Bill shielding some lawyers from FTC ‘red flag rule’ headed
By 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
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
required to protect personal information under new federal rule
(April 1, 2009)
delays enforcement of ‘Red Flags Rule’ requiring creditors
and financial institutions to identity theft prevention programs
(May 1, 2009)
Bar of Wisconsin and ABA continue to push for exclusion from pending FTC
identity theft 'Red Flags Rule' (July 8, 2009)
needed with efforts to delay “Red Flags Rule” implementation
on August 1 (July 28, 2009)