Dealerspan News
October Auto Success Magazine Article
Oct 08, 2008What happens if I don’t comply?
That is a question that may go through the Dealer Principle’s and/or the Finance Managers’ minds. With the state of business in July and August compliance to a new Federal Regulation is the last thing dealers want to spend time or money on.
FTC's Red Flags Rule requires every U.S. auto dealer to develop, implement, and maintain a written, comprehensive identity (ID) theft prevention program that specifically outlines the dealership's plan to detect, prevent and mitigate identity theft. This Red Flag regulation applies to every auto dealer - regardless of size - and must be in place by November 1, 2008.
So you decide not to comply and put off writing your Identity Theft Prevention Program. There are staggering statistics out there about the rising concern of Identity Theft. 1 out of every 8 persons will be touched by Identity Theft by 2009. If you think you will not be affected you are lying to yourself. The actual identity thief is way ahead of the November deadline, as Steve Zabawa, owner of Rimrock Auto Group in Billings, Montana can attest. He paid $80,000 in ID theft claims; “pay now or pay later,” Zabawa simply stated. Now equipped with a Red Flag solution Zabawa said this about the program “If I would have had this program in place this costly identity theft would have been avoided. This application helps my dealership be proactive when dealing with identity theft.” He added, “By preventing just one incident, you will save thousands and thousands of dollars.” Zabawa recommends posting signs and/or certificates that your dealership is Red Flag compliant to deter employees and provide consumers the confidence that they have chosen the right dealership. He compares his Red Flag solution to an anti-virus program, noting it’s a best practice for protecting your business.
When looking for a Red Flag solution dealers should look to address some of the tougher aspects of compliance, such as:
- Automating training of F&I and sales staff
- Improving dealership knowledge base with informative data to assist the staff in detecting Red Flags in their dealership.
- Automating the process of developing the required Identity Theft Prevention Program.
Our greatest fear as consumers is for someone to get our personal information. It’s essential for dealers to have business systems, protocols, and procedures in place. It is common practice to have your lot secured every night to deter vehicle theft; why not take the same diligence in knowing your customer and deterring identity theft?
The goal is to prevent identity theft from occurring, as well as protect the dealerships bottom-line. For example:
- Identity theft claims go up, meaning Property and Causality insurance costs go up
- If several claims are logged, dealerships run the risk of tarnishing their reputation with the community and possibly losing their insurance.
What this means is that you can’t afford not to comply with the Red Flags Rule. Putting off this important Federally Mandated Regulation is like playing Russian Rolette with a six shooter with 5 bullets in it. That is not very good odds.
Jason Blair
President/Founder
Dealerspan, LLC.
