Red Flag Rules


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The Federal Trade Commission and the federal financial institution regulatory agencies have published final rules on identity theft "red flags" and address discrepancies that implement sections 114 and 315 of the Fair and Accurate Credit Transactions Act of 2003. The Final Rules require each financial institution and creditor that holds any consumer account, or other account for which there is a reasonably foreseeable risk of identity theft, to develop and implement an Identity Theft Prevention Program for combating identity theft in connection with new and existing accounts. 

The Program must include reasonable policies and procedures for detecting, preventing, and mitigating identity theft and enable a financial institution or creditor to:

  1. Identify relevant patterns, practices, and specific forms of activity that are "red flags" signaling possible identity theft and incorporate those red flags into the Program
  2. Detect red flags that have been incorporated into the Program
  3. Respond appropriately to any red flags that are detected to prevent and mitigate identity theft
  4. Ensure the Program is updated periodically to reflect changes in risks from identity theft.
  5. The Final Rules require users of consumer reports to develop reasonable policies and procedures to apply when they receive a notice of address discrepancy from a consumer reporting agency. 

Motor vehicle dealers must comply with the Rules by November 1, 2008.

To assist members in complying with the Rules, NIADA will distribute materials, developed by NIADA General Counsel Keith Whann and the Law Firm of Whann & Associates that will include: An overview of the Red Flags Rules, guidelines to assist your dealership in analyzing identity theft red flags and developing a written program, a model written dealership policy for the detection, prevention and mitigation of identity theft and an employee acknowledgment and service provider agreement addendum regarding the identity theft program.

More Information

 NIADA will make the "FREE" materials available through it's website, it's internet television network and through it's affiliated associations in early July.