6th time the charm for Red Flags Rule?

Donna Harris covers automotive retailing for Automotive News
The Federal Trade Commission plans to start enforcing the Red Flags Rule on Dec. 31. Don't hold your breath.

Call me cynical, but as this would be the sixth time the feds have threatened enforcement, I'm just a little skeptical.

The rule requires businesses that handle credit, like car dealerships, to adopt written plans to identify, detect, monitor and respond to potential instances of identity theft.

Enforcement of the Red Flags Rule was initially set to kick in Nov. 1, 2008. But the FTC has postponed enforcement five times to give certain businesses more time to comply. It was first delayed to May 1, 2009, then Aug. 1, 2009; Nov. 1, 2009; June 1, 2010; and finally Dec. 31, 2010.

For the most part, car dealerships aren't holding it up. Most of them are in compliance, reports the National Automobile Dealers Association. The broad regulation applies to many other businesses that just weren't aware of it and scrambled to ask for more time.

I'd like to think that this is the final enforcement deadline.

But not so fast, says Michael Benoit with the Washington law firm Hudson Cook. Benoit says Congress may revise the rule before its current session ends. The revision won't have an effect on dealers; it will affect the doctors, lawyers, accountants and others who have been requesting the delays.

If these businesses can't get Congress to reduce the scope of the rule, then guess what? They'll be pressuring the FTC for another delay.

So will the FTC start enforcing the rule come Dec. 31?

Sit tight.

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