Understanding The Red Flag Rules To Fight Identity Theft

Identity thieves have many ways of using an individual’s personally identifying information. They may open new accounts or misuse existing accounts, creating headaches and misery for both consumers and businesses. Fortunately, rules are in place that require financial institutions and creditors to detect, prevent, and mitigate instances of identity theft. November of last year, the Federal Trade Commission, the federal bank regulatory agencies, and the National Credit Union Administration put in place the Red Flag Rules requiring financial institutions and creditors to develop and implement written identity theft prevention programs. The rules were set forth as part of the Fair and Accurate Credit Transactions (FACT) Act of 2003. The programs must provide for the identification, detection, and response to patterns, practices, or specific activities (i.e., red flags) that could indicate identity theft may be taking place.

The rules apply to financial institutions and creditors such as banks, credit unions, finance companies, mortgage brokers, utility companies, car dealers, cell phone companies, etc. Although the credit reporting agencies are exempt from the rules, they have also gotten involved in educational efforts.

Guidelines issued identify 26 red flags, given as examples for covered institutions to consider as a starting point when designing their prevention programs. They fall roughly into five categories:

1) notifications from a consumer reporting agency;
2) suspicious documents;
3) suspicious personally identifying information (such as a suspicious address);
4) unusual use or suspicious activity in a covered account; and
5) notices from customers, victims of identity theft, law enforcement authorities, or other businesses about possible identity theft in connection with covered accounts.

The rules offer financial institutions and creditors the opportunity to design and implement their own program that is appropriate to their size and conditions. The plans have to be in writing, and would include things like unusual account activity, fraud alerts on a consumer report, or attempted use of suspicious application documents. There also have to be provisions in place for ongoing plan management and proper staff training.

The Red Flag Rules may seem like mere common sense, but they offer added protection to consumers by requiring that banks, creditors and other institutions take an active role in prevention of identity theft.

You can take a more active role yourself in protecting your good name, by becoming better educated on the methods used by identity thieves, by being alert to warning signs, by routinely monitoring activity in your accounts for suspicious transactions, and by reviewing your annual credit reports from the three major agencies. Or, you can take things even further by taking advantage of the proactive identity protection program from LifeLock. LifeLock will provide aggressive, ongoing, 24/7 monitoring for you with their year around double check, they’ll put a stop to pre-approved offers (which are often misappropriated by thieves and used to set up fraudulent accounts) and they’ll back their work with a million dollar guarantee. Lifelock is that confident in their ability to protect your personal information.

Use our LifeLock Promo Code to sign up today and you’ll save on your membership. Why wait to pick up the pieces after someone has already stolen your identity? Put LifeLock to work for you with their proactive protection program today.

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