Friday, June 10, 2022

Regulation Conversation: Lessons from the Auto Industry

The IT industry is being regulated. "Not being regulated" is no longer an option. Regulations come from many places, including state and federal agencies. Actual laws are a little ways down the road in most cases. But they're coming.

I thought it would be useful to look at some other industries and how they came to be regulated. One of the most obvious parallels is the automotive repair industry. You can actually look at some of the regulations and tell why they were implemented.

[Disclosure: I come from an auto repair family. My father and two of my uncles made a living as mechanics. My father and one uncle owned gas stations with repair facilities. My father had a side business rebuilding Volkswagens into custom dune buggies. I have brothers and cousins by the dozens who have been professional or amateur mechanics.]

If you engage a mechanic today, your experience generally goes like this:

  • They look at your car
  • They give you an estimate for the work
  • You go away and they start working on it
  • If something is more complicated or difficult than they thought it might be, they contact you and give you a revised estimate
    • You don't feel like you have a lot of options, so you say yes
  • They do the work
  • You pay the bill

As with many, many professions, knowledge plays a big role in the relationship. Even if you're mechanically inclined, the mechanic knows more than you. They have updated knowledge and lots of recent experience. So you pretty much have to believe them.

So honesty is another factor. You have to believe that you have a problem, that it's the problem they identify, and that the fix is appropriate to the problem. On top of all that, you need to believe they are competent. And, if they ever want to see you again, you have to believe that you were dealt with fairly.

This entire discussion is VERY analogous to the IT industry. In fact, the first legislation regulating MSPs in Louisiana was designed to address the IT version of the situation described above. Consultants (which the Secretary of State identifies as Managed Service Providers whether they are or not) were signing contracts with state agencies and then under-performing or not performing the work as described in the contract.

See information on the Louisiana law at

I said we could figure out why regulations were put in place. In the case of the automotive industry, there were obviously lots of mechanics who used their knowledge to engage customers, and then charge them more than they had agreed to. And, in many states (maybe all states), the mechanic can actually place a lien on your car. So if you don't pay them what you owe, they can have your car repossessed or, at a minimum, get their money when you sell the car some day.

In other words: Unscrupulous mechanics were making huge profits by cheating their customers. The laws or regulations that require an estimate and approval of additional charges has not eliminated the problem, but it has three positive effects. First, it has dramatically reduced the number of bad actors in the industry. Second, it has increased consumer awareness of the problem. And, third, it has created an opportunity for the best, most honest mechanics to promote themselves as super-competent and super-honest.

All of those things are good for the consumer. And they have raised the bar with regard to competence and honesty in the automotive repair industry. So, these requirements have been good for honest, competent mechanics as well.

I realize that many people want to treat discussions like this with quick judgments. But the world is a big, complicated place. No matter how much you hate regulation, it's coming. And sometimes, the smallest amount of regulation can make a huge difference - and help us avoid a lot more regulation.

If an industry can regulate itself effectively, we won't find ourselves being regulated from the outside by government agencies that don't really understand what we do for a living. I hope the National Society of IT Service Providers will be the voice of our industry and help us to regulate ourselves.

Please check out the NSITSP at Join today. Be involved in the conversation. And help us address the major issues we face industry-wide.

Comments welcome.



  1. Anonymous11:57 AM

    >the mechanic can actually place a lean on your car.

    Autocorrect got the better of you here, Karl. It should be 'place a lien'.

    Great post, it's important to see how IT will be regulated going forward.

    1. Fixed. I can't blame auto-correct. I wrote it and I supposedly proofed it as well. :-)
      Thanks for the note.


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