The Red Flags deadline came and went nearly a month ago; but it’s a poorly kept secret that many institutions did the bare minimum to comply with the rules, not least because not all the federal regulators have released their examination guidelines yet. The Federal Trade Commission went as far as giving the companies it governs an extra six months to get on board.

But Ted Dreyer, senior attorney with Wolters Kluwer Financial Services, warns that regulators aren’t going to buy it when institutions claim ignorance or confusion about the rules. “While there may not initially be any heavy penalties or large fines, the slaps on the wrists from regulators are going to be hard and hurt very much from a reputational standpoint with customers,” added Dreyer “No institution wants to be known for failing to protect its customers from identity thieves.”

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