Red Flags Rule Clarified

By: Absolute Team | 1/7/2011

On December 18th, President Obama signed into law the Red Flag Program Clarification Act, making changes to the Red Flags Rule. The Red Flags Rule requires many businesses and organizations to implement a written Identity Theft Prevention Program designed to detect the warning signs — or "red flags" — of identity theft. The new Clarification Act limits the circumstances in which creditors are covered by the Red Flags Rule.

The Red Flags Rule has been delayed by the FTC for enforcement on a couple of occasions. The last delay extended the enforcement of the rule through December 31, 2010 in order that Congress could consider legislation to affect the scope of entities covered by the Rule.

The new Clarification Act makes a number of changes to what defines a "creditor" and what business activities would require the application of the Rule. There's a great summary of the changes here.

Financial Services