The new Fair and Accurate Credit Transactions Act (FACTA) "Red Flags" regulations take effect on April 1, 2009. This Act is a Federal consumer rights law designed to protect consumers' private information and prevent identity theft. The term "red flag" is used to signify activities and behaviors that would suggest to an alert person that someone's identification is being stolen or dishonestly used in the course of a credit transaction. The law is intended to insure that parties who extend credit have a program in place that will serve to ensure that they are on the lookout for key indicators of identity theft, that they set up safeguards against it, and that they properly notify authorities and consumers when a breach occurs.

More specifically, Section 114 of FACTA requires financial institutions and creditors to implement a written identity theft prevention program to detect identity theft and-- if it is detected before damage occurs-- to step in to prevent it. If it is not detected in time, the regulation calls for the financial institution or creditor to mitigate the risk of identity theft to both the consumer and the organization. It also requires that organizations implement a comprehensive identity theft prevention program, bringing their institutions into compliance with the FACTA Red Flags provisions. The purpose of this law is to require that businesses and individuals do everything reasonable they can to nip identity theft in the bud before truly expensive costs and damages to consumers are incurred.

Any person or business who arranges for the extension, renewal, or continuation of credit is subject to this new regulation. As a hospital, you are most likely included.

In anticipation of this May 1st deadline, Cardon has developed our own "Red Flag Policy" that meets the

Federal requirements. We have:

• Established "Red Flags" involving areas of risk for new and existing "credit-related" accounts referred to us,
• Detected Red Flags that have been identified as risks to Cardon,
• Reported Red Flag occurrences to Cardon clients,
• Responded appropriately when Red Flags have been detected,
• Remained current, and in line with the needs and risks associated with this Law so that we can be proactive in periodically updating our program as needs and risks develop and change over time.

Cardon would be pleased to assist you in understanding the Red Flag regulations. As a valued business partner, we will be in touch with you in the upcoming days to share our policy directly with you and be able to answer any questions or concerns that your organization may have.