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Merchant Account Guide > Merchant Account News > FTC delays 'Red Flags Rules' to May 1, 2009


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FTC delays 'Red Flags Rules' to May 1, 2009

Anti-ID theft measures for merchants had been slated to begin Nov. 1

By Julie Sherrier

Editors note: On July 29, 2009, the Federal Trade Commission again delayed the deadline for compliance with its Red Flags Rules until Nov. 1, 2009. Click here to read the FTC's press release announcing the delay. 

The Federal Trade Commission has granted a six-month delay for creditors and financial institutions to comply with its anti-theft "Red Flags Rules." The rules, which had been slated to go in effect Nov. 1, 2008, will require merchants to implement identity theft fraud-prevention programs to "identify, detect, and respond to patterns, practices, or specific activities that could indicate theft." The new deadline is May 1, 2009.

Creditors and financial institutions requested more time for the development and implementation of the rules, which also require written identify theft prevention programs. According to the FTC, "Many entities also noted that, because they generally are not required to comply with FTC rules in other contexts, they had not followed or even been aware of the rulemaking, and therefore learned of the rule's requirements too late to be able to come into compliance by Nov. 1, 2008. The commission's delay of enforcement will enable these entities sufficient time to establish and implement appropriate identity theft prevention programs, in compliance with the rule."

The creditors and financial institutions affected include finance companies, automobile dealers, mortgage brokers, utility companies, telecommunications companies, and nonprofit and government entities that defer payment for goods or services. Financial institutions include those that offer checking accounts and allow third-party payments through telephone transfers, automatic debits or other means.

Updated: July 29, 2009

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