Red Flag Rule

The recently implemented Red Flag Rule is the United States  is a federal regulation whose goal it is to assist in identifying and eliminating identity theft. Identity theft costs US Citizens hundreds of millions of dollars a year or more annually. Its goals it to force businesses and organizations to develop and implement documented plans to protect consumers from theft, specifically identity theft.

The Federal Trade Commission (FTC), the federal bank regulatory agencies, and the National Credit Union Administration (NCUA) have together have created and implemented  the Red Flags Rule regulations  which require financial institutions and creditors to develop and implement written identity theft prevention programs, as part of the Fair and Accurate Credit Transactions Act (FACTA) of 2003.

The rule mandated that no later than by  May 1, 2009 companies must provide for the identification, detection and response to patterns, practices, or specific activities – known as “red flags” – that could assist in in ID theft.

LionCage-Definition-RiskWho must comply?

• Financial Institutions: National, State or Local banks, Federal and State savings & loan associations, mutual savings banks, both federal and state credit unions, as we as any entity operating in or as a  bank holding entities belonging to or on behalf a customer.

• Creditors: Any entity that regularly extends, renews, or continues credit, any entity that regularly arranges for the extension, renewal, or continuation of credit; or any assignee of an original creditor who is involved in the decision to extend, renew, or continue credit.

• Red Flags Rules require that  financial institutions and creditors develop a documented program that identifies and detects the relevant warning signs of  potential identity theft. The program must also describe appropriate responses that would prevent and mitigate the crime and detail a plan to update the program.

• The Red Flags Rule provide  flexibility in that all financial institutions and creditors can customize  implement a program that is appropriate to their size and complexity, as well as the nature of their operations.

When the period of retention and or the decision has been reached to destroy documents that hold identifying information belonging to a client and/ or that contains information regarding a client and or account holder, document and client confidentiality laws such as Red Flag hold the document holder and authorized handlers responsibility in maintaining the confidentiality of the document. Shredding documents with LionCage Shredding, a certified, secure shredding facility is a safe, NAID AAA certified, BIC approved way in guaranteeing that documents and drives are shredded and irrecoverable. LionCage LC certified technicians will work with you to ensure that your shredding procedures and policies meet strict compliance regulations.

To learn more about LionCage and its affiliated security services including automated online backup  and cloud vulnerability testing services please contact us.

Source of Red Flag Rule Information : http://www.ftc.gov