Get your business in compliance with the Red Flags Rule today

Advantage Credit's Facta Red Flags Report can help get your business compliant with the FACT Act quickly and securely by detecting the deceptive practices and actions commonly indicating indentity theft.

Frequently Asked Questions on the Red Flags Rules

What is the Red Flags Ruling?
The federal banking agencies, the National Credit Union Administration (NCUA) and the Federal Trade Commission (FTC) recently have issued a new requirement — called the "Red Flags Rule" — for creditors and financial institutions to assess whether they offer or maintain covered accounts and if they do, to develop and implement an "Identity Theft Prevention Program" (Program) to detect, prevent and mitigate identity theft with respect to those accounts.

What I have to do to be compliant with the Red Flags Rule?

Step 1: According to the federal banking agencies, the National Credit Union Administration (NCUA) and the Federal Trade Commission (FTC), you must have a written program in place that is adopted by your organization. To make this as easy as possible for you, we’ve created a program template. All you need to do is print this document, complete it and keep it on file for auditing purposes. Click here to download the program template.

Step 2: You must also have a method in place for detection of Identity Theft Red Flags. Our Red Flags Report can be run with each credit report as a profile option in Advantage Online if you choose. It can also be run independently when you require it for different transactions.

Am I considered a “creditor?”
The term "creditor" has the same meaning as under the Equal Credit Opportunity Act (ECOA) and is defined as a person who regularly participates in credit decisions, including, for example, a mortgage broker, a person who arranges credit or a servicer of loans who participates in "workout" decisions. The term "credit" is defined, as in the ECOA, as the right granted by a creditor to defer payment for goods or services. It is important to note that commercial, as well as consumer, credit accounts may be covered by the Red Flags Rule.

I am an auto dealer. Does the Red Flags Rule apply to me?
If the business extends auto credit to consumers or arranges auto credit for consumers, the Rule may apply.

I service residential mortgage loans. Do I offer or maintain covered accounts?
Residential mortgage loans are covered accounts, and as a servicer you may be considered to be "maintaining" such accounts. If you are considered to be a creditor, such as by regularly participating in credit decisions, then you are subject to the Rule. If you do not regularly participate in credit decisions, you are not subject to the Red Flags Rule; however, you may have contractual duties imposed upon you by the lenders for which you provide services that are related to their Programs.

What is required in an Identity Theft Prevention Program?
According to the Red Flags Ruling, a Program must be written, must be approved and implemented by the board of directors or senior management, and must include staff training and oversight of service providers. The board of directors or senior management should assign specific responsibility for implementation of the Program, should review reports by staff and should approve material changes to the Program. Staff should report to the board of directors or senior management at least annually on (1) the effectiveness of the Program’s policies, (2) service provider arrangements, (3) significant security incidents and (4) any recommendations for material changes.

Click here to download a sample Red Flags Program Form

What product does Advantage Credit offer to help keep me in compliance with the Red Flags Rule?
Advantage Credit offers the Red Flags Report – a comprehensive solution that can be implemented as part of your Program or as a standalone Program. Advantage Credit's Red Flags Report searches thousands of data sources with billions of records, from credit and retail cards to mortgages and auto loans, giving you the power to reduce fraud and lower associated operational costs.

Is the Red Flags Report standalone or must it be run with a credit report on a prospective customer?
Both. The Red Flags report can be run on a prospective customer by itself, or as an add-on to the credit report.

If you would like more information, or if you are already an Advantage Credit customer and you would like your account to be set up to run the Red Flags Report automatically with your credit reports, simply let us know by e-mail or call us at 800.600.2510.