Address Discrepancy and the Red Flags Rule

Address Discrepancy and the Red Flags Rule

November 1, 2008 marks the day that new rules dealing with address discrepancies in consumer credit reports will go into effect.

We all know that identity theft has become a growing problem over the years costing consumers and businesses millions of dollars. With this in mind the FTC has taken action to help offset this trend by implementing some new regulations as part of FACTA.

For the most part employers won't be impacted too greatly. You may be jumping through a few more hoops, but the end result will benefit your organization if for no other reason than to ensure you aren't hiring someone who has presented himself fraudulently.

Here's how it works:

Only employers who request credit reports on applicants during a background screening will be affected. If the credit bureau compiling the report (CIC clients use TransUnion) finds an address discrepancy which raises a red flag, the employer will receive a notice from the credit bureau.

If notice of address discrepancy is received employers will need to take reasonable measures to verify the identity of the applicant. You can do this through the applicant directly, employment applications and other paperwork, or using a third party if necessary.

Employers who use credit reports will need to establish policies to be in compliance with these new regulations. The policy should address what procedures will be followed should notice of address discrepancy be recieved from the credit bureau, what measures will be taken to ensure the identity of the applicant and how the findings be reported to the bureau.

1. Identify Relevant Red Flags
2. Detect Red Flags
3. Respond Appropriately to Red Flags
4. Ensure that the Program is Updated Periodically.

The good news is that an extension of 6 months has been granted to give creditors and financial institutions additional time to develop these programs. The new enforcment date for this portion of the regulations is May 1, 2009.

As your conduit for credit reports requested in your background screening reports, CIC is prepared to submit your findings directly to TransUnion on your behalf. Please call our office if and when you receive an address discrepany notice from TransUnion and we will work with you to help you through the next steps.

In the meantime, it is strongly recommended that you contact your labor attorney to further clarify these rules with you and how they may impact your business. Their expertise in creating the policies and procedures needed will be invaluable.