Newsletters
August 2006
Will an ID Theft Prevention Program be Required by the FTC?
Are you prepared to implement a program to help fight identity theft? Well, the FTC just might just force you to under the proposed Red Flag ruling.
On May 9, 2006, the federal banking agencies and the FTC approved for publication proposed rules regarding “Red Flag” guidelines. These guidelines, requiring businesses to implement an identity theft program, address reconciliation procedures required by sections 114 and 315 of the Fair and Accurate Credit Transactions Act of 2003 (FACTA).
The Red Flag Guidelines
According to the FBI, identity theft is the fastest growing crime in the nation. Unfortunately, auto dealers have become prime targets. The Red Flag guidelines would be a significant step forward in the fight against identity theft. If approved, they would address financial, operational, compliance, reputation and litigation risks, including policies and procedures to:
- Identify Red Flags
- Verify the identity of persons applying for credit
- Mitigate the risk of identity theft using a risk-based approach
- Train staff to implement an identity theft program
“The proposed ‘Red Flag’ guidelines would require financial institutions (yes, that includes car dealers) to establish a written, risk-based identity theft program,” says Tom Hudson, senior partner with Hudson Cook, LLP, and author of CARLAW.
“One that’s designed to address the risk of identity theft to customers and the safety and soundness of the financial institution.”
Given the proposed ruling, you may not want to wait for any “Red Flags” of your own. Perhaps it’s a good time to explore your options for a comprehensive identity verification program. First Advantage CREDCO offers easily integrated solutions, which are designed to help you prevent identity fraud and vehicle theft, and the associated losses, before they happen.
For more information about the Red Flag guidelines, contact the Federal Trade Commission by calling (202) 326-2222 or visit www.ftc.com.
View All Newsletters