RED FLAGS RULE

As businesses increasingly rely on technology to store and maintain data, including customer records, the risk of identity theft is also increasing. The Federal Trade Commission (FTC) together with federal regulatory agencies and the National Credit Union Association has adopted new regulations intended to combat identity theft. These "Red Flag Rules" require financial institions, utility companies, and other "creditors" to develop and implement a written identity theft prevention program to identify and combat identity theft in connection with new and existing customers.

If you are an entity that provides a service in advance of payment, then you are a "creditor" because you regularly extend, renew, or continue credit or defers payment for goods or services. The Red Flag Rules apply to each "covered" account which is a customer account involving multiple payments or transactions for which there is a forseeable risk for identity theft.

All companies subject to the Red Flag Rules are required to implement a written customer protection programs by December 31, 2010. The program must be designed to detect a "red flag" which is a pattern, practice or specfic activity that indicated the possible existenced of identity theft. The FTC has identified five categories of Red Flags and have provided a list of examples of the types of red flags that fall under each category. These red flags are not a checklist, but rather, are examples that financial institutions and creditors may want to use as a starting point. They fall into five categories:

• alerts, notifications, or warnings from a consumer reporting agency;
• suspicious documents;
• suspicious personally identifying information, such as a suspicious address;
• unusual use of — or suspicious activity relating to — a covered account; and
• notices from customers, victims of identity theft, law enforcement authorities, or other businesses about possible identity theft in connection with covered accounts.

The customer protection program must include policies and procedures for (1) detecting warning signs or Red Flags of identity theft, (2) respsonding to any such Red Flags in a manner that will prevent or mitigate the identity theft, and (3) updating the program.

First Check Applicant Screening currently serves many public sector clients by providing them with employment background screening reports. As a result, we have had many inquiries about how our identity authentication tools can help them comply with the FACT Act - Red Flags Rule.

When we conduct a background search for employment screening purposes we always start the process with an identity authentication tool such as social security trace or a past address history report. While these types of searches are inexpensive, they are incredibly accurate in determining if a person is who they say they are.

Our First Check - ID Check report helps utility companies and other "creditors" comply with the new Red Flags Rule by verifying the applicant's name and address history, social security number and year the ssn was issued which are all examples listed in the new law. If the information on the customer's application matches what our report contains, there would be no Red Flag Alert.

Our pricing is volume based and is an extremely affordable solution to Red Flags Compliance.

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