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The new rule is estimated by the Federal Trade Commission to apply to 11.1 million enterprises under their jurisdiction of which well over 90% are estimated to be small enterprises. 

 

Compliance with the The Red Flags Rule is required by May 1, 2009.  This new rule promulgated under the Fair and Accurate Credit Transactions Act of 2003, amends the Fair Credit Reporting Act (FCRA). The rule applies to all enterprises that meet the rule's definition of a financial institution or creditor and who have consumer or business accounts as defined in the rule.  Some of the types of accounts and enterprises covered under the the rule include: transaction accounts—Savings, checking, credit, and margin,  loans (mortgage, auto, student, etc), utility (gas, water, electric, etc), telecommunication (phone, cell, cable, etc). 

Compliance with the rule reflects many of the fundamental principles of privacy best practices including management responsibility, appointment of a responsible manager to oversee the program (Privacy Officer), assessing risks, documentation, employee education and training, and period review (audits), all of which are discussed in Privacy MakeOver: The Essential Guide to Best Practices.

To help small enterprises develop their Red Flags Rule compliance program quickly and effectively, a Red Flags Rule Policy document is now available for download on the Reader-Only Resource Section of this Web site along with a Red Flags Rule Guidelines document that summarizes the requirements of the rule.

Compliance for the Address Discrepancy Rule also goes into effect on November 1, 2008 also.  It applies to any enterprise or person that uses credit reports. This rule has been estimated to apply to 1.6 million enterprises of which 90% are small enterprises according to the FTC.  Joseph Campana believes the number is under estimated because it does not include many individuals, for example landlords, and small enterprises that routinely access credit reports and for whom the rule is also mean to apply. Some of the covered entities include credit unions, non-bank lenders, insurers, landlords, employers, mortgage brokers, auto dealers, collection agencies, investigators, and any other person who requests consumer reports from credit reporting agencies. 

To help small enterprises comply with this rule, an Address Discrepancy Policies and Proceduresdocument is available for immediate download on the Reader-Only Resource Section of this Website.  To gain access to these resources, purchase the Privacy MakeOver Book through this website or through any bookseller.