The Red Flags Rule and Identity Theft

The Red Flags Rule was adopted in December of 2010 Justice _scaleby the Federal
Trade Commission (“FTC”) to help prevent identity
.  The rule was implemented to force businesses to
keep a watchful eye on any suspicious activities or “red flags”
that may lead to identity theft within business operations…..simply
put, it is a rule adopted by our government to protect us from the

growing threat of identity theft
at the corporate

The Red Flags Rule only applies to financial institutions and
creditors, excluding lawyers, doctors and other service
providers.  Specifically, the rule applies to companies which
include but are not limited to mortgage brokers, finance companies,
automobile dealerships, utility companies and telecommunication

This rule sets up guidelines about how these specified
businesses must operate an Identity Theft Prevention Program in an
effort to keep the consumer population safe from this growing
concern.  The program has four steps each companies must
adhere to:  (1) the ability to identify red flags alerting the
company to any potential identity theft; (2) procedures to detect
these red flags; (3) prevention and mitigation of damages once a
red flag is discovered; and (4) maintenance of a program in
compliance with the Red Flags Rule and the ability to continue to
evolve the program over time.  The government allows each
company to adapt a program to fit their specific needs as long as
it can assure its program is protecting its clients from the
inherent risk of identity theft. 

A small percentage of the population is opposed to the Rule and
feels that it may act as a cause of identity theft.  They
argue that the Rule requires these specified companies to collect
personal information, including social security numbers, drivers’
license numbers, maiden names, previous address history, etc. from
its clients which these companies would otherwise not normally
maintain in its records.  The availability of this information
to employees puts consumers at a greater risk of being a victim of
identity theft when the information would otherwise not be made

To read more about identify theft and how it effects your
credit, see  Identity
Theft – 10 Things You Need to Know
, Identity Theft Kit,
of Having a Common Name
, Another
Horrifying Background Check Story
, and
When Can Debt Collectors Gain Access to Your Credit Report

If you feel your personal information may have been compromised
or you have been the victim of identity
, contact SmithMarco P.C. for a free case review.