There is a lot of hand-wringing going on about November 1.
Oh, sure, most of the country is focused on a different November date, that of November 4, Election Day. But there are a group of people, representing two million organizations and businesses, that surely are a bit anxious.
Last year, Congress passed Section 214 of the Fair and Accurate Credit Transactions Act (FACTA), which stated that any businesses making credit decisions have to look for "red flags" that would indicate that the person they're about to extend credit to is actually the person they're extending credit to.
This is a good thing for the public. It means that it may get a little harder for someone to steal your identity and then, say, buy a house in your name, or have you paying some other guy's utility bill.
The companies that Section 214 of FACTA are referring to are mortgage brokers, mortgage lenders, consumer finance companies, small business lenders, motor vehicle dealers, utility companies, municipalities, phone companies and numerous other outfits. Basically, the way I understand it, all of these enterprises need to have a plan in place that details the types of red flags that go off when a con artist is trying to steal the identity of one of their customers.
When the red flags do go off, the owner of the company needs to have a detection and response plan determined. This plan has to be written down and approved by the board of directors. Employees need to be trained. And the plan needs to be updated periodically.
It's all very confusing, and if you're just a regular, non-executive guy who works for these type of companies, don't give it a second thought. If you work at a pizza parlor, don't give it a second thought. If you're a teacher or an accountant -- well, you get the idea. This isn't something you need to worry about.
But what if you do own, say, a car dealership and do need to worry about these things? What happens if you're not prepared by November 1? Are you fined? Does your business shut down until you have a red flag plan in place? Do some guys from the government drop by and beat you up?
I asked Eduard Goodman, the General Counsel and Chief Privacy Officer at Identity Theft 911, LLC, a company that specializes in protecting business owners from identity theft.
Goodman is confident that nobody will be beaten up, and he even says, "From what I've heard from people in the know, that took part in the drafting of the Red Flag provisions, regulators and groups are well aware that the majority of businesses will not be ready in time and will likely be given a little leeway."
He says that the Federal Trade Commission -- the agency overseeing all of this -- will decide what happens but suspects that businesses that are still working on this several days or weeks after November 1 are going to be fine. A year later, and instead of fine, they'll probably be fined, into the thousands of dollars.
And chances are, Goodman admits, companies may be able to skate indefinitely without adopting a red flag plan. Not that he recommends this. He just means that it's likely that the only way the FTC will learn that a company hasn't put a red flag plan in place is if down the road, someone complains of having their identity stolen and an investigation then shows that the company never adopted a strategy for protecting their customers.
So what does any of this mean for the public? Anything? Well, yeah. I'm assuming that after November 1, when you ask your bank for a replacement credit card because yours is worn out, it'll be even more challenging than ever to get them to send you one.
But on the other hand, we will be more protected than ever from identity thieves. At least in theory. And just knowing about the red flag rules means that after November 1, if you're working with any business that deals in credit and seems a little disorganized or incompetent, Goodman suggests that you "simply ask the institution that they do business with whether they are red flag compliant."
If they aren't? My advice, and what I'll bet Goodman was implying -- politely nod, grab your money and run.
Geoff Williams is a freelance journalist and the author of C.C. Pyle's Amazing Foot Race: The True Story of the 1928 Coast-to-Coast Run Across America (Rodale).
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