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Federal Compliance

Federal Compliance

NAAG offers training and support in helping your dealership comply with Federal Regulations.

RED Flags

The Federal Trade Commission (FTC), the federal bank regulatory agencies and the National Credit Union Administration have issued the "Red Flags
Rule" requiring auto dealers to create a written identity theft prevention program that allows them to verify, with reasonable certainty, the
identity of the individuals entering into a credit or lease transaction. The program should identify, detect, and respond to warning signs - known as
"red flags" - that indicate if a customer or potential customer could be using stolen information to obtain an indirect or direct loan, or lease at their dealership.

Dealerships must maintain a written program that contains the following:

  1. A list of things (red flags) that could signal possible identity theft.
  2. Methods used to detect and evaluate if a red flag has occurred. The program should describe procedures used to verify customer information and detect when information is incorrect.
  3. How your dealership will respond when red flags are detected

Your dealership should document all red flag responses and keep them
in the customer file. Your written red flag program should be updated as necessary, and should be expressly followed by all dealership personnel.