Compliance
Specialists Information
Safeguarding F&I Development Aftermarket Products Sales Training AFIP Certified 1250 Grove Avenue,
Suite 305 Barrington, IL 60010 Phone: 847.382.1095 Fax: 847.382.1083 www.dealershipdevelopment.com
My name is Lee Woodward and I run
the compliance and safeguarding division for Dealership
Development.
This is the first of our monthly compliance
bulletins that you will be receiving.
The purpose of this bulletin is to keep you updated
on the latest changes on the compliance landscape.
Hopefully our monthly bulletin will give you a little more
direction and confidence as you navigate through
the maze of government imposed compliance requirements. If you
have questions on subjects other
than what are addressed in these bulletins, please feel free to
contact me at (847)840-6738 or email at lwoodward@dealershipdevelopment.com
Our goal is to be your “go to” source for
compliance help.
Let’s get
started with, if you can believe it, some good news…
Everyone
can take a deep breath.
If you didn’t already know, the Federal Trade Commission (FTC) has
extended the deadline for dealerships to
comply with the Red Flags Guidelines to May 1, 2009. If you’re still not familiar with this new
federal law,
its intent is pretty simple:
To DETECT,
PREVENT and MITIGATE identity theft from happening in your dealership on
finance and lease transactions.
The
intent is simple, but the key is proper execution.
There
are some common misconceptions on the street when it comes to what proper
execution entails.
Misconception #1
If we use a software solution, that will make
us compliant with the Red Flags Guidelines.
Reality #1
False. The Red Flags Guidelines are very specific in
defining your responsibilities. One of
the key components is
developing
a written Identity Theft
Prevention Program (ITPP) that contains reasonable policies and procedures
for your
employees to follow. In addition, you
must train all effected staff on your written ITPP.
This
cannot be accomplished with the report your software solution provides.
Misconception #2
I am confused regarding our dealership’s
responsibilities to “Mitigate” identity theft.
Some say “Mitigation” is not a defined
responsibility while others say it is.
Which is correct?
Reality #2
Mitigation
is mentioned multiple times in the 256 pages of the finalized Red Flag
Guidelines.
It is a responsibility of your
dealership. Mitigating identity theft
can be defined as minimizing the
ill
effects that identity theft can cause your customers. It is your dealership’s responsibility to be
proactive
and assist your customers to limit the damage to their good name and credit
standing. FYI – Sources
say that
the time it can take for a person to recover from the effects of identity theft
is anywhere between 80 to
300
hours. If you used your attorney to
assist in mitigating the damage to your customers at, let’s say, $200 per
hour,
which can be an expensive venture.
Needless to say, this could be your most important responsibility.
You will
need to have a plan on how to handle this.
Misconception #3
If an identity thief buys a car from the
dealership and we miss it, we have broken the law and will be fined.
Reality #3
Not
necessarily. The intent of the law does
not require you to be perfect so if you let one slip by, you could be o.k.
IF, and only if, you:
Misconception #4
I will take my chances. After all, how many dealers have you heard of
that have been fined for violating the
Safeguarding Rule and that is over 5 years
old.
Reality #4
FTC
investigations are conducted on a non-public basis.
One day
you will find in your mail an “Access Letter” demanding a truck load of
documents
to be
delivered by you to the FTC in a specified time period, or else. At this point if you do not have a
fully
compliant Red Flags program get out the checkbook. You can be fined $2,500 per finance and lease
delivery
that occurred after the deadline to comply.
Misconception #5
You guys are all alike. All you do is to try to scare the dealers to
sell your compliance solutions programs.
Reality #5
Let’s be
clear on this one. It is not me that is
trying to scare you; it’s the Federal Trade Commission,
the
federal government and the law. My
intent is to inform you of what potential liabilities face your business.
Should the
FTC set their sights on you they can investigate compliance with all the laws
that
your
dealership is subject to, not just Red Flags.
Do you have a compliant Safeguarding program?
My goal is
to provide your dealership with an option to satisfy the requirements of the
law with minimal
effort on
your part. I know in this economic
environment this is the last thing that you want to hear, but
these laws
are not going away.
For more information on Dealership Development
please visit us at
Or
If you would like more information on Red
Flags or any other compliance question contact
Lee Woodward at (847) 840-6738 or you can
email me at Lwoodward@dealershipdevelopment.com