Fed publishes final rules combating identity theft

WASHINGTON, Oct 31 (Reuters) - U.S. financial regulators and the Federal Trade Commission said on Wednesday they will soon publish final rules designed to detect "red flags" when consumers are at risk of identity theft.

"These rules provide consumers with an additional layer of protection by requiring financial institutions and creditors to adopt identity theft prevention programs that apply to all consumer accounts -- without exception," said Federal Reserve Board Governor Randall Kroszner.

These final rules implement two sections of the Fair and Accurate Credit Transactions Act of 2003.

Financial institutions will be required to develop a program that shows relevant patterns, practices and specific forms of activity that are "red flags" signaling possible identity theft, the Federal Reserve said.

Credit and debit card issuers will have to develop policies and procedures to assess the validity of a request for a change of address followed closely by a request for an additional or replacement card.

Users of consumer reports will be required to develop procedures they will apply when they receive a notice of an address discrepancy from a credit reporting agency.

The 2003 law had ordered banking regulators and the Federal Trade Commission to take steps to improve the accuracy of credit reports, combat identity theft and help consumers manage disputes over inaccuracies in their credit reports.

The financial regulators include the Office of the Comptroller of the Currency, the Federal Deposit Insurance Corp., the Office of Thrift Supervision and the National Credit Union Administration.

The final rules are effective on Jan. 1, 2008.