Realty Times - FACT Act Hoists 'Red Flags' To Stop ID Theft

Front Page

Ultimate Real Estate Success SuperConference

NEED HELP?

Click for Live Support

Call: 214-353-6980

FACT Act Hoists 'Red Flags' To Stop ID Theft

by Broderick Perkins

Federal lending regulators are set to open for public comment proposed rules that should give lenders and creditors a better handle on stopping identity theft.

The new provision, the so-called "Red Flags Rule" would mandate official ID theft prevention programs based on red flags that signal someone may be attempting an ID theft.

If you are the victim of identity theft, you don't actually lose your identity and wander aimlessly like some Jane or John Doe.

ID theft occurs when someone steals your personal identifying information and uses it in a crime. With your Social Security number, driver's license number, credit account numbers, passwords or other information in hand, thieves can masquerade as you to access your financial accounts, withdraw cash, make credit purchases, and open additional accounts in your name.

Many financial institutions, aware the federal regulation is coming down the pike, already use policies that help them quickly act upon so called ID theft "red flags" or indicators that someone is trying to become you for financial gain.

That federal law is the Fair and Accurate Credit Transactions Act (FACT Act), enacted Dec. 4. 2003 to amend and strengthen the Fair Credit Reporting Act (FCRA).

Since its inception, the feds have been rolling out a host of regulations to better safeguard consumers' credit and financial information, as well as to give consumers greater access and control over that information.

Among the existing and future provisions are free consumer access to credit and finance reports stockpiled by major credit agencies and smaller personal data collection firms; other fraud and identity theft protection provisions; more thorough procedures for disposing and monitoring the disposal of consumer credit and finance data; more accurate credit data reporting; and a more finely tuned consumer credit information dispute resolution process.

Under the proposed "Red Flag Rule," mandatory corporate Identity Theft Prevention Programs must contain polices and procedures to access and address the risk of identity theft by identifying patterns, practices and activities involving existing accounts and account applications that indicate possible risk to a consumer's identity.

Among the host of red flags, the proposed rule is zeroing in on a potentially major one -- a request for a change of address -- something ID-thieves may do to mask their own identity and to get accounts, funds, documents and other items transferred or sent to an address that benefits the ID thief.

The proposed rules say ID theft prevention programs must assess the validity of address change requests on a credit card or other account especially when the request is followed within 30 days by a request for an additional or replacement card. To assess the validity the financial institution also must take steps to notify the cardholder of the request by a variety of means, according to the provisions.

The rules also address procedures necessary when a consumer receives a notice of an address discrepancy from a credit reporting agency.

Among more than three dozen red flags financial institutions should incorporate in their ID theft prevention programs, the proposed rule includes these red flags:

Inconsistent activity patterns including, recent and significant increases in inquiries; an unusual number of newly established credit accounts and a significant change in credit use.

Documents that appear altered; information not consistent with information on file; and photographs that aren't consistent with physical descriptions or appearance.

Social Security Numbers (SSN) that can't be verified as issued or listed on the Social Security Administration's Death Master File; and a missing correlation between the SSN range and date of birth.

Mail sent to the customer is returned as undeliverable although transactions continue to be conducted in connection with the customer's account; electronic messages are returned.

Previously inactive accounts suddenly becoming active.

The name of an employee of the financial institution or creditor has been added as an authorized user on an account.

The proposed "Red Flags Rule - Docket No. R-1255" is open for public comment until September 18, 2006 online at the Federal Reserve Board's Proposals For Comment among other public comment locations online. The proposed provision was not yet published in the Federal Register or available for public comment on July 18, 2006, but the Fed indicated it soon would be available at that online location.

This report is the latest in an ongoing RealtyTimes.com series about the Fair and Accurate Credit Transactions Act (FACT Act) since it was enacted Dec. 4. 2003 to amend and strengthen the Fair Credit Reporting Act (FCRA). Previous reports explaining other provisions of the law and its benefits for consumers are available from the list below.

Published: July 20, 2006

Use of this article without permission is a violation of federal copyright laws.

Related Articles:

Broderick Perkins parlayed a career in old-school journalism into a contemporary digital news service that really hits home.

The award-winning consumer journalist, originally from Wilmington, DE, is founder, publisher and executive editor of the bootstrap DeadlineNews Group, a Silicon Valley-based editorial content and consulting service specializing in residential real estate, consumer news and related editorial consulting services.

The DeadlineNews Group includes the website, DeadlineNews.com, offering real estate editorial content and consulting services, and its back shop, the Deadline Newsroom, an open house on news that really hits home.

Perkins obtained his formal journalism education from University of Delaware and a journalism boot camp, the Institute of Journalism Education at the University of California-Berkeley. He went on to 20 years of service as a daily newspaper journalist at the Wilmington, DE News Journal and San Jose, CA Mercury News.

Perkins covered housing on the San Jose Mercury News reporting team which earned a General News Reporting Pulitzer Prize in 1989 for coverage of the Loma Prieta earthquake.

He has also produced real estate, consumer and small business content for the Wall Street Journal, Los Angeles Times, RealtyTimes.com, Nolo.com, Better Homes and Gardens, the National Association of Realtors, Homestore/Move and Intuit/Quicken among more than three dozen publications.

In addition to managing the DeadlineNews Group, Perkins most recently served as chief editorial consultant for Nolo's Essential Guide To Buying Your First Home, Nolo, and writes real estate television scripts for RealtyTimes.com.

Real Estate News Network