Red Flags Rule FAQ's

  • Where did these Red Flag Rules come from?

    The Fair and Accurate Credit Transactions Act of 2003. On November 9, 2007, the Federal Trade Commission and other Federal Agencies issued a joint final rule (the "Red Flag Rule"). The Red Flag Rule took effect on January 1, 2008 and covered businesses must comply by January 1, 2011.

    The Agencies that created the Red Flag Rule "require all financial institutions and creditors to evaluate the adequacy of existing policies and procedures and to develop and implement risk-based policies and procedures that detect Red Flags in an effective and comprehensive manner."

    The purpose of the Red Flag Rules is not to protect businesses or financial institutions, it’s purpose to protect consumers from having their identity stolen.

  • What is a Red Flag?

    A red flag is a pattern, practice, or specific activity that indicates the possible existence of identity theft. It doesn’t mean that an identity theft situation is occurring, only that the possibility exists.

  • Do the Red Flag Rules apply to my business?

    Any business that is involved in any part of the process of granting an installment loan AND runs consumer reports on their customer(s) has to be compliant. So if your business works with a bank or financial institution to get a loan for a customer, the FTC refers to this as a covered account, then you will need to be compliant.

  • This Red Flag Rule law keeps getting delayed. Why?

    The law has actually been in effect since January 1, 2008. The enforcement of the law is what is getting delayed and that is only true for some types of businesses. The main reason for the delay has been determining which businesses need to be complaint and which ones don’t. The initial guidelines were so broad that almost all business that was not cash only would need to be compliant.

    For more FAQs please see our FAQs PDF by clicking below.

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News & Events

  • 26Jan

    Automotive News
    Vendor Don Pavoni of Infinity has an idea for helping dealers comply with 2009 Federal Trade Commission rules to combat identity theft. His finance-department software program flashes a red flag anywhere there is a potential compliance problem on a sales contract.

  • 18Dec

    Obama Signs Red Flags Bill
    The Red Flags Exemption law was passed to help define what organizations must comply with the Red Flags Rule. With the passing of this law, enforcement will begin January 1st, 2011.

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