Chicago Automobile Trade Association

ADP takes fence-mending steps with dealers over data sales to Carfax

November 22, 2010

ADP Dealer Services has ceased its brief practice of selling dealership service records to Carfax without dealers’ consent, ADP officials said, adding that the procedure is permitted in the vendor contracts dealers signed with ADP.


The company would not disclose how many dealerships were involved in the Carfax program, which took place from December through March of this year. 

In the Aug. 29 edition of this newsletter, CATA directors condemned the practice. They said that the information in a dealer’s computer database is the property of the dealership, and that the practice of data mining should result in severe penalties in an era of rampant identity theft, mounting privacy lawsuits and stiff privacy regulations.


A chief concern of dealers is liability for any customers’ personal information falling into the hands of hackers. Federal law requires dealers to protect such personal data. 

But ADP said it sold Carfax only VIN data, which is not protected by federal privacy laws.


Matt Parsons, an ADP vice president of sales and marketing, said the company ceased the practice after feedback from clients. "It was not well received," he said. 

Parsons said Carfax was unaware of which dealers were the sources of any information, so the GLB Act was not violated. "But it became a trust issue," he said.


Parsons referred to Section 9d of ADP’s vendor contract, which permits the company to move encrypted data to third-party vendors. ADP relied on a subsidiary, Digital Motorworks (DMi) to transfer the repair and maintenance records.


Parsons said a contract addendum has been drafted that would forbid ADP from mining any dealership data without the dealer’s written consent. Dealers should call their ADP representative to discuss the addendum.


Dealers also can call ADP at 847-485-4888, or Carfax at 800-561-5496, ext. 4255, to demand that Carfax purge service histories from its vehicle reports.


Kevin Henahan, ADP’s senior vice president of marketing, said ADP meant to help dealers and consumers by selling the records to Carfax. The information,Henahan said, could help dealers evaluate trade-ins and help used-vehicle buyers make informed purchases.


But Parsons conceded, "There has certainly been some relationship damage that has occurred."



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