The Red Flags Act is apart of the Fair and Accurate Credit Transactions (FACT) Act of 2003. This act was put into place in hopes of protecting consumers against identity theft and other types of credit fraud. All financial institutions and creditors, both big and small, are required to be compliant with the Red Flags Act by November 1, 2008, or face potentially large fines and difficult audits by the Federal Trade Commission (FTC).
There has been almost no publicity regarding this November 1, 2008 deadline and it is expected to catch a lot of mortgage brokers, financial institutions and creditors off guard as there are 4 issues that you need to be aware of: 1. When is the compliance deadline? As stated before, November 1, 2008 is the deadline for you to be compliant with this new law.
What groups are impacted by these new rules? Generally, most businesses that are involved with consumer credit such as banks, credit unions, vehicle dealerships, debt collectors, and many others.
3. How do you comply with this Red Flags Act? What follows is only a simple overview of the items all companies have to comply with; you must gather more details from additional sources in order to be more fully informed.
Owners of companies (or senior managers) must approve the identity theft prevention program as well as be involved in the oversight, development, implementation and administration of the program.
The company must have specific procedures in writing regarding the implementation, audit compliance, training of staff, issuing annual reports and overseeing anyone granted access to accounts.
The important aspects of this act are to have specific procedures in writing, produce annual reports and have a strict procedure for handling suspicious documents or activities. Companies are now responsible for helping to detect fraudulent activities and responding according to the Red Flags Act.
It is not sufficient to only keep a watchful eye out for difficulties. And it is not sufficient to just respond at the time there is a difficulty in the future. These regulations are authentic and written procedures ought to be put in place before November 1,2008 otherwise business organizations can face severe enforcement.
4. What’s the next step is becoming compliant? If you’re working with consumer credit in any way at all, you’ve got to take action immediately and become compliant. There are a couple of ways to do this.
You can do it on your own by reading parts of the 256-page FTC Report (simple Google “FTC red flags compliant” in order to see it). I’ve perused some of this report, and I was completely floored by it.
Or you could search out a company whose specialty is getting companies in compliance. I looked into several companies that offer this and discovered that there was a wide variety of pricing and quality. Do your own research and make the right choice because the right company will make things go much more smoothly and quickly.
To get more details on the Red Flags Compliance act and learn which companies can best help you get compliant, visit http://www.Red-Flags-Help.com and download a Special Report on this time sensitive topic.
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