As a dealer it is your responsibility, to communicate any instances where identity theft may have been perpetrated in order to obtain credit and conduct a transaction at your business. (You can call local authorities).  Under the 2003 Fair and Accurate Credit Transactions Act, the “Red Flags” rules were developed by the Federal Trade Commission with the intent of STOPPING identity theft. https://www.gpo.gov/fdsys/pkg/PLAW-108publ159/html/PLAW-108publ159.htm

Identifying information can be a name, a social security number, address, biometric information, pin numbers, and/or personal access codes.

As a dealer you might have what is known as a covered account. The term covered account(s) refers to customers who have an  account that will be maintained  with the intent of conducting a long-term business relationship which will include multiple transactions and/or multiple payments. Red Flags rules also apply to “covered accounts” maintained by a business. Dealers who also finance their own vehicles, also known as “Buy-Here-Pay-here” dealers, should be very aware of these rules. Red Flags rules also apply to dealers who maintain parts and service customer accounts.

Dealers are obligated to document their procedures for verifying customer identities in their location. Dealers must develop a plan for spotting possible warning signs or “red flags” when identity theft may be occurring. Dealers should document any and all discrepancies found in the verification of a customer’s identity. Dealers should also develop a training procedure or protocol for all of their employees.

Some examples are but not limited to:

These situations can somewhat be easily explained, and should be noted at the dealership and retained in case any issues arise in the future.

Please refer to the Federal Trade Commission article titled. FTC Fighting Fraud with Red Flags Rule:  https://www.fdic.gov/news/news/press/2009/pr09088a.pdf  

FTC most frequently asked questions on this subject: http://www.occ.gov/news-issuances/news-releases/2009/nr-ia-2009-65a.pdf

Consequences

By not being careful it can lead to fines from the Federal Trade Commission, plus you are exposed to lawsuits under the Unfair and Deceptive Practices Act.