Noncompliance with certain FTC requirements can be costly, with civil penalties of up to $53,088 per violation. When you use Gather for identity and insurance verification, you’re doing more than helping protect your dealership from fraud-related vehicle theft. A consistent verification process can also support your dealership’s compliance efforts across several important federal requirements—including the Red Flags Rule, the FTC Safeguards Rule and fair-lending requirements under the Equal Credit Opportunity Act (ECOA).
Here’s how:
1. The Red Flags Rule: Detect Identity Theft Before It Becomes a Bigger Problem
The FTC’s Red Flags Rule requires covered creditors and financial institutions with covered accounts to develop and implement a written Identity Theft Prevention Program designed to identify, detect and respond to warning signs of identity theft.
For auto dealerships, identity verification can be an important part of that process.
A customer presenting a fraudulent, altered or stolen identity can be a red flag. Suspicious identification documents and inconsistencies in a customer’s identifying information are among the warning signs businesses should consider—and identity verification procedures can help businesses detect them.
That’s where Gather can help.
Gather creates a documented identity-verification step in the customer journey, helping dealerships establish a consistent process for verifying who is actually sitting across the desk—or getting behind the wheel for a test drive.
Instead of relying solely on an employee’s visual inspection of an ID, Gather combines identity verification technology with document authentication and other data points to help identify potential inconsistencies before a fraudulent transaction progresses.
The result: a more consistent, documented process for detecting and responding to potential identity theft.
2. The Safeguards Rule: Protect the Customer Information You Collect
Identity verification also intersects with another important FTC requirement: the Safeguards Rule.
The Safeguards Rule requires covered financial institutions—including most auto dealers that finance or lease vehicles—to develop, implement and maintain a written information security program with safeguards designed to protect customer information.
For dealerships, that means taking a close look at how sensitive customer information is collected, stored, accessed and ultimately disposed of.
Every additional copy of a driver’s license, Social Security number or other sensitive information creates another piece of customer data that needs to be protected.
Gather helps reduce the amount of sensitive information sitting around the dealership by digitizing the verification process and limiting the need for physical copies of identification documents.
For example, Gather’s workflow is designed so that records are de-identified after 30 days, while Social Security numbers are only collected when needed for a purchase.
That’s not just good data hygiene. It’s an important part of reducing the amount of sensitive customer information your dealership has to protect.
Less unnecessary data means less data to safeguard.
3. ECOA and Fair Lending: Create a More Consistent Verification Process
Compliance isn’t only about what you verify. It’s also about how consistently you apply your process.
The Equal Credit Opportunity Act (ECOA) establishes requirements designed to prevent discrimination in credit transactions, including auto financing. That’s why dealerships should consider how subjective decision-making and inconsistent processes can affect the customer experience and their broader compliance program.
A standardized identity-verification process can help reduce unnecessary variation from one customer to the next.
If employees are making individual decisions about who needs additional verification, for example, the process can become inconsistent from customer to customer. A uniform process helps take some of that subjectivity out of the equation.
Gather gives dealerships a consistent process that can be applied across customers and documented by store.
That consistency can help dealerships establish a more uniform approach to identity verification while creating a record that the process was followed.
Fraud Prevention and Compliance Can Work Together
Fraud prevention and compliance don’t have to be separate initiatives.
The same verification process that helps protect your dealership from fraud can also support your broader compliance program.
With Gather, dealerships can:
- Identify potential identity theft with a documented verification process.
- Reduce unnecessary exposure to sensitive customer information.
- Create a consistent verification process that can be applied across customers and locations.
- Document that verification occurred as part of the customer journey.
And perhaps most importantly, Gather helps dealerships address these considerations before a fraudulent transaction becomes a much bigger problem.
Because the cost of fraud isn’t limited to the vehicle you might lose.
There can be a cost to not having a consistent, documented process, too.
