Antitrust Law Daily Wrap Up, CONSUMER PROTECTION NEWS: FTC Amends Identity Theft Red Flags Rule, Seeks Comment, (Nov 30, 2012)
Organizations Mentioned:Consumer Financial Protection Bureau
By Tobias J. Gillett, J.D., LLM.
The FTC has issued proposed amendments to its Red Flags Rule for comment following a unanimous vote. The Interim Final Rule narrows the class of creditors covered by the Rule.
The FTC issued the amendments pursuant to the Red Flag Program Clarification Act of 2010, Congressional legislation narrowing the scope of the definition of “creditors” covered by the Rule. The amended Rule covers a creditor only if, in the ordinary course of business, the creditor:
“Obtain[s] or use[s] consumer reports, directly or indirectly, in connection with a credit transaction;”
“Furnish[es] information to consumer reporting agencies in connection with a credit transaction;” or
“Advances funds to or on behalf of a person, based on an obligation of the person to repay the funds or repayable from specific property pledged by or on behalf of the person.”
The Fair Credit Reporting Act, as amended by the Fair and Accurate Credit Transactions Act, directs the FTC, together with several banking agencies, to issue regulations requiring “financial institutions” and “creditors” to develop and implement written identity theft prevention programs. These programs attempt to identify “red flags” in business operations that signal possible identity theft.
Under the Red Flags Rule, covered entities must maintain programs that consist of four parts:
Reasonable policies and procedures to identify “red flags” of identity theft.
Program elements designed to detect those “red flags.”
Actions that the entities will take upon detecting “red flags.”
Regular re-evaluation of the program to ensure it responds to new risks.
Although the 2010 Dodd-Frank Act transferred much of the FTC’s authority under the Fair Credit Reporting Act to the Consumer Financial Protection Bureau, the FTC retains rule-making authority with respect to the Red Flags Rule, among other provisions.
The FTC has opened a 60-day comment period on the new amendments. Following a review of the comments, the Interim Final Rule will become final.
News: ConsumerProtection Privacy FederalTradeCommissionNews