The Federal Trade Commission has issued new regulations to the Fair and Accurate Credit Transactions Act (FACTA) known as the Red Flags Rules. The new rules require financial institutions to create prevention programs to detect and respond to "patterns, practices, or specific activities that could indicate identity theft." The program must be in place by November, 1 2008.
According to the rule a financial institution is defined as banks, savings and loan associations, credit unions, and creditors. Creditors does not include every business that accepts credit cards but does include any business that extends credit. For example, finance companies, automobile dealers, mortgage brokers, utility companies, and telecommunications companies.
Some red flags that covered entities must be monitoring are:
According to the rule a financial institution is defined as banks, savings and loan associations, credit unions, and creditors. Creditors does not include every business that accepts credit cards but does include any business that extends credit. For example, finance companies, automobile dealers, mortgage brokers, utility companies, and telecommunications companies.
Some red flags that covered entities must be monitoring are:
- Alerts, notifications, or warnings from a consumer reporting agency
- Suspicious documents
- Suspicious information
- Unusual use of a covered account
- Notices from customers, law enforcement authorities, or other businesses
Labels: FACTA, Red Flag Rules
