Equifax data breach what dealers should know

Equifax data breach what dealers should know

By Mark Scarpelli, 2017 NADA Chairman

Equifax recently announced a major breach of the financial data it stores, and news coverage of the breach has been widespread. Given the number of people affected as many as 143 million and the sensitive information exposed, dealers should understand the basics of the breach and what it means for their customers.

In particular, dealership employees should realize they are likely to (a) get questions from customers about the breach, and (b) see a potential increase in credit freezes and fraud alerts on credit applicantsê credit reports. To prepare, dealership personnel should review the Federal Trade Commission (FTC) guidance below and understand what they may encounter, what they should look for, and what steps they should take when facing a fraud alert or frozen credit report.

If dealership personnel do get questions, they should first explain that the reported breach occurred at Equifax and does not involve the dealership, data stored at the dealership or dealership processes. Dealership personnel can also point consumers to the FTCês consumer guidance “The Equifax Data Breach: What to Do?” That guidance: (a) provides a link to the Equifax website where consumers can determine if their information is at risk and how to sign up for the free credit monitoring service provided by Equifax; and (b) provides general information about steps consumers can take to protect their credit, including how to place a fraud alert or a credit freeze on their account.

What if dealership staff do see a fraud alert or encounter a frozen credit report? First, they should review the FTC document “Fraud alerts vs. credit freezes: FTC FAQs.” It explains that if a customerês credit is frozen, the credit report generally cannot be viewed until the customer takes steps to unfreeze their credit. They will be assigned a PIN they must use (and may forget), and unfreezing the report may include a fee that the customer must pay (both to place and to temporarily lift the freeze). The process may also include a lead time that could affect a financing transaction.

If there is a fraud alert on the credit report, the dealership must take additional steps to verify the identity of the applicant before the credit process can be completed. That generally involves calling a phone number that the consumer provided when they placed the fraud alert and speaking with the consumer.

Dealers and their employees should also be aware that scammers are trying to take further advantage of the Equifax breach by calling consumers and trying to obtain personal information under false pretenses. See the FTC warning here for more information.

This is all a good reminder for dealers to revisit their Red Flags program to ensure that they are taking the required steps to detect and prevent scammers from opening a line of credit using someone elseês information.