Opening suspicious accounts

March 17, 2009 by Keir Breitenfeld

If you have detected a Red Flag in connection with a credit application, are you prohibited from opening the account when following the Red Flag guidelines?

First, you must assess whether the Red Flag evidences a risk of identity theft and your response must be commensurate with the degree of risk that is posed. You generally are not prohibited from opening the account, unless the only appropriate response in light of the degree of risk posed by the Red Flag would be not to open the account. In some instances, for example, you may be able to contact the applicant directly to verify that the application is legitimate.