What is the Red Flag Rules?
Commonly known as the red flag rules, the full name for the regulation is the Identity Theft Red Flags and Notices of Address Discrepancy. The rules were developed in response to the findings of the President’s Identity Theft Task Force, which found that identity fraud results in billions of dollars in losses each year to individuals and businesses. Basically, the rules, which are applicable to both dealers and financial institutions, entail implementing an Identity Theft Prevention program. According to the Federal Trade Commission, this program must include “reasonable policies and procedures for detecting, preventing and mitigating identity theft.” The Red Flag Rules were passed on January 1, 2008. Dealerships must be compliant by January 1, 2011. For more information on Federal Trade Commission’s requirements, effective date and guidelines, please visit the Federal Trade Commission.
