Not long after Identity Theft became all to familiar with the public the FTC red flag rule gave out details after doing a survey that more than 20,000,000 different entities were required to comply with the FACTA section 144, which are commonly known as the FTC Red Flag Rules. Under this section, all the financial institutions and creditors and/or businesses are affected.
A “creditor” is now defined as one whom regularly, and in the ordinary course of business, meets one of three general criteria:
1) Obtains or uses consumer reports in connection with a credit transaction;
2) Furnishes information to consumer reporting agencies in connection with a credit transaction; or
3) Advances funds to, or on behalf of, someone, except to fund expenses incidental to a service provided by the creditor to that person.
But what exactly is the FTC Red Flag rule? This is a rule that requires most of the financial institutions and businesses to adopt a written security program to detect, mitigate and prevent identity theft by the person(s) in a business environment. This allows the business entity of the creditor to opt for a risk-management program that helps in identifying the red flags that are relevant for its own operation.
Because of this rule, businesses must have had completed and implemented the following to comply with FTC rule requirements:-
1. It should have performed a risk assessment in order to identify areas for potential exposure.
2. It should have implemented appropriate procedures for detection and response.
3. It should have developed and also deployed the procedures for written identity theft prevention policy and provided mandatory training for the employees.
After this implementation, the Red Flag rules should be reviewed and the updating of the FTC compliance program should be done Bi-annually, if not Annually.
The compliance program includes the details in the ways in which a business identifies the practices and patterns that indicate the possibility of the existence of identity theft or some kind of fraud that may be committed. Personal identifiable information, or PII, includes the name of the person along with the social security number and a unique identification number telling the potential thief the date of birth, address and driver’s license number of a person.
The FACTA section 144 has brought down the cases of identity theft by a considerable rate. These attempts are making it better for society and the FTC Red Flag rule is a huge step in attaining this aim.
This program has been a boon to the people who had suffered from the identity theft in the past and were exposed because of the financial irregularities that were imposed on them. But because of the FTC red flag rule there is a very coordinated effort by the financial institutions, businesses and the government to rid identity theft from businesses. Millions of people have been saved from identity theft and the procedures followed homes in on the source to commit this crime.