Barring further delays, beginning Nov. 1 all financialinstitutions and any company that extends credit to customers, evenin the form of multiple-month payment plans, will be required toestablish centralized anti-fraud procedures and systems under theFederal Trade Commission's new Red Flags Rule.

Facing a growing wave of identity theft, the FTC wants companiesto pay more attention to establishing the identity of customers andcredit recipients, and to put in place a system to flag theftattempts early. “Identity theft has been the No. 1 consumercomplaint at the FTC for years now,” says Manas Mohapatra, anattorney with the agency's division of privacy and identityprotection.

But attorneys specializing in business law warn that the newregulations could surprise many companies that have never viewedthemselves as creditors. Mohapatra notes that even sendingcustomers bills for payment in 30 days for a product or servicecould be construed as extending credit.