Do you feel like your property management office does not need to comply with the FTC’s Red Flags rules? If so, you should rethink your position. This legislation definitely applies to the Property Management industry and (to protect yourself) you DO need to have a written Red Flags Rule Policy in your office.
Identity theft has become a multi-million dollar business, causing many people both financial and emotional harm. There are endless stories of credit card theft, credit card rings, and financial fraud. This has led to the creation of the “Red Flags Rule” by the FTC.
The FTC defines “Identity Theft” as a fraud committed or attempted using the identifying information of another person without authority.[i]
Originally, Congress passed the Fair and Accurate Credit Transactions Act (FACTA) in 2003 to develop rules and guidelines for detection, prevention, and mitigation of identity theft for financial institutions and creditors. Then, the Fair Trade Commission (FTC) created the “Red Flags Rule” for businesses in 2007 and imposed active enforcement November 1, 2009. This rule requires that business have a written Identify Theft Prevention Program to detect the warning signs or “red flags” of identity theft in daily operations.
The FTC has defined “red flags” as suspicious patterns or practices, or specific activities that indicate the possibility of identity theft. [ii]
The Red Flags Rule applies to “financial institutions” and “creditors.” In the past, it was unclear to many if this applied to property management companies. However, newer amendments to the Federal Credit Reporting Act, FCRA, have made it clear that property owners and managers are subject to the provisions of the Red Flags Rule. The Red Flag Program Clarification Act of 2010, which President Obama signed into law in December 2010, is responsible for this clarification. To read through the act, visit govtrack.us for more information.
If you do not have a written Red Flags Office Policy, we can help. LandlordSource offers a Red Flags policy template that you can easily customize for your real estate / property management office. In fact, we feel so strongly about helping you comply with this important legislation that we are offering the Red Flags manual free to all of our customers who purchase one of our other policy & procedures manuals before the end of December (2012).
Please do not ignore this very important legislation. Identity theft is serious business and there are serious fines involved if you are not complying with the Red Flag Rule.
Jean Storms, MPM® is the founder/author of LandlordSource and has been a NARPM® member since January 1993.
Disclaimer: LandlordSource does not represent the article content in this website as legal advice. It is shared information only and up to the reader to use this information responsibly, seeking legal advice as necessary to their business.