NADA Insurance announces Identity Theft Protection–an important new insurance plan to protect our Dealer member assets from identity theft exposure and claims.

Identity theft is America’s fastest growing crime, even surpassing drug trafficking. Some 15 million people were victims of identity theft in 2006, with the average time spent recovering losses ranging from 300 to 600 hours. Most victims liken the emotional impact to violent crime. Auto Dealers are considered “lending institutions” and are now required by federal rules to be “Red Flag” compliant no later than May 2009 by establishing an Identity Theft Prevention (ITP) program. Failure to do so will lead to violations of the Fair Credit Reporting Act, the Federal Trade Commission Act, and possible violation of state unfair and deceptive practices laws. Penalties and fines can be in the tens of thousands of dollars.

Why NADA Identity Theft Protection Insurance?

Identity Theft Protection will not pay the fines mentioned above nor help you become “Red Flag” compliant; the identity theft insurance policy offers coverage to Dealers when their data is compromised resulting from identity theft. Whether the identity theft is the consequence of negligence occurring at the dealership, sophisticated identity thieves hacking into dealer DMS systems, dumpster diving, or scanning the transaction codes off customer credit cards, the policy offers exceptional coverage to businesses and individuals for the following:

• Legal liability damages
• Defense costs
• Regulatory action expense
• Notification costs
• Crisis expenses
• Identity theft recovery services for victims such as education, assistance and credit monitoring

Even if you are “Red Flag” compliant, customers can take civil action if their personal information is compromised through your dealership. If you are not “Red Flag” compliant at the time of the loss, you are at serious risk.  Civil liability, notification costs, and monitoring expenses can add up to hundreds of thousands of dollars, affecting the balance sheet you have worked so hard to maintain. Most importantly if your customers’ identities are stolen due to your employees’ negligence or identity thieves compromising your customer data, customers may be reluctant to continue doing business with you.  Faced with potentially disastrous consequences, our Crisis Management Response team can act immediately and efficiently, providing practical assistance for victims and saving your Dealership’s reputation—a reputation that took years, even generations, to build.

By providing services for identity theft victims, a Dealership demonstrates its commitment to the needs of its customers. This act of good faith has proved invaluable in retaining customers, maintaining employee satisfaction, and preventing costly actions.