According to “What Compliance Looks Like,” What 4 basic elements of the Red Flags Rule must one include in their Identity Theft Prevention Program?
For elements that must be included in the identity theft prevention program:
- Descriptions and features helping to identify suspicious operations and harmful activities that can be recognized as identity theft attempts and called Red Flags.
- Activities listed as red flags.
- Instructions explaining how to act after a red flag is detected.
- Improvements that are needed for the program to remain effective with the newly appearing threats.
Who must comply with the Red Flags Rule?
The Red Flags rule is designed for financial institutions and some of the creditors and only should be implemented in cases when covered accounts are detected.
What is a “financial institution?”
Financial institutions can be a state or federal credit union, savings, and loan association, a state, national, or mutual savings bank, or a person that, directly or indirectly, owns a transaction account that belongs to a client.
What is a “creditor?”
A creditor is a business or organization that defers payments and grants or arranges credits, can set the terms of credits, extend or renew them. A creditor also receives credit reports and provides finds for the clients who are obliged to repay later.
What is a “covered account?”
The Red Flags Rule is implemented when an organization or a business has covered accounts. The Red Flags Rule differentiates between two types of covered accounts. The first type includes consumer accounts created for personal purposes such as saving and checking accounts, mortgage or automobile loans. The second type includes any other counts that a creditor institution may hold, which can be under a risk of identity theft harmful for the customers of the institution; such accounts are a small business or sole proprietorship accounts.
What staff members must be trained?
To administer the program, the organization managers are to train the staff relevant to the practices covered by the Red Flags Rule. This means that all of the service providers who perform practices and tasks identified by the Rule (for example, operations involving granting and arranging credits) should be appropriately trained.
What are the penalties for non-compliance with the Red Flags Rule?
The responses to the non-compliance with the Red Flags Rule may include such actions as changing security codes and passwords of the affected accounts, contacting services such as law enforcement, notifying the customer of the account, checking the activities of the account for proofs of identity theft, closing the account altogether, reopening the affected account under a different number.
List 3 types of Identity Theft?
Three types of identity theft are:
- Tax-related identity theft (includes frauds with stolen social security numbers)
- Child identity theft (represents manipulations with stolen social security numbers of children)
- Medical identity theft (covers activities under stolen names or medical insurance numbers)
What can you do to help fight Identity Theft?
To help fight identity theft and to protect themselves, one must never reveal their security codes or passwords to strangers over the internet or phone. Besides, one must not open untrustworthy emails or be intimidated by them. Scammers may call the consumers, telling them they represent a certain financial institution and ask to confirm secret information and name. Whenever such accidents happen, the consumer must immediately report the numbers or emails of such scammers and inform the institution they pretend to work for. Moreover, the holders of accounts must often check the activities there to see if all the payments are correct.
When dealing with credit reports, how many consumer reporting companies are there and what are their phone numbers?
There are three main national credit reporting organizations. They are Experian (1 888 243 6951), TransUnion (877-322-8228) and Equifax (1-800-685-1111). These organizations provide one free credit report every year.