Welcome to our “Facts on the FACT Act” Blog. I’m Adam Elliott, president and co-founder of ID Insight, Inc. And if you made a point of stopping by, you’re very likely just as interested as I am in exactly what the FACT Act is going to mean to your business.
For the foreseeable future, I’ll be offering my take on the latest FACT Act news, as well as commentary and tips, all designed to help banks, credit card issuers, retailers, wireless providers, online merchants, and financial services companies comply with the Red Flag rules as efficiently as possible. Some other ID Insight team members will likely contribute to the discussion along the way.
Let’s kick things off by talking about the reason behind all the discussion that’s happening in board rooms across the country: the FACT Act Red Flag rules.
The Red Flag rules have been a major question mark since the Fair and Accurate Credit Transactions (FACT) Act was signed into law back in 2003. Last month, all that talk became a reality: The FDIC, Federal Reserve and several other federal regulatory agencies finalized the rules. By November 1, 2008, financial institutions and other creditors will be required to adopt a risk-based program to detect and prevent identity theft.
Under FACT Act Sections 114 and 315, financial institutions and creditors are now required by law to adopt procedures to reduce the risk of identity theft by examining consumer address changes on both new and existing accounts. Roughly 20 percent of new consumer credit applications feature a different address from the corresponding credit bureau file, so financial institutions using traditional address-verification methods are in for a lot of extra work and expense.
It doesn’t have to be all doom and gloom, though. In fact, if institutions take the right steps to comply with FACT Act, there are opportunities for millions of dollars in savings each year, especially for large banks that process thousands of applications every day.
In upcoming posts, I’ll talk about some easy-to-implement solutions to this often-confusing challenge. In the meantime, visit http://www.idinsight.com/ for more information and our free white papers on the Red Flag rules.
