In a previous post I mentioned the Red Flags Rule and how it was just about to take effect.
Well the FTC has granted a six month delay of enforcement of the Identity Theft Red Flags Rule. Seems that plenty of businesses that would have been impacted by the new rule were unaware that it affected them.
So, the question is just who does it affect? And is the Red Flag Rule something that your business needs to be in compliance of? Read through the following to see if you’re in there. Hint: if you’re a mortgage broker then you are.
The Rule applies to creditors and financial institutions. Federal law defines a creditor to be: 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. Accepting credit cards as a form of payment does not, in and of itself, make an entity a creditor. Some examples of creditors are finance companies, automobile dealers, mortgage brokers, utility companies, telecommunications companies, and non-profit and government entities that defer payment for goods or services. Financial institutions include entities that offer accounts that enable consumers to write checks or to make payments to third parties through other means, such as other negotiable instruments or telephone transfers.
I attended the Colorado Association of Mortgage Broker’s convention last month and sat in on a presentation talking about this very rule. Fascinating stuff. The consequences are dire for companies found to be in non-compliance so I’m glad that there is a little more time to prepare.
I’d love to hear your opinion on whether the FTC has done a fair job of getting the word out. Let me know if you’ve heard of this rule until very recently or if this is all news to you.
