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The Red Flags Rules
As a broker or
lender are you complying with the Red Flags Rules? Is
your company prepared to comply with the "red flags rules” implementing
Sections 114 and 315 of the Fair and Accurate Credit Transactions Act of 2003
("FACT Act")?
The Red Flags Rules requires many businesses and organizations
to implement a written Identity Theft Prevention Program designed to detect the
warning signs — or "red flags" — of identity theft in their
day-to-day operations. Are you in compliance with the Red Flags Rules?
The
rules define "creditor" by reference to the Equal Credit Opportunity
Act (15 U.S.C. § 1681a(r)(5)) as a person who regularly participates in a
credit decision, including setting the terms of credit. This is a broad
definition, and the FTC estimates that it will affect over 11 million entities.
The definition includes "lenders such as banks, finance companies,
automobile dealers, mortgage brokers, utility companies, and telecommunications
companies." 16 C.F.R. § 681.2(b)(5).
Do you have a written Red Flag program in place? If you do not,
remember that on October 31, 2007, a joint committee of the
OCC, Federal Reserve Board, FDIC, OTS, NCUA and the Federal Trade Commission
passed the final legislation for Section 114 of the Fair and Accurate Credit
Transactions Act of 2003 (FACTA), also known as the Identity Theft Red Flags
and Notices of Address Discrepancy or "Red Flags Rules." The rule
requires that all organizations subject to the legislation develop and
implement a formal, written and revisable "Identity Theft Prevention
Program" (Program) to detect, prevent and mitigate identity theft. The
enforcement date for the Rule has been set for June 1, 2010.
QCP Systems can write a
detail “Red Flags Rules” plan that will be tailored to your specific mortgage
operation. To request a Red Flags Plan for your company, call our office for details at 310-330-0333.
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