FTC delays mandatory compliance with "Red Flags" rules.(EYE ON THE HILL: NACM)

After realizing a persistent haze of uncertainty still exists regarding some of the ambiguous wording in its "Red Flags" Regulations, the Federal Trade Commission (FTC) has decided to delay enforcement until August 1, 2009 and will soon release a template to help affected companies plan compliance. "Given the ongoing debate about whether Congress wrote this provision too broadly, delaying enforcement of the 'Red Flags' Rules will allow industries and associations to share guidance with their members, provide low-risk entities an opportunity to use the template in developing programs and give Congress time to consider the issue further," said FTC Chairman Jon Leibowitz. This is the second time the FTC has delayed the mandatory compliance deadline in the last seven months.

The regulations are in response to the years of increasing cases of identity theft as more and more businesses and consumers used the Internet for transactions, resulting in tens of billions of dollars in write-downs each year. In 2003, the Fair and Accurate Credit Transactions Act of 2003 (FACTA) directed that financial regulatory agencies craft rules requiring creditors and financial institutions to develop and employ programs to detect, mitigate and respond to instances of identity theft.

NACM's diligent work with the FTC in an attempt to clarify the "Red Flags" Regulations' language and its effect on trade creditors had significant impact in the FTC's decision to delay implementation. NACM has also been active in educating its members about their responsibilities under the looming ...