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US banks to adopt "red flag" ID theft scheme

US regulators are planning to order banks to adopt a new “red flag” system to help counter the growing problem of identity theft.

The Federal Deposit Insurance Corp (FDIC) said banks should adopt an identity theft prevention programme, including “red flags” against suspicious account activity.

Among other changes, the new practices would require credit and debit card issuers to assess the validity of requests for a change of address when followed by requests for additional cards.

The proposed regulations would also mean that every bank and creditor would have to adopt procedures for detecting, preventing and mitigating identity theft.

It is estimated that around 10 million Americans were the victims of some sort of identity theft in 2003.

The FDIC proposals are out for public consultation until mid-September.

 

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