Comments:

See attached comments.

June 15, 2004

Via E-Mail

Federal Trade Commission

Office of the Secretary

Room H-159 (Annex J)

600 Pennsylvania Avenue, NW

Washington, D.C. 20580

            Re:  FACTA Identity Theft Rule, Matter No. R411011

Dear Sir/Madam:

The National Automobile Dealers Association (“NADA”) submits the following comments in response to the Federal Trade Commission’s (“FTC” or “Commission”) Notice of Proposed Rulemaking (“NPR”) requesting comment on the regulations it should implement under Section 112 of the Fair and Accurate Credit Transactions Act (“FACT Act”) regarding related identity theft definitions, duration of active duty alerts and appropriate proof of identity. 69 Fed. Reg. 23,370 (April 28, 2004) 

NADA represents approximately 20,000 franchised automobile and truck dealers who sell new and used vehicles and engage in service, repair and parts sales.  Our members employ more than 1.1 million people nationwide.  A significant number of our members are small businesses as defined by the Small Business Administration.  Most of our members routinely use consumer reports incident to the extension of credit to consumers for the purchase of automobiles and light-duty trucks.

NADA urges the Commission to clarify the obligations of users of consumer reports with regards to fraud and active duty alerts.  The proposed rule extensively examines and requests comment on the duration of fraud and active duty alerts under Section 112 of the FACT Act; however, the Commission did not address the new obligation for users of consumer reports that Section 112 imposes.  According to Section 112(h)(1)(B)(i), a prospective user of a consumer report that includes an initial or extended fraud alert or active duty alert cannot establish a new credit plan or extension of credit, etc. in the consumer’s name, “unless the user utilizes reasonable policies and procedures to form a reasonable belief that the user knows the identity of the person making the request.” We ask that the Commission, as permitted, clarify the “reasonable policies and procedures” requirement and provide illustrative guidance and non-exclusive examples of how users may comply with this requirement. 

Section 112(h)(1)(B)(ii) also states that users shall use a telephone number listed by the consumer “for identity verification purposes,” or take “reasonable steps to verify the consumer’s identity.”   Financed vehicle sales typically are conducted when the consumer is physically present at the dealership and often occur shortly after the consumer has applied for credit and authorized the dealership to obtain a copy of his or her consumer report.  Consequently, it may not be feasible for the dealership to contact the consumer at the specified telephone number since the consumer may remain at the dealership during the process.  Therefore, we urge the Commission to provide clear guidance on the alternative “reasonable steps” that our members may take to “confirm that the application of a new credit plan is not the result of identity theft.”

NADA appreciates the opportunity to comment on this matter.

                                                                        Sincerely,

                                                                        Smitha J. Koppuzha