FTC: No Leeway on Red Flag Compliance


The Federal Trade Commission said it has no plans to grant leniency to financial institutions and creditors that miss the Nov. 1 deadline for complying with the government's Red Flag rules.

"Businesses should be aware that when instances of possible noncompliance are reported to the FTC, the commission will investigate," an FTC official said.

The agency would not predict how many companies may not meet the deadline.

Robert Shavell, the director of identity compliance at Identity Force, a division of Bearak Reports Inc. of Framingham, Mass., that provides identity theft protection services, said fewer than half the affected companies will meet the government's deadline.

The FTC official said that when the agency is made aware of noncompliant organizations, it will investigate and take appropriate action. Such action generally "a formal complaint" that could be followed by "a settlement or a court order."

Federal bank regulators, along with the FTC and the National Credit Union Administration, passed the Red Flag rules as part of the Fair and Accurate Credit Transactions Act in 2003. Under the rules, financial institutions and creditors with covered accounts must monitor and act on specific warning signs, such as consumers who provide suspicious identification.


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