Policeman Bob Sebby looks out at a meeting room full of people and sees many potential identity-theft victims. Were he so minded, they could make him a rich criminal, he says.
“Everyone in this room each is worth $250,000,” says Sebby, a lieutenant with the Las Vegas Police Dept.'s financial crimes unit. “I could retire on that.”
He tells Ward's how he comes up with that per-person dollar amount. “Just by going through your garbage, an ID thief could get enough personal information to obtain six credit cards in your name and rack up a quarter of a million dollars in charges to you over six months. I could scare you with some stories.”
His recollections get attendees' attention at the F&I Management and Technology conference in Las Vegas during a panel discussion on ID Theft and impending “Red Flag” regulations to fight it.
The Federal Trade Commission rules, scheduled to take effect May 1, require financial institutions and auto dealerships to follow a set of safeguards to spot and stop identity thieves.
Such crimes have become prevalent in this age of electronic financial transactions, the Internet and crooks with international ties.
Sebby tells of three major investigations involving perpetrators in countries of the former Soviet Union. He says an ID thief could con a dealership out of a car, which “could then be on a boat headed overseas” before store personnel realize what happened.
ID thievery has become “a massive problem,” says Terrance O'Laughlin, a former investigator for the Florida Attorney General's office and now a compliance director for Reynolds & Reynolds, an information company for car dealerships.
“Every 79 seconds, an ID is stolen, and every two hours someone uses a stolen ID to try to buy a vehicle,” O'Laughlin says.
The red-flag legislation will require dealerships to take “reasonable steps” to comply with the anti-crime regulations. Those range from checking photo IDs to spotting discrepancies on credit reports.
“If you run a credit report and see that someone has been to five or six dealerships in a short amount of time, you better react to that,” Sebby says. “If you know your town and see that an address doesn't fit a zip code, you probably have a counterfeit ID.”
If that happens, what should a dealership employee do next? Sebby recommends leaving the office on a pretense and calling the police or getting a colleague to do so.
Most ID thieves only have one piece of identification, he says. “A dealership employee should ask for two or three. Most non-thieves have several pieces of ID with their names on them.”
Some dealerships offer rewards to crime-fighting employees, says Greg Oltman, a manager for the Kansas-based Van Tuyl Automotive Group with 65 dealerships nationwide.
“If you want to detect ID thieves, pay your people $500 for catching them,” he says. “Just this year alone, we caught 15 ID thieves through that program.”
Some dealership-information firms, such asInc., offer identification software that checks provided information against several data points.
“The software can do several things, such as determine the validity of an address,” says Raj Sundaram, avice president. “It's a detecting tool that lets a dealer ask questions that only a real customer can answer.”
Such software will help dealers abide by the red-flag rules. “It's not enough to just say you want to be compliant,” Sundaram says. “You need to have procedures in place.”
Some dealers worry the new rules will place an undue burden on them and expose them to liability. But dealers have “very little to worry about if they have reasonable policies in place,” says Robert Shimberg, an attorney with the Tampa, FL, law firm of Hill Ward Henderson, specializing in dealership compliance.
“Essentially, red-flag rules are designed to catch the bad ID thieves, not the best ones,” he says. “The regulations don't expect you to catch mastermind criminals. But they do expect you to follow your written plan, with proof that you did, such as photocopies of legitimate driver's licenses in deal jackets.”
Many dealerships are more concerned about inside ID theft, Sebby says. In such cases, suspicious dealers need to “bring in law enforcement to work together to see if an employee is bad.”