out until a few days before. We're not a part of active investigations. But the investigating part of it, you end up. You follow the money and you follow the titles. And the title is. The real trick is, how are these cars? How are they getting out from the auction? And how did they end up into a consumer's hand without the tax being collect and all that? And that was the real trick to it. And last year at the niada, I think we call it the president's meeting or board meeting. There's California had mentioned that they were seeing an increase in Arizona licensed dealers purchasing cars at their auction. But that car, never going back to Arizona, being titled in Arizona and ending up in a consumer's name. In California, we were seeing the same problem with licensees from other state. And it tripped a flag. Also, as I'm sure the cat's coming out of the bag right now. I'm sure you guys have seen the ads everyone's showing about how to catch these guys. A lot of states are just advertising, hey, license for rent, and they're putting on Craigslist, hey, we'll rent it. And so our detectives, basically, in this particular case, rented a license just to see how it worked. And that just led to one investigation to the other, and just to see the thing. And they stumbled upon something huge. And it's in other states. I saw someone, I think, from Washington Post, something of Craigslist with a picture of auction access, like, be A dealer without the fees, you know, rent your auction access for 250amonth or something. It's a problem. And auction access has a lot to do with it too. They could really help us out in stopping this. But yeah, they kind of.

Someone's got 1500 buyers on their license.

I don't.

How does that even, how does that even happen? How does.

I don't get that? Or, or here's a, here's a better idea. You got a really big car lot. You know, he's doing, you know, four or five hundred cars a year for us, these guys. And you've got a wholesaler licensed out of his house, you know, some, some house in Mesa or wherever you live, and he's run 1500 transactions in a year or what? How does he even keep 1500 cars? You know, because ones that are open titles for these wholesalers, that's going to be a red flag too, you know.

So, so, so to help me out here, I guess so if I, as a dealer, aren't I allowed to put as many buyers on my license? I mean, where does, how did Arizona or where does that law come down to say who says I can't if I'm gonna put my bond and my insurance and my license at risk? Who says I can't do that for 1200 of my closest friends?

I'm with you, Jeff. And I had that question written down. What was illegal about, about that operation? Well, where was the questionable legality? I guess.

So wholesale dealers are only allowed to sell, at least in our state. So in our state, and we're really working on this, I know some states have said they've got rid of wholesale dealers altogether. The problem was it's not retail dealers putting 1500 people on their license. Retail dealers we're spending the expense of. In Arizona, it's far less expensive to get a wholesale license. You don't have to have the building, it doesn't have to be retail, the bonds cheaper. So for Arizona I could speak about. Retail dealers are definitely not the problem or the majority of the problem here. When you have a wholesale dealer, he is allowed to buy from a dealer and sell to a dealer, buy from an auction and sell to a dealer. He's not able to put a car for sale on the street. He's not able to sell directly to Joe Consumer. And the illegal part was how they were taking him from one state to the other. And without going to too much detail, there's, there's obviously third party title places. In our state, there's also, you're gonna have a retail dealer at the end of the line for these 1500 dealers to open these titles up. So it's the income portion of it and taxes and stuff that if you're not. You're making money. Not important. The government. The government's gonna want to know about it. The licensing portion of it comes back to who's ultimately issuing the license and opening these titles to be sold in Arizona. If you sell retail car, it has to be done at your establishment, at your place of business, with your. Your licenses in plain view and all that. So you can't put them on a curb. So that was part of our curbstone act. Now, in Arizona, unless you're car. If you have a car on the curb. Yeah. Unless you're Carvada, that's your car. Bottom if you have a car on the curb in Arizona and no plate, they can tow it now, it's great. They just take it. So they should.

Right. If it's not licensed, if it's not registered.

Yeah.

What's funny is you just brought up Carvana, and I buy a lot of Carvana cars, and every single Carvana car I get has an Arizona title. What's the deal with the Arizona title? Because it must be an easy title to get.

Nope. They're the owner and his son live here. That's. Carvana is actually, I believe, out of.

Arizona, based out of Tulsa or something.

Yeah, but. But I don't understand why that. That all the titles are coming through y' all state. Even if I buy the car in Florida, it was traded in in Florida, you know, it should have had a Florida title, and all of a sudden it has Arizona title. It seems like maybe it's a good place to wash the title or something.

Yeah. I don't know how they do that. And really, I haven't dealt much with Carvana. I know all the stories.

Who's the registered owner of the title?

Luke Carvana.

Okay. So they're just taking a trade in. They're just titling it in their own name.

Yeah, I think that's what they're doing.

Protect them from you losing the title, then having to go back to that owner to get it and that. And that must be what talked about doing that here. We've talked about every single piece of inventory we send in for a Utah title. It's $6. We get a title in our own name so that it stops any kind of issue. If the title gets lost, then I can just quickly get a duplicate made.

It's great that you just said that. So we just had a big discussion. So you're asking about wholesalers and all this and the Carvana think Carvana's license in Arizona may have something to do with. But to touch on what you just said, I title every single vehicle into my dealership's name before I sell it. I've had issues where I get a title at auction and I stick in my folder and by the time I go sell it, something's happened with that dealer or something's happened with that title and now it's tied up. So every title I have, I titled myself the $6. I had a thought that, you know, if every dealer in any state were required to title, even if it. Even if I got the vehicle, my own state were required to title the vehicle into their dealership's name instead. A lot of the stuff is the reassignments on the back. You get a title from Texas, it's sold to an Arizona dealer, that Arizona deal reassigned to someone in Pennsylvania. It's very hard to track that. It's hard to track the movement in interstate investigations as you've seen Arizona trying to do. If every dealer had to do that, that would be because the unicorn of 50 statewide E title as much as that would just stop everything. It's a unicorn. It may exist somewhere. I've never seen it happen, so. But if every dealer had to do that and every wholesale dealer had to do that. If you buy a car from Texas but you do business in Arizona, you have to title it in Arizona before you can sell it to a Pennsylvania dealer. If they sell it to Utah, it would just create a great tracking mechanism. I also had the thought of the increased revenue for depart because we've managed to increase a lot of revenue in our task force. Any fines go back into the funds to fund further enforcement, which is. That was a big thing. And of course department revenue, they got on board because they realized all the revenue that they can go and see. They've had house of seas property seeds from these guys. But with the increased revenue of the $6 a title, I'd pay $8 a title for dealer reassignments. If I knew $2 was going to fight, you know, bad dealers and curbing and make my state better. So it'd be a great solution.

Yeah, that's true. And you talk about the unicorn of a nationwide e title system instantly. Like you said, the funds that would be recovered from stopping any illegal transactions and missing out on those revenues for state by state easily would Pay for itself. Right?

You would think so.

So our governor really, he was the one to help us with that. And Dave, when we wrote the law and so when we put all this together our. In fact I had some numbers here somewhere. Our curb sellings have any fines reassess. So in Arizona it's on average about $1,000 a car. And we can see cars and go back further, but it can be even more than that for the curbstorming portion of it then revenue, they're gonna go after you for the tax evasion, all that. But any fines, any money that's collected goes back into a fund that is dedicated to this task force. And the increase we had one officer investigating for the entire state or one detective when this first started through the office Spectre Gen, that's one guy combating cars on every single curve in the state of Arizona, it seems like. So with the fines that are created and the funds that go back into it, it gets bigger and bigger and bigger and allows for more enforcement, more tools you could say to use do enforcement. And that's the real key to how we've grown this. It hasn't cost taxpayers one dime to employ more officers, which creates jobs to build this bigger and level our playing field because they're getting it from the fines imposed on these illegal dealers.

How many, how many Kirbystonian officers y' all have in Arizona? And also to that effect, are they allowed to carry a gun?

Yes, they do carry a gun. When I go to the meetings it's. They're licensed badged officers. Most of them are either adot enforcement. We. I won't mention their names just in case they want me to talk who they are. But yes, most of them carry guns. That's gonna be your go out in the forest investigate stuff. Then we've got office Becker General who also has gun care guys. But we've got some back end, very smart, almost, I would almost say like FBI smart analytical people who can get in the webs and see where money trails, where IP addresses and stuff like that. And it's gone to a digital age of marketing anyway, so it's your Facebook marketplace, your Craigslist, your offer UPS and all that. And how do you know which one's a curbber, which one's not? If they're all post and private party, there's ways to tell that. Several states use programs like we have to track that and that works well. But yes, our amount of officers we have has increased exponentially. I don't know the exact number of gun Carrying officers out there. But we had one and now I've. I mean I sit in a meeting with five of them every month.

So there's ways that we can be aware of who's curbstoning around us. Right. And where dealers can try to report it. Maybe mention that you kind of talked about. There's some. There's some telltale signs and obviously there's things we can do as dealers. We should not be selling a wholesale car or selling a trade in with an open title to Joe Schmo that comes in and wants to take it across state lines. So we think we can just, you know, friggin sign our side of it and leave it as an open title. Right?

That's not legal. That's not legal as a dealer to do so if you're.

Or your repos. Right?

Yeah. If you're newly.

I can sell. You can sell your repos as the bank with an open title.

I still think you're doing questionable acts as a dealer that way. So let's just make sure that no dealer sells any cars with open titles because you're asking to get yourself in trouble.

So Luke, I agree.

You're filling in his name on the physical title.

I don't give anyone a title that's reassigned. The only time I reassign a title is if it's in my personal name and I'm selling it to a wholesaler and I reassign the back, write their name in and I photocopy and keep my records the way that I do business and a lot of other dealers do. In Arizona it's not illegal, but there's no such thing as a title only anymore. If you're going to sell a car to a consumer, you can't just do a title flip. You have to do the plates, the registration, emissions and all that. If you're an emissions environment, which has helped a lot. But I get customers that come in from out of state. We do some other vehicles that, you know, old jeeps and stuff. So we'll sell on ebay. They don't leave with a signed off title. I get their information, my same title apps, all the paperwork I normally do. And I in Arizona, I can transfer the title into their name so they have an Arizona title with their name on the front but their address in Texas or wherever. And then my name's no longer on. It's not an open title. It's for them. The only way they can do something with that title is if they take it and transfer into their name in their Home state. So it just shows I've done my end of the deal done. I don't give anyone a sign off.

Title and I think that's a very good process to have. We, the only time I'd send a title anywhere is the auction. If I'm selling a car, the auction, of course it's going to have. And let's, let's talk about that. Let's talk about the auctions responsibility in this because read through a lot of the things on the Facebook page that kept coming up. You know, where should auctions fit into this? Did y' all discuss that or was it. Has it been discussed with the state of Arizona? Because it sounds like y' all have the best laws out there.

Well, you know, we work really close with the auctions and so you get a lot of dealers in there, you get a lot of back. And so your good dealers know the bad ones, we know them and we start working really close with the auctions to kind of see what information we get. Now granted they're not just going to offer up. They make money. The more cars that sell, the more it sells for, the more they make. And we understand that. But they want a fair marketplace. One auction in town we have in particularly was, it's actually kind of known as a smaller auction here. They really caught on that they had an issue at their auction. It was driving away good dealers. And we have these curbbergs going on and they took steps that I've seen in other states to really enforce this. So you have to have now if you have an option access card you can get in. And most auctions allow guest passes or whatever. This auction is just said no. You have to show your auction access card to even get in the front door. And you have to have your own bidder badge. You can't, you know, share and all that. That's how. But the auctions is a touchy situation. I'm sure they see the problem like we all do. I'm sure they know that some of them could be more helpful and enforcing it. But at the same time, if you have auction access like, like you said, Jeff, there's nothing says I can't have 15,000 buyers on my thing if I got the same dealer with 15. That if every dealer and at the auction, if 50% of them is tied to one license, where they care if they have their auction access. You know, they have the requirements to be in the door. How they got. It is not the auctions job to figure out, so to speak. So it's Touchy.

But help me out here. When. When an auction sends out, and I think this is the same for all auctions, but when they deliver a title, it's gonna say Godwin Motors as the seller. And obviously every state's different. It's all confusing. Don't get into that. But Godwin Motors, the seller, and then they're gonna stamp it sold through Mannheim, blah, blah, blah, blah, blah, blah. But they don't write in the buyer. They don't write in my dealership is the buyer.

Yeah, they do in Arizona. They do in Arizona. Right.

Do it.

They do.

So even those wholesalers, I mean, they're giving their agent something that says it got sell to Joe Schmo's Wholesale. And Joe Schmo Wholesale is then just flipping that title into it.

That. Well, that's what I noticed.

It.

It said that in that article. It said that they were charged $150 fee to get an Arizona title. Correct. Or something to that effect. So they were doing. They were doing all the paperwork for the. For the. The Curbstoner, I guess you should say, and just making extra money off of it. It's.

Whose name were they putting that title into?

I guess in that dealer's name. Right.

You know, I. I actually don't know the end of that story. It's. It's like I said, being on the task force, one thing, knowing the investigation, another.

Yeah.

I will tell you, in Arizona, we did pass a law that every wholesale dealer. If you're a wholesale dealer, you cannot reassign a title. I know that. You know, I get a car and I'm gonna sell it to the next deal. And they sell it to the next deal. We use the reassignments on the back title. In Arizona, if you're a wholesale dealer. This was a big thing too. That created some upset for some wholesalers, but makes sense. Wholesale dealers are required to transfer the title into their name. I think all dealers should be required to do that. Just makes sense. I don't know why some don't. But in Arizona, wholesale dealers are required to transfer the title in their name before they can reassign it anywhere through the dmv. Through dmv. Yep, through. So they get.

That they had a transaction. That's the issue is.

Yes.

The auction doesn't talk to the DMV. So you don't know that this. Wholesalers run in 1200. Well, they've got the auction because he's not running them all to the DMV under his name.

Well, I mean, they Were having to get all the name. Well, no, they weren't. So, yeah, nevermind. So I got a question. Was. Was the dealer that got in trouble, was he a part association? Was he a member?

No.

The funny thing is they said in Chandler and Gilbert, which is I'm born in Chandler and Gilbert. But I looked at the photos because again, you know, we helped create this thing. We talk about the scale that we've done and the measurement and how well it's doing where it's going. But just like any. No detectives gonna tell you who they're investigating or anything like that, which I'd rather not know till it's over. And then we get, you know, the news a couple days before broke all over Facebook and the news and TV out here about what was going on. And Dave and I were. We knew something big was coming down. They were really working hard and all that. We had no idea it was this big. And then to find out, it's right in my backyard. I mean, it's literally, you know, four miles that way is. Is the. The godfather of this thing. And I will tell you, I noticed there was a little strip of cars that's kind of bothered every time I drive by, just kind of grit my teeth and they're not there anymore. It's always like 15 or 20 cars down the. Down this country road that they're not there anymore. So with no licenses on whatever they're doing or temporary tax. And in Arizona, if, like I said, if it's a wholesale car, no license or anything like that, they're supposed to tow them. But most officers, regular law enforcement officers from city municipalities, they're not aware of that law, nor are they have enough time to get a tow truck to tow 15 cars off the side of the road. So that's. Just because it's a law doesn't mean it's well enforced. But. Yeah.

Yeah. So you didn't know the guy. You didn't. He didn't hit your radar, Even though this guy had been running a 1200 agent ring out of.

Yeah, I was like, you guys, probably. I was looking at the. Especially in Arizona, I'm trying to zoom in on the pictures and see who they are. Like, there's been some that got busted. We all know. And in Arizona, we'll publish that, you know, if they get trouble. And once the investigation's over and found guilty, you know, so we don't. And we'll send out there for every deal. See, hey, this dealer was just indicted. Don't be like him. Come to our training class, become compliant. So it's always kind of fun for dealers to talk at the auction because it's, you know, it's like a boys club there. When someone we know has been doing wrong forever actually does get busted and what happens. And it kind of warns other ones. But this one, I have. I have never seen these guys. And I talked to everyone at auction. I've never seen them in my life. They probably just figured out a hustle and went with it. They probably never been in the car business.

With $6 million in revenue since 2016 or 17, they probably really didn't need to do much.

No, no. I went through the mailbox a lot.

Yeah, I bet. Yeah. So tell me this, how do we recognize these? Because you saying that makes me remember there's a small ranch house very close to mine that has always got about 20 vehicles parked in the sticks around it that all have Arizona license plates on them. And I'd never really connected the dots, like, oh, maybe they just like to drive a lot of cars. But, I mean, you got 20 to 25 cars on your property. I mean, obviously that's something sketchy, and I probably should go by and see if they're all gone now. I wouldn't doubt if they were connected.

Are they selling them or.

No, I don't. They're not for sale, but they're there either coming or going or who knows? Or maybe they've got them listed somewhere. Honestly don't know. But as dealers, how do we recognize those things? How can we see that? Is this something we should be policing? Our own, you know, local Craigslist, our own local marketplace and making people aware of these things?

Well, in Arizona, we encourage it, actually, and we work very hard to educate consumers, too. Of course, once the fund gets bigger, maybe we'll have a public service announcement or something like that. And that just continues to grow because, I mean, how far it's come to where it is now, it's not done growing. And the better it does, the bigger it's going to grow and get funded. But in Arizona, I don't know how you guys do your temporary tags, renew your licenses or anything like that, or your motor vehicle services, your online portal. Every dealer in the state of Arizona uses basically the same portal that has different access for wholesalers versus retail dealers. But in that portal, there's a click to report, curb stoning, completely anonymous. If you have a. You see a guy that's got 16 cars on Craigslist, they have no rear license plate, they're all you know, paper tags or something and the same phone number pops up and that you just see them signed through cars. You can just copy paste a few of those links, click it, send it. No one knows you sent it. And that helps these officers to maybe catch on to something that they haven't caught on to or a new one coming the game or someone's change your phone number or whatever. So we encourage it and I know there's a lot of dealers that do it, but no one talks about it because you want to be at auction, you know, figure snitch or something. We encourage it. I think every time someone says hey, you know, can you report this for me? Can you turn this in? Because they think somehow the association actually investigates these what we don't or yeah, I get talked about all the time. I encourage them to do that. If they don't want to do. I said give me the, give me what you got and I'll do it for you. It's really, you're bettering all of us by doing it. So. But we have that set up in Arizona. We do try to police ourselves and it does help.

What do you. So let's wrap this up with I guess what every independent organization should do. What as a member of our association on the state level, what should we try to encourage our executive directors and other dealers to do to get legislation like yours passed in our states?

I think that there's a lot of states that are looking to do that and they've called for advice and our executive director is very knowledgeable about this too. I think the key point is you need to find someone in your state that will rally around you, find something that's going to be allowed in your state like we did and work to fine tune it. And then you need a sponsor to get it legislated and find someone that really is a heavy hitter. We were fortunate enough to have state president fan. I'm sorry to help us with this. At the time she was the director of the transportation department in the senate working with your legislators, developing those relationships. Depending on I know each state have different IADAs and those states have different levels of relationships or what they do amongst their state senators and state politicians. Arizona works really hard to stay close and work well and develop these relationships. So if you can get your state iadas to get together, put something together like Arizona did and then work hard to get with the legislators and the key factor in it and really this is me speaking just dealer. Dealer is when the state benefits from it as well. They're more likely to do it. I mean, it's that it's the truth. If the state's going to benefit from as well, like the department revenue, they're more likely to do it. So if you can make sure the state's getting a little bit of money, but some of that money is going to go to further this, you know, this curbstorming project. I think that was the key factor and why we were so successful.

I think, you know, it's so great that you said that is Sean talked about this, I guess, last week, Jeff. And it's the relationships we need to build with our legislators and our congressmen and our senators. All of this really goes a long way for making the laws that affect our business easier to get passed and also have more teeth in it. And also that when the state benefits, if you can show the state a revenue source, it's hard for them to turn it down.

That's it. That's.

Awesome. Thank you so much for your time. We really appreciate you chatting with us this morning and all the great information and everything. I'm sure if anyone wants to connect with you, they can find you on Facebook, they can find you on your website, at your place and probably convention, I imagine, huh?

I'll see you guys in Vegas. I'm already booked. I already got my hotel room and ready to go.

Oh, that's awesome. Awesome to see.

All right, Jared, thanks so much.

Hey, guys, thanks for having me. Appreciate you.

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