For years I’ve said that identity theft is a complex problem that requires cooperation between consumers, business and law enforcement.  In June, 2010, the Federal Trade Commission (FTC) will begin enforcing the “red flag” rules on thousands of businesses and organizations with consumer accounts.

The rules are designed to prevent identity fraud and require businesses that handle sensitive consumer information to have a plan in place to detect suspicious activity, or patterns of activity, that could result in fraud.  The rules affect a host of accounts, including credit card accounts, mortgage loans, automobile loans, margin accounts, cell phone accounts, utility accounts, checking accounts and savings accounts.

Most consumers won’t experience any changes in the way you do business with these companies.  But in case you trigger a red flag, or plan to open a new account after June 1, you should be prepared to confirm that “you” are really “you” and explain facts that can trigger a “red flag.”

For example, a red flag could be triggered if your address on a credit application doesn’t match the address on your credit report, or if there is a fraud alert on your credit report. Expect the creditor to take extra steps to authenticate your identity by requesting additional identification or by asking questions only you can answer.

You should prepare for added scrutiny when opening a new account or applying for a loan.  First, take more than one form of identification – a drivers license and a passport or other government-issued identification document.  Second, be prepared to answer one or more probing questions about yourself or your financial affairs – addresses of past residences or the name of the company that hold your mortgage.

These rules may seem inconvenient or overly cautious to many consumers, but they are designed to help you by keeping the crooks from pretending to be you.  My goal is to make identity theft prevention a part of our learned safety behaviors, like putting on a seatbelt.  You don’t think twice about it.

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