In what way does the “Red Flags Rule” under the Fair and Accurate Credit Transactions Act (FACTA) relate to the owner of a grocery store who uses a money wire service?
In what way does the “Red Flags Rule” under the Fair and Accurate Credit Transactions Act (FACTA) relate to the owner of a grocery store who uses a money wire service?
The Red Flags Rule under the Fair and Accurate Credit Transactions Act (FACTA) requires businesses that are classified as creditors, including non-traditional financial entities like a grocery store using a money wire service, to implement an identity theft warning system. This system is designed to detect and respond to red flags that may signal identity theft.
I don't think this business is covered by FACTA. This business does not have covered accounts. https://www.ftc.gov/business-guidance/resources/fighting-identity-theft-red-flags-rule-how-guide-business#who
The answer should be B, on page 228 in section 9.2.2, under the "Red Flags Rule", "certain financial entities to develop and implement written identity detection programs that can identify and respond to the "red flags" that signal identity theft."
I think it is D because the red flags rule revolves around protecting identity theft and the grocery store is not a financial entity
D is the correct answer
Even though the grocery store might not be a traditional financial institution, FACTA's Red Flags Rule applies to them as a "creditor" because they offer money wire services, a form of credit under FACTA. This means they are required to have a program to identify and address potential red flags for identity theft. FACTA's definition of "creditor" is broader than the traditional definition and applies to businesses that regularly extend credit in connection with the offering or sale of a product or service. In this case, by offering money wire services, the grocery store is essentially extending credit (facilitating the transfer of funds) and falls under FACTA's definition of a creditor for the purposes of the Red Flags Rule.
I agree.
Should be D The Red Flag Program Clarification Act of 2010 was passed in response to concern that the definition of creditor extended to implicate unintended entities, such as attorneys and health providers, simply because they allow customers to pay their bills after the time of service . The clarification narrows the previously broad definition of creditor, as well as the circumstances under which they are covered by the rule. It eliminates entities that extend credit only “for expenses incidental to a service.” FACTA rule requires certain financial entities to develop and implement written identity theft detection programs that can identify and respond to the “red flags” that signal identity theft. Specifically, the rule applies to Financial institutions and creditors.
“Financial institution” is defined as all banks, savings and loan associations and credit unions. It also includes all other entities that hold a “transaction account” belonging to a consumer. FACTA rule applies to entities that, regularly and in the course of business: Obtain or use consumer reports in connection with a credit transaction Furnish information to consumer reporting agencies in connection with a credit transaction Advance funds to or on behalf of someone, except for expenses incidental to a service provided by the creditor to that person The new law also authorizes regulations that apply the rule to businesses whose accounts should be “subject to a reasonably foreseeable risk of identity theft.”