Compli, the Leader in Auto Dealership Compliance Management, Alerts Nation’s Dealers to Pending Federal Identity Theft Regulations and How They May Affect Their Businesses

PORTLAND, Ore.--Compli^Ž is alerting U.S. auto dealerships to the potential requirements of pending Fair Credit Reporting Act (FCRA) regulations meant to help curb the rising tide of identity theft. As currently written, the proposed regulations will change the way dealerships handle virtually all vehicle sales transactions, including retail installment sales contracts, loans, and leases. Compli, the leading provider of compliance management and risk mitigation products for auto dealerships, is urging dealerships across the country to review the new proposed regulations and then assess their current compliance systems and methods.

Auto Industry Organizations Concerned About Proposed Regulatory Amendments

The new regulations are based on Sections 114 and 315 of the Fair and Accurate Credit Transactions (FACT) Act, which was signed into law in 2003. These two sections of the FACT Act amend Sections 615 and 605, respectively, of the FCRA. The new and complex regulations will apply to “financial institutions and creditors”, which includes almost every automotive dealership in the United States.

Some representatives of industry groups — including Ford Motor Credit, the National Automobile Dealers Association, the National Independent Auto Dealers Association, Nissan Motor Acceptance Corporation, and others — who reviewed the draft regulations, have commented that the regulations are “ambiguous”, “exceedingly burdensome”, and will cause "undue controversy or difficulty”. For example, the proposed amendments would require that:

A dealership evaluate its current identity theft prevention practices and its understanding of all of the “red flags” of identity theft that apply during a credit transaction. This means that, while the proposed rules provide a few dozen examples of the so-called red flags, each dealership must perform an internal audit to identify which red flags may be unique to its business.
Once a dealership completes this evaluation, it must create new policies and train all relevant staff to recognize the applicable red flags and know what actions to take when red flags are found.
The dealership’s designated program manager must continuously monitor new identity theft trends and determine the need for applicable updates to the dealership’s compliance program.
Once each year, a dealership’s designated program manager must provide detailed reports on the compliance program’s effectiveness.

One example of the dozens of red flags suggested by the Federal Trade Commission (FTC) is the verification of whether or not the date of birth and Social Security Number provided by a customer match the accepted ranges provided by the Federal government. Most dealers would have a hard time being able to recognize that information today. In addition, dealers must train their staffs to recognize any discrepancies between the address provided by a consumer during a credit transaction and the consumer’s address(es) provided to the dealer by consumer credit reporting agencies.

These amended regulations will affect virtually all vehicle sales transactions and will require increased vigilance by dealerships to manage and monitor regulatory compliance.

Questions Will Remain For Dealers After The Amended Regulations Are Enacted

Until the proposed rules are finalized, dealers will have to wait for clear answers as to the extent of necessary changes and when the changes will be required. Even once enacted, many questions will remain about the regulations, specifically the red flags that the Federal Trade Commission (FTC) “suggest” be monitored as part of its “flexible, risk-based approach.”

For now, dealers can assess their current regulatory compliance program and prepare for the new regulations by completing a Dealership Compliance Appraisal (DCA) provided at no charge by Compli at www.compli.com/appriasal.com. The only tool of its kind, the popular Compli DCA lets an auto dealer conduct a confidential assessment of a dealership's existing methods of compliance with regulations and employment practices.

About Compli

Privately held Compli is headquartered in Portland, Ore., with sales offices in California, Florida, and Massachusetts. For automobile, truck, and RV dealerships, Compli's Dealership Compliance Management System (DCMS) controls, tracks, and automates regulatory compliance operations within and across dealerships. For more information about the Compli DCMS, to view a product demonstration, and for the latest news and information from Compli, visit www.compli.com or call 1-866-294-5545 toll free. For a free, confidential assessment of a dealership’s compliance program, visit www.compli.com/appriasal.com.

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