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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AICPA Sues FTC

over Identity Theft Rule

The American Institute of CPAs has filed a lawsuit against the Federal Trade Commission challenging the applicability of the so-called “Red Flags Rule” to CPAs.

The lawsuit follows on the heels of the FTC’s recent decision to delay enforcement of the rule for the fourth time (see FTC Extends Deadline for ‘Red Flags’ ID Theft Rule). The rule, promulgated by the FTC in November 2007 to comply with the Fair and Accurate Credit Transactions Act of 2003, requires financial institutions and creditors to develop and implement written identity theft programs to help identify, detect and respond to patterns, practices or specific activities — known as “red flags” — that could indicate identity theft. It was originally set to take effect on Nov. 1, 2008, but after the latest extension, it is now set to become effective June 1, 2010.

Barry Melancon

 

The AICPA filed suit in the U.S. District Court for the District of Columbia seeking an injunction barring the FTC from applying the Red Flags Rule to CPAs, claiming the rule would impose onerous and unnecessary requirements on AICPA members. Its application to lawyers and law firms has already been blocked after a similar lawsuit was filed by the American Bar Association.

“We do not believe that there is any reasonably foreseeable risk of identity theft when CPA clients are billed for services rendered,” said AICPA president and CEO Barry Melancon in a statement. “As trusted advisors, CPAs are personally acquainted with their clients and already adhere to strict privacy requirements governing identifying information.”

The Red Flags Rule was mainly intended to apply to financial institutions and credit card companies, requiring them to develop and implement programs to detect and respond to activity that may signal identity theft. Under the FTC’s interpretation, the rule would apply to public accountants only because CPA firms typically bill clients for services rendered, thus technically qualifying them as a “creditor.”  However, the AICPA contends that public accountants do not provide financial services that would typically create identity theft risks for clients.

The AICPA’s complaint, filed by the law firm Fried, Frank, Harris, Shriver & Jacobson LLP, alleges that the FTC is exceeding its congressionally granted powers under the 2003 law by interpreting its Red Flags Rule to apply to accountants. The complaint alleges that the FTC has acted arbitrarily, capriciously, and contrary to law by failing to articulate a rational connection between the profession of public accounting and identity theft. The FTC failed to explain how the manner in which public accountants bill their clients in the normal course of business constitutes an extension of credit, according to the AICPA, adding that the FTC further failed to identify any legally supportable basis for applying the rule to accountants.

The AICPA’s lawsuit follows an Oct. 30 order by U.S. District Court Judge Reggie B. Walton in response to the American Bar Association’s lawsuit seeking to enjoin the FTC from applying its Red Flags Rule to practicing attorneys. Judge Walton granted the ABA’s motion in a partial summary judgment, holding that the FTC had exceeded its authority by interpreting the term “creditor” to include attorneys engaged in the practice of law. That same day, the FTC issued a press release announcing that it was delaying enforcement of the rule until June 1, 2010, a decision welcomed by the AICPA.

“The FTC made the right move in delaying implementation of the Red Flags Rule and we certainly still appreciate the commission’s continuing consideration of our request for a CPA exemption,” Melancon said.

A copy of the complaint filed by Fried Frank is available at http://www.aicpa.org/download/news/2009/AICPA-Complaint.pdf.

car dealer education for red flag rules

a recent blog post of ours

citing a fraud arrest

and pending criminal trial

by a car dealer in fresno

( mr al jennings of western fleet )

has resulted in a flurry of conversations

with our car dealer education staff

and an apology to our staff from

mr. al jennings for his conduct.

mr jennings criminal defense attorney

said to me:

” IF AL JENNINGS CANNOT SHUT HIS MOUTH

HE CAN LOOK FOR ANOTHER LAWYER ”

we appreciate mr jennings apology

and wish him well in his criminal fraud case

thx

RED FLAG CERTIFIED CAR DEALER EDUCATION

Federal Judge Rules:

FTC Cannot Make Lawyers

Comply With Red Flag Rules

Identity Theft Laws

* The red flag rules program must ensure that service providers use reasonable policies and procedures to detect, prevent and mitigate the risk of identity theft.

Agreements with service providers should contain policies to require them to detect relevant red flags under the appropriate circumstances and to either report the red flags to the dealership or take appropriate steps to prevent or mitigate identity theft.

The most important thing to understand about implementation of the Red Flag Rules is that it is a common sense exercise. However, a dealer cannot pretend that it will be easy.

The Red Flag Rules are different from the Information Safeguards Rule. The Information Safeguards Rule is a “Thou Shalt Not” obligation: “thou shalt not leave deal folders lying around”, or ” thou shalt not leave file drawers unlocked.”

In contrast, the Red Flag Rules require dealership employees to affirmatively exercise judgment and discretion to know the customer in every transaction.

FTC Red Flag Rules

Dealing with a Data Breach

Information Compromise

and the Risk of Identity Theft:

Guidance for Your Business

These days, it is almost impossible to be in business and not collect or hold personally identifying information — names and addresses, Social Security numbers, credit card numbers, or other account numbers — about your customers, employees, business partners, students, or patients. If this information falls into the wrong hands, it could put these individuals at risk for identity theft.

Still, not all personal information compromises result in identity theft, and the type of personal information compromised can significantly affect the degree of potential damage. What steps should you take and whom should you contact if personal information is compromised? Although the answers vary from case to case, the following guidance from the Federal Trade Commission (FTC), the nation’s consumer protection agency, can help you make smart, sound decisions. Check federal and state laws or regulations for any specific requirements for your business.

Notifying Law Enforcement

When the compromise could result in harm to a person or business, call your local police department immediately. Report your situation and the potential risk for identity theft. The sooner law enforcement learns about the theft, the more effective they can be. If your local police are not familiar with investigating information compromises, contact the local office of the FBI or the U.S. Secret Service. For incidents involving mail theft, contact the U.S. Postal Inspection Service. Check the blue pages of your telephone directory or an online search engine for the number of the nearest field office.

Notifying Affected Businesses

Information compromises can have an impact on businesses other than yours, such as banks or credit issuers. If account access information — say, credit card or bank account numbers — has been stolen from you, but you do not maintain the accounts, notify the institution that does so that it can monitor the accounts for fraudulent activity. If you collect or store personal information on behalf of other businesses, notify them of any information compromise, as well.

If names and Social Security numbers have been stolen, you can contact the major credit bureaus for additional information or advice. If the compromise may involve a large group of people, advise the credit bureaus if you are recommending that people request fraud alerts for their files. Your notice to the credit bureaus can facilitate customer assistance.

Equifax
U.S. Consumer Services
Equifax Information Services, LLC.
Phone: 678-795-7971
Email: businessrecordsecurity@equifax.com

Experian
Experian Security Assistance
P.O. Box 72
Allen, TX 75013
Email: BusinessRecordsVictimAssistance@experian.com

TransUnion
Phone: 1-800-372-8391

If the information compromise resulted from the improper posting of personal information on your Web site, immediately remove the information from your site. Be aware that Internet search engines store, or “cache,” information for a period of time. You can contact the search engines to ensure that they do not archive personal information that was posted in error.

Notifying Individuals

Generally, early notification to individuals whose personal information has been compromised allows them to take steps to mitigate the misuse of their information. In deciding if notification is warranted, consider the nature of the compromise, the type of information taken, the likelihood of misuse, and the potential damage arising from misuse. For example, thieves who have stolen names and Social Security numbers can use this information to cause significant damage to a victim’s credit record. Individuals who are notified early can take some steps to prevent or limit any harm.

When notifying individuals, the FTC recommends that you:

• consult with your law enforcement contact about the timing of the notification so it does not impede the investigation.
• designate a contact person within your organization for releasing information. Give the contact person the latest information about the breach, your response, and how individuals should respond. Consider using letters (see sample below), Web sites, and toll-free numbers as methods of communication with those whose information may have been compromised.

It is important that your notice:

• describes clearly what you know about the compromise. Include how it happened; what information was taken, and, if you know, how the thieves have used the information; and what actions you have taken already to remedy the situation. Explain how to reach the contact person in your organization. Consult with your law enforcement contact on exactly what information to include so your notice does not hamper the investigation.
• explains what responses may be appropriate for the type of information taken. For example, people whose Social Security numbers have been stolen should contact the credit bureaus to ask that fraud alerts be placed on their credit reports. See www.ftc.gov/idtheft for more complete information on appropriate follow-up after a compromise.
• includes current information about identity theft. The FTC’s Web site at www.ftc.gov/idtheft has information to help individuals guard against and deal with identity theft.
• provides contact information for the law enforcement officer working on the case (as well as your case report number, if applicable) for victims to use. Be sure to alert the law enforcement officer working your case that you are sharing this contact information. Identity theft victims often can provide important information to law enforcement. Victims should request a copy of the police report and make copies for creditors who have accepted unauthorized charges. The police report is important evidence that can help absolve a victim of fraudulent debts.
• encourages those who discover that their information has been misused to file a complaint with the FTC at www.ftc.gov/idtheft or at 1-877-ID-THEFT (877-438-4338). Information entered into the Identity Theft Data Clearinghouse, the FTC’s database, is made available to law enforcement.

Model Letter

This model letter is provided as an example of how businesses might notify people whose names and Social Security numbers have been stolen. In cases of stolen Social Security numbers, it is important that people place a fraud alert on their credit reports. A fraud alert may hinder identity thieves from getting credit with stolen information because it is a signal to creditors to contact the consumer before opening new accounts or changing existing accounts. Potential victims of a theft also should review their credit reports periodically to keep track of whether their information is being misused. For some victims, weeks or months may pass between the time the information is stolen and the time it is misused.

For More Information

This publication provides general guidance for an organization that has experienced an information compromise. If you would like more individualized guidance, you may contact the FTC at idt-brt@ftc.gov. Please provide information regarding what has occurred, including the type of information taken, the number of people potentially affected, your contact information, and contact information for the law enforcement agent with whom you are working. The FTC can prepare its Consumer Response Center for calls from the people affected, help law enforcement with information from its national victim complaint database, and provide you with additional guidance as necessary. Because the FTC has a law enforcement role with respect to information privacy, if you prefer to seek guidance anonymously, you may do so.

The FTC works for the consumer to provide information on identity theft. To file a complaint or to get free information on ID theft issues, visit www.ftc.gov/idtheft or call toll-free 1-877-IDTHEFT (877-438-4338). The FTC enters identity theft complaints into the Identity Theft Data Clearinghouse, a secure online database available to law enforcement agencies.

Your Opportunity to Comment

The National Small Business Ombudsman and 10 Regional Fairness Boards collect comments from small businesses about federal compliance and enforcement activities. Each year, the Ombudsman evaluates the conduct of these activities and rates each agency’s responsiveness to small businesses. Small businesses can comment to the Ombudsman without fear of reprisal. To comment, call toll-free 1-888-REGFAIR (1-888-734-3247) or go to www.sba.gov/ombudsman.

THE RED FLAG RULES COUNTDOWN HAS BEGUN

redflagclass.com

THE RED FLAG RULES DEADLINE IS 26 DAYS AWAY

RED FLAG CAR DEALER SCHOOL

COMPLETE RED FLAG PROGRAM

$ 500.

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1. Is there a Red Flags certification or accreditation that will ensure our Program complies with the Rule?

No.  Some companies and organizations offer Red Flags compliance services, but the FTC doesn’t certify or approve any particular program.  It’s up to you to decide if you need help like that.  Before paying for Red Flags compliance services, visit www.ftc.gov/redflagsrule for free resources developed by the FTC to help you design your Program.

Bank of America CEO Lewis leaving by year’s end

NEW YORK

Ken Lewis, the embattled CEO of Bank of America Corp., is leaving the company, succumbing to nearly a year of strife that followed his company’s acquisition of Merrill Lynch & Co.

The bank said in a statement late Wednesday that Lewis, 62, would retire as CEO and also leave the company’s board by the end of the year. The company said his successor will be selected by the time he steps down Dec. 31.

The news, coming after shareholders had stripped Lewis of his chairman’s title earlier this year, wasn’t surprising because of the heavy pressure he came under after the Merrill deal. Lewis had said he would stay on as CEO until after the company’s financial problems were resolved, a process expected to take several years.

However, with the bank also under heavy criticism from government officials, Lewis was increasingly seen as vulnerable.

Since the Merrill deal closed Jan. 1, it was learned that the investment bank with the knowledge of Bank of America executives, gave billions of dollars in bonuses to employees even as it asked for more bailout money from the government. The deal was forged a year ago at the height of the financial crisis.