Are you willing to bet that there isn’t any legitimate connection between ’90s dance group C + C Music Factory and the FTC’s just-announced request for public comment on the Red Flag Rule and the Card Issuer Rule (collectively, the Identity Theft Rule)? You might lose that bet—and no, it has nothing to do with C+C’s ubiquitous hit “Everybody Dance Now.”
But it had a lot to do with their other hit song, “Things that Make You Go Hmmm.”
The Fair and Accurate Credit Transactions Act (FACTA) amends the Fair Credit Reporting Act to require the Federal Trade Commission and other federal agencies to establish guidelines for certain businesses to detect patterns, practices and activities that may indicate signs of identity theft.under red flag rule, any Financial Institution or Creditor subject to the jurisdiction of the FTC’s enforcement agencies must develop and maintain a written identity theft prevention program that contains reasonable policies and procedures to detect, prevent, and mitigate related to any Covered Account of identity theft. (The red flag rule defines these terms.) Of course, what should raise a red flag depends on the facts, but it could be a driver’s license that appears to have been altered, or a credit application when a fraud alert appears on that person’s credit record. Credit Report.
The Card Issuer Rules, also a product of FACTA, require financial or credit card issuers to have reasonable procedures in place to evaluate the validity of a change of address request when the same account quickly receives a request for additional cards. This rule is designed to address a common tactic used by fraudsters: changing the billing address on a consumer’s credit card and then requiring the card issuer to send an additional copy of the card to the new address.
Both rules require businesses to think hard about suspicious patterns they observe of alleged fraud—in other words, in the words of C+C Music Factory, the kind of behavior that should make them go “uh-huh.” In this way, these rules help mitigate the costly consequences of identity theft for businesses and consumers.
The FTC’s approach is to periodically review existing rules and solicit input on how they work in the real world. What are the costs, benefits and economic impact? Has something changed in the market that indicates a need to reconsider? The Federal Trade Commission (FTC) just announced that the next step in regulatory review is the Red Flag Rule and the Card Issuer Rule, so we’re asking for your input. Please read the public comment document for a list of the general and specific questions we asked. Please submit your comments by February 11, 2019.
