FTC tips for the red flag rules


Are you complying with the Red Flags Rule?

The Red Flags Rule requires many businesses and organizations to implement a written Identity Theft Prevention Program designed to detect the warning signs — or “red flags” — of identity theft in their day-to-day operations. By identifying red flags in advance, businesses will be better equipped to spot suspicious patterns that may arise — and take steps to prevent a red flag from escalating into a costly episode of identity theft.

Resources on this site can help business people educate their staff and colleagues about complying with the Red Flags Rule.

What Compliance Looks Like

Your Identity Theft Prevention Program is a “playbook” that must include reasonable policies and procedures for detecting, preventing, and mitigating identity theft. Your Program should enable your organization to:

  1. identify relevant patterns, practices, and specific forms of activity — the “red flags” — that signal possible identity theft;
  2. incorporate business practices to detect red flags;
  3. detail your appropriate response to any red flags you detect to prevent and mitigate identity theft; and
  4. be updated periodically to reflect changes in risks from identity theft.

The Red Flags Rule also includes guidelines to help financial institutions and creditors develop and implement a Program, including a supplement that offers examples of red flags.

The FTC and the federal financial agencies have issued Frequently Asked Questions and answers to help businesses comply with the Rule.

Who Must Comply with the Red Flags Rule?

The Rule requires “financial institutions” and “creditors” that hold consumer accounts designed to permit multiple payments or transactions — or any other account for which there is a reasonably foreseeable risk of identity theft — to develop and implement an Identity Theft Prevention Program for new and existing accounts. The definition of “financial institution” includes:

  • all banks, savings associations, and credit unions, regardless of whether they hold a transaction account belonging to a consumer; and
  • anyone else who directly or indirectly holds a transaction account belonging to a consumer.

A change in the law on December 18, 2010 amended the the definition of “creditor,” and limits the circumstances under which creditors are covered. The new law covers creditors who regularly, and in the ordinary course of business, meet one of three general criteria. They must:

  • obtain or use consumer reports in connection with a credit transaction;
  • furnish information to consumer reporting agencies in connection with a credit transaction; or
  • advance funds to — or on behalf of — someone, except for funds for expenses incidental to a service provided by the creditor to that person.

Bookmark this site and check it often for revisions that reflect changes in the law.




Related Topics

Protecting Personal Information: A Guide for Business

Are you taking steps to protect personal information? Safeguarding sensitive data in your files and on your computers is just plain good business. After all, if that information falls into the wrong hands, it can lead to fraud or identity theft.

Avoid ID Theft: Deter, Detect, Defend

A one-stop national resource to learn about the crime of identity theft. It provides detailed information to help you deter, detect, and defend against identity theft.

OnGuard Online

Provides practical tips from the federal government and the technology industry to help computer users be on guard against Internet fraud, secure their computers, and protect their personal information.

Privacy Initiatives

Educates consumers and businesses about the importance of personal information privacy, including the security of personal information.

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FTC red flag rules for car dealers offering credit

Red Flags Rule

From Wikipedia, the free encyclopedia
The Red Flags Rule was created by the Federal Trade Commission (FTC), along with other government agencies such as the National Credit Union Administration (NCUA), to help prevent identity theft. The rule was passed in January 2008, and was to be in place by November 1, 2008. But due to push-backs by opposition, the FTC delayed enforcement until December 31, 2010.[1]

In December 2010, the Red Flags Rule was clarified by the Red Flag Program Clarification Act of 2010 [2] to exclude most doctors, lawyers, and other professionals who do not receive full payment at the time when their service is furnished.




The Red Flags Rule was based on section 114 and 315 of the Fair and Accurate Credit Transactions Act of 2003.[3] FACTA was put in place to help Identity Theft Prevention and Credit History Restoration, Improvements in Use of and Consumer Access to Credit Information, Enhancing the Accuracy of Consumer Report Information, Limiting the Use and Sharing of Medical Information in the Financial System, Financial Literacy and Education Improvement, Protecting Employee Misconduct Investigations, and Relation to State Laws.[4]


There are two different groups that this rule applies to: Financial Institutions and Creditors.[5] Financial institution is defined as a state or national bank, a state or federal savings and loan association, a mutual savings bank, a state or federal credit union, or any other entity that holds a “transaction account” belonging to a consumer.[6] FACTA’s definition of “creditor” applies to any entity that regularly extends or renews credit – or arranges for others to do so – and includes all entities that regularly permit deferred payments for goods or services [7]

The definition of a creditor was clarified by the Red Flag Program Clarification Act of 2010.[2] Under the Clarification Act, a creditor regularly and in the course of business:

  • Obtains or uses consumer credit reports;
  • Provides information to consumer reporting agencies; or
  • Advances funds which must be repaid in the future (or against collateral).

This definition was further clarified United States Court of Appeals For the District of Columbia Circuit in its March 4, 2010 ruling on The American Bar Association vs. Federal Trade Commission.[8] The court affirmed Senator Dodd’s statement regarding the bill that “lawyers, doctors, … and other service providers [are] no longer classified as ‘creditors’ for the purpose of the red flags rule just because they do not receive payment in full from their clients at the time they provide their services.”

There are many different companies that this rule applies to: this list includes, but is not limited to finance companies, automobile dealers, mortgage brokers, utility companies, and telecommunications companies; or any other company that advances funds or routinely interacts with consumer credit agencies when performing a service and receiving payment once the work is complete.


The Red Flags Rule sets out how certain businesses and organizations must develop, implement, and administer their Identity Theft Prevention Programs. The program must include four basic elements, which together create a framework to address the threat of identity theft.[9][10]

The program has four elements:

1) Identify Relevant Red Flags

  • Identify likely business-specific identity theft red flags

2) Detect Red Flags

  • Define procedures to detect red flags in day-to-day operations

3) Prevent and Mitigate Identity Theft

  • Act to prevent and mitigate harm when red flags are identified

4) Update Program

  • Maintain the red flag program, including educating operational staff

The Red Flags Rules provide all financial institutions and creditors the opportunity to design and implement a program that is appropriate to their size and complexity, as well as the nature of their operations.[6]

The red flags fall into five categories:

  • alerts, notifications, or warnings from a consumer reporting agency[6]
  • suspicious documents[6]
  • suspicious identifying information, such as a suspicious address[6]
  • unusual use of – or suspicious activity relating to – a covered account[6]
  • notices from customers, victims of identity theft, law enforcement authorities, or other businesses about possible identity theft in connection with covered accounts[6]


The FTC has a created a template for businesses that can be populated to meet an individual company’s needs. The template can be found on the FTC website. This template however is appropriate only for small, very low risk businesses.

Red Flag Rule and identity theft

As the Red Flag rule widely defines creditors, many businesses (such as utilities)[11] are required to collect personal information (such as SSN and Driver’s License Numbers) that they do not need and have no use for. This policy is precisely contrary to the FTC’s advice to consumers that they should disclose their social security number to others only when absolutely necessary.[12] This aspect of the Red Flag rule has the unintended consequences of increasing the number of business that hold consumers’ Social Security numbers thereby putting consumers at greater risk for identity theft through data theft.


  1. Jump up^ http://ftc.gov/opa/2010/05/redflags.shtm
  2. Jump up to:a b http://www.govtrack.us/congress/bills/111/s3987
  3. Jump up^ http://ftc.gov/opa/2007/10/redflag.shtm
  4. Jump up^ FAIR AND ACCURATE CREDIT TRANSACTIONS ACT OF 2003, Public, Law 108-159, 108th Congress, retrieved 2009-02-02
  5. Jump up^ http://www.ftc.gov/opa/2008/07/redflagsfyi.shtm
  6. Jump up to:a b c d e f g http://www.ftc.gov/bcp/edu/pubs/business/alerts/alt050.shtm
  7. Jump up^ http://www.ftc.gov/opa/2009/04/redflagsrule.shtm
  8. Jump up^ http://www.ama-assn.org/ama1/pub/upload/mm/399/aba-versus-ftc.pdf
  9. Jump up^ http://www.ftc.gov/bcp/edu/pubs/business/idtheft/bus23.pdf
  10. Jump up^ “Identity theft” means a fraud committed or attempted using the identifying information of another person without authority. See 16 C.F.R. § 603.2(a). “Identifying information” means “any name or number that may be used, alone or in conjunction with any other information, to identify a specific person, including any – (1) Name, Social Security number, date of birth, official State or government issued driver’s license or identification number, alien registration number, government passport number, employer or taxpayer identification number; (2) Unique biometric data, such as fingerprint, voice print, retina or iris image, or other unique physical representation; (3) Unique electronic identification number, address, or routing code; or (4) Telecommunication identifying information or access device (as defined in 18 U.S.C. 1029(e)).” See 16 C.F.R. § 603.2(b).
  11. Jump up^ “Start or Install Service”.
  12. Jump up^ ftc.gov. “Deter Minimize Your Risk”.

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Red Flag Enforcement still on the FTC radar for car dealers

Federal officials don’t seem to be routinely monitoring whether dealerships are complying with the Red Flags Rule, which went into effect last year, compliance expert Gil Van Over told Automotive News.

“I haven’t seen any enforcement action being taken as a pre-emptive measure,” he said.

Even so, dealerships face dire consequences if identity theft is detected and the store didn’t comply with the rule, said Van Over, president of gvo3 & Associates in Crown Point, Ind.

The Red Flags Rule is aimed at preventing identity theft. Dealers must create and maintain a written plan for complying. The plan spells out how the dealership will detect “red flags” and who’s responsible for doing what. Examples of red flags include a photo ID that does not look like the customer, an address that doesn’t match the customer’s official records, or a customer who is in an unusual hurry and doesn’t take delivery in person.

Carole Reynolds, senior attorney for the Federal Trade Commission’s Division of Financial Practices, says the Red Flags Rule is still on the FTC’s radar. “It is something that can be and remains a focus,” she said last month during an Automotive News F&I Week Webinar.

Attorney Michael Benoit of the Hudson Cook law firm, who also spoke during the Webinar, noted that several states have identity-theft laws, too: “What I have seen are attorney generals launching investigations against creditors where there has been an identity theft, and where it appears that lax procedures or ineffective compliance played a part in letting that happen.”


You can reach Jim Henry at autonews@crain.com.

Read more: http://www.autonews.com/article/20120709/RETAIL07/307099991#ixzz20zIYFzVI

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attorney general to review car dealer markup bill proposed for 2014

December 3, 2013

By Brittany-Marie Swanson

Rosemary Shahan, president of CARS, speaks at the CFPB’s first public forum on auto lending in November.
Rosemary Shahan, president of CARS, speaks at the CFPB's first public forum on auto lending in November.

SACRAMENTO, Calif. — Consumers for Auto Reliability and Safety (CARS), a consumer advocacy group, submitted a new ballot initiative to the California attorney general’s office on Oct. 30. Part of the initiative calls for the elimination of dealer markup, a practice currently being scrutinized by the Consumer Financial Protection Bureau (CFPB).

Rosemary Shahan, president of CARS, discussed the ballot measure during the CFPB’s first public forum on auto lending, held on Nov. 15 at its Washington, D.C., headquarters. The Car Buyers Protection Act is slated to appear on the November 2014 ballot.

“I would note that the provision [aimed at eliminating dealer markup] in the initiative that we just filed … polled at 82 percent support,” Shahan said during the CFPB forum, for which she served as a panelist. “And there isn’t a lot these days that polls so resoundingly well.”

Most industry and regulatory representatives present at the forum, including CFPB Director Richard Cordray, agreed that dealers deserve to be compensated for arranging financing for consumers. The CFPB is concerned that the discretion dealers are allowed when marking up rates creates a fair lending risk. Shahan, however, disagreed.

“I don’t think they should be compensated for that,” Shahan told F&I and Showroom. “It’s something you can do yourself better for free. Why would you pay someone to put you into a bad loan?”

California New Car Dealer Association (CNCDA) President Brian Maas told the magazine that Shahan’s approach is “pretty hard to respond to.”

“The short summary is, [the initiative] is a solution in search of a problem,” he said. “It would have a potentially devastating impact on the new-car business, just to fix things that frankly are going to be resolved one way or another anyway, or don’t need to be resolved at all, or are confusing. So we’re perplexed, frankly. Why this ballot measure at this time?

“Obviously, the CFPB is looking at the issue closely and trying to decide if disparate impact or discrimination exists [in auto lending], and what’s the appropriate compensation scheme and what have you,” Maas added. “But even the CFPB has conceded that dealers should be paid for performing the service.”

In addition to eliminating dealer markup, the proposed Car Buyers Protection Act would make it illegal for dealers to sell, rent, lease or loan recalled used cars, as well as improve protections against “bait and switch” financing and for victims of identity theft perpetrated at car dealerships. The proposed ballot measure would also require that dealers offer a minimum 30-day, 1,000-mile warranty on all used cars.

The initiative also seeks to eliminate the authority of the New Motor Vehicle Board to overrule disciplinary actions against dealers and manufacturers approved by the Department of Motor Vehicles.

“There are a number of problems that have been identified over the years where the public really wants to see change, but the dealers keep blocking it in the legislature either federally, or at the state level,” Shahan said. “And so [this initiative] is aimed at getting these policies enacted through popular vote.”

The advocacy group recently sponsored SB 686, a bill intended to prohibit the sale of unsafe used cars. It was blocked in California’s Assembly Business and Professions Committee in July and cannot be revived until January 2014.

At the CFPB forum, Shahan called California “ground zero” for the issue the CFPB is currently tackling: discrimination in auto lending. California is one of two states that caps dealer markups —2.5 percent for loans up to 60 months and 2 percent for longer loans.

Shahan’s organization’s next step is to meet with the California attorney general’s office, and she said she’s prepared for a long fight. “I expect it to be a battle,” she said. “I imagine the dealers are going to oppose it tooth and nail. But I think at the end of the day, we’ll win. Because … the practices really do not stand up to scrutiny.”

Maas, however, pointed out that the ballot measure may harm the people it intends to protect.

“If dealers don’t provide financing, how does a subprime customer get financed? You can’t walk into a subprime lending intuition; they don’t exist … If I’m a credit challenged customer, it’s the dealer that is working hard to get me financed,” he said. “He’s got an incentive, he wants to sell a car … and that’s why the dealer financing model works.

“We’re a bit frustrated,” Maas added. “It’s not clear at this point how much support [Shahan] has for the measure, other than the fact that she spent $200 to file it with the attorney general.”

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By Alan Ohnsman 

Tesla Motors Inc. (TSLA)’s promotion of a lease-style finance program for Model S electric sedans spurred the California New Car Dealers Association to seek a state investigation of what it says are deceptive advertising claims.

Tesla told customers they “can take advantage of multiple incentives, gas savings, and tax savings resulting in low monthly vehicle payments, when it is unlikely that customers will actually realize such savings,” the dealer group said in an e-mail. The association made its request for an investigation of “unsubstantiated and illegal savings claims” with the California Department of Motor Vehicles.


Sept. 16 (Bloomberg) — Elon Musk, chief executive officer of Tesla Motors Inc. and Space Exploration Technologies Corp., speaks about his career and businesses. He speaks at the Montana Economic Development Summit in Butte, Montana. (Source: Bloomberg)

The electric-car maker led by billionaire entrepreneur Elon Musk debuted the finance program in April and revised it in May after the company was criticized for its explanation of monthly payments. When first introduced, Tesla said customers could finance one of its cars for the equivalent of $500 per month, based on factors including fuel and time savings.

While the company’s website shows a monthly cash payment of $916 for a $71,070 version of Model S, financed for 72 months, it also displays an “effective” monthly payment of just$579 that includes fuel and time savings and the impact of a guaranteed resale price after three years.

Shanna Hendriks, a Tesla spokeswoman, declined to comment on the matter.

Tesla, based in Palo Alto, California, sells its electric cars directly through its own stores while vehicles produced by major automakers are sold through franchised dealers. That’s spurred opposition from dealers across the country.

Dealers have filed lawsuits in New York and Massachusetts to block direct sales, and the company also has been barred from selling directly to customers within Texas and North Carolina.

Tesla gained 0.6 percent to $166.58 at the close in New York. The shares have surged almost fivefold this year, compared with a 20 percent increase for the Russell 1000 Index.

To contact the reporter on this story: Alan Ohnsman in Los Angeles ataohnsman@bloomberg.net

To contact the editor responsible for this story: Jamie Butters at jbutters@bloomberg.net

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Most Commonly Used DMV Forms

Adobe Acrobat Reader is required to view, fill out and print forms. To incorporate the latest accessibility features download of the latest version of Acrobat Reader may be required. If you have problems with Acrobat Reader or our PDF form, select PDF Troubleshooting. To submit a form electronically, use the eForm version. For large quantities, read Ordering DMV Forms in Large Quantities To obtain a form by mail, call DMV’s automated phone service 24 hours a day, 7 days a week at 1-800-777-0133. To speak to an operator call between the hours of 8 a.m. and 5 p.m. Monday – Friday, Pacific Time.

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Cap Cost: this is the sale price you negotiate for that new car you want to lease; unless there’s a waiting list a mile long, this is not the same as the MSRP.

Certified: means the car has been cleaned and checked out by the dealer. Remember: only factory certified cars have the backing of the manufacturer.

Credit Report: a detailed explanation of your borrowing and bill-paying history, not to be confused with your… (See Credit Score.)

Credit Score: a three-digit number that expresses your creditworthiness. This number gives lenders a good idea of how likely you are to pay your bills.

“Cup Holder Factor”: Is your chosen car a good physical fit for you? Does the seatbelt hit your shoulder, or are you chewing on it? Do the seats and steering wheel adjust for your height and weight? Is there enough headroom? Legroom? Are there any blind spots? Are the controls and accessories logically placed and easy to locate? And, the inevitable, will the cup holder accommodate your double decaf grande latte? All this factors in to a good deal.

Curb Appeal: means cleaning up your car to make it look ten times better than it ever did while you were driving it—to entice potential buyers.

Dealer: Someone who is licensed to sell you a car, and abides by all the appropriate auto industry rules and regulations, or so you hope.

Dealer Cost: is the dealer invoice minus a whole bunch of stuff like incentives, environmental packages, advertising fees, and more. This is what the dealer actually paid for the car.

Dealer Invoice (Invoice): The price the dealer wants you to believe he paid for the car, when chances are, he really paid much less. (See Dealer Cost.)

Depreciation: The reduced value of the car after you buy it, or that portion of the car you “use” over the course of a lease.

The “Desk”: the sales manager

Extended warranty: This is also referred to as a service contract. It is an option you may purchase on a new, and some used cars. The extended warranty should cover car repairs over a longer period than the manufacturer’s warranty, which comes with the car. But beware: it’s a high-profit item for a dealer—cheaper ones are available online.

Four-Square Easy Sheets: easy sheets designed to combine all elements of the deal- the purchase price, trade-in, monthly payments and down payment. Don’t do it! Keep all items separate!

Holdback: An amount the manufacturer pays the dealer for each car sold of a particular make. Also referred to as a “kickback.”

Idiot- What you are if you don’t use AutoIdiot’s “Don’t Be an Idiot!” car-buying system before you buy, sell, or lease a car!

“In the Box”: In the salesperson’s cubicle.

Incentives: Money or other special deals that entice you to buy a vehicle.

Invoice (Dealer’s Invoice): The price the dealer wants you to believe he paid for the car, when chances are, he really paid much less. (See Dealer Cost.)

Lay-down: a customer who takes any deal the salesperson offers.

Leasing: is when you pay a low monthly fee to drive a fully warrantied, brand new car every two years or so, but you don’t actually own the car.

Mileage Allowance- the amount of miles per year you’re allowed to drive on a lease. Better not go over: the fees can be quite painful.

Money Factor: used for leases, this is kind of the same thing as an interest rate on a loan, only much more complicated.

MSRP: Manufacturer’s Suggested Retail Price

Options: These are extras you can have added to a standard vehicle, and usually come in packages.

Rebate: money you get back after you buy the car.

Recall: If a car model has a defect, a manufacturer may issue a “recall” notice, meaning that the defect will be fixed at the manufacturer’s expense.

Repossession: If you don’t make your car loan payments, you may get a visit from the Repo-man: the finance company that gave you the loan has every right to come and take your T-Bird away.

Residual Value: The amount a leased car is predicted to be worth after your lease is up

Rollover: this is when the dealer takes the loan from your old car and magically rolls it over into the loan for your new car. Don’t do it! You’ll be paying off two cars on the same bill!

Rustproofing: Meant to hold off body erosion, rustproofing is an unnecessary extra that a lot of car dealers push.

Salvaged or Rebuilt Title: when a car has been previously totaled, the title is marked “salvaged”. Often, these cars are dolled up and their titles are “rebuilt”, or laundered back to normal. You do not want one of these cars!

Service contract: Also called an “extended warranty,” it supplements the manufacturer’s warranty, which comes with a vehicle you purchase. A service contract is a high-profit item for the dealer. Make sure it offers substantially more than the standard warranty.

Subvent: This is when the manufacturers need to unload a certain kind of car so they inflate or “subvent” the residual value to entice you to sign up for a lease.

Target Price: the fair and reasonable price for a vehicle.

Test Drive: That’s when you take the car out for a spin- and check everything from the engine to the tires to the “Cup Holder Factor” to make sure it’s the car for you.

Title Search or Title History: gives you the lowdown on a car’s potentially sordid past. Shows a vehicle’s ownership history by using its VIN. Always do a title search if you’re buying a used car.

Upside Down: means you owe more on your car than it’s actually worth.

VIN: Vehicle Identification Number, every car’s got one.

The 5 W’s: system for advertising your car: Window (of the car), Word-of-mouth, Work (or anywhere potential buyers congregate), Wall Street Journal (really just refers to any newspaper advertisement), World Wide Web.

The Walkaround: this is when you—that’s right– walk around the car and check it out.

Warranty: is a guarantee that certain mechanical problems and body parts will be fixed if they aren’t in proper working condition. The warranty is usually limited, so make sure you know what’s included- and especially what’s not. Check online for cheaper warranties—this is a big money-maker for a dealership.

gotplates.com has more locations in orange county for the car dealer license class

dmv requires a training class to take your car dealer license examination

dmv requires you pass a 40 question exam to submit your car dealer license application

we teach the required dmv license certification class in more places than anyone else

find out why our competition struggles to match our offer

could it be better value??

could it be better pricing??

could it be our dedication to customer service??

we like to think it is all three

visit our website to see our entire class schedule


nancy is our car dealer license instructor in anaheim


we have a class in anaheim every month


sony is our car dealer license instructor in garden grove


we have a class in garden grove every month


alex is our car dealer instructor in newport beach


we have a class in newport every two weeks


good luck with getting your car dealer license


red flag rules car dealer school for dealers offering credit


every car dealer offering credit

must be Red Flag certified

as of Jan 1, 2011


annual review and updates are required

we have a complete Red Flag car dealer program


Red Flag Program

Red Flag Updates for 2013




just what does it take to become a licensed car dealer in california ???

DMV Car Dealer Licensing Checklist

The process can be broken down into three steps:
Dealer Class, Practice Exam & Certificate
Getting your bond & submitting an Application
Final location inspection by your DMV Inspector

Here is a list of everything:
· Dealer Education School, Call TriStar Motors
800 – 901 – 5950 and to attend obtain your Certificate.
· Register On-Line at www.gotplates.com

Everyone must take the New Dealer Class,

· Obtain the DMV Inspector’s number for your area and
leave a message to schedule the examination.
The DMV website @ www.dmv.ca.gov

Then from the dmv website, www.dmv.ca.gov,

the student must find the:
list of DMV inspectors,
application for dealers license,
list of registration forms,


· Pay $ 16. and pass the DMV exam.

When you have studied and are prepared for the
DMV dealer examination the student will make an
appointment with the DMV Inspector.

The student will
need to take their:
CA photo ID & TriStar issued DMV Certificate of Completion.
The DMV dealer test is 30 minutes long, 40 questions,
multiple choice.
The student must get 28 correct out of 40, 70%, and
three chances are allowed on one certificate.
If the student does not pass, TriStar supplemental
training is always FREE.
If the student fails the test three times, TriStar will
make a full refund.

· Choose the Name, Location and Type of dealership.
Once the testing is complete the student begins to
build the business.

Every dealer needs to choose a name of the
dealership and a location.

Every dealer MUST have an office.

Every dealer needs to choose the type of dealership
and vehicle type with endorsements.
Dealer types: Retail or Wholesale Only
( Retail includes Wholesale )
Vehicle Types: A/C cars and trucks
M/C motorcycles
ATV all terrain vehicles
MH motorhome
Rec T recreational trailer
Trl trailer
SM snowmobile

Endorsements: AutoBroker

· Obtain the Zoning Verification Letter.
Every dealer must have their location zoning
approved, using the proper DMV form, by the local
planning authority for the office location.
The proper zoning


· File a Fictitious Name Statement with the county clerk
and have it published in a local paper.
The dealer must file a Fictitious Name Statement with
the county clerk of jurisdiction for the office location.
A list of California county websites:


Obtain a Surety Bond in the amount of $ 50,000.
Wholesale & less than 25 cars/ year then $ 10,000.
The surety bond is a promise by the dealer to honor
all obligations on behalf of the dealership, including
DMV fees and penalties, State sales tax and a
judgment by any court against the dealership.
Cash, Savings or a Bond may be posted.
Your credit report will set the Bond Premium
Some credit scores will require collateral.
The DMV form needed to submit your bond:
If less than 25 cars per year & wholesale only:

· Obtain a Business License
The city or county issuing the zoning permission letter
will usually require a business license.
· Obtain a Live Scan Fingerprint Card.
To obtain a location check:


DMV Live Scan information:
DMV Sample Live Scan Form


Obtain a Board of Equalization Seller’s Permit.
To obtain a location of a field office:
Board Information on Registration:
Application Form:

· Complete the Application and have someone read it
over for you to look for errors and omissions.

Ask your
DMV Inspector if you can FAX it in for review.
· Call the DMV Inspector and submit the Application with
your Bond Declaration Form. You must have a Bond in
place to submit your application. If you wish to be
considered for a temporary license, you must have all
photos completed as well.
list of DMV inspectors,
DMV photo requirements:

Generally you will need:
11 photos for retail
8 for wholesale, 9 for wholesale with a broker endorsement

 They are:

1 Building photo
2 Outside sign photo ®
3 Display area photo ®
4 Office
5 Business License posting photo
6 Resale Permit posting photo
7 Telephone
8 Interior Signs ®
9 Locked Cabinet
10 Checkbook
11 Dealer Book

· Build your office before you contact the DMV Inspector
for final inspection and clearance.

· Obtain a phone and have a phone line installed in the
name of the dealership, including a 411 listing.

· If retail, Obtain and install exterior signs.
One sign if sole user of the location.
Multiple signs if mixed use at the location.

· If retail, Install the three Office Signs provided by TriStar

The No Cooling Off Period Notice to Public

The Inspection of Vehicle Notice to Public

Car Buyer Bill of Rights Disclosure


 Create a locked cabinet, desk drawer, file cabinet or safe to store DMV report of sale forms.


· Open a Bank Account in the name of the dealership.

· Label a thick 3 ring binder as your dealer book.

This book will hold for all updates sent by the DMV, all ROS
forms you might have to void & your broker log. ·

For registration forms write to:
DMV Forms Office
P.O. Box 932242, Sacramento,CA, 94232
Use the list of forms from the DMV website & add the
REG 262 to the list.
list of registration forms,
Draft a letter on your dealer letterhead including a
copy of your DMV certificate of completion requesting
25 of each listed form.
These forms are sent at no charge.

· Contact for forms & disclosures.
Their website for dealer forms:

The four forms needed:

conditional sales contract CA553
English copy, 4 per set, latest version
Spanish Copy, 1 per set, latest version

as-is no warranty for Federal Buyers Guide, 327D
English copy, latest version
Spanish Copy, latest version


car buyer bill of rights option form
English copy, latest version
Spanish Copy,latest version


Not for Sale Sticker


· Create & have ready photos of your setup.
Instruction on photos @

· Final inspection follows in 90 – 120 days following
clearance from Sacramento.
The DMV Inspector will call you for an inspection appointment.
· When you pass inspection you will receive your:
dealer number
wall license
car dealer license special plates
report of sale forms, for your type of license.


good luck



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