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FTC offers free Red Flags compliance help

November 15, 2010

For the few—right?—dealers who have not met the Red Flags Rule’s May 1 compliance deadline, the Federal Trade Commission has produced a how-to guide accessible on the commission’s Web site,

The FTC, which will enforce the rule, prepared the free guide, "Fighting Fraud with the Red Flags Rule."

The Red Flags Rule requires auto dealers and other businesses involved in finance and insurance to develop and follow a written program to prevent customers from being victimized by identity theft. Examples of possible red flags include a credit report with a fraud alert, a notice of a freeze on a credit file, or an ID that appears to have been altered.

"If you work with a lot of credit applications, you may have seen multiple applications with the same or similar address," said Michael Benoit, a dealer attorney who wrote a guide on complying with the rule.

"It may mean the dealership is doing a good job selling to the whole family. "Or," he said, "it might be that particular address is appealing to an identity thief."