For the most part, when a company’s database was breached, a laptop with personal information was lost or credit card numbers got swiped, it was up to consumers to put fraud alerts on their credit reports, check those reports frequently and put back the pieces of their credit history together on their own.
Starting today, businesses that extend credit will have to take extra steps to protect your personal information on the front end, and investigate if they find something of concern.
That’s when Federal Trade Commission rules will kick in. The so-called “Red Flags Rule” requires businesses, small and large, to do a better job of verifying the identity of their customers — to keep them from being taken advantage of by identity thieves.
Businesses from utilities to physicians will be on the lookout for fraud alerts on consumers’ credit reports, identification that doesn’t look like the person presenting it and anything that looks forged.
These and 23 other potential red flags are supposed to lead businesses to take extra steps to figure out who they are doing business with.
“What it focuses on is any company that extends credit — such as where they bill you now and you pay in 30 days,” said Miami attorney Luis Salazar, of Greenberg Traurig. “If there’s a red flag, they have to investigate.”
“Small businesses are not excluded, even the smallest business, if they qualify as a creditor,” he said. Businesses that accept credit cards as a form of payment aren’t necessarily subject to the rules, which were enacted in 2007.
At Honda Cars of Bradenton, General Manager Matt Woods said his dealership has been in compliance with the red flag requirements for at least five months.
“We have tons of safeguard initiatives throughout the store,” Woods said.
Some of those include securing documents in well-protected areas, shredding sensitive information and issuing procedures to employees for them to follow.
“We have a three-strike policy with employees if they don’t properly follow the safeguards,” Woods said. “First is a warning, second is counseling through a training video or session and third could be termination.”
Bob Firkins, general manager of Firkins Chrysler in Bradenton, said his dealership keeps records locked up and shreds outdated documents. In addition, the dealership has annual inspections to make sure it is in compliance with identity theft protection procedures.
“The red flag rules are a good thing for consumers,” Firkins said. “It protects their identity, and it’s another thing done to protect the consumer.”
Neil Spirtas, with the Manatee Chamber of Commerce, said the chamber has “great concern” about identity theft and its impact on businesses. “We’ve had several workshop on it over the past few years,” he said.
— The Herald’s Jennifer Rich and Grace Gagliano contributed to this report.