LOUISVILLE, Ky. (January 28, 2011) – The Red Flags Rule was developed in 2003 as part of the Fair and Accurate Credit Transactions Act (FACTA). This act was aimed at combating the rise in identity theft claims that were mounting particularly within the lending industry.<\/p>\n
With these guidelines<\/a>, the federal government requires creditors and financial institutions to implement a system of checks so they may identify, detect, and respond to patterns, practices, or specific activities that could indicate identity theft.1<\/sup><\/p>\n Where the Rule Stands Today<\/strong><\/p>\n After several push<\/ins>backs over the past couple of years, the Red Flags Rule<\/a> is now moving forward with an amendment geared toward clarifying the law. On December 18, 2010, President Obama signed the Red Flags Program Clarification Act<\/a>, which limits the circumstances under which creditors are covered by the Red Flags Rule. As part of clarifying the term creditor<\/em>, the act points to any organization that regularly and in the ordinary course of business<\/p>\n Per the same act, however, a creditor<\/em> does NOT include a business that advances funds on behalf of a person for expenses incidental to a service provided by the [business] to that person.2<\/sup><\/p>\n With the passing of this law and the higher level of clarity in defining the organizations responsible for complying with the Red Flags Rule, the proactive penalty phase is now in effect. This means that any company that falls under the Red Flags Act and doesn’t have a Red Flag Program can be penalized.<\/p>\n EVS: A Step in the Right Direction<\/strong><\/p>\n As part of becoming Red Flag-compliant, companies must identify possible red flags, detect red flags, prevent identity theft by monitoring their accounts, and mitigate identity theft by contacting affected customers when necessary. Furthermore, compliant organizations must update their systems<\/a> periodically to ensure they are current and on point.3<\/sup><\/p>\n EVS<\/a> maintains an active role in the fight against identity theft by providing a valuable piece to an organizations overall Red Flags Rule compliance package. With our id verification<\/a> and id authentication<\/a> solutions, EVS can satisfy an organization’s need for identifying suspicious personal information, thereby helping our clients remain vigilant against fraud while also performing satisfactory due diligence.<\/p>\n\n