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MAKING SENSE OF DODD-FRANK

The Dodd-Frank Act has broad and deep implications that will touch every corner of financial services and multiple other industries. This site, developed and maintained by attorneys at Stinson Leonard Street, is dedicated to making sense of this complex legislation and helping businesses understand how it will affect them specifically. Our Bloggers »

Dodd-Frank

Proposed Red Flags Rules Jointly Announced by the SEC and CFTC

by David Jenson   |   February 28, 2012

Under the Fair and Accurate Credit Transactions Act of 2003 (the “FACT Act”), the Federal Credit Reporting Act was amended to require that certain federal agencies, including the  FTC and FDIC, jointly issue rules and guidelines related to identity theft, which have colloquially been termed the “red flag rules.”  The FACT Act also required the agencies to issue joint rules and guidelines relating to issuers of credit and debt cards.  Final card issuer rules and red flags rules were issued by the agencies in 2007 – you can find more information on those rules here, at the FTC’s red flags website.

The Dodd-Frank Act amended the FACT  Act to add the SEC and the CFTC to the list of agencies that are required to issue joint red flags rules and card issuer rules, proposed forms of which were announced today by the SEC.  The notice of proposed rules explains that the practical effect of the Dodd-Frank Act’s amendment of the FACT Act is to shift the rulemaking authority for the red flags rules and card issuer rules from other agencies to the SEC and CFTC.

Although the proposed rules are coming from the SEC and CFTC, they are “substantially similar” to the rules adopted by the other agencies in 2007.  The notice of proposed rules assures businesses that “the proposed rules and guidelines, if adopted, would not contain new requirements not already in the [existing red flags and card issuer rules], nor would they expand the scope of those rules to include new entities that were not already previously [sic] covered.”

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