Red Flag Rules: Fair and Accurate Credit Transactions (FACT) Act of 2003 and Federal Identity Theft Prevention (Updated July 29, 2009).

The FTC has again extended the enforcement of the Red Flag Rules until June 1, 2010.

New federal regulations, known as "red flag rules," require financial institutions and creditors to develop and implement written identity-theft-prevention programs. Many municipalities may be affected by these regulations, depending upon whether a specific municipality can meet the definition of “creditor.” Initially, the due date was November 1, 2008. The Federal Trade Commission (FTC) then suspended enforcement of the new “Red Flags Rule” until May 1, 2009, and then again to August 1, 2009, and then again until November 1, 2009. The FTC has again extended the enforcement of the rules until June 1, 2010 to give creditors and financial institutions additional time in which to develop and implement written identity theft prevention programs. Click here for the FTC press release.

In addition, the FTC has created a website dedicated to providing information about the red flag rules. It is a "How-to" guide for financial institutions and creditors. The website includes, among other things, a guide to the rules, frequently asked questions, press releases, and a four-step template for creating your own rules.

In the meantime, the information below offers some analysis of these rules, and links to sample ordinances and templates from various organizations.

Articles and Analysis:

Identity Theft Prevention Program Requirements For Local Governments; 2008 Illinois Municipal League Seminar For Municipal Attorneys; Kathleen Elliott, Esq.: This presentation analyzes the impact of the new regulations on local governments.

Federal Identity Theft Prevention Requirements; Illinois Municipal Review, September 2008; Brian Day, Staff Attorney, IML: This article gives a brief overview of the federal rules and their possible impact on municipalities.

Model Policies and Other Resources:

Municipal Research and Services Center of Washington: Provides analysis and links to model/sample policies and resolutions from other State and Municipal organizations.

California Society of Municipal Finance Officers: Analysis and Model Policies

North Carolina League of Cities: PDF Memo

Georgia Municipal Association: Analysis and Model Policy

Minnesota Municipal Utilities Association: Analysis and Model Policy

Kentucky League of Cities: Analysis and Model Policy