Question: What information do I need to know about the May 1, 2009, Red Flags Rule compliance deadline?
Answer: The Federal Trade Commission (FTC) announced in October that it would delay the enforcement of the Red Flags Rule until May 1, 2009, in order to give companies additional time to develop and implement written identity theft prevention programs. The regulation was delayed, in part, because the FTC found that many companies were unaware of the Nov. 1 deadline or believed that the new regulations applied only to financial institutions. The definition of “creditor” under the Red Flags Rule is broad, encompassing nontraditional creditors such as utility and telecommunications companies, auto dealers, collections agencies, hospitals and others.
The FTC, along with the federal bank regulatory agencies and the National Credit Union Association (NCUA), issued the Red Flags Rule last year as a result of the Fair and Accurate Credit Transactions Act (FACTA). Under the rule, organizations that regularly extend credit are required to implement risk-based programs to protect against credit fraud resulting from identity theft. The rule is designed to require companies to identify certain transactions, or “red flags,” that might signal a security breach.
As the May 1 compliance deadline approaches, financial institutions should work to establish and implement appropriate identity theft prevention programs that meet the new FACTA requirements.
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Experian BoilerplateExperian’s Decision Analytics business combines data intelligence, analytics, software and consulting to help clients optimize profitability and improve performance. Its enterprise-wide decisioning capabilities enable clients to manage and mitigate credit risk; prevent, detect and reduce fraud; meet regulatory obligations; and gain operational efficiencies. 1 888 414 1120 or fraud.solutions@experian.com.
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