Since the beginning of 2008, businesses have been preparing for the institution of the Federal Trade Commission (FTC) Red Flag Rule. Under the rule, businesses will be required by Federal law to implement a system to prevent, detect and respond to potential identity theft. But some businesses may be unsure if Red Flag applies to them.
An article by Business Insurance News reports the use of certain FTC definitions may have caused confusion among some businesses, resulting in the previous two pushbacks of the Red Flag implementation date. The article states when the Red Flag rule goes into effect, “financial institutions and creditors are required to implement a program that identifies and detects warning signs of identity theft.” But “creditors” may have not been specific enough.
The FTC defines creditor in a broad sense, intended to extend the Red Flag rule to business entities like retailers for greater consumer protection. But these businesses may not realize they will be held accountable after the execution date of August 1st. With the end date closing in, it’s important for all business to understand if they are subject to Red Flag, and obtain a comprehensive identity fraud protection program.