The Federal Trade Commission will delay enforcement of the new “Red Flags Rule” until Aug. 1 to give creditors and financial institutions more time to develop and implement written identity theft prevention programs, it reported in a recent statement.
Under this rule, powersports dealerships that provide or arrange financing are defined as creditors, as are any businesses that provide services and bill later.
For entities that have a low risk of identity theft, such as businesses that know their customers personally, the commission will soon release a template to help them comply with the law, the FTC reported.
“Given the ongoing debate about whether Congress wrote this provision too broadly, delaying enforcement of the Red Flags Rule will allow industries and associations to share guidance with their members, provide low-risk entities an opportunity to use the template in developing their programs, and give Congress time to consider the issue further,” said FTC Chairman Jon Leibowitz.
The Fair and Accurate Credit Transactions Act of 2003 (FACTA) directed financial regulatory agencies, including the FTC, to promulgate rules requiring “creditors” and “financial institutions” with covered accounts to implement programs to identify, detect and respond to patterns, practices or specific activities that could indicate identity theft, according to the FTC.
During outreach efforts last year, the FTC staff learned that some industries and entities within the agency’s jurisdiction were uncertain about their coverage under the Red Flags Rule. During this time, FTC staff developed and published materials to help explain what types of entities are covered, and how they might develop their identity theft prevention programs. Among these materials were an alert on the Rule’s requirements, www.ftc.gov/bcp/edu/pubs/business/alerts/alt050.shtm, and a Web site with more resources to help covered entities design and implement identity theft prevention programs, www.ftc.gov/redflagsrule. The compliance template will be available on this Web site.
To learn more about how your business can prepare to comply with this rule, read the Powersports Business article on the subject by clicking here or visiting www.powersportsbusiness.com and searching under the key words: red flags.