NOTE: The FTC has delayed enforcement of the new Red Flag Rule until June 1, 2010.

On November 1, 2008, new federal regulations promulgated by the Federal Trade Commission and designed to curb identity theft took effect. The regulations require certain end-users of consumer reports to create policies and procedures to help identify and mitigate instances of identity theft.

Notably, the regulations do not apply to all end-users of consumer reports. Rather, they apply only to "users" of consumer reports who receive information from "Nationwide CRAs." The Fair Credit Reporting Act defines the term "Nationwide CRAs" as entities that "maintain credit information." As such, the regulations apply to end-users that receive credit reports directly from credit bureaus or from a third-party that has obtained information from a credit bureau, such as Frasco® Profiles. Accordingly, if you are a user of credit reports, the regulations likely will apply to you.

The regulations require credit bureaus (nationwide CRAs) to issue a "Notice of Address Discrepancy" when there is a substantial difference between the address provided by the subject of the report to facilitate the background check and the address contained in the credit bureau's files. This notice will likely appear on the credit report itself instead of being a separate document. Companies covered by the regulations must implement a written policy to respond to situations where they receive a "Notice of Address Discrepancy."

An end-user's written policy must allow it to form a "reasonable belief" that the consumer report actually pertains to the consumer for which the company conducted a background check. The regulations offer examples of the types of actions that an end-user can take to form a "reasonable belief," including: (1) checking the information contained in the company's records, (2) asking the applicant about current and former addresses, or (3) requesting that the individual provide proof of identity, such as a driver's license.

In regard to a report provided by Frasco^® Profiles, you may find a "Notice of Address Discrepancy" in either the Social Security Trace or the Credit Report, or both. It will be in bold type and will note that the address provided does not match the address on file at the credit bureau.



NOTE: This summary is being provided solely as a courtesy. It is intended to provide a brief snapshot of legislation potentially affecting end-users. It should not be construed as providing a comprehensive discussion of this or any law. This summary should not be construed in any way as legal advice. Parties receiving this summary are encouraged to consult with legal counsel to ensure that they are complying with all applicable laws affecting end-users in their jurisdictions.