Wikipedia explains a brief history of red flags:

Red flags can signify a warning, martial law, defiance, or left-wing politics. The earliest citation for “red flag” in the Oxford English Dictionary is from 1602 and shows that at that time the flag was used by military forces to indicate that they were preparing for battle. It has been associated with left-wing politics since the French Revolution. The red flag became a symbol of communism as a result of its use by the Paris Commune of 1871. The flags of several communist states, including China, Vietnam, and the former Soviet Union, have red backgrounds. The Labour Party in Britain used it until the 1980s and the French Socialist Party uses it. The earliest citation of “red flag” in the sense of a warning is dated 1777 and refers to a flag warning of flood.

On November 1, 2008 US financial entities and creditors will be working under a completely new interpretation by the FTC:

The Federal Trade Commission (FTC), the federal bank regulatory agencies, and the National Credit Union Administration (NCUA) have issued regulations (the Red Flags Rules) requiring financial institutions and creditors to develop and implement written identity theft prevention programs, as part of the Fair and Accurate Credit Transactions (FACT) Act of 2003. The programs must be in place by November 1, 2008, and must provide for the identification, detection, and response to patterns, practices, or specific activities – known as “red flags” – that could indicate identity theft.

I’ll be presenting a webinar on this subject on October 30th. I promise to resist the urge to discuss the long-standing meaning of red flags and how the US government is increasingly appropriating it in areas of security and regulation. For example, the US Bureau of Industry and Security also has “things to look for in export transactions”, which are called Red Flag Indicators. Better dead than red?