Helping customers keep their identities safe

Automotive Industries, Spring, 2008 by Malcolm Babbin

The FACT Act, which was passed in 2003 by the US Congress, allows consumers to request and obtain a free credit report once a year from each of the three nationwide consumer credit reporting companies.

It also helps reduce identity theft by allowing individuals to place alerts on their credit histories if identity theft is suspected. New regulation to the FACT Act makes it mandatory for any firm that gives credit to consumers to implement an identity theft prevention program for new and existing accounts.

This Identity Theft Red Flags Rule is already in effect, with compliance mandatory on November 1,2008. Sai Huda, Chairman and CEO of Compliance Coach, a leading provider of automated regulatory compliance solutions to the financial services industry, told Automotive Industries that there had been three different responses to the legislation:

Huda: The first type are companies that realize complying with the Rule will not be easy. They need further guidance and a tool to help them comply correctly. The second type are companies that are now just getting up to speed with the rule and starting compliance efforts. They need a tool to make compliance easier, faster and correct. The third type are companies that think they will have plenty of time to get into compliance--this is the majority. These will most definitely need a tool in order to make the deadline, because they have underestimated the time and effort it will take to comply.

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AI: How will the regulation affect credit applications?

Huda: Automotive companies are now expected to take active steps to detect, prevent and mitigate identity theft during the credit process. The regulation spells out that an automotive company must implement an effective identity theft prevention program. Certain procedures must be implemented and followed.

Additionally, automotive companies must ensure they are in full in order to obtain financing from financial institutions or other investors. Compliance will be enforced by the marketplace, along with the FTC and other federal and state regulators.

AI: How have you helped these auto firms?

Huda: Non-compliance penalties are severe. The biggest penalty is negative publicity and harm to a company's reputation and goodwill. Compliance Coach developed CompliancePal to make it easy, fast and inexpensive to comply with the Rule. An automotive company can use it to do the risk assessment, map the red flags to appropriate detection and response procedures, and produce the necessary program and training for its employees with a few clicks of the mouse and save hundreds of hours and thousands of dollars.

AI: When did you start working on updating CompliancePal to take into account the new legislation?

Huda: As soon as the new Identity Theft Red Flags Rule was issued, within five days Compliance Coach developed a training program for our customers to educate them on the Rule and its impact, and started to develop a software solution and be the first to market. We put together a team of subject matter and technology experts, and within a few months developed and launched the CompliancePal software.

AI: How has industry reacted to the updated CompliancePal?

Huda: Hundreds of companies have already signed up and are using the tool to get into compliance--we have been receiving rave reviews. Our goal is to have as many as possible out of the millions that need to comply. The tool is easy to use and makes it simple to comply using a proprietary five-step system. It is all web-based and there is no software to install. It is also most affordable. Daniel Kehrer, Executive Editor at Business.com, said CompliancePal was "among seven of the best and brightest 2008 web-based products."