Agencies Want Comments on “Red Flag” Program

The federal financial institution regulatory agencies are soliciting comments on a Notice of Proposed Rulemaking concerning identity theft “red flags” and address discrepancies.

The proposal appeared in the Federal Register on July 18. Comments must be submitted on or before Sept. 18.The NPRM has been reviewed and approved by the Board Of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation, the Federal Trade Commission, National Credit Union Administration, Office of the Comptroller of the Currency and Office of Thrift Supervision. It implements sections 114 and 315 of the Fair and Accurate Credit Transactions Act of 2003.

The regulations that the agencies are jointly proposing would require each financial institution and creditor to develop and implement an identity theft prevention program that includes policies and procedures for detecting, preventing, and mitigating identity theft in connection with account openings and existing accounts.

The proposed regulations include guidelines listing patterns, practices, and specific forms of activity that should raise a “red flag” signaling a possible risk of identity theft.

The proposed regulations also would require credit and debit card issuers to develop policies and procedures to assess the validity of a request for a change of address followed closely by a request for an additional or replacement card.

Additional proposed regulations would require users of consumer reports to develop reasonable policies and procedures that they must apply when they receive a notice of address discrepancy from a consumer reporting agency.

The FACT Act, which was signed into law on Dec. 4, 2003,

added several new provisions to the Fair Credit Reporting Act of 1970 that relate to the detection, prevention, and mitigation of identity theft.

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