What does FACTA require from financial institutions?

The requirement from the Fair and Accurate Credit Transactions Act (FACTA) that is correct involves the need for financial institutions to establish an identity theft prevention program. This program is designed to detect, prevent, and mitigate identity theft, ensuring that financial entities take proactive measures to protect consumers’ personal information. This requirement reflects the legislation's focus on enhancing consumer protection and addressing the growing concern of identity theft.

Establishing an identity theft prevention program includes policies and procedures that are specifically tailored to the risks associated with identity theft, such as monitoring accounts for suspicious activities and responding to alerts about potential identity theft occurrences. By mandating a structured program, FACTA aims to provide consumers with a level of assurance that their financial institutions are actively working to safeguard their personal data.

In contrast, the other choices do not accurately reflect the core requirements established by FACTA. While security measures against data breaches are important and related to the overall goal of FACTA, the Act specifically emphasizes the need for comprehensive identity theft prevention programs rather than merely enhancing security protocols or raising fees associated with identity theft services. Moreover, monitoring credit card transactions is not a specific mandate of FACTA; it serves a broader function within financial institutions' operational practices but does not directly address the identity theft focus of