As Seen in the “Auto Retail Informer”
October 20, 2006
New ID Theft ʺRed Flagsʺ May Force Some Dealers To Raise White Flag in Surrender
by Eric Sedwick ‐ Vice President of Content Services, Compli
ʺAmbiguousʺ. ʺExceedingly burdensomeʺ. ʺUndue controversy or difficultyʺ. These are just a few of the
negative references made by NADA and Nissan Motor Acceptance Corporation to describe updated
federal regulations meant to help curb the rising tide of identity theft. Dealers need to be aware of the
probable language and scope of these fast‐approaching requirements to effectively mitigate the impact
they will have on a dealershipʹs core sales operations.
The Fair and Accurate Credit Transactions Act (FACT Act) was signed into law in 2003. Sections 114 and
315 of the FACT Act amended sections 615 and 605 of the Fair Credit Reporting Act of 1970, respectively.
These complicated amendments directly affect ʺfinancial institutions and creditorsʺ, including auto
In short, dealers will be required to create, follow, and regularly review new dealership procedures to
1) ʺred flagsʺ ‐ also known as the dozens of ʺusual suspectsʺ that indicate possible identity theft during
a credit transaction, and
2) discrepancies that can occur between the address information given by consumers during a credit
transaction and what is provided by consumer reporting agencies.
These required updates will impact every auto dealer in the country and virtually all auto sales
transactions ‐ including retail installment sales contract, loan, and lease.
Industry representatives including NADA, NIADA, Nissan Motor Acceptance, and Ford Motor Credit
have already weighed‐in during the Public Comment period. Examples of the proposed requirements
that are causing concern include:
• Cleaning House
o Dealers will be tasked with evaluating their current identity theft practices and
understanding all of the ʺred flagsʺ that apply to their specific dealership. This means