WASHINGTON, D.C. — Dealers received yet another reprieve from Red Flags enforcement this week when the FTC announced Wednesday that it will provide more time for small companies to review guidance and develop written identity theft programs. The new deadline is now Nov. 1.

Discussing this additional delay and what it means for the industry, Lee Domingue, chief executive officer of indirect lending at Wolters Kluwer Financial Services, told SubPrime Auto Finance News Wednesday, "My concern is that delaying enforcement multiple times might make dealers think that the rule isn't important. But this is a very important rule and needs to be taken seriously by dealers because it protects them, the lenders they do business with and consumers.

"Unfortunately, the delayed enforcement date might send a ‘boy-who-cried-wolf' message to dealers. When the wolf does actually come, dealers need to be ready," he continued.

As many likely already know, the Red Flags Rule is an anti-fraud regulation that requires creditors and financial institutions, as well as dealers, to implement programs to identify, detect and respond to warning signs that could mean identity theft.

Explaining the reprieve, FTC officials said, "Although many covered entities have already developed and implemented appropriate, risk-based programs, some — particularly small and entities with a low risk of identity theft — remain uncertain about their obligations. The additional compliance guidance that the commission will make available shortly is designed to help them."

Basically, the FTC is expanding its business education campaign, which includes:

—Creating a special link for small and low-risk entities on the Red Flags Rule Web site, with materials that provide guidance and direction regarding the implementation.

—The commission noted that it has already posted facts that address how the FTC intends to enforce rules and other topics at www.ftc.gov/bcp/edu/microsites/redflagsrule/faqs.shtm.

—The enforcement FAQ states that commission staff would be unlikely to recommend bringing a law enforcement action if entities know their customers or clients individually, or if they perform services in or around their customers' homes, or if they operate in sectors where identity theft is rare and they have not themselves been the target of identity theft. This likely does not include dealers.

"The three-month extension, coupled with this new guidance, should enable businesses to gain a better understanding of the rule and any obligations that they may have under it," FTC officials stated Wednesday.

"These steps are consistent with the House Appropriations Committee's recent request that the commission defer enforcement in conjunction with additional efforts to minimize the burdens of the rule on health care providers and small businesses with a low risk of identity theft problems.

"Today's announcement that the commission will delay enforcement of the until Nov. 1, 2009, does not affect other federal agencies' enforcement of the original Nov. 1, 2008 compliance deadline for institutions subject to their oversight," FTC officials added.

Offering a word of caution for dealers who have not yet prepared for Red Flags enforcement, Domingue said, "The Red Flags Rule will happen, so dealers should proceed with getting this done now and not wait. Dealers need to have a Red Flags Rule plan in place not only to be compliant, but also to mitigate present fraud risk and the tremendous exposure that comes with it."