FTC Extends Enforcement Deadline for

Identity Theft Red Flags Rule

At the request of Members of Congress, the Federal Trade Commission is delaying enforcement of the “Red Flags” Rule until June 1, 2010, for financial institutions and creditors subject to enforcement by the FTC.

The Rule was promulgated under the Fair and Accurate Credit Transactions Act, in which Congress directed the Commission and other agencies to develop regulations requiring “creditors” and “financial institutions” to address the risk of identity theft. The resulting Red Flags Rule requires all such entities that have “covered accounts” to develop and implement written identity theft prevention programs to help identify, detect, and respond to patterns, practices, or specific activities – known as “red flags” – that could indicate identity theft.

http://www.ftc.gov/opa/2009/10/redflags.shtm

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beginning june 1, 2010

every car dealer must have a written red flag rules program

within their dealership with a designated red flag compliance officer

if the dealership does not have the red flag rules program in place

the dealership faces a fine of $ 2500. per car deal after june 1, 2010

the FTC is the new sheriff in town

the FTC are the folks who years ago brought you the buyers guide

( remember, the federal buyers guide is the MANDATORY statement posted in the side window describing warranty / no warranty on every car offered for retail sale in america )

dmv compliance requires the buyers guide and now the red flag rules

our program will make you red flag compliant quickly

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Auto Dealer Fraud
Did you know Auto Dealer Fraud is ranked as the number one consumer complaint throughout the nation? Dishonest car dealers are deceitfully swindling average consumers of thousands of dollars. You may be a victim and not know it. For an average consumer it is often difficult to determine whether or not they have been victimized. Since there are so many forms of Dealer Fraud, an average person can easily be defrauded. Auto Dealer Fraud categories include: misrepresentation of title, false advertisement, misrepresentation of vehicle history, financing fraud, packing payments, negative/trade-in equity, contract confusion, and selling prior rental, wrecked, or marked vehicles without disclosure or as new vehicles.

Contract Confusions
Contract fraud is perhaps the most discrete form of auto fraud. Since an average consumer is unaware of the many deceptive tactics that dealers use, they could be bound into paying hundreds of dollars. An average consumer is manipulated through various tricks, including rewriting/backdating contracts; signing more than “one” document in an attempt to charge a higher down payment, higher APR (Annual Percentage Rate), etc.; forging customers’ signatures; failing to provide translations of the completed lease or purchase contract in the applicable language; packing the contract with add-ons such as a service contract, warranty options, and accessories including alarms, GAP insurance, paint/fabric protection, window etching or low jack, items the customers don’t need.

Rewritten Contracts/Backdating: This occurs when a customer does not qualify for financing under initial contract terms. Therefore, the customer may have to consent to increase in down payment, higher APR, etc. in order to qualify for a loan. The dealership deceitfully has the customer sign a second contract with different terms and backdates the second contract with the date of the initial contract, thereby, charging interest for a time period in which the contract is not yet in effect. Not only is the act of backdating illegal, it is also a violation of the Automobile Sales Finance Act (ASFA), which requires that all parties sign one document.

Financing Fraud
Consumers are routinely billed hundreds and sometimes thousands of dollars by fraudulent car dealers. These schemes are designed to extort the highest possible profit from each sale. Dealers use many tactics, including negative equity/trade-ins which a transaction where the consumer is falsely led to believe that the dealership is valuing the trade-in vehicle at the same amount as what is owed. However, in reality the actual cash value of the vehicle in trade-in is less than the amount owed. This difference is added to the cash price of the new vehicle and as a result consumers ends up paying more in taxes and registration. The consumer is also duped when they are told they do not qualify for a loan under the original contract terms and therefore must pay a higher down payment or APR. Often customers end up paying for add-ons (such as alarms, service contracts, GAP insurance, paint/fabric protection, window etching, lo-jack, etc.) that they don’t necessarily need.

Used Car Fraud
Used Car Fraud occurs when the seller fails to disclose prior vehicle history (such as prior accidents, or rentals, etc); misrepresents title (often by selling a “salvage” title); or odometer fraud, where an odometer is illegally rolled back, replaced, or started over.

Negotiating in a Foreign language
California law provides that if a customer negotiates a lease/purchase of a vehicle primarily in Spanish, Chinese, Korean, Tagalog or Vietnamese, the dealer must give consumer a translation of the final contract in the applicable language before the contract is signed.

Odometer Fraud
Odometer fraud is the most prevalent form of auto fraud, resulting in costs of thousands of dollars. Odometer fraud occurs when illegal changes are made to the mileage shown on a used vehicle’s title and odometer. Examples of odometer fraud include roll back, replacement, or having an odometer rolled through all digits and started over.

http://www.carlawyer.com/whatwedo.htm

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BEWARE OF SPOT DELIVERY!
DON’T BE PUT “ON THE SPOT.”

So you purchased a beautiful new car, signed all the necessary paperwork and drove it right off the lot with a big smile on your face. The dealer got you approved on the “spot”. Or so you thought.

A few days or weeks later, the dealer calls and asks you to return to “sign a few more papers”. “Mr. Smith”, they say, “we couldn’t get the car financed and you need to sign a new loan with another bank” or “you need someone to co-sign”, or “give us another $1000 and we can do the deal”, or “Mr Smith, we need to increase your monthly payment to get this done”. The dealer may even have delayed paying off a traded vehicle loan or refused to mail registration papers, all to place additional pressure on the consumer to do as they are instructed or to face dire consequences to their credit.

Sound familiar? It gets worse.

If you refuse, the dealer may threaten to repossess the car, tell you that you have no legal entitlement to keep it or even make you wait for hours at the dealership under some excuse, to wear you down. This situation is most common involving consumers with bad credit, since dealers perceive that such people are vulnerable and easy to take advantage of.

Most consumers assume the dealer is telling the truth and will do whatever the dealer says, resulting in higher payments, additional money being spent over the life of the loan and/or thousands of dollars in increased “hidden” costs. Those who refuse, see their cars repossessed.

What is happening here? It’s a Scam. Dealer Fraud. Unlawful. Illegal. Call it what you will. The industry has given it a name: Spot Delivery, a description which refers to the dealer placing a consumer in a car “on the spot”, to get the sale, only to “yo-yo” them back at a later date for additional funds. Played to perfection, a dealer can reap thousands of dollars in unearned fraudulent gain.

What to know about Spot Delivery: If you signed purchase documents and registration applications and if you obtained insurance for the vehicle, had a new license plate put on the car and/or had your old plate transferred, the car belongs to you.

Spot Delivery happens to unsuspecting consumers throughout the United States. It is very popular with dealers in Pennsylvania, New Jersey and Delaware. If you find yourself in this situation, the chances are good that you have legal remedies available to right this wrong.
Tools to Protect Yourself from Spot Delivery or Dealer Fraud:

* Remember that if you have signed papers, you own the car, regardless of whether the vehicle has been financed.
* Your credit was good or the dealer would not have delivered the car to you at the price you agreed to pay
* A finance document showing payments, deposit, interest rate and other financial items is a binding contract, giving you specific legal rights.
* You own the car subject to making payments only. The dealer cannot change that once you take possession.
* Keep all copies of your paperwork and anything else associated with the sale (including calendars, photographs, advertisements). If the finance manager asks for your papers at any time for any reason, refuse! Keep these documents in a safe place, not the car.
* If you are called back to the dealership to sign additional papers, either do not go or do so in a different car than the one you bought.
* Have a friend or spouse drive you and witness whatever is being told to you. This will prevent the dealer from taking your car as hostage, an all too common happening.
* If a dispute arises with the dealer over the contract and the dealer demands the car is returned, park it in a garage or remote location until the matter is resolved, to prevent it from being taken against your wishes.
* Put together a complete timeline of everything that happened from the time you thought of purchasing the car until the car was taken away. Try to remember specific names of dealership personnel and any statements that were made to you during conversations with the sales and finance staff.
* Keep track of all monies you had invested into the purchase, including registration, insurance, down payment and trade. Never pay cash and always get a receipt!

If you believe you are a victim of a Spot Delivery scam and wish to discuss it with a consumer attorney, call 1-800-LEMON-LAW (1-800-536-6652) or contact us by e-mail. Remember to leave a daytime telephone number where you can be reached. Based on the information you provide us, an attorney will meet with you to discuss your claim. If we do decide to represent you, the process will be cost-free.

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red flag rules compliance for car dealers is about good car dealer education