When your auto dealership works with indirect financing and lease agreements, you are making a guarantee to the leasing company about the customer’s identity. Depending on the terms of your master agreement, the leasing company you work with may be able to return contracts to you if the buyer is discovered to be an identity thief. This would make you responsible for the collection of any payments, payments that the thief has no intention of making. At this point, you could try to reclaim the vehicle but because any information you have about the customer is probably incorrect, it is highly unlikely that you will be able to track it down, leaving you with a loss for the entire purchase price.
Taking steps to actively prevent identity theft at your dealership not only protects consumers, it can also save you from a costly loss.
To protect consumers, the Federal Trade Commission’s (FTC) Red Flags Rule requires affected businesses to take an active role in recognizing and stopping identity theft. Specifically, this is accomplished through a mandatory, written identity theft prevention program coupled with employee training. Primarily of concern to financial institutions and creditors due to the leasing and loan options they offer, auto dealerships fall within the scope of this rule.