Red Flag Rules Deadline Approaching

The Nov. 1 deadline for new federal identity theft regulations requiring financial institutions and other creditors that provide financing is fast approaching, reports eWeek. Known as FACTA (Fair and Accurate Credit Transactions Act), the rules require covered organizations to re-examine their ID theft prevention policies and implement new procedures and business practices.

More specifically, FACTA requires a written ID theft prevention policy that includes polices that identify ?patterns, practices or specific activities that could indicate identity theft,? according to the FTC (Federal Trade Commission). Violators of the new rules can be subject to civil penalties of up to $2,500 per violation.

The new regulations ? also known as Red Flag rules ? have long been thought to only apply to financial institutions such as banks, savings and loans, mortgage lenders and credit unions, but as the compliance deadline nears, SMBs (small and midsize businesses) are concerned the rules may also cover them. While clearly targeting financial institutions, the rules also cover ?any person or business? that arranges for customer credit.

The agency defines a creditor as ?any entity that regularly extends, renews, or continues credit; any entity that regularly arranges for the extension, renewal, or continuation of credit; or any assignee of an original creditor who is involved in the decision to extend, renew, or continue credit.?

A business alert issued by the FTC adds, ?Accepting credit cards as a form of payment does not in and of itself make an entity a creditor.?
The FTC added the Red Flag rules to FACTA in January. Businesses are required to define policies for recognizing red flags in identity verification. Typical red flags include discrepancies in address histories, fraud alerts on consumer reports, questionable use of Social Security numbers, credit freeze notifications and unusual patterns of customer activities.

Once those definitions are in place, companies are then required to define appropriate courses of action when a red flag drops.

CAIMR Tackles Identity Theft

A group of corporate, government and academic institutions have formed the Center for Applied Identity Management Research (CAIMR), which focuses on developing research and solutions for identity management challenges, such as cyber crime, terrorism, financial crimes, identity theft and fraud, weapons of mass destruction, and narcotics and human trafficking.

The Center is the first of its kind to bring cross-disciplinary experts in criminal justice, financial crime, biometrics, cybercrime and cyber defense, data protection, homeland security and national defense to address identity management challenges that impact individuals, public safety, commerce, government programs and national security.

The group consists of non-profit, public sector and corporate institutions, including Indiana University, U.S. Secret Service, LexisNexis, IBM, Cogent Systems, Visa and Intersections. CAIMR aims to identify the key challenges, the gaps in knowledge and the research needed to provide solutions to these challenges.

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Husband Steals Wife?s Identity

Identity theft is frequently committed by people who are close to the victim, as evidenced by a new case. According to Newsday, a man was arrested and charged with stealing his wife?s identity. He wrote checks for $32,000 from her personal bank account, making the checks payable to his business.

The checks bounced after the man cashed them at PLS Check Cashing in Freeport, causing a $32,000 loss to the check cashing agency.

Stephen Takats, 44, of Papoose Lane, was charged with first-degree identity theft, first-degree fraud and third-degree grand larceny in the May 13 check-cashing scheme.