NAAA has delayed sending this notice to its members because the original Red Flags Rule compliance date of November 1, 2008 has been extended until December 31, 2010.

Early analysis of the Red Flags Rules indicated they may not apply to wholesale motor vehicle auctions, however, industry attorneys believe they do so the purpose of this notice is to provide compliance guidance to NAAA regular members.

Although the compliance deadline has been extended until December 31, 2010, some auction customers such as banks may require auctions to comply prior to that date.

On November 9, 2007, final regulations regarding the management of risks imposed by identity theft were published at 72 Federal Register 63718 – 63775. The regulations provide guidelines for identifying patterns, practices and specific forms of activity that indicate the possible identity of identity theft, which have become known as Red Flags.

NAAA regular members are required to develop a written identity theft program in connection with the opening or maintenance of a “covered account”, which includes an account an NAAA regular member offers or maintains for which there is a reasonably foseeable risk of identity theft. The definition of covered account is broad enough to pick up business accounts subject to identity theft.

Auction Insurance Agency has prepared an identity theft protection program for its AuctionAccess customers, and has been kind enough to share that with NAAA. NAAA has adapted that program so it can be easily used by NAAA members who do not participate in AuctionAccess, and NAAA is providing that program to its members with this notice.

Please note that the establishment and operation of identity theft prevention programs is very flexible, and what might be required of a Manheim or Adesa would not be required of a small independent.

Members should not use this identity theft prevention program without consulting their legal counsel. In addition to the reference to the final regulations at the beginning of this notice (which are very lengthy and cumbersome to digest), Federal Trade Commission guidelines can be found at http://www.ftc.gov/bcp/edu/pubs/business/alerts/alt050.shtm.

PDF Download: Identity Theft Prevention Program