Scam Emails Archive : Generic

Subject: Scamdex, Internet Scambusters Newsletter #313, 12-10-08

From: "Scambusters Editors" <>

This email with the subject "Scamdex, Internet Scambusters Newsletter #313, 12-10-08" was received in one of Scamdex's honeypot email accounts on Wed, 10 Dec 2008 01:02:28 -0800 and has been classified as a Generic Scam.

The sender was "Scambusters Editors" <>, although it may have been spoofed.


Internet Scambusters (tm)
The #1 Publication on Internet Fraud

By Scambusters Audri, Jim and Keith
Issue #313  December 10, 2008


Note 1: Easily change your subscription information by
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Note 2: Please share this newsletter with 3 or 4 of your
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Hi Scamdex,

Today we cover a topic most people have probably never heard
of that is important for protecting your identity: the "red
flag rules."

Red flag rules are a set of regulations that firms who handle
your money were originally supposed to have in place by
November 1, 2008, as part of a crackdown on identity theft.

But many didn't make the deadline, and the recent banking
crisis has overshadowed the struggle to get these vital new
measures in place.

The Federal Trade Commission (FTC) decided to suspend
enforcement of the new "Red Flag Rules" until May 1, 2009, to
give creditors and financial institutions additional time to
develop and implement written identity theft prevention

In this article, we explain how the red flag rules work and
what your bank or other lender should be doing to protect you.

Although this issue is geared towards our US subscribers, we
believe our international subscribers should ask similar
questions of their financial institutions.

As always, we recommend you begin by taking a look at this
week's issue of Scamlines -- What's New in Scams? -- here.

We also recommend you check out the most popular
articles from our other sites during the past week:

Answers to 7 of the Biggest Questions About Japan's Winter
Wildlife: An Interview With Roy Toft

Dirt Cheap Airfare For Everyone

Money Saving Ideas to Stretch Your Budget Further

Holiday articles:

Creating Gourmet Chocolate Covered Spoons

Christmas Trees: Artificial or Natural?

Find Perfect Romantic Gift Ideas to Spark Your Love Life!

Let's check out today's main topic...

Identity Theft: Is Your Lender Complying With the New Red Flag

While they've been dealing with all the woes of the current
financial crisis, America's banks and other institutions that
provide credit have been grappling with another tough but
lesser-known issue that affects us all -- the "red flag

Never heard of them? Nor, it seems, have some of the
organizations that are supposed to put them in place.

The red flag rules are a set of regulations that were
originally set to come into force at the beginning of November
as part of a bold, new crusade against the nation's biggest
fraud -- identity theft.

And while its effects may not quite be on the scale of the
banking disaster that has sent the economy into a tailspin, 9
million of us do fall victim to ID theft every year -- and
that number is growing.

Five years ago, the Federal Government introduced the Fair and
Accurate Credit Transactions (FACT) Act. As part of that, the
red flag rules became law at the beginning of 2008, with a
requirement that all "creditors" -- banks and other companies
that give credit -- implement them by November 1.

At the beginning of November, the FTC decided to suspend
enforcement of the new "Red Flag Rules" until May 1, 2009, but
we thought it's important you should know what's coming.

So why is this important to you?

Because you should make it part of your own personal security
to check if your bank or other credit-giver is complying. If
they are, maybe you can feel just that little bit safer from
the clutches of ID thieves. If they don't, you should want to
know why.

Basically, the red flag rules say these creditors must have
the following:

- A written program of safeguards and checks they will use to
flag up potential identity thefts.

- Written procedures for how they will do these checks and
deal with instances of the crime.

- Support and approval of the program at the highest level --
the board of directors.

- A system in place for continuously monitoring the
development of the crime and updating their programs for
dealing with it.

- Appropriate training for all staff who may be in a position
to spot the crime and deal with it.

Now, you may think that many institutions already have
measures in place to cut the risk of ID theft but that's not
enough. The red flag rules demand the measures are actually
written down -- and followed.

They not only define and formalize the way lenders must behave
but the rules also extend to other organizations besides banks.

For example, utility companies, health care providers and even
car dealerships are all involved with providing services or
products that are effectively on credit -- in that we may pay
for them in installments.

Every single one of them -- and there may be as many as two
million affected organizations -- must comply with the

The Federal Trade Commission (FTC), which is responsible for
overseeing implementation provides 26 examples of red flags --
situations that should trigger an alert and prompt the vetting
measures in the written programs.

Some of them are rather obvious, but these are the events that
are supposed to put lenders on guard:

1. A fraud alert is included with a consumer report they've
requested on an individual.

2. Notice of a credit freeze is received in response to a
request for a consumer report.

3. A consumer reporting agency indicates an address

4. Unusual credit activity, such as an increased number of
accounts, is noticed.

5. Documents provided for identification appear altered or

6. Photograph on an ID is inconsistent with the appearance of
the customer.

7. Information on an ID is inconsistent with information
provided by a person opening an account.

8. Information on ID, such as signature, is inconsistent with
information on file at the financial institution.

9. The application appears forged, altered, or destroyed and

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

11. There's a lack of correlation between the individual's
Social Security number range and their date of birth.

12. Personal identifying information is associated with known
fraud activity.

13. Suspicious addresses are supplied, such as a mail drop or
prison, or phone numbers associated with pagers or an
answering service.

14. The Social Security number that was provided matches that
submitted by another person opening an account or other

15. An address or phone number matches that supplied by a
large number of applicants.

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

17. Personal information is inconsistent with information
already on file at financial institution or creditor.

18. A person opening an account or a customer is unable to
correctly answer challenge questions.

19. Shortly after a change of address, the creditor receives a
request for additional users of an account.

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

21. A drastic change in payment patterns, use of available
credit or spending patterns occur.

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

23. Mail sent to a customer is repeatedly returned as
undeliverable, despite ongoing transactions on an active

24. The financial institution or creditor is notified that the
customer is not receiving paper account statements.

25. The financial institution or creditor is notified of
unauthorized charges or transactions on a customer's account.

26. The financial institution or creditor is notified that it
has opened a fraudulent account for a person engaged in
identity theft.

But, says the FTC, "these red flags are not a checklist, but
rather, are examples that financial institutions and creditors
may want to use as a starting point." Creditors must define
their own red flags, and the appropriate responses, in their
written program.

It was estimated that somewhere between a quarter and a third
of organizations did not have their red flag rules in place by
the original November 1 compliance deadline, and the FTC
decided to give more time -- until May 1, 2009.

Unfortunately, many institutions and organizations don't even
know they're supposed to comply or they think that having an
ID theft policy already in place is enough.

Though they're unlikely to jump on any non-compliant
organization straightaway, the FTC does have power to levy
huge fines against creditors who don't get their act together.

How will they find out? Well the FTC could, and probably will,
do spot checks.

But after the laws go into effect, you can also ask your
creditors if they're compliant. If they're not, or if the
person you ask doesn't know, that's a serious cause for
concern because they're handling your money and your account.

After all, if you discover your financial institution isn't
complying, so might the scammers, making your creditor a
favored target for ID theft. And you don't want that. It's
your money.

And your identity. So if they're not ready, that's your own
personal red flag. And, we recommend you stay up-to-date on
this to make sure your lenders and financial institutions
comply with the red flag rules as the deadline approaches.

That's all for today -- we'll see you next week.

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