January 1, 2012
CLIFTON N. MILLER – The impact of the RED FLAG CLARIFICATION ACT on the FAIR AND ACCURATE CREDIT TRANSACTIONS ACT
The Fair and Accurate Credit Transactions Act of 2003 (“the FACT Act”) directed the Federal Trade Commission (“FTC”) to promulgate rules requiring creditors to implement programs to detect and respond to so-called red flags that could indicate identity theft. The FTC’s Red Flags Rule implementing Section 114 of the FACT Act became effective on January 1, 2008 (Federal guidelines for use by financial institutions and creditors in establishing policies and procedures to mitigate identity theft risks). Section 114 of the FACT Act (hereafter “Section 114”) directed financial regulatory agencies, including the Federal Trade Commission, FTC, to promulgate rules requiring “creditors” and “financial institutions” to implement programs to detect and respond to red flags-patterns, practices, or specific activities-that could indicate identity theft.