Who Must Comply with the Red Flag Rules?
The Red Flag Rules apply to financial institutions and creditors who offer or maintain one or more covered accounts, and specifically mandate these entities create and implement a Program.1 A financial institution is defined 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.”2 Section 461(b), which falls under the Federal Reserve System regulations, defines a transaction account asa deposit or account on which the depositor or account holder is permitted to make withdrawals by negotiable or transferable instrument, payment orders of withdrawal, telephone transfers, or other similar items for the purpose of making payments or transfers to third persons or others. Such term includes demand deposits, negotiable order of withdrawal accounts, savings deposits subjec
