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.
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:
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.
