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ABA Fights Implementation of the FTC's "Red Flag" Rules

by Christian D. Lavers, posted Monday, August 31, 2009 12:00 AM

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On Thursday, August 27, the American Bar Association filed suit against the Federal Trade Commission to prevent application of the FTC's new proposed "Red Flag" rules to lawyers and law firms (See the complaint at www.abanet.org/media/nosearch/1). The "Red Flag" Rules require that any business or entity that acts as a "creditor" create a policy and procedure to help prevent identity theft—even if the business is only acting as a creditor by billing for goods and services after the services are rendered or the goods are provided.
 
The FTC has had numerous problems in its attempted implementation of the rule, and recently postponed enforcement of the rule to November 1—its third such postponement. The problems have related to the incredible breadth of the rule, and its application to virtually every business and industry in existence.  The American Medical Association has also been a vocal critic of the rule as applied to doctors, (see www.ama-assn.org/ama/no-index/physician-resources/red-flags-rule.shtml), though they have not gone so far as to file a lawsuit.
 
While identity theft is a growing problem and needs to be addressed, the current version of the "Red Flag" Rules creates almost as many problems as it attempts to fix. Stay tuned for updates...
 
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