Identity Theft Red Flag Rules start May 1

Published: April 16, 2009

The Federal Trade Commission (FTC) recently launched a new webpage designed to help “creditors” and “financial institutions” comply with “red flag” rules which go into effect on May 1, 2009. The “red flag” rules are designed to identify and prevent identity theft. The website, “Fighting Fraud with the Red Flags Rule: A Guide for Business,” describes the entities covered and how to comply with its provisions.

Mortgage brokers and mortgage lenders that provide credit, or arrange for credit to be provided, are required to establish policies and procedures to prevent identity theft. A real estate agent may be considered a “creditor” if s/he regularly arranges for credit to be extended, e.g. regularly pulls credit reports, suggests potential lenders, helps with the loan applications. See NAR’s FAQs for further guidance.

A How-To Guide for Business

As many as nine million Americans have their identities stolen each year. Identity thieves may drain their accounts, damage their credit, and even endanger their medical treatment. Th e cost to businesses – left with unpaid bills racked up by scam artists – can be staggering, too.Th e “Red Flags” Rule, in eff ect since January 1, 2008, requires many businesses and organizations to implement a written Identity Th eft Prevention Program designed to detect the warning signs – or “red fl ags” – of identity theft in their day-to-day operations, take steps to prevent the crime, and mitigate the damage it infl icts.

By identifying red fl ags in advance, they will be better equipped to spot suspicious patterns when they arise and take steps to prevent a red fl ag from escalating into a costly episode of identity theft.

Th e Red Flags Rule is enforced by the Federal Trade Commission (FTC), the federal bank regulatory agencies, and the National Credit Union Administration. If you work for a bank, federally chartered credit union, or savings and loan, check with your federal regulatory agency for guidance. Otherwise, this booklet has tips for determining if you are covered by the Rule and guidance for designing your Identity Theft Prevention Program.

Last modified: April 16, 2009 at 9:03 am | Originally published: April 16, 2009 at 9:03 am
Printed: September 28, 2020