Identity Theft Red Flags Rule
United States
2008
Consumer Protection
Privacy
Overview
The Identity Theft Red Flags Rule, adopted in 2008 under Section 114 of the Fair and Accurate Credit Transactions Act (FACTA), requires certain businesses and financial institutions to establish formal programs to detect, prevent, and mitigate identity theft. The rule was issued by the Federal Trade Commission (FTC) along with federal banking regulators and the National Credit Union Administration (NCUA).It applies to banks, credit unions, lenders, utility providers, auto dealers, and other creditor organizations that maintain covered accounts involving consumer credit or deferred payment.
Key Obligations
- Implement a written Identity Theft Prevention Program
- Identify relevant red flags based on account types and operations
- Detect and verify red flags through account authentication methods
- Take appropriate actions to mitigate or prevent identity theft
- Update the program periodically based on evolving risks
- Oversee service provider compliance and train employees
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Related Regulations
FAQ
When did the Red Flags Rule take effect?
The rule took effect in 2008, following its issuance in late 2007.
What qualifies as a “covered account”?
Accounts used for personal, family, or household purposes that carry a foreseeable risk of identity theft.
Are service providers also required to comply?
Yes, businesses must ensure that their service providers follow the rule’s standards.
What are some examples of red flags?
Alerts from credit reporting agencies, suspicious documents, unusual account activity, and discrepancies in identity information.