Detecting Red Flags

February 25, 2009 by Keir Breitenfeld

At which stage of the application process does the Red Flags Rule apply?

The Red Flag Rule would apply whenever you detect a Red Flag in connection with an application. This could occur as soon as you receive an application, for example:

  • if the application appears to have been altered or forged; or
  • the consumer’s identification appears to be forged or is inconsistent with the information on the application.

Is the social security number (SSN) check a requirement?

No, but an invalid SSN may be a Red Flag – i.e., an indicator of possible identity theft – and obtaining and verifying a SSN may be a reasonable means of application risk management todetect this Red Flag when opening accounts. You may be able to utilize your existing procedures under your Customer Identification Program under the USA PATRIOT Act.