Okay, life wasn’t tough enough, right? Now, starting November 1, 2009 (Important Note: See our updated story “Help for FACTA Red Flags Compliance“), millions of small businesses that extend credit or defer payments for goods and services will be subject to a new set of rules under the Fair and Accurate Transaction Act aimed at helping curb identify theft. The new rules — known as the FACTA Red Flags Rules — are basically federally-mandated precautions certain businesses must take to protect customers from identity theft crimes. (Don’t worry…I’ll give you key links to further FACTA details and compliance solutions below!)
Never heard of FACTA? Join the club. Legions of small businesses that will now be covered — including auto dealers, jewelers, furniture companies, mortgage brokers, doctors, dentists and many others — are still unaware of this looming regulatory issue. Business owners who are aware are most likely confused about what they’ll have to do. And forget about an extension. The Federal Trade Commission (FTC), the enforcing agency, already stretched the compliance deadline, originally set for last November.
The coming FACTA Red Flags Rules require covered businesses to create a process for detecting so-called “Red Flags” in identity verification, such as:
- discrepancies in address history
- fraud alerts on credit reports
- suspicious use of Social Security numbers
- inactive accounts that suddenly become active
- credit-freeze notifications
- credit reports with suspicious activity patterns
- notices from identity theft victims or law agencies, among others.
Meanwhile, FACTA fear has spawned a cottage industry of compliance vendors focused on helping companies find out who’s covered and what the business must do to comply. They’re also offering helpful tools and training, along with web-based compliance solutions. One such firm is Microbilt, a leading provider of risk management information to small and medium businesses. Microbilt has created a special FACTA Red Flags Center website, which features compliance information and a Red Flags Hotline that lets you submit specific questions by email. Microbilt even hired Internet comedian GoRemy to produce a humorous video about FACTA Red Flags, which you can see at Microbilt, or on YouTube.