The Federal Trade Commission announced today another six-month "delay of enforcement" of the Red Flags rule. Dealers and other creditors now have until January 1, 2011, to develop and implement a written identity theft prevention program (ITPP). As with prior delays, this does not affect the address discrepancy rule, which continues to have an effective date of November 1, 2008.

 

Dealers who have already drafted and implemented their ITPP are not required to do anything.  

 

 

As stated in a previous GCADA memoranda, despite this apparent extension many Dealers are not affected by this delay in enforcement.  Accordingly, these Dealers should already have their identity theft prevention program in place. 

 

The reason for this distinction is that while the FTC has delayed its enforcement, the extension does not apply to financial institutions whose compliance falls under other federal agencies, such as federal bank regulatory agencies (i.e. the FDIC) or the National Credit Union Administration.  As such, the lenders of many Dealers were required to be in compliance with the Red Flags Rule on November 1, 2008.

In short, under the Red Flags Rule your Dealership may be considered a "service provider" to the financial institutions with whom you conduct business, since you are opening credit accounts on their behalf.  Those financial institutions are required under the Rule to oversee their service providers to ensure that they have an identity theft prevention program in place.  Therefore, any Dealership that has been asked to assure and/or certify to a lender their compliance with the Red Flags Rule should have a program in place.  Regardless of whether or not you fall under this distinction, GCADA recommends that Dealers do not wait to comply with this rule.

 

For further information regarding this delay, please click HERE. Again, we encourage those dealers who have not yet finalized their ITPP to complete their work as soon as possible, in advance of the new deadline. 

 

If you have any questions please contact Ellen Mastrangelo or Nick Hanna at (440) 746-1500, or by email at ellen@gcada.org  or nhanna@gcada.org. This memo and its contents should not be construed as legal advice.