Credit Loan > Identity Theft > The New Red Flags To Identity Theft

The Effect Red Flags Will Have On Consumer Credit

On May 1st 2009, a new federal law goes into effect to try to prevent identity theft. These new requirements, known as the Red Flags rules, were supposed to go into effect by November, 2008, but were delayed to give financial services companies more time to comply.

The Red Flags rules establish written guidelines to detect the warning signs of potential identity theft involving all the customers that receive credit from financial institutions and businesses. Financial institutions and businesses are allowed to design their own plans and are encouraged to develop procedures that will best serve their customers. Whatever programs institutions design to mitigate threats of identity theft are required to be managed by senior staff and managers to lessen the number of people that have access to sensitive personal information.

Will these steps go far enough to slow down the growth of identity theft? It is unclear whether or not the Red Flags rules will have much effect, but it is a start. Something has to be done to quash the rapid explosion this crime has seen in recent years.

The number of identity theft victims has gone up, but the statistics are a bit misleading. I have been a victim myself. Ten years ago someone opened a credit card account in my name and used the card to illegally get almost ten thousand dollars in cash and merchandise. They never found the criminal, nor did they get many leads.

It took me a long time to fix my credit report and cost me almost two thousand dollars. Since then things have changed. Now when someone is a victim they can get identity theft entries off of their credit report faster than before. There is also a way to freeze your credit report and stop creditors from opening new accounts without your express permission. These changes can make it difficult for someone to open accounts in your name, but it can also make it more difficult to open accounts yourself.

Until a better system is created for reporting someone’s creditworthiness and to protect consumers from identity theft, it really is up to the individual to safeguard themselves. The Federal Trade Commission has a list of simple steps people can take for protection. Simply following a few key rules can prevent identity theft or at least lessen the effects if you become a victim.