WisBar News: Bill shielding some lawyers from FTC ‘red flag rule’ headed to Senate:

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    October
    27
    2009

    Bill shielding some lawyers from FTC ‘red flag rule’ headed to Senate


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    Oct. 27, 2009 – Following the U.S. House of Representative’s 400-to-zero vote in favor of a bill to exclude some lawyers from the Federal Trade Commission’s anti-identity theft rules, the legislation heads to the Senate.

    Bill shielding some lawyers from FTC ‘red flag rule’ headed to Senate

    By org wisbarnews wisbar Alex De Grand, Legal Writer, State Bar of Wisconsin

    Oct. 27, 2009 – A bill to exclude some lawyers from the Federal Trade Commission’s anti-identity theft “red flag rule” has passed the U.S. House of Representatives and awaits action in the Senate.

    The “red flag rule” is part of the Fair and Accurate Credit Transactions Act of 2003 (FACTA), a congressional response to spikes in reported identity theft. Those subject to the rule are expected to implement a written policy specifying how they will watch for the warning signs that indicate an identity theft may be occurring and how they will respond to prevent or mitigate the crime if uncovered.

      As the law currently stands, the “red flag rule” reaches “creditors” and financial institutions who maintain consumer-type accounts or other accounts at reasonable risk of identity theft. As interpreted by the FTC, the term “creditors” encompasses professionals such as lawyers and doctors who defer payment of a client’s bill.

    But on Oct. 20,   the House of Representatives voted in favor of H.R. 3763 to exclude from the meaning of “creditor” any health care practice, accounting practice, or legal practice with 20 or fewer employees. The bill also excludes any other business which the FTC determines: (1) knows all its customers or clients individually; (2) only performs services in or around the residences of its customers; or (3) has not experienced incidents of identity theft, and identity theft is rare for businesses of that type.

    The House bill passed on a roll call vote of 400 to zero. All eight of Wisconsin’s House members voted in favor of the bill.

    Following House action, the bill was received in the Senate and referred to the Committee on Banking, Housing, and Urban Affairs. Wisconsin Senator Herb Kohl (D) is a member of that Senate committee.

    Related: Lawyers required to protect personal information under new federal rule (April 1, 2009)

    Related: FTC delays enforcement of ‘Red Flags Rule’ requiring creditors and financial institutions to identity theft prevention programs (May 1, 2009)

    Related: State Bar of Wisconsin and ABA continue to push for exclusion from pending FTC identity theft 'Red Flags Rule' (July 8, 2009)

    Related: Help needed with efforts to delay “Red Flags Rule” implementation on August 1 (July 28, 2009)