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On January 1st, 2008 Section 114 of the Fair and Accurate Credit Transactions Act 2003 (FACTA), also known as the Red Flags rules became effective. The November 1st deadline for compliance is rapidly approaching and much confusion about the Red Flags rules still exists. Learn the ins and outs today to ensure compliance tomorrow.
Red Flags: What's it all About?
The Red Flags rule requires business to develop a formal program comprising policies and procedures designed to detect, prevent and mitigate identity theft of clients who hold certain types of accounts. These accounts fall into two categories:
- Personal accounts that allow for the extension, renewal or continuation of credit and are designed to allow for on-going sequential payments, such as mortgages, personal loans, credit cards and utility bills.
- Any other account (for example business accounts) which could pose a potential threat, be it financial, operational, compliance or litigation related, to the creditor that extends the account.