In 2003, The Fair and Accurate Credit Transaction Act (FACTA) was signed into law. This gave the FTC responsibility for writing the rules regarding the accuracy of credit file information, privacy considerations and fighting identity theft among other things.

Two Sections, 315 and 114, were not completed in the initial rule making of 2004. The FTC left these two sections unfinished, which were completed and enacted on January 1,2008 which require all financial institutions to be in compliance as of November 1, 2008.

Section 114 requires each financial institution and / or creditor to develop and implement a written Identity Theft Prevention Program. The “Program” should detect, prevent and mitigate identity theft in connection with the opening of new and the maintenance of existing accounts.

This is known as the “Red Flags Rule” because the FTC has designated 26 specific red flags that must be considered in the design of your organization’s Program.

These Red Flags are not obscure possibilities of a security breach that may or may not ever occur, quite the contrary. These defined Red Flags are common occurrences that are taking place in your operation any day at any time.