After two years of confusion as to what businesses must comply and delays in enforcement the Red Flags Rules are now in effect, with the Federal Trade Commission (FTC) gearing up enforcement activity. The Red Flags Program Clarification Act of 2010, signed into law on December 18, 2010, confirms that certain businesses are not within the scope of the Rules. Attorneys, accountants, physicians, dentists and other healthcare professionals, and many other small businesses are no longer subject to enforcement actions. Dealerships however fall under the definition of a creditor if they ” regularly and in the ordinary course of business: (i) obtains or uses consumer reports, directly or indirectly, in connection with a credit transaction; (ii) furnishes information to consumer reporting agencies in connection with a credit transaction; or (iii) advances funds to or on behalf of a person, based on an obligation of the person to repay the funds or repayable from specific property pledged by or on behalf of the person; however, a creditor that falls under (iii) is excluded from the requirements of the Red Flags Rules if the creditor advances funds for expenses incidental to a service provided by the creditor to the person”.
More information on the Red Flags Rules can be found at http://www.ftc.gov/bcp/edu/microsites/redflagsrule/index.shtml. KPA offers a free white paper on compliance with the Red Flags Rules and HotlinkHR clients have access to a complete compliance program for Red Flags Rules and Customer Information Security included within their subscription.