Adhering to the Notarys New Standard of Care has become more vital than ever as the federal government prepares to launch its long awaited Red Flags Rules, which hold certain industries accountable for verifying identities and protecting consumer data to prevent fraud, or face stiff fines and other penalties for violations.
Notaries and their employers have already been delivered a judicial wake up call to embrace the New Standard Of Care: best practice industry standards that often go beyond state laws to protect the public, avoid liability and build trust in the publics most important transactions. But the Rules, which go into effect on June 1, 2010, add another potential penalty for companies whose careless actions expose their clients to fraud.
The Rules, developed by the Federal Trade Commission, require financial institutions, banks and a wide swath of creditors such as legal and medical practices industries that traditionally employ thousands of Notaries nationwide to implement company programs to verify identities, protect consumer data and prevent fraud. Notaries perform these tasks regularly in vetting identity and keeping records of their notarizations. Companies that fail to institute these programs and knowingly violate the Rules face a $3,500 fine per incident if the carelessness of its management and employees leads to a pattern of fraud.
The FTC has identified Notaries as an important mechanism in combating identity theft and fraud and, as employees of covered industries, Notaries will be held accountable to follow their employers program. While performing their official duties, Notaries can easily keep their clients and their companies out of harms way by simply adhering to the New Standard of Care requiring personal appearance, positively identify signers, keeping accurate and complete records of their notarizations, and following the industry standard best practices outlined in the Model Notary Act and The Notary Public Code of Professional Responsibility.
As the landmark Vancura v. Katris case illustrated, proper training and education are key in ensuring that Notary employees fulfill their duties and avoid liability for themselves and their employers. Now proper training and education will also help Notaries and the companies that employ them avoid violations of the Red Flags Rules.
More Information and Resources:
- Red Flags Rules information
- The Trusted Notary Training program
- The Notary Public Code of Professional Responsibility
- The Model Notary Act
- Legal analysis of Vancura v. Katris case
- More information on NNA educational offerings
- How Notaries can protect themselves from liability
