Entrepreneurial

How will new identity theft rules affect small business?

- Minara El-Rahman is a contributor to FindLaw’s “Free Enterprise” blog. FindLaw is owned by Thomson Reuters. -

Small business owners have new federal requirements to protect against identity theft in their businesses.

The Federal Trade Commission (FTC) estimates that over 9 million Americans are victims of identity theft annually. As a result, the FTC introduced what is known as the “red flags” rule that was slated to be enforced back in November 2009. The so-called red flags rule requires that certain creditors and organizations with covered accounts implement programs that would identify, detect and address warning signs of possible identity theft in the course of business.

According to the FTC, the red flags programs implemented by such businesses must:

• Identify relevant patterns, practices and specific forms of business activity that are “red flags” of possible identity theft.

• Detect those red flags.

• Respond appropriately to any red flags that are detected and help mitigate identity theft of consumers.
• Update the program periodically in order to ensure that the program is up to date.

New credit card regulations a big step forward

Marshal Cohen

Feb 22, 2010 08:57 EST

– Marshal Cohen, chief industry analyst of The NPD Group, Inc., is a nationally-known expert on consumer behavior and the retail industry. The views expressed are his own. —

These new credit card regulations should be viewed as a big step forward… and they are indeed a big step forward for consumers, especially as they are forced to confront the realities of their credit cards.

As these new credit card regulations go into effect, I hope that they will in fact help consumers manage their credit card debt more effectively. Yes, these changes are a step in the right direction, they inform and empower consumers to manage their credit better. But they still don’t replace the importance of ensuring consumers fully understand how credit cards work.

I am continually amazed at how often I learn, during the course of my research with consumers, how few truly understand that paying the minimum payment does not pay off any of their balance. These changes will enable consumers to monitor their account limits more effectively and perhaps force consumers to balance their credit cards as they might a checkbook. (Something, I’m not so sure consumers have really been forced to do, thus far.)

I think that by being forced to confront their credit card balances at point of purchase as well as being given the option to accept a ‘purchase over limit fee’ is critical in getting consumers to be conscious of their spending. Over the decades consumers have used credit cards as if they were invitations to go on shopping sprees without regard to spending limits.

These new regulations will also afford consumers a deeper awareness of bank charges. Advance notice of rates changing and the like will empower the consumer not only be more reactive to changes but proactive, too. Consumers will also have the ability to anticipate changes and seek out new or alternative banks and accounts.

In the past, consumers were made aware only after receiving their statements and in most cases, not made aware of rate changes at all. Frankly, most consumers don’t read the details of their statement and just pay off the minimum amount due without complete understanding of the statement. With these new regulations going into effect, consumers will be made aware ahead of time. This will in turn allow them to take action and take advantage of competitive offers and convert their accounts to another card or bank.

America’s economic recovery lies in the middle market

Thomas Bonney is founder and managing director of CMF Associates, a financial consulting, staffing and recruiting firm based in Philadelphia, PA, that serves private equity, middle-market and small-cap public companies nationally. The views expressed are his own.

In his 1988 Republican National Convention acceptance speech, George Bush championed the tradition of the American community, describing it as “a brilliant diversity spread like stars, like a thousand points of light in a broad and peaceful sky.”

More than 20 years later, this tradition still forms the core of our country’s strength – particularly the “thousand points of light” that comprise our medium-sized, family- and private-equity owned business community. I believe it is this community that will ultimately drive the tailwind of economic recovery and growth.

The economic healing power of these businesses is clear. According to the Small Business Administration, more than 6.7 million of the 27.2 million existing businesses in 2007 were small businesses with less than 500 paid employees. Just one hire by each of these firms would more than replenish the 6.46 million jobs lost since the recession began in December 2007 through June 2009.

Smaller companies continue to forge the strongest track record of job protection. The Labor Department’s Quarterly Business Employment data for Q4 2008 shows that, relative to the size of private sector employment, job losses at large companies were approximately one-third larger than losses in the middle market. Mid-sized companies with 999 employees or less accounted for 10.9% of job losses, while larger companies with 1000+ employees were responsible for 20.7% of job losses.

Middle market American leadership teams generally are innovators. The innovation we see on the ground is qualitative and anecdotal, but indicates a growing desire on the part of a subset of the middle market to begin to play some offense. This is not the sort of data that quickly moves through the labyrinth of channels used to generate state and federal government data that drives Wall Street and dominates media outlets; we expect that our qualitative observations will be validated in quantitative data by Q1 2010.

For instance, smaller companies are already taking the initiative to pick up the pieces of fallen “humpty dumpty” corporations. Many individuals displaced by larger organizations’ job-shedding are choosing to leverage their experience and relationships and start their own organizations which, in turn, will hire more employees. One example is a newly founded consulting firm that identifies orphan pharmaceutical compounds within large pharmaceutical companies, and connects them with middle-market companies whose cost structures are in line with the orphan compounds’ expected revenues.