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Endnotes An Overview The Red Flags Rule tells you how to develop, implement, and administer an identity theft prevention program. A program must include four basic elements that create a framework to deal with the threat of identity theft.
Red Flags are suspicious patterns or practices, or specific activities that indicate the possibility of identity theft. If you have identified fake IDs as a red flag, for example, you must have procedures to detect possible fake, forged, or altered identification.
Fortunately, the Rule also gives you the flexibility to design a program appropriate for your company — its size and potential risks of identity theft. While some businesses and organizations may need a comprehensive program to address a high risk of identity theft, a streamlined program may be appropriate for businesses facing a low risk.
Securing the data you collect and maintain about customers is important in reducing identity theft. A business must Business law 100 a written program only if it has covered accounts. Does my business or organization regularly: No to all, the Rule does not apply.
Yes to one or more, ask: Does my business or organization regularly and in the ordinary course of business: Yes to one or more, you are a creditor covered by the Rule. Two categories of accounts are covered: A consumer account for your customers for personal, family, or household purposes that involves or allows multiple payments or transactions.
For example, there may be a reasonably foreseeable risk of identity theft in connection with business accounts that can be accessed remotely — say, through the Internet or the telephone. Your risk analysis must consider any actual incidents of identity theft involving accounts like these.
But business models and services change. You may acquire covered accounts through changes to your business structure, process, or organization. FAQs I review credit reports to screen job applicants.
Does the Rule apply to my business on this basis alone? I am a professional who bills my clients for services at the end of the month.
Am I a creditor just because I allow clients to pay later? In my business, I lend money to customers for their purchases. The loans are backed by title to their car. Anyone who lends money — like a payday lender or automobile title lender — is covered by the Rule.
Their lending activities may make their business attractive targets for identity theft.
No one in our organization ever sees the credit reports. Is my business covered by the Rule? Your business is — regularly and in the ordinary course of business — using credit reports in connection with a credit transaction. The Rule applies whether your business uses the reports directly or whether a third-party evaluates them for you.
I operate a finance company that helps people buy furniture. Does the Rule apply to my business? My business accepts credit cards for payments. Are we covered by the Red Flags Rule on this basis alone? How should I structure my program? The Guidelines to the Rule have examples of possible responses.
But even a business at low risk needs a written program that is approved either by its board of directors or an appropriate senior employee. A Four-Step Process Many companies already have plans and policies to combat identity theft and related fraud.
Different types of accounts pose different kinds of risk.
For example, red flags for deposit accounts may differ from red flags for credit accounts, and those for consumer accounts may differ from those for business accounts.Awarded As India’s Best Research University. Indian Education Awards – 4th National Awards on Excellence in Education.
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