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Red Flag Rules take effect Aug. 1

November 15, 2010

The Red Flags Rule enforcement originally was scheduled for implementation last fall. It was postponed until May 1, 2009, then again until Aug. 1.

Who knows, there may be a third postponement. But careful dealers will be paying attention because the penalties for failure to comply are significant.

 

From recent headlines, a Canadian man was arrested in the United States and charged with 90 offenses involving the use of fake foreign credit cards to purchase high-priced vehicles and even a $140,000 boat.

 

The Red Flags Rule, simply stated, tries to prevent ID thieves from entering into fraudulent transactions. Under the rule, the dealer is obligated to train his staff to recognize false identities. In effect, the FTC has conscripted the staff to help in the FTC’s enforcement efforts against identity theft and the resulting fraudulent transactions.

 

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