Car Dealer Insider Sep 1, 2008
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Car Dealer Insider Sep 1, 2008

Get onboard with Red Flags Rule compliance today!

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Get onboard with Red Flags Rule compliance today!

By November 1st, every auto dealership that maintains consumer credit and business credit is required under the Federal Trade Commission's Red Flags Rule to develop and implement a written Identity Theft Prevention Program that can help detect, prevent, and mitigate identity theft. Hopefully you've already started working on yours. If not, you've no time to waste:

  1. Before you can actually write your plan, you have to figure out which of the accounts that you offer can be subject to identity theft (generally all consumer finance accounts and certain business accounts.) You then have to identity each relevant Red Flag - the pattern, practice or specific activity that indicates the possible existence of identity theft - that may be relevant to those accounts, figure out how to detect them, and decide what steps to take if you do.

  2. Civil penalties of up to $2,500 for each "knowing" violation of the rule can be assessed - and can also be applied to past violations uncovered during an investigation. Fail to comply with this order and the FTC can file a federal lawsuit seeking fines of up to $11,000 for each future violation. Your dealership could also be subject to state law claims, including class action claims, under Unfair and Deceptive Acts and Practices (UDAP) statutes.

  3. Reputation risk - and the ensuing loss of customers - can be even more damaging than the financial penalties associated with not doing enough to deter identity theft in your dealership. _The good news

If you're feeling overwhelmed or annoyed by yet another compliance burden, here are some bright spots to consider.

First, having a written Identity Theft Prevention Program (ITPP) can help increase the likelihood that your employees will more consistently follow policies and procedures your dealership already has or puts in place to... (302 of 1208 words)

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