In another attempt to thwart ever-present identity thieves, the Federal Trade Commission put a new set of guidelines in place that lenders, banks and credit unions must follow as of November 1 of this year. These guidelines are known as the “Red Flag†requirements. The hope is that these rules will help financial institutions be more proactive in identity theft prevention and reactive in a quicker and more streamlined fashion when the need arises. The FTC has now extended the Red Flag rules by 6 months.
According to Red Flag requirements, each organization must have a written policy that describes what it sees as risk factors that could lead to identity theft on an account, or show that identity theft has already occurred and the account is compromised. These could include an unusual influx of large purchases, a suspicious change or address or atypical account applications. After identifying these “red flags†the institution must also have a procedure in place for how to deal with them and a policy for updating the program if any prove to be ineffective.
All of this procedure will be going on behind the scenes, so you may wonder what any of it has to do with you. The way this will affect the consumer in many cases is via the introduction of more stringent identity standards in regards to account information. For example, you may have to show two forms of identity to open your account, have additional verification steps required to sign up for online banking than before or be asked more personally identifying questions when trying to make transactions by phone. This may be in an attempt to mitigate risk factors or prevent them from occurring in the first place.
Another change you might notice is holds on your credit card when identity theft flags are raised. Yes, this can be frustrating, but just remember, it’s for your own protection. I know this is little solace when you’re standing at the cashier line trying to buy that $15,000 Jet Ski you’ve always wanted, but it’s better that you’re inconvenienced for the day than that an identity thief uses your card to buy not only the Jet Ski but yachts for 10 of his or her closest friends.
Don’t try to get around these new regulations. It’s expected that identity thieves will so there will be systems in place to stop you. It’s just one more thing we have to accept since the risk is always out there. If, in contrast, you’d like to protect yourself further, there are some things that you can do. First of all, you can use passwords that are difficult to guess, even when you’re not required to. Secondly, you can shred important documents instead of simply throwing them in the trash can or recycle bin. And lastly, you can look into signing up for an identity theft protection plan. This insurance can protect you and your family even if your financial institution drops the ball. Even with the new Red Flag regulations, they will not be infallible by any means.