Definitions
Some key definitions under the Red Flags Rule
include:
"Account"
- Under the Red Flags Rule, "account" means: "a continuing relationship
established by a person with a financial institution or creditor to
obtain a product or service for personal, family, household or business
purposes." Account specifically includes: "(i) An extension of credit,
such as the purchase of property or services involving a deferred
payment; and (ii) A deposit account."
Because a person may establish a relationship with a
creditor, such as an automobile dealer or a telecommunications provider,
primarily to obtain a product or service that is not financial in
nature, "account" includes relationships with creditors that are not
financial institutions, and the definition is no longer tied to the
provision of "financial" products and services.
"Covered Account"
-Under the Red Flags Rule, a "covered account' means:
"(i) An account that a financial institution or creditor offers or
maintains, primarily for personal, family, or household purposes, that
involves or is designed to permit multiple payments or transactions,
such as a credit card account, mortgage loan, automobile loan, margin
account, cell phone account, utility account, checking account, or
savings account; and
(ii) Any other account that the financial institution
or creditor offers or maintains for which there is a reasonably
foreseeable risk to customers or to the safety and soundness of the
financial institution or creditor from identity theft, including
financial, operational, compliance, reputation, or litigation risks."
"Financial Institutions" -financial
institution as “a State or National bank, a State or Federal savings and
loan association, a mutual savings bank, a State or Federal credit
union, or any other person that, directly or indirectly, holds a
transaction account (as defined in section 461(b) of Title 12) belonging
to a consumer."
"Creditor"-Under
the Red Flags Rule, "creditor" has the same meaning as Section 702 of
the
Equal Credit Opportunity Act (ECOA) (pdf), 15 U.S.C. 1691a.
ECOA defines "creditor" to include a person who arranges for the
extension, renewal, or continuation of credit, which in some cases could
also include third-party debt collectors. As outlined in the final rule,
"creditor" specifically includes, but is not limited to, lenders such as
banks, finance companies, automobile dealers, and mortgage brokers, and
creditors such as utility companies, telecommunications, and cellular
/wireless companies.
"Customer"
- Under the Red Flags Rule, "customer" (and "account holder") means a
person that has a covered account with a financial institution or
creditor.
"Red Flag"
- Under the Red Flags Rule, "red flag" means: "a pattern,
practice, or specific activity that indicates the possible existence of
identity theft."
