New rules have been issued in the fight against identity theft.  These new rules and implementations are called the “Red Flag Rules” which have been created by The Federal Trade Commission, bank regulatory agencies and committees, and the National Credit Union Administration.  The purpose for the Red Flag Rules is so that banks implement proper frameworks and systems in order to deal with identity theft.  They aim to help deter identity theft by creating programs which help detect, prevent and mitigate identity theft scenarios.  The rules stipulate that the Red Flag implementations must have been in place since November 2008.

The Red Flags Rules apply to all financial institutions and credit union organizations.  A financial institution or organization is defined as a statewide or national based bank, a monetary association, a state or national credit union, or any other institute which can hold a bank or transactional account on behalf of a consumer.  A transaction account is an account in which a consumer can increase or decrease revenue by way of purchase, withdrawal or saving.

Under the implementations and rules created by the Red Flags Rules, financial institutions and credit unions must create and develop a written platform or framework in order to detect relevant identity threat warning signs or red flags as they are also commonly called.  The written framework must also develop and describe the appropriate course of action that a banking institute or credit union must take in the event that red flags have been raised.  The implemented program must be managed by a board of directors or by powered employees of the relevant financial institute or credit union.

The Red Flags Rules help create the provision for financial intuitions and credit unions the opportunity to design relevant programs aimed to overall decrease and prevent high levels of identity theft.  It’s obviously in the interest of the banks to implement these rules as millions of dollars each year are lost due to identity theft and related crime and these changes are hoped to further decrease the incidence of identify theft.  The government has given the banks a small framework to help develop the overall theft programs that the banks have to implement.  This small framework includes these following elements which banks have had to use as a guide in helping develop these crime fighting programs.

* Warnings, notifications and alerts from a consumer agency that monitors suspicious activity and notifies the consumer and the bank accordingly.
* Suspicious transactional activities and documents;
* Proper reaction guidelines to the acknowledgement of identify theft and identity protection for consumers and banks alike.

With the rise of the internet, identity theft is seen to have become far easier to carryout.  This is due in part to technology improvements in being able to copy and manipulate identity documents and the like.  Identity theft costs taxpayers, banks, the government, and consumers millions each year and this move to introduce regulatory framework in the Red Flag Rules provision will mean millions are saved each year through the minimization of identity theft and related crime.

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