The FTC, Federal Trade Commission has implemented the RED FLAG RULE. This rule goes into effect on August 1,2009 and will be enforced by the FTC.
Businesses covered by the rule are Real Estate Agents and Brokers, Mortgage Brokers, Finance Companies and other businesses that help consumers get financing from any other entity.
This is what the FTC guide says:
There are procedures that we must develop, implement and administer in regards to the RED FLAG RULE which is the Identity Theft Prevention Program that the FTC has mandated.
According to the FTC; 93% of all the Identity Theft that happened in 2008 was the result of financial information being stolen.
To find out what you need to do to comply with the new RED FLAGS RULE- here is a link to the FTC Guidebook.
You can also order this brochure and others for your company and agents at the same website.
- You will be expected to create a program in writing that you must implement in your company or office and it must address within it identity theft protection, prevention and mitigation.
- You will be expected to set up policies in your office to be spot fake looking IDs and other signals that Identity theft might be taking place.
- You will be expected to make sure that all those who work for you are trained in the program that you implement.
- You will be expected to monitor your policies and update them as needed.
The FTC wants more businesses to become involved with protecting consumers from identity theft. Most of us are very protective over our client's financial information.
This is why we never take our client's full social security numbers. All of the short sale lenders only require the last 4 digits of the social security numbers for identification purposes.
This is also why we do not hand out our client acceptance letters to every mortgage company and buyer agent that wants it. In fact, we are under no obligation to do so according to our sales and purchase contract.
A conviction of the use of a credit card that is not authorized is a maximum penalty of 10 years in prison.
Identity theft can get the convicted person up to 15 years in prison.
The maximum fine of any the above crimes is $250,000.
The FTC website also has in the guide a step by step process to create your own RED FLAG RULE compliance.
Red Flag Rules For Real Estate Agents, Brokers and Mortgage Brokers by Katerina Gasset is licensed under a Creative Commons Attribution-Noncommercial-No Derivative Works 3.0 United States License.
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