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© 2010 Bloomberg Finance L.P. All rights reserved. Origina lly published by Bloomberg Finance L.P in the Vol. 3, No. 1 edition of the Bloomberg Law Reports – Risk & Compli ance. Reprinted with permission. The views expressed herein are those of the authors and do not represent th ose of Bloomberg Finance L.P. Bloomberg Law Reports® is a registered trademark and service mark of Bloomberg Finance L.P. Th e FACTA Red Fl ag s Ru l e: A Pr i m er Co n t r i b u t ed b y Tan y a L. Fo r sh ei t , I n f o Law Gr o u p LLP On No v em b er 9 , 2 0 0 7 , t h e Fed er al Dep o si t I n su r an ce Co r p o r at i o n , Fed er al Reser v e Bo ar d ( FRB) , Of f ice o f t h e Co m p t r o ll er o f t h e Cu r r en cy , an d t he Of f ice o f Th r if t Su p er v i si o n ( co l l ect i v el y , b an k i n g ag en ci es) , al o n g w it h t h e Nat io n al Cr ed i t Un i o n Ad m i n i st r at i o n ( NCUA) an d t h e Fed er al Tr ad e Co m m issio n ( FTC) , issu ed a j o i n t f i n al r u l e ( t h e Red Fl ag s Ru l e) p u r su an t t o t h e Fai r an d Accu r at e Cr ed i t Tr an sact i o n s Act o f 2 0 0 3 ( FACTA) . 1 Th e Red Fl ag s Ru l e r eq u i r es co v er ed en t i t i es t o d esi g n an d i m p l em en t w r i t t en p r o g r am s an d p o l i ci es t o d et ect , p r ev en t an d m it ig at e id en t it y t h ef t co n n ect ed w it h t h e o p en in g o f a " c o v er ed acco u n t " o r an y ex ist in g co v er ed acco u n t . 2 Ov er v i ew of t h e Red Fl ag s Ru l e Th e Red Fl ag s Ru l e ap p l i es t o cer t ain " co v er ed en t i t i es" , as d ef i n ed b el o w . At a h i g h l ev el , t h e Red Flag s Ru l e r eq u i r es t h e f o l l o w in g o f co v er ed en t it ies: ( 1 ) est ab l i sh a w r it t en I d en t it y Th ef t Pr ev en t io n Pr o g r a m , i n cl u d i n g t h e f o l l o w i n g el em en t s: ( a) id en t if icat i o n o f r ed f l ag s, ( b ) d et ect ion o f r ed f l ag s, ( c) ap p r o p r i at e r esp o n se t o d et ect ed r ed f l ag s, an d ( d ) u p d at es; an d ( 2 ) ad m i n i st er t h e p r o g r am b y , am o n g o t h er t h i n g s: ( a) o b t ai n i n g t h e ap p r o v al o f t h e b o ar d o f d i r ect o r s, ( b ) d esi g n at i n g p er so n n el t o o v er see an d ad m i n i st er t h e p r o g r am , ( c) t r ai n i n g st af f , an d ( d ) ex er ci si n g o v er si g h t o f ser v i ce p r o v i d er ar r an g em en t s. Red f lag s i n cl u d e, b u t ar e n o t l i m i t ed t o , t h e f o l l o w i n g :