NMHC Guidance: FACT Act Identity Theft Regulations--Red Flag and Address Discrepancy Rules
By: None Specified
Date:  October 18, 2008

Apartment firms should be aware of new federal identity theft prevention rules that went into effect on November 1, 2008 as they impose some compliance obligations on our industry as users of consumer credit reports.  The rules implement Sections 114 and 315 of the Fair and Accurate Credit Transactions Act of 2003 (FACT Act).

Known commonly as the “Red Flag” and Address Discrepancy Rule, its overall objective is to prompt businesses to take additional steps to authenticate a person’s identity when certain warning signs of potential id theft are present.  The first two sections of the rule outline steps that financial institution and creditors have to take to detect and mitigate the risks of "red flags" that might signal possible identity theft and procedures credit and debit card issuers must implement to assess the validity of a change of address request followed closely by a request for a new or replacement card. 

While apartment firms do not, in most circumstances, meet the efinition of financial institution or creditor, and most certainly not a credit card issuer, they are obliged to comply with the third section of the rule that implements Section 315 of the FACT Act and applies to users of credit reports.  Specifically, Section 315 requires users of consumer reports to develop reasonable policies and procedures that they must apply when they receive a notice of address discrepancy from a consumer reporting agency. 

NOTE: On October 22, 2008, the FTC announced that they will suspend enforcement of the new “Red Flags Rule” until May 1, 2009 to give creditors and financial institutions additional time in which to develop and implement written identity theft prevention programs.  On April 30, 2009, the FTC further delayed the enforcement date to August 1, 2009.  

This delay however does not extend to the rule regarding address discrepancies, which applies to apartment owners as users of consumer reports.  Firms are still obliged to comply with that rule as of November 1, 2008. 




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NMHC Contact Information:
Jeanne McGlynn Delgado
NMHC Vice President of Business and Risk Management Policy
jdelgado@nmhc.org
202/974-2344