Automated Solutions Help ARM Professionals Become Red Flag Compliant

Some debt collectors and buyers may not think of themselves as a potential source of identity theft because they don’t loan money or are more often trying to obtain information to collect a debt.

But some agencies have been duped into providing debtor information that could lead to identity theft with another creditor, said Sai Huda, chief executive officer of Compliance Coach, a privately held automated compliance solutions company in San Diego.

Huda said organized crime groups have used collection agencies to get information by pretending to be the borrower.  Some claim they are responding to a notice they received from the debt collector, or that they are trying to verify other information about the account.  Some unsuspecting associates, believing the caller is trying to settle a debt, have provided information the caller was able to use to commit identity theft, he said.

“If multiple calls are made in a short time from a consumer to verify information they should already have, that’s a red flag,” Huda said.

As the May 1 deadline for complying with the Federal Trade Commission’s Red Flag Rule nears, most new automated solutions focus on helping small and medium-sized creditors, such as auto dealers, furniture stores, health care providers and financing companies.  Some automated products, however, offer solutions that may suit part or all of the needs of ARM professionals.

Huda said Compliance Coach kept ARM professionals in mind when it designed Compliance Pal, a web-based red flag compliance solution that helps companies design and update their identify theft prevention program. Compliance Pal allows users to answer questions from a menu of industry specific red flag risk questions to generate an identity prevention theft program specific to their business.  Huda said the annual subscription allows companies to print training material based on their program.  Or the company can choose a computer based training module for an additional fee.  Users also receive fraud alert about new risk specific to their industry, so they can update their programs and training materials, Huda said.

“Thirty-three percent of the time, it’s an insider that commits the identity theft. Supervisors used employees’ computers when away on lunch break, leave or vacation,” Huda said. “When hiring debt collectors, are they doing criminal background checks?  Is that part of their policies?”

Minneapolis-based Wolters Kluwer Financial Services says its Wiz Sentri: RiskID solution not only helps companies verify identities at the beginning of a relationship, it can be used for identity authentication in ongoing relationships common among collection professionals.

Ted Dreyer, senior attorney for Wolters Kluwer, said the program generates challenge questions that an identity thief trying to open an account or seek information for theft wouldn’t know simply by stealing information.  He said it’s particularly useful if you’re dealing with person long distance and you need to determine that they truly are who say they are.

"That’s an area where authentication would be useful to say to them, what cities lived in past, in what state was  your social security number issued to determine if a person has knowledge about their past life," said Dreyer.

Privately held MicroBilt of Kennesaw, Ga. designed Red Shield to help small and medium-sized companies who extend credit to consumers comply with the FTC’s red flag rules, while offering some insurance the creditor and consumer can rely on if a fraudulent account is opened.  Using scoring tools from Fair Isaac, Red Shield analyzes the likelihood of identity fraud and assigns a pass or fail grade to the transaction, said Brian Bradley, MicroBilt’s executive vice president of strategy and emerging products. If a transaction passes, it’s automatically guaranteed against fraud for up to $25,000 for both the business and consumer. If the transaction fails, Red Shield users are given several options to reduce the risk of identity theft or fraud.

Bradley said Red Shield also can be used by collection professionals to spot discrepancies in personal information, giving vendors four top reasons the transaction failed.

“If it fails, you need to look to your own policies,” Bradley said.  “You may need to report to your customers, that they might have the wrong customer.”

MicroBilt has been highlighting the impact of Red Flags non-compliance with some clever advertisements on YouTube. (one of MicroBilt’s commercials can be seen at the bottom of this story)

Meanwhile, credit information manager TransUnion offers a range of products from simple messaging tools to interactive identity decisioning services for ARM professionals who use their credit data to help with identity verification and theft prevention. TransUnion’s decisioning tools automatically assess and extract data from credit and non-credit sources to more accurately verify a customer’s identity, while allowing users to determine the best format for viewing the information.  High risk fraud alerts and identification mismatch alerts also are offered as add-on to a TransUnion credit report, according to Charles Deremer, a TransUnion senior business consultant.

Microbilt’s YouTube ad: