Final Rules On Red Flags

 
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Agencies Issue Final Rules On Identity Theft Red Flags And Notices Of Address Discrepancy

The Federal Trade Commission and the Federal Financial Institution Regulatory Agencies have sent to the Federal Register for publication, final rules on identity theft "red flags" and "address discrepancies". The final rules require each financial institution and creditor (including auto dealerships) that holds any consumer account, or other account for which there is a reasonably foreseeable risk of identity theft, to develop and implement an Identity Theft Prevention Program (Program) for combating identity theft in connection with new and existing accounts.

The Program must include reasonable policies and procedures for detecting, preventing, and mitigating identity theft and enable a financial institution or creditor to:
  • Identify relevant patterns, practices, and specific forms of activity that are "red flags" signaling possible identity theft and incorporate those red flags into the Program
  • Detect red flags that have been incorporated into the Program
  • Respond appropriately to any red flags that are detected to prevent and mitigate identity theft
  • Ensure the Program is updated periodically to reflect changes in risks from identity theft
The agencies also issued guidelines to assist financial institutions and creditors in developing and implementing a Program, including a supplement that provides examples of red flags. The final rules require users of consumer reports to develop reasonable policies and procedures to apply when they receive a notice of address discrepancy from a consumer-reporting agency. Additionally, the Board of Directors (or appropriate individual/owner) of covered institutions must certify that all Program processes will be effective in preventing or reducing chances of identity theft, periodically review the Program for updates and ensure that all appropriate staff are properly trained. Several companies are marketing "solutions" that require paying an "installation fee" and incur on-going monthly fees. HR Solutions has created a cost effective Program that will provide a comprehensive solution aimed at alleviating concerns, and the stress associated with complying with Red Flags law.

There is no time to waste. Covered financial institutions and creditors (this means Auto Dealerships) must comply with the rules by June 1, 2010.
 
   
 
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