FTC Prepares to Enforce New Identity Theft Red Flags Rules
Just days after identity thieves used Senate Majority Leader Dick Saslaw's credit card to purchase medical marijuana, the Federal Trade Commission has reminded banks and retail stores that its new "Red Flags Rule" takes effect June 1. The rule requires all financial institutions and creditors who process credit applications to implement a written identity theft prevention program.

Many retailers who offer "instant credit card" or business terms accounts were surprised to discover that they were considered "creditors" under the new FTC rule. Therefore, the Commission changed its enforcement start date from November 1, 2009 to June 1, 2010. Commissioners developed Red Flags to help customer service personnel increase awareness of frequent identity theft techniques and to help company owners detect internal identity theft threats.

Although companies affected by the rule do not need to submit their Red Flags procedures to the FTC, Commission personnel will demand copies of written policies during the course of identity theft investigations. The FTC has posted instructional brochures, videos, and training materials to its website to aid banks and retailers who have not yet completed their written plans.

About the Author


Joe Taylor Jr. is an internal business consultant for a Fortune 500 company, who writes about finance, culture, and design. He holds a Bachelor of Science in Communications from Ithaca College.