Creditor Red Flag

Federal creditor Red Flag Update

What dealers need to know about Red Flag Compliance?
The Red Flag Rule is now in effect. The Federal Trade Commission and the National Credit Union Administration created and passed this legislation. This rule became effective January 1, 2008 and is mandatory as of November 1, 2008. The rule requires all financial institutions (including auto dealers) and creditors to develop and implement a written identity theft prevention program.
What does the mean for auto dealers?
Dealers must organize a Red Flags team and develop an identity theft prevention program. Your written program should identify Red Flags relevant to your dealership. Your written plan must be able to detect the relevant Red Flags and outline how to respond to identity theft. Once the program is written the dealership must designate the responsibility for the program to the board of directors, committee thereof, or an employee at the senior management level.
The identity theft prevention program that is put in place will also need to contain a detailed process on how to update the program to reflect risk changes. A report should be submitted at least annually to the committee and the committee should analyze the programs procedures and make any necessary changes. The report should address the effectiveness of the policies and procedures, review accounts where identity theft took place and how management responded to the theft. The annual report should also include recommendations to improve you identity theft program. Finally, the rule requires auto dealers to fully train their staff so that they are familiar with the policies and can effectively identify red flags.
Automotive dealers are mandated to comply with this new federal regulation. Compliance with this new regulation is important not only to protect your customers but also to safeguard your dealership against regulatory penalties.
Lou Roman is the Regional Sales Manager for Radiant Concepts Inc, which provides dealer management software and websites for independent auto dealers.
Lou Roman Radiant Concepts Inc. 817-579-9747 www.carsplussoftware.com www.carlotservices.com
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