Sacramento Association of REALTORS® Web Log

The Red Flags Rule will be enforced beginning November 1, 2009. The “Red Flags” Rule, in effect since January 1, 2008, requires many businesses and organizations to implement a written Identity Theft Prevention Program designed to detect the warning signs – or “red flags” – of identity theft in their day-to-day operations.

By identifying red flags in advance, they will be better equipped to spot suspicious patterns when they arise and take steps to prevent a red flag from escalating into a costly episode of identity theft.

The Red Flags Rule applies to “financial institutions” and “creditors.” The Rule requires you to conduct a periodic risk assessment to determine if you have “covered accounts.” You need to implement a written program only if you have covered accounts.

The Rule also defines a “creditor” as one who regularly grants loans, arranges for loans or the extension of credit, or makes credit decisions. Examples include finance companies, mortgage brokers, real estate agents, automobile dealers, and retailers that offer financing or help consumers get financing from others, say, by processing credit applications.

How to comply in four-easy steps:

• Identify relevant red flags -  Identify the red flags of identitytheft you’re likely to come across in your business.
• Detect red flags – Set up procedures to detect those red flags in your day-to-day operations.
• Prevent and mitigate identity theft – If you spot the red flags you’ve identified, respond appropriately to prevent and mitigate the harm done.
• Update your Program – The risks of identity theft change rapidly, so it’s important to keep your Program current and educate your staff.

Continue reading: ID Theft Red Flags Rule