FACTA Red Flags

There are 26 RED FLAGS or alerts outlined in the regulation and shown below for your reference.

1) A fraud alert included with a consumer report

2) Notice of a credit freeze in response to a request for a consumer report

3) A consumer reporting agency providing a notice of address discrepancy

4) Unusual credit activity, such as an increased number of accounts or inquiries

5) Documents provided for identification appearing altered or forged

6) Photograph on ID inconsistent with appearance of customer

7) Information on ID inconsistent with information provided by person opening account

8) Information on ID, such as signature, inconsistent with information on file

9) Application appearing forged or altered or destroyed and reassembled

10) Information on ID not matching any address in the consumer report, Social Security number has not been issued or appears on the Social Security Administrator’s Death Master File, a file of information associated with Social Security numbers of those who are deceased.

11) Lack of correlation between Social Security number range and date of birth

12) Personal identifying information associated with known fraud activity

13) Suspicious addressed supplied, such as a mail drop or prison, or phone numbers associated with pagers or answering service

14) Social Security number provided matches that submitted by another person opening an account or other customers

15) An address or phone number matching that supplied by a large number of applicants

16) The person opening the account unable to supply identifying information in response to notification that the application is incomplete

17) Personal information inconsistent with information already on file

18) Person opening account or customer unable to correctly answer challenge questions

19) Shortly after change of address, creditor receives request for additional users of account

20) Most of available credit used for cash advances, jewelry or electronics, plus customer fails to make first payment

21) Drastic changes in payment patterns, use of available credit or spending patterns

22) An account that has been inactive for a lengthy time suddenly exhibits unusual activity

23) Mail sent to customer repeatedly returned as undeliverable despite ongoing transactions on active account

24) Customer indicates that they are not receiving paper account statements

25) Customer notifies that there are unauthorized charges or transactions on customer’s account

26) Institution notified that it has opened a fraudulent account for a person engaged in identity theft

What is the purpose of the FACTA Red Flags regulation?

The purpose of the regulation is to detect and prevent identity theft by defining red flags or alerts that refer to a pattern, practice, or specific activity that indicates the possible existence of identity theft.

What is covered by the regulation?

Financial institutions and creditors (see definition below) with covered accounts are required to develop and implement identity theft prevention programs.

What is the definition of a financial institution or creditor?

The Federal Trade Commission has defined this very broadly as anyone who defers payment on a debt or anyone who defers payment on goods or services. Furthermore, a creditor is:

Any entity that regularly extends, renews or continues credit
Any entity that regularly arranges for the extension, renewal or continuation of credit
Any assignee of an original creditor who is involved in the decision to extend, renew or continue credit