The Red Flags Rule was created from the Fair and Accurate Credit Transactions (FACT) Act of 2003. The Rule requires that all financial institutions and creditors must have written and executed identity theft prevention plans in place before November 1st, 2008.

The penalty for non compliance ranges from $2,500 to $11,000 and includes ongoing audits from the Federal Trade Commission (FTC).

Who must comply? The Rule applies to all creditors and financial institutions with covered accounts. The FTC defines a creditor as: "any entity that regularly extends, renews, or continues credit; any entity that regularly arranges for the extension, renewal, or continuation of credit; or any assignee of an original creditor who is involved in the decision to extend, renew, or continue credit." And goes on to explain: "Some examples of creditors are finance companies, automobile dealers, mortgage brokers..."

You can see the entire 256 page Federal document here: http://www.ftc.gov/os/fedreg/2007/november/071109redflags.pdf

What steps need to be taken now to become compliant? The Red Flags Plan should provide identification, detection, and responses to patterns, practices, or specific activities that could indicate identity theft.

Many companies hire an attorney or consultant to write their Red Flags plan (with costs ranging from $5,000 to $20,000).

There are a few "do it yourself template plans" that can be purchased and implemented for those who wish to save money. Average costs for such templates range from $500 to $2,000. Template plans are usually much faster to implement yet still provide an outline of the specific rules, training and implementation of the Red Flags FACT Act.

The "do it yourself template plans" are ideal for the small to medium size business owners such as Mortgage Brokers, Auto Dealers, Debt Collectors, etc.

To learn more about the Red Flag FACTA Rules and learn about Affordable Red Flags Template Plans visit http://www.Red-Flags-Help.com and download the 4 Page Special Report "3 Facts You Must Know About The Red Flags Act BEFORE Starting The Compliance Process."