Financial Update (Third Quarter 2009)

Fed, Other Agencies Issue FAQs on Identity Theft Rules

ID theft graphicThe Fed and five federal agencies recently issued a set of frequently asked questions (FAQs) to help financial institutions, creditors, users of consumer reports, and credit and debit card issuers comply with federal regulations on identity theft and discrepancies in changes of address.

The "Red Flags and Address Discrepancy Rules," which implement sections of the Fair and Accurate Credit Transactions Act of 2003, or FACT Act, were issued by the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation, the National Credit Union Administration, the Office of the Comptroller of the Currency, the Office of Thrift Supervision, and the Federal Trade Commission. The FACT Act amended the Fair Credit Reporting Act.

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Address changes require validation
The rules require financial institutions and creditors to develop and implement written Identity Theft Prevention Programs and require card issuers to try to ensure the validity of change of address requests. The rules also set out guidance for users of consumer reports regarding reasonable policies and procedures to use when consumer reporting agencies send them notices of address discrepancy. However, the FAQs do not address the applicability of any other federal or state laws.

The agencies' staffs have jointly developed answers to these FAQs to help clarify numerous aspects of the rules, including which types of entities and accounts are covered, establishment and administration of an Identity Theft Prevention Program, address validation requirements applicable to card issuers, and the obligations of users of consumer reports upon receiving a notice of address discrepancy.

July 30, 2009