FTC Seeks Comment on ID Theft Detection Rules

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The Federal Trade Commission (FTC) recently announced that it is seeking comment on whether the agency should make changes to rules requiring financial institutions and creditors to take certain steps to detect signs of identity theft affecting their customers.  Specifically, the FTC is seeking comment on whether any modifications need to be made to the Red Flags Rule and the Card Issuers Rule (collectively, the Rules).

Under the Red Flags Rule, financial institutions and some creditors are required to implement a written identity theft prevention program aimed at detecting identity theft red flags during the course of day-to-day operations, to take steps to prevent identity theft, and to mitigate any damage that may result from identity theft if it occurs.  With the Card Issuers Rule, debit and credit card issuers are required to implement policies and procedures that assess the validity of a change of address request in cases where, within a short period of time after it receives the request from the consumer, the issuer receives a request for an additional or replacement card for the same account.  In addition, the Card Issuers Rule prohibits a card issuer from issuing an additional or replacement card until it has notified the cardholder about the request or otherwise assessed the validity of the address change in accordance with the policies and procedures the card issuer has established.

The FTC press release indicates that several of the questions on which the FTC wants comments include:

  • Is there a continuing need for the specific provisions of the Rules?
  • What benefits have the Rules provided to consumers?
  • What significant costs, if any, have the Rules imposed on consumers?
  • What significant costs, if any, have the Rules imposed on businesses, including small businesses?
  • Are there any types of creditors that are not currently covered by the Red Flags Rule but should be, because they offer or maintain accounts that could be at risk of identity theft?

The comments on the Rules, as published in the Federal Register, are available here. The deadline for submitting comments is February 11, 2019.

The FTC press release is available here.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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