The New “Red Flag” Regulations

September 30, 2008 – 12:29 pm

By November 1, 2008 The new “Red Flag” regulations are going to be put in place. The new regulations are designed to help prevent identity theft through creditor institutions. A creditor is not just banks and mortgage lenders either. Any business that allows customers to receive a extension,renewal, deferred payments of goods or credit relationships may need to comply.

If a business needs to comply to the Red Fag rules then the creditor will need to create a program that allows them to do the fallowing:

Periodically determine whether it offers or maintains a “covered account.”
Identify relevant patterns, practices, and specific forms of activity that are “Red Flags” signaling possible identity theft.
Detect when such Red Flags are occurring in the entity’s business activities.
Respond appropriately to any Red Flags that are detected to prevent and mitigate identity theft.
Ensure the program is updated periodically to reflect changes in risks from identity theft.

If a business needs to comply they have to develop and implement a written program that accomplishes the above tasks. The program has to be approved by the board of directors and implemented by someone in senior management.

These “Red Flag” rulers might be annoying to some and could make it more difficult to get your credit approved at your local creditor. This is a step in the right direction to get the creditors to take some responsibility for the management of their accounts. It makes the creditors regulate and monitor the accounts better which could help in the struggle against identity theft.

The new Red Flag regulations don’t prevent your identity from being stolen it just makes the creditors monitor their accounts better. Identity theft can happen to you and your family and there is still a need to be protected. If you would like a discount on LifeLock to protect yourself and family use LifeLock promotion code, Defense.

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