"Red Flags" Regulations Currently Under Enforcement

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While the Red Flags Clarification Act may have exempted a number of very specific types of small businesses, it didn't exempt them all.

For this reason, the Federal Trade Commission's (FTC's) much-discussed, oft-delayed "Red Flags" Rules went into effect with the New Year, meaning many entities need to be in compliance with the amended statute. As described by the FTC, the new law "gives businesses the flexibility to tailor their written ID theft detection program to the nature of the business and the risks it faces. Businesses with a high risk for identity theft may need more robust procedures—like using other information sources to confirm the identity of new customers or incorporating fraud detection software. Groups with a low risk for identity theft may have a more streamlined program—for example, simply having a plan for how they'll respond if they find out there has been an incident of identity theft involving their business."

“Red Flags” Clarification Act Signed Into Law

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The "Red Flags" Clarification Act of 2010 was signed into law this past weekend.

While the law has been couched as a relief for the nation's small businesses from the burden of the Federal Trade Commission's (FTC's) regulations, many doubts linger surrounding the constituency of trade creditors, who, despite the new law, may still be required to have a "Red Flags" program in place as the statute originally dictated.

FTC Applauds “Red Flags” Clarification Act

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Federal Trade Commission (FTC) Chairman Jon Leibowitz recently applauded Congress' passage of the "Red Flags" Clarification Act of 2010, admitting that, in their original form, the rules went too far.

"We're pleased Congress clarified its law, which was clearly overbroad," said Leibowitz a recent press release. "Now we can go forward with less litigating and more protecting consumers from identity theft. I want to express my appreciation to Congressmen John Adler (D-NJ) and Mike Simpson (R-ID), and Senators John Thune (R-SD) and Mark Begich (D-AL), for their excellent work in resolving the uncertainty created by Congress."

BREAKING: House Passes “Red Flags” Legislation, Bill Headed for Passage

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The U.S. House of Representatives approved legislation amending the application of the "Red Flags" Rule Tuesday night. The bill, the Red Flags Clarification Act of 2010, was passed by voice vote and now heads to President Barack Obama's desk for signature into law.

According to Rep. Paul Broun (R-GA), one of the bill's champions in the House, the bill would exempt many small business owners and other unrelated businesses from the burdensome regulations, promulgated under the Fair and Accurate Credit Transaction Act of 2003 and due to be enforced by the Federal Trade Commission (FTC) at the end of this month.

Senate Quietly Passes Red Flags Clarification Act

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The Senate very quietly passed a bill exempting many firms from the Federal Trade Commission's (FTC's) "Red Flags" rules this week.

In the Red Flag Program Clarification Act of 2010, the Senate voted by unanimous consent to amend the Fair Credit Reporting Act's (FCRA's) definition of "creditor," offering further clarification on one of the "Red Flags" rules' vaguest provisions and ultimately limiting the scope of the regulations. Specifically, the bill further defines a creditor as any entity who, in the ordinary course of business, obtains or uses consumer reports in connection with a credit transaction; furnishes information to consumer reporting agencies in connection with a credit transaction; and advances funds "based on an obligation of the person to repay the funds or repayable from specific property pledged by or on behalf of that person."

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