Red Flags Rule
The Red Flags Rule was
developed pursuant to the Fair and Accurate Credit Transactions
(FACT) Act of 2003.
Under the Rule, financial institutions and creditors with covered
accounts must have identity theft prevention programs to identify,
detect, and respond to patterns, practices, or specific activities that
could indicate identity theft.
The Rule applies to
creditors and financial institutions. Federal law defines a creditor to
be: 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. Accepting
credit cards as a form of payment does not, in and of itself, make an
entity a creditor. Some examples of creditors are finance companies,
automobile dealers, mortgage brokers, utility companies,
telecommunications companies, and non-profit and government entities
that defer payment for goods or services. Financial institutions include
entities that offer accounts that enable consumers to write checks or to
make payments to third parties through other means, such as other
negotiable instruments or telephone transfers. For additional
information, go to www.FTC.gov.
|
|
