Frequently Asked Questions Regarding the Red Flags Rule

What is the Red Flags Rule?

The Red Flags Rule is an Identity Theft Program that many businesses and organizations must adopt. This is a Federal Government regulation that is enforced by the Federal Trade Commission (FTC).

What types of businesses and organizations are covered by the Red Flags Rule?

The Rule applies to "financial institutions" and "creditors." Under the Rule, the definition of "creditor" is broad, and includes businesses or organizations that regularly provide goods or services first and allow customers to pay later. Examples of groups that may fall within this definition are utilities, health care providers, lawyers, accountants, and other professional companies.

Does the Red Flags Rule apply to Midstate Electric Cooperative, Inc.?

Yes. Utilities that regularly bill customers after they've received services fall within the statutory definitions of "creditor" and the Co-op is covered by the Rule. 

When did the Red Flags Rule go into effect?

Originally, the FTC deadline was November 1, 2008, but several extensions were granted to businesses. Now at the request of Members of Congress, the Federal Trade Commission is delaying enforcement of the Red Flags Rule until June 1, 2010, for financial institutions and creditors subject to enforcement by the FTC.

Are other utilities complying with the Red Flags Rule?

Some utilities like Midstate are complying, but some utilities have chosen to postpone adopting the Red Flags Rule until the deadline.

If the law is not yet in effect, why is Midstate following the law?

At Midstate, we feel it is only a matter of time before the law will be in effect. Although implementing the Red Flags Rule has been frustrating for our members, there have been many positive benefits for the Cooperative, such as:

• Only you will have access to your account information.
• New electric accounts cannot be setup under a fraudulent name.
• Fewer accounts with balances owing the co-op are being written off.
• We are able to update contact information for members, such as phone numbers and email addresses.
• Many unpaid estate retirements have been located and the heirs have been paid.

So why do you need my identity to protect my identity?

This is probably the most frequently asked question. When working with customers over the phone or in person, we have to ensure the person we are helping is in fact you, the account holder, and not an imposter. In order to ensure no information about your account is given out to the wrong person, we need to ask you indentifying questions that only you would know the answer to. 

What steps has Midstate taken to ensure my identity protection?

• All member information is locked and secured.
• Employees are given training on how to detect and prevent identity theft.
• Midstate uses the latest technology to protect information stored in our computer systems.

For more information regarding the government regulation, visit the FTC’s website.