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Red Flag Helps You Protect Your Customers

Here are the expectations for Red Flag Compliance

Each financial institution is required to implement a Red Flag / Identity Theft program that considers the guidelines in Appendix J of the regulation. Then, the bank must include in its Program those guidelines that are appropriate.

How Financial Institutions Fail at Red Flag Compliance

Most bank Red Flag programs fail to figure out which guidelines to follow. They dump the entire Red Flag App J into their policy, not realizing that many of those flags do not apply to their bank. It should be remembered that the guidelines are intended to assist financial institutions in the formulation and maintenance of a Program that satisfies the regulatory requirements. They are not to be used as a “de facto” policy.

A second failing most Red Flag programs have is not creating a way to account for the overall effectiveness of its program for their particular institution. In other words, an institution must be monitoring the Red Flag program in terms of its overall activity.  NOTE: the Red Flag policy has become inextricably entwined with the EFT Rules and the most recent policies published by VISA for their member banks.
 

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