Have you ever been many miles from home, perhaps on vacation, when suddenly your bank notifies you that your credit card account has been frozen? Such occurrences always seem to happen at the most inopportune moments. However, the credit card freeze may simply be the bank’s attempt to comply with the so-called “Red Flags Rule.”
In our ever-evolving technological landscape, consumer information may be more vulnerable now than ever before. Instances of identity theft—using another’s personal data fraudulently or deceptively, usually for financial gain—occur at an alarming rate. In 2014 alone, an estimated 17.6 million U.S. residents experienced some form of identity theft, according to the Bureau of Justice Statistics. In an effort to curb the identity theft epidemic, various federal regulators administer the Red Flags Rule, requiring certain financial institutions and creditors to take extra care in protecting consumer financial information. Although general counsel of banks, savings and loan associations, and credit unions clearly should take note, the rule is very broad, and less obvious entities may also need to comply with the rule.
What is the Red Flags Rule?
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