Identity theft red flag guidelines about to go into effect
It’s anyone’s guess whether it will help or not, but new identity theft protection guidelines are about to go into effect. The same 1993 Fair and Accurate Credit Transactions Act (FACT Act) that gave consumers the right to free annual credit reports, contained additional steps creditors must take to protect consumers from identity theft. After five long years, creditors and financial institutions must be in compliance with the Federal Trade Commission’s new Red Flag Guidelines by November 2008 or face penalties.
Generally, the guidelines cover three areas:
The first section identifies more than two dozen red flags that might indicate a fraudulent credit transaction. These include things like an address on a credit application that doesn’t match the address on drivers’ license; a Social Security number that has never been issued, or was issued to someone now deceased; a drivers’ license that appears altered; a fraud alert on a credit report; a credit freeze notification in response to a request for a credit report; a photo ID that doesn’t match the applicant’s appearance; an unusually high number of credit transactions.
The second area is a requirement that creditors take additional steps to authenticate a credit applicant’s identity if one of those red flags appears. Financial institutions and creditors are given a lot of leeway on what steps they take, depending on the inconsistency they’re confronting, the size of the organization, and the risk involved.
The third area requires that financial institutions and creditors have a plan in place to respond to any red flags.
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