Red Flag Rules and Current Privacy Legislation

Who must comply?

• Financial Institutions: State or national bank, a state or federal savings & loan association, a mutual savings bank, a state or federal credit union, or any other entity that holds a “transaction account” belonging to a customer.
• Creditors: 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.
• Under the Red Flags Rule, financial institutions and creditors must develop a written program that identifies and detects the relevant warning signs of identity theft. The program must also describe appropriate responses that would prevent and mitigate the crime and detail a plan to update the program.
• The Red Flags Rule provides all financial institutions and creditors the opportunity to design and implement a program that is appropriate to their size and complexity, as well as the nature of their operations.
• As federal and state legislation tightens and affects not only financial and credit businesses across America, it is imperative that all organizations conduct due diligence and take appropriate measures to ensure end-of-lifecycle documentation is properly destroyed and recycled.

Source: Federal Trade Commission