Does the Identity Theft Red Flags Rule apply to me?

Published: March 5, 2009 by Keir Breitenfeld

Here are a few more frequently asked questions.

1.Am I a “creditor” under the rule?
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 Rule.

2.We are an insurance company that uses credit reports to underwrite insurance. Does the Red Flags Rule apply to us?
The Red Flag Rule applies to creditors and depository institutions and should not apply to an insurer when engaged in activities related to insurance underwriting. To the extent that you extend credit, however, you may be covered. For example, you may wish to examine whether you permit consumers to finance their premiums; whether you extend credit to vendors, independent agents or other business partners; or whether you extend credit in connection with your investment activities, including real-estate investments.

3.I am an auto dealer. Does the rule apply to me?
If the business extends auto credit to consumers or arranges auto credit for consumers, the Red Flag guidelinesmay apply.