RV dealers have some new consumer credit-related Federal Trade Commission (FTC) obligations starting in January, plus new tax elections, the Recreation Vehicle Dealers Association (RVDA) stated in its current issue of RV Executive Today Online.
After five delays over the past three years, the Red Flags rule is finally slated for enforcement. Although a last-minute sixth delay is possible, dealers shouldn’t count on one, because many industry professionals anticipate a broad FTC compliance sweep once the rule is fully enforced. RVDA has sent compliance information and links to free and fee-based compliance templates to all members.
The Risk Based Pricing Rule, which also goes into effect in January, takes another step forward in educating consumers about the effects of their credit scores on their credit rates. It requires that consumers be informed when something in their credit file causes them to receive a less favorable credit rate than the rate offered to a dealer’s best customers.
The Risk Based Pricing Notice (RBPN) that dealers will have to distribute is based on very complex rules, but the FTC allows dealers a safe harbor that simplifies compliance and makes it merely annoying. To help dealers avoid having to calculate complex formulas with each customer, the FTC allows dealers to provide an “exception notice” to every credit customer before the contract is signed.
Also, frustrated by the lack of uniformity in privacy notices that were being given to consumers, the FTC has created a new model form that, if used exactly as directed, satisfies dealers’ compliance obligations.
For more details on these issues and several other new compliance issues, read “Ringing in the New Regulations” in the January issue of RV Executive Today.
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, according to an FTC announcement today (Nov. 2).
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.
The commission previously delayed the enforcement of the rule for entities under its jurisdiction until Sunday (Nov. 1). The commission staff has continued to provide guidance to entities within its jurisdiction, both through materials posted on the dedicated Red Flags Rule website (www.ftc.gov/redflagsrule), and in speeches and participation in seminars, conferences and other training events to numerous groups. The commission also published a compliance guide for business, and created a template that enables low risk entities to create an identity theft program with an easy-to-use online form. FTC staff has published numerous general and industry-specific articles, released a video explaining the rule, and continues to respond to inquiries from the public. To assist further with compliance, FTC staff has worked with a number of trade associations that have chosen to develop model policies or specialized guidance for their members.
On Friday (Oct. 30), the U.S. District Court for the District of Columbia ruled that the FTC may not apply the Red Flags Rule to attorneys. Today’s announcement that the commission will delay enforcement of the rule until June 1, 2010, does not affect the separate timeline of that proceeding and any possible appeals. Nor does it affect other federal agencies’ ongoing enforcement for financial institutions and creditors subject to their oversight.
The Federal Trade Commission (FTC) has delayed — for the third time — new “Red Flags Rules” until Nov. 1 to give affected businesses more time to develop and implement identity theft prevention programs, according to a bulletin from the Recreation Vehicle Dealers Association (RVDA).
The rules were schedule to take effect on Saturday (Aug. 1).
This third delay is primarily due to the FTC’s realization that the Red Flags Rules are covering many more small businesses, RVDA noted. And these are small businessess that are not traditionally covered by FTC privacy rules, such as doctors’ offices and law offices.
The American Bar Association (ABA) and others have argued that the FTC has gone too far in implementing the law by extending its definition of “creditors” to include lawyers and doctors. The Red Flags Rule requires creditors, defined as those who provide services for deferred payment, to create and maintain policies guarding the personal information of their clientele. The agency has delayed implementation for health care providers who raised similar objections and ABA officials believe that a similar step is possible for attorneys, but only if the FTC hears from Congress.
RV dealers who have not established a written plan and have not appointed a plan administrator will benefit from this additional delay. However, dealers can be sure there will be a large nationwide compliance sweep after Nov. 1. During this latest extension, the FTC has developed a sample templates and materials to assist smaller businesses with compliance.
For RVDA members-only FTC Red Flags rule compliance information, visit
For more information on the FTC’s delay, visit www.ftc.gov/opa/2009/04/redflagsrule.shtm.
For more information on complying with the FTC’s Red Flags Rule, visit the RVDA Members only website or visit www2.ftc.gov/bcp/edu/microsites/redflagsrule/index.shtml.