Tuesday, November 04, 2008
FTC delays "Red Flags Rule" until May 2009; would increase due diligence required of credit grantors
The Federal Trade Commission has developed a “Red Flags Rule” that would apply to credit grantors. The Rule is supposed to require more due diligence from creditors in making loans. “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.”
However, on Oct. 22, 2008 the FTC announced that it would suspend implementation of the Rule until May 1, 2009. The link is here.
The concept of “creditor” does not apply to all businesses that accept credit cards. It apparently would not apply to a small book publisher or author accepting credit card payments for a book, for example.
The Rule is based on Fair and Accurate Credit Transactions Act of 2003 (FACT), PDF document for the law here.
Private vendors are developing solutions to meet the “Red Flags Rule:, such as “idBusiness”, link here.