December 09, 2010
Red Flags Rule Won’t Apply to Lawyers, Congress Says
December 9, 2010 — Congress has exempted lawyers from the list of “creditors” that must adopt federal protocols to protect clients from identity theft.
The Senate voted November 30 and the House December 7 to exempt lawyers from the Red Flags Rule. The exemption also applies to physicians, other medical professionals, accountants, and others that accept deferred payments for a provided service.
The American Bar Association learned in April 2009 that the Federal Trade Commission planned to regulate lawyers and law firms under the rule, developed to enforce the Fair and Accurate Credit Transactions Act of 2003. The rule requires creditors to develop and implement written programs to identify, detect, and respond to warning signs — “red flags” — of identity theft.
Through lobbying and a lawsuit, the ABA challenged application of the rule to lawyers, saying that the regulation would be onerous and unnecessary.
ABA President Stephen N. Zack called application of the rule to lawyers “a bureaucratic effort to solve a nonexistent problem with paper-pushing regulations that would have increased legal costs.”Updated: Dec 09, 2010