Car Dealer Insider Dec 1, 2007
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Car Dealer Insider Dec 1, 2007

Don't delay complying with new "Red Flags" rules

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Don't delay complying with new "Red Flags" rules

The final rules on identity theft "red flags" - scheduled to go into effect on Jan. 1 - have a lot of industry experts up in arms because of the added burden they'll place on auto dealers to fight identity fraud. Some say compliance could add hours to the credit application process.

Dealers - who fall under these rules issued by the Federal Trade Commission and the federal financial institution regulatory agencies because they're considered to be creditors - aren't required to comply until Nov. 1, 2008. But can you really afford to wait an extra nine months to develop and implement the required Identity Theft Prevention Program?

J.R. Wilson, a frequent speaker on identity theft prevention in the retail automotive sector and president of compliance solutions provider PatriotDealer.com, thinks not.

"Delay implementation and you leave yourself vulnerable...Dealers should attack this sooner rather than later," Mr. Wilson, who refers to Nov. 1, 2008 as the "drop-dead deadline," tells _Dealer Business Briefing.

Put off the process and you may be more likely to have a customer or employee perpetrate identity fraud in your dealership - and less likely to be held harmless during an ensuing government audit or lawsuit.

"You've known about the regulation but there's the possibility of being perceived as not doing enough to be compliant and protect consumers in today's environment with attorneys hovering and looking for slip-ups," says Mr. Wilson. Legal exposure, as we all know, can also generate lots of negative public relations.

Mr. Wilson reminded us of the well-publicized raid this past summer at Douglas Nissan in Orange County, Calif., following multiple customer complaints of identity theft. Investigators took more than 350 boxes filled with lease documents,... (286 of 1143 words)

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