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FTC Red Flag Rule
FTC Policy

ID Theft

The Identity Theft Red Flags Rule implements section 114 of the Fair and Accurate Credit Transactions Act (FACT Act). To combat identity theft, the Identity Theft Red Flags Rule requires all financial institutions and creditors to develop and implement a written identity theft prevention program.

It is the Final Rule on Identity Theft Red Flags and Address Discrepancies Under the Fair and Accurate Credit Transactions Act of 2003, as published in the Federal Register, Vol. 72, No. 217, on Friday, November 9, 2007.

The Rule applies to a financial institution or a creditor such as a:

  • Bank
  • Savings Association
  • Credit Union
  • Mortgage Lender
  • Mortgage Broker
  • Municipalities
  • Educational Institutions
  • Utility Company
  • Phone Company
  • Other Creditor

The Rule mandates that each covered entity:

  • Perform a risk assessment
  • Identify all covered accounts
  • Identify relevant identity theft red flags for covered accounts
  • Implement appropriate detection and response procedures
  • Develop a written Identity Theft Prevention Program
  • Obtain board of directors approval
  • Train appropriate staff
  • Update the program periodically
  • Review compliance at least annually

Non-compliance penalties can include:

  • Civil money penalty for each violation
  • Cease and desist Order
  • Lowering of examination rating
  • Consumer lawsuit
  • Negative publicity, loss of business



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Customer Say

"How else can one keep up with new Identity Theft risks and quickly update the Prevention Program? CompliancePal is the answer."

Susan A. deFreese
Senior Vice President
Chief Compliance & BSA Officer
Old Southern Bank

"With CompliancePal, I was able to comply with the Identity Theft Red Flags Rule in under five days! The program was quick, easy, extremely functional, and completed in just hours instead of weeks and months. The ability to customize my Prevention and Training programs will greatly help me get our employees into compliance by the deadline. Thank you Compliance Coach!"

Karla Flores
Compliance Manager
Cottonwood Financial



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