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December 28, 2009

Red Flags Rule just can't seem to reach the checkered flag

In 2003, Congress passed amendments to the Fair Credit Reporting Act.  One of the changes was a requirement for business that met a certain definition to implement procedures to prevent identity theft.  The procedures were dubbed the "Red Flags Rule".  Congress gave the businesses that met the definition of creditor until November 2008 (yes, five whole years, longer than a term in office for the President) to create and implement the Red Flags Rules.  Shouldn't be too hard, just some common sense things to watch out for that might indicate that an identity thief is trying to pull a fast one. 

Apparently, the creditors sat on their hands for the first five years, because right at the deadline, the creditors started seeking an extension of the deadline to implement the Red Flags Rule.  And they got the extension.  And another one, and another one and (I think) another extension (quite frankly, I've lost count).  The latest Red Flags Rule implementation date was January 1, 2010.  That was the new date, until Congress just extended it yet again ... this time all the way to June 1, 2010.  So this law, seven years after it was enacted, has yet to take effect. 

The Red Flags Rule is supposed to get companies to train all their employees (not just their handful of "fraud specialists" who aren't even contacted until after the proverbial excrement hits the fan) on how to spot the warning signs of identity theft (i.e. the red flags that would tip off a person of normal intelligence).  From my 10 plus years of representing consumers in litigation against banks, credit card companies and the credit bureaus, I have learned one important, nearly universal fact ... the vast number of people that work for corporations check their common sense at the door when they report to work every morning.  Most corporate clones are paid the same no matter the quality of their work.  So most don't go out of their way to do a good job.  As said by the main character of the movie Office Space, they just simply work hard enough not to get fired. 

What's worse is that these corporate cronies follow the all mighty "policies and procedures" of their corporate employers, which are usually written by corporate higher ups with no idea how things are done at ground level.  I swear, I think if the corporate policy said to murder all customers who complained of a certain widget, the streets would be filled with blood.  I know the employees possess common sense, they just seem to leave it at home.  The bottom line is ... most corporate employees just don't care about what they are doing. 

This is why, time and time again, I see corporate employees ignore the obvious signs of identity theft, signs even my most under educated clients easily spot and, as a result, prolong the nightmare that is identity theft.  For this reason, the prevention procedures required by the Red Flags Rule are critical to consumers all across the nation.  Yet, these consumers, lacking the beneft of the lobbyists employed by the corporate sector, are repeatedly getting the shaft by the continued delay allowed by Congress.  Maybe by the time my 2 year old gets his first credit card, some measure of the Red Flags Rule might be implemented.  But, unlike my 2 year old when he's mad, I'm not holding my breath.

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