After realizing a persistent haze of uncertainty still exists regarding some of the ambiguous wording in its "Red Flags" Regulations, the Federal Trade Commission (FTC) has decided to delay enforcement until August 1, 2009 and will soon release a template to help affected companies plan compliance. "Given the ongoing debate about whether Congress wrote this provision too broadly, delaying enforcement of the 'Red Flags' Rules will allow industries and associations to share guidance with their members, provide low-risk entities an opportunity to use the template in developing programs and give Congress time to consider the issue further," said FTC Chairman Jon Leibowitz. This is the second time the FTC has delayed the mandatory compliance deadline in the last seven months.
Read below for the most current updates on Red Flags regulations.
According to the Federal Trade Commission (FTC), in 2006, there were nearly 10 million victims of identity theft in the United States. The cost to businesses and individuals was roughly $53 billion; a staggering bleed out as consumers lost wages and businesses were forced to write-off merchandise purchased fraudulently.
After a six-month delay, the May 1, 2009 deadline for companies to be in compliance with the FTC's Red Flags Rules regulation is fast approaching. The regulations will require most creditors and financial institutions to adopt a written program to detect, prevent and mitigate identity theft in connection with the opening of a covered account or any existing covered account. A "red flag" is a pattern, practice or specific activity that could indicate identity theft. The FTC lists 26 red flags, but that list is far from complete. A covered account, as it pertains to business creditors, is any account designed to permit multiple payments or transactions or for which there is any reasonably foreseeable risk from identity theft.
In light of the Federal Trade Commission's (FTC) impending Red Flags Regulations, a recent NACM-sponsored teleconference offered attendees a thorough primer on the new rules from the FTC's own attorney in the division of privacy and identity protection, Tiffany George, Esq. "I know that the rules may seem overwhelming but you'll find that the actual rules themselves are only a few pages," she said. "The rules benefit your customers and your business, which are protected from fraudulent charges that you couldn't collect on."