Here is a statement sent out to SCT dealers:
Today, Derive Systems announces reaching an agreement with EPA to establish and comply with automotive aftermarket regulations.
The EPA agreement is very positive for our business. With this agreement in place, Derive has established itself as the only federally-compliant player in the tuning industry. Every company in the aftermarket will be held to the same standard as Derive.
Under the agreement, we will make investments to demonstrate environmental leadership in the automotive aftermarket industry.These include: additional emissions tests of our preloaded calibrations on new and past model year applications, developing additional training and certification programs for our custom tuning dealers, continuing to make and sell emissions compliant devices, and further investing in our policy compliance initiatives.
Please take note that:
Every product we sell today is legal. We are permitted to, and will continue selling, our existing tuners and Advantage software.
There is no need for resellers or consumers to return or swap out anything on shelves today, nor is a recall required.
For users of our Advantage custom tuning software, we are forming our certification and training program now, and will share those details directly with you once we’re finished.
Derive Systems, SCT, and Bully Dog remain leaders in the automotive aftermarket and will continue to provide the most advanced technology to our enthusiast consumers, dealers, and resellers.
Read our press release here.
Q: Why did Derive settle?
A: Collaborating with EPA on a settlement allows us to provide market-leading tuners and creates certainty for our customers.
Customers continue to expect innovation and results, but no customer wants to buy regulatory uncertainty or an EPA enforcement action.
Unlike our competitors, we have a clear path forward for our products to enter and thrive in the market with EPA’s approval.
Q: Why is Derive paying a penalty?
A: Derive was formed only a few years ago from the purchases of two tuning companies, SCT and Bully Dog.
Our new company’s management discovered legacy compliance issues with some Bully Dog products that were hidden during the transaction.
We expect this settlement to wipe the slate clean with EPA on these legacy issues.
We will continue to pursue the former owners of Bully Dog and others who committed fraud and other wrongdoing as part of our purchase.
Q: Did Derive sell defeat devices?
A: No, Derive did not sell defeat devices.
Derive bought Bully Dog and SCT only a few years ago. After the transaction, we discovered legacy compliance issues, particularly on the Bully Dog side. We continue to pursue claims arising from that transaction.
In the meantime, Derive entered into this agreement to provide a clear and certain path to continue selling tuners and custom software in partnership with EPA.
Q: How did EPA come up with the 363,000 figure for tuner sales?
A: That question is best put to EPA. Our focus is on the fact that the settlement provides a clear path to continue selling our tuner and custom tuning software products and to continue to introduce those products to market. No other company has this kind of partnership with EPA, which allows to continue providing market-leading performance tuners and custom software, while avoiding regulatory and enforcement uncertainty for our customers.
Q: The settlement states that the penalty is based on Derive’s financial condition [or a limited ability to pay]. Is the company in financial trouble?
A: No, the settlement reflects the fact that Derive is committing a substantial amount to building out its partnership with EPA in this settlement.
Q: Does the settlement require Derive to recall any tuners from its customers or stop selling any tuners?
A: No, it does not. Unlike past EPA tuning settlements, there are no recall terms in the settlement for our products in the market. We are required to test tuners going forward. If the testing reveals issues, we will deal with those issues in an appropriate manner, in consultation with EPA.
Q: Does the settlement require Derive to stop selling custom software?
A: No, it does not. Our settlement partnership with EPA requires us to provide customer training and certification that encourages the legitimate use of our custom tuning software.
Q: Will the settlement require Derive to change its marketing practices or reseller agreements for tuners?
A: From a customer perspective, there will be little change. Derive was not marketing any illegitimate uses of its products before the settlement. And we already have a vigorous compliance program to avoid customer abuse of our products. The settlement memorializes what are already industry best practices.
