Red Flags Rule has been enhanced

The Red Flags Rule which has been in effect since January 1, 2008, has incorporated some additional rules, to prevent thieves from stealing identity information for fraudulent purposes. The programme will require jewellery retail businesses to implement a written Identity Theft Prevention Program. The FTC changed the Red Flags enforcement date from October 1, 2009 to November 1, 2009 to give creditors and financial institutions more time to review this guidance.

Financial institutions and creditors must comply. Under the law, companies that offer credit to their customers, either though in house financing, branded credit card programs or layaway facilities or any other credit arrangement must comply. Jewellery businesses that only accept credit cards as a form of payment are not considered creditors and do not have compliance obligations.

The rules require a business covered by the rule to establish a written programme designed to detect “red flags” indicating an attempt to steal identity information, and to put in place a programme to prevent such thefts. This program is required to be integrated into daily operations and can be tailored to the risks of the one’s credit programme.

Examples of “Red Flags” include alerts from a credit reporting company about suspicious identification documents or activity on the internet that indicates an attempt to access identification information by an unauthorised third party.

Cecilia Gardner, JVC’s president, CEO and general counsel mentioned that: “The FTC’s new regulations require businesses that extend credit to institute a written Red Flag policy program to help to identity and prevent ID theft through credit arrangements.

She further added that “JVC’s website – www.jvclegal.org – includes information and updates about the new Red Flags regulations. In addition, JVC is developing an easy-to-use Red Flags compliance programme on CD for jewellers who have to comply with these regulations. The CD will include forms and templates for jewellers to customise and adapt for their individual businesses. The CD will be available for sale at a modest cost on JVC’s site. JVC members can purchase our Red Flags CD and all JVC products at deep discounts. JVC’s expert legal compliance team will be available to answer jewellers’ questions.”