Some cemeteries, funeral homes may be affected by ‘red flag’ rules
Effective November 1 new federal regula- tions to fight identity theft, called "red flag" requirements, are mandatory for financial institutions and also for creditors. As defined under the regulations, the term "credi- tors" may include funeral homes and cemeter- ies.
The regulations require covered businesses to have developed and implemented a written identity theft prevention program by November 1 for the identification, detection and response to patterns, practices or specific activities (known as red flags) that could indicate identity theft.
Cemeteries or funeral homes that help cus- tomers arrange for credit or arrange for cus- tomers to pay in multiple installments or multi- ple insurance premiums may be considered creditors under the regulations.
According to the Federal Trade Commission, "A creditor is any entity that reg- ularly 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.
Accepting credit cards as a form of pay- ment does not in and of itself make an entity a creditor. Creditors include finance companies, automobile dealers, mortgage brokers, utility companies and telecommunications companies. Where non-profit and government entities defer payment for goods and services, they too, are to be considered creditors."
The ICCFA is developing compliance infor- mation and members with questions should call general counsel Bob Fells at 1.800.645.7700.
More detailed information on complying with the red flag regulations will also be forth- coming from the FTC.
Navigating the economic crisis: Use CDARS for protection above $100,000
For over 75 years, depositors have been assured that their funds are safe from bank failures through the Federal Deposit Insurance Corporation. The FDIC protects depositors from losses up to $100,000 per customer per financial institution for savings, checking accounts and on certificates of deposits. It is important to note that various accounts owned by the same customer at the same bank are combined to determine the $100,000 limit. Today, both individuals and small businesses can easily exceed the $100,000 insured maxi- mum and risk losing, at least theoretically, amounts in excess of that limit.
Two solutions to this risk: Open accounts at several different FDIC-insured financial institutions (a potentially cumbersome approach), or enroll in a Certificate of Deposit Account Registry Service (CDARS) at one FDIC-insured financial institution.
An increasing number of banks are offering CDARS, which entail no charges or fees to the customer.
Basically, the customer indicates how much of his or her money should be placed in CDARS (some banks require a $100,000 mini- mum) and the bank arranges to place those funds (known as "pass-through deposits") with other FDIC-insured institutions.
The term of investment is selected by the cus- tomer and typically ranges from four weeks to several years.
Monthly statements are provided to the depositor with the benefit that none of the cus- tomer’s accounts at any of the institutions exceed the $100,000 limit (principal plus interest) and all are insured under the FDIC program.
For more information on CDARS, check the FDIC webpage at www.fdic.gov
or ask your local banker.