May 4, 2009 |
FTC Delays Enforcement of Red Flags Rule Utah Higher Education Assistance Authority has learned that the Federal Trade Commission (FTC) announced that it will again delay enforcement of the new “Red Flags Rule” until August 1, 2009. The delay will give creditors and financial institutions more time to develop and implement written identity theft prevention programs. The announcement is available on the FTC Website at http://www2.ftc.gov/opa/2009/04/redflagsrule.shtm. Under the Red Flags Rule, financial institutions and creditors with “covered accounts” must have in place programs to identify, detect, and respond to patterns, practices, or specific activities—known as “red flags”—that could indicate identity theft. A “financial institution” is defined as a state or national bank, a state or federal savings and loan association, a mutual savings bank, a state or federal credit union, or any other entity that holds a “transaction account” belonging to a consumer. Institutions of higher education also will generally be considered “creditors” under the Rule if they loan money and collect it. Many schools hold “covered accounts”—a consumer account that involves multiple payments or transactions that are billed or payable monthly. Postsecondary institutions likely subject to the “Red Flags Rules” are those that participate in the Federal Perkins Loan program, offer institutional loans to students (or faculty and staff), or offer an extended tuition payment plan throughout a semester or term. On October 14, 2008, Federal Student Aid (FSA) clarified that the Red Flags Rule applies to institutions participating in the Federal Perkins Loan Program, and may also apply to other credit programs administered by the institution. FSA’s Electronic Announcement can be viewed at http://ifap.ed.gov/eannouncements/1014FTCRedFlagRules.html. Any questions related to this Bulletin should be directed to UHEAA Policy and Training at 801.321.7166, or by e-mail to mjohnson@utahsbr.edu. |
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