NEW England HVAC Insider News FTC Extends Compliance Deadline for Red Flag Identity Theft Rule

The Federal Trade Commission (FTC) has issued an extension of the compliance deadline for companies to implement new identity theft requirements for customer accounts.  The “Red Flag” rule as it is commonly known was to go into effect on August 1 and applies to all heating oil dealers, propane dealers and petroleum marketers who do not collect cash on delivery for customer transactions.  The new compliance deadline is now set for November 1, 2009. Congress mandated the Red Flag requirements in the Fair and Accurate Credit Transactions Act of 2003.  Under the FTC Red Flag rule, any company that meets the broad definition of “creditor” established by Congress must put into place a prevention plan that identifies patterns, practices and activities that are “red flags” for possible identity theft. A “creditor” is defined as essentially any company that bills customers for products or services.  As a result, most petroleum marketers qualify as creditors under the Red Flag rule and must implement an identity theft prevention plan. The Red Flag rule goes beyond the routine securing of customer account information that most companies already follow. The rule requires companies to seek out and respond to suspicious data in customer accounts that indicate an identity theft has taken place. Story continues below ↓ advertisement | your ad here

In other words, companies must now police customer accounts for identity theft. This is the third time the FTC has extended the compliance deadline for the Red Flag rule which was initially set to go into effect on November 1, 2008. This latest extension was mandated to avert a lawsuit by the American Bar Association (ABA).  The ABA objects to the rule’s application to attorneys. Various other trade groups are also objecting to the seemingly limitless reach of the Red Flag Rule. In fact, the FTC admitted that it issued the previous deadline extension due to the ongoing debate over whether Congress wrote the law too broadly, capturing businesses far outside the traditional definition of “creditor”.  The continuing uncertainty over applicability of the rule cuts across a wide array of retail and wholesale businesses and industries. NEFI will continue to monitor this issue and report on further developments as they occur. NEFI is developing Red Flag program templates that will be tailored to the needs of heating oil dealers and propane marketers. The templates will be available soon.                                                                ###