Red Flag Rules with the FTC Extended
By Suzy Gutierrez, Account Manager
 The Federal Trade Commission (FTC), the federal bank regulatory agencies, and the National Credit Union Administration (NCUA) have issued regulations, known as the Red Flags Rules, requiring financial institutions and creditors to establish and enforce written identity theft prevention programs, as part of the Fair and Accurate Credit Transactions (FACT) Act of 2003. Originally, the programs were to be in place by November 1, 2008 but the deadline has been extended until May 2009 because many of the required institutions were unaware of its existence, or only recently learned that they must comply.
The new regulations require financial institutions and creditors to develop a written program that identifies and uncovers the significant warning signs of identity theft. These may include: unusual account activity, fraud alerts on a consumer report, or attempted use of suspicious account application documents. The program must also specify responses that would prevent and mitigate the crime and describe a plan to amend the program. The program must be managed by the Board of Directors or senior employees of the organization, include applicable staff training, and provide for oversight of any service providers.
“Red Flag Rules apply to “financial institutions” and “creditors” with “covered accounts”. A financial institution includes a state or national bank, a state or federal savings and loan association, a mutual savings bank, a state or federal credit union, or any other entity that holds a “transaction account” belonging to a consumer. A transaction account is a deposit or other account from which the owner makes payments or transfers. Transaction accounts include checking accounts, negotiable order of withdrawal accounts, savings deposits subject to automatic transfers, and share draft accounts. 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; or any assignee of an original creditor who is involved in the decision to extend, renew, or continue credit. Accepting credit cards as a form of payment does not in and of itself make an entity a creditor. Creditors include finance companies, automobile dealers, mortgage brokers, utility companies, and telecommunications companies. A covered account is an account used mostly for personal, family, or household purposes, and that involves multiple payments or transactions. Covered accounts include credit card accounts, mortgage loans, automobile loans, margin accounts, cell phone accounts, utility accounts, checking accounts, and savings accounts. A covered account is also an account for which there is a foreseeable risk of identity theft – for example, small business or sole proprietorship accounts”.[1]
The Federal Trade Commission (FTC) recently announced that it will delay penalties until May 1, 2009 for required entities not in compliance with FACTA's Red Flag Rules. The reason for the extension was the lack of communication to organizations subject to the regulation. “These organizations indicated that they were not aware that they were engaged in activities that would cause them to fall under the FACT Act’s definition of creditor or financial institution. Many entities also noted that, because they generally are not required to comply with FTC rules in other contexts, they had not followed or even been aware of the rule, and therefore learned of the requirements too late to come into compliance by November 1, 2008”[2]. The Commission’s postponement of enforcement will allow these organizations enough time to develop and achieve proper identity theft prevention programs.
The Red Flags Rules provide all financial institutions and creditors the opportunity to create and carry out a program that is in alignment to their size and complexity, as well as the nature of their operations. For more information on Guidelines issued by the FTC, the federal banking agencies and the NCUA visit http://www.ftc.gov/opa/2007/10/redflag.shtm.
Sources:
1. http://www.ftc.gov/bcp/edu/pubs/business/alerts/alt050.shtm
2. http://www.ftc.gov/opa/2008/10/redflags.shtm
The Mental Health Parity Act of 2008 is Now Law
By Amy Slettedahl, Manager of Professional Services
On October 3, 2008, President George W. Bush signed into law, “The Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act of 2008.” This landmark victory, as it is has been characterized by mental health advocates, is part of a twelve year fight to end insurance discrimination against those seeking treatment for mental health and substance use disorders. In 1996, the late Senator Paul Wellstone teamed up with Senator Pete Domenici to win passage of a law that banned healthcare plans from setting lower annual and lifetime spending limits for mental health treatments.
The 2008 Act, named after both Wellstone and Domenici, closes several of the loopholes left by the 1996 Mental Health Parity Act and extends equal coverage to all aspects of health insurance plans. Specifically, it will end health insurance benefits inequity between mental health/substance use disorders and medical/surgical benefits for group health plans with more than 50 employees. It further preserves existing state parity and consumer protection laws while extending protection of mental health services to over an estimated 80 million Americans who are not protected by state laws. The act also ensures mental health coverage for both in-network and out-of-network services.
According to Dr. Katherine Nordal, the American Psychological Association’s (“APA”) executive director for professional practice, “With passage of this bill, insurance companies can no longer arbitrarily limit the number of hospital days or outpatient treatment sessions, or assign higher co-payments or deductibles for those in need of psychological services.” The National Institute of Mental Health has reported that more than 57 million Americans suffer from a mental health disorder. According to a 2008 nationwide survey by Harris Interactive in conjunction with the APA, 25 percent of Americans do not have adequate access to mental health services and 44 percent either do not have mental health coverage or are not sure if they do.
For more information on this act please visit:
http://www.dol.gov/ebsa/faqs/faq_consumer_mentalhealthparity.html
Quote of the Month
"I am always doing that which I can not do, in order that I may learn how to do it."
–Pablo Picasso
BCI Launches New Case Management System, MySafeWorkplace Plus™
By Briggin Palmer, Marketing Manager
 Business Controls, Inc., a leading provider of ethics hotlines and risk mitigation services, announced the launch of MySafeWorkplace Plus™ for clients to better manage, organize, and report on incidents submitted through their hotline system.
MySafeWorkplace® is an anonymous reporting system that allows client employees to report workplace incidents via an online web form or via a toll-free number and then automatically distributes that information to designated recipients within an organization. MySafeWorkplace Plus™ is an enhanced version of MySafeWorkplace® and offers improved case management functionality, more investigative management features, tools for executive reporting, and enhanced graphical and analytical reporting.
“Many of our clients have been interested in facilitating better communication with executives on certain high profile incidents” said Fred Hessler, Director of Business Development. “MySafeWorkplace Plus™ allows clients to quickly summarize allegations and report on the current status of on-going investigations. Busy executives can now grasp the essence of an allegation without having to navigate an entire written report.”
In 1999 Business Controls, Inc. created MySafeWorkplace® to serve as a central repository for issues within an organization and to give employees a safe way to bring concerns to management. The system enables compliance with numerous governmental regulations and is globally accessible 24/7/365 by both the Internet and toll free numbers.
“One of the things we are most pleased about is the degree of client involvement in determining requirements of this initial release,” Hessler added. “Their insight has been invaluable, and we plan to rely on that insight as we continue to broaden the product.”
In addition to MySafeWorkplace Plus™, MySafeCampus Plus™ and MySafeHospital Plus™ were also released.
Zazzle.com is a site that allows consumers to create one-of-a-kind products and have them shipped within 24 hours. According to their site, “Zazzle's innovative on-demand retail and technology platform, users can instantly create, customize to fit their personal style, purchase and sell a near infinite array of products online.” What does this mean for consumers? “It means that every single product they ship to customers is made – literally – one at a time, right after you click “Purchase Now”.
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