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Washington
Red flags Another reprieve for state-chartereds
WASHINGTON (7/31/09)—The Federal Trade Commission (FTC) announced it will launch a new educational program and further delay enforcement of its identity theft "red flags" rule--to Nov. 1. This is the third time the compliance date has been pushed backed by the FTC, an action which affects state-chartered credits unions. Federally chartered credit unions under a similar National Credit Union Administration identity theft rule had to comply by Nov. 1, 2008. The red flags rule was developed to implement parts of the Fair and Accurate Credit Transactions (FACT) Act of 2003. FACTA directed financial regulatory agencies, including the FTC, to promulgate rules requiring those under its supervision that have covered accounts to implement programs to identify, detect, and respond to patterns, practices, or specific activities that could indicate identity theft. A covered account generally is a consumer account or any other account the institution determines carries a foreseeable risk of identity theft. The FTC announced this week that in an attempt to help small businesses and “other entities” with compliance, it will “redouble” its education efforts and provide additional resources and guidance to clarify what businesses are covered by the rule and what must be done to comply. “Although many covered entities have already developed and implemented appropriate, risk-based programs, some – particularly small businesses and entities with a low risk of identity theft – remain uncertain about their obligations,” the FTC noted, explaining its latest delay. The FTC’s additional compliance guidance will include a special link for small and low-risk entities on commission’s “Red Flags Rule Website.” The agency already has posted FAQs that address how the FTC intends to enforce the Rule and other topics. The FTC release highlighted that the enforcement FAQ states that commission staff” would be unlikely to recommend bringing a law enforcement action if entities know their customers or clients individually, or if they perform services in or around their customers’ homes, or if they operate in sectors where identity theft is rare and they have not themselves been the target of identity theft.” Use the resource links below for more information.
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