Buying A Car? Prove You’re Not a Terrorist

(Wheeler News-Register)   If you’re in the market for a car, be prepared to prove you are not a terrorist.

The federal government’s Red Flags Rule mandates that auto dealers, banks, credit unions and other “creditors” and “financial institutions” take additional steps to prevent identity theft and fraud, beginning Jan. 1. Included in the list of so-called creditors is your family doctor.

Among those steps is determining whether a person applying for financing – or even paying cash for a car – appears on any government watch lists of known or suspected terrorists or terrorist organizations.

As a result, consumers hoping to finance a new or used car, a home or even a major appliance will be required to supply personal information – such as their Social Security number and birth date, as well as the answers to five questions designed to confirm a customer is who they say they are – to the business at the time of the sale. Those questions could include anything from previous addresses and area codes to the names of other members of the consumer’s household.

Thomas Garage Chrysler, Dodge, Jeep in St. Clairsville uses a software called Wise Scan ID to simplify the search of public records and the 475-page Office of Foreign Assets Control “Specially Designated Nationals and Blocked Persons” list, commonly referred to as the terror watch list.

Anyone can view the “SDN List” online at

Sparing the dealership the time it takes to check the list manually, the software generates a report verifying the person in question is still living and has provided accurate personal information – and that they are not listed among suspected terrorists.

Ray Smith, finance manager for Thomas Garage Chrysler, Dodge, Jeep, said the Thomas dealership has been using the system for about two years, as the Red Flags Rule was introduced in September 2008. The Federal Trade Commission, however, has delayed enforcement of the rule several times , most recently at the request of some members of Congress who hope to resolve any questions regarding which entities must comply. Currently, enforcement is slated to begin Jan. 1.

Smith noted, though, that it already is possible for a business to face civil penalties or make restitution to the bank that supplied the loan if it does not perform its due diligence in ensuring a customer is not committing identity theft. After Jan. 1, he said, fines and jail time could result for anyone who commits the federal offense of approving such a sale without performing the required checks on the applicant.

And for car dealers, there can be consequences if an automobile is sold to a person on the Office of Foreign Assets Control’s list of suspected terrorists, regardless of the price of the vehicle or whether they seek financing.

“We still run the OFAC check if they pay cash,” Smith noted.

But not everyone passes the screening. Smith estimated he has encountered “hits” on the terror watch list a couple of times in a six-month period. So far, each of these results has involved someone with a name similar to one on the list, not an actual entry on the list.

“The first time you see it, it kind of scares you,” he admitted.

When the system turns up such a red flag, Smith said, he calls a toll-free number to have a federal agency double-check the result.

Todd Thoburn, Internet manager for Thomas Garage, said customers generally do not object to the process.

“Everyone I’ve had in here has liked it,” he said. “Most are receptive, knowing it’s protecting their identity.

“I see it as a positive,” he continued. “If you ask one person who has had their identity stolen how long it has taken to put their life back in place … the benefit outweighs (concerns about privacy) as far as what it is going to prevent.

“The No. 1 reason is to protect the consumer.”

Some local dealerships have not yet implemented a system like the one used by Thomas Garage. Because enforcement has been delayed, some dealers have adopted a wait-and-see approach to the Red Flags Rule.

Others who do comply don’t always tell customers they are checking their name against the Office of Foreign Assets Control’s list of terror suspects. And some businesses believe the Red Flags Rule is just another, unnecessary layer of paperwork, noting they would like to see the various mandates they must adhere to combined into a single rule.

Smith said he has worked in finance for 13 years and has never had an issue with identity theft. He added that most identity theft today occurs via the Internet.

Still, he acknowledged an auto dealer must help protect the assets of the bank they are working with to secure financing for a sale.

“We have to be the eyes and ears of the bank,” he said, pointing out the customer never visits the bank in person when their credit application is processed through the dealership.

Likewise, the dealership also is responsible for protecting the customer’s personal information. Smith said when Thomas Garage prints the report generated by the Wise Scan system, it is placed in a secure folder with all other paperwork related to the sale. Those files are kept under lock and key. He stressed that employees who process applications for financing are required to lock their offices when they leave, and the dealership has a storeroom where those documents are held for five to seven years.

To further protect customers, Thomas Garage works with a shredding service that visits the dealership monthly. That company weighs and shreds designated documents on the premises and provides an affidavit stating the work was completed.

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