Many dealerships have missed the deadline for complying with a new federal rule designed to curtail identity theft, even though they could face thousands of dollars in penalties for violations.
Legal experts who have helped develop guidelines for the National Automobile Dealers Association and the Association of Finance and Insurance Professionals say few dealerships
have complied with the Safeguards Rule.
"Dealers are too busy selling cars," says Tom Hudson, senior partner of Hudson Cook, the Linthicum, Md., law firm that helped NADA write a compliance guide called A Dealer Guide to Safeguarding Customer Information. Though the guide was sent to all NADA members, Hudson says few dealers seem aware of the rule and compliance deadline.
The Safeguards Rule is the second phase of the Gramm-Leach-Bliley Act, which was passed in 1999 to protect consumers' privacy. The first phase on privacy notices kicked in almost two years ago. The Safeguards Rule, which took effect Friday, May 23, requires businesses, including dealerships, to develop written policies and procedures to protect customer data and to train employees to safely handle the data.