The Federal Trade Commission has once again extended the deadline for enforcing the so-called “Red Flags Rule” that requires financial institutions and creditors to develop identity theft prevention programs.

The rule, which was set to go into effect on Nov. 1, 2009, was extended to June 1, 2010, at the request of members of Congress. The rule was originally promulgated as part of the Fair and Accurate Credit Transactions Act. Under the rule, Congress directed the FTC and other agencies to develop regulations requiring “creditors” and “financial institutions” to address the risk of identity theft. The Red Flags Rule requires all such entities that have “covered accounts” to develop and implement written identity theft prevention programs to help identify, detect, and respond to patterns, practices or specific activities — known as “red flags” — that could indicate identity theft.

The rule was originally set to go into effect on Nov. 1, 2008, but this is the fourth time the deadline for enforcing the rule has been extended.

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