Lawyers exempt from Red Flag Rules to curb ID theft, federal judge says
Looks like employing the classic legal strategy of delaying the case has paid off for the American Bar Association—at least for the time being. A federal judge today determined that lawyers should be exempted from the Red Flag Rules intended to curb identity theft.
The Red Flag Rules go into effect this weekend for all businesses that fall under the Federal Trade Commission’s definition of creditor. Essentially, the FTC considers any business that provides services before payment is rendered or allows customers, clients or patients to make payments on their bills to be a creditor.
Federal Judge Reggie Walton said he disagreed with that definition, and that the definition was so broad that a plumber who worked on a toilet for two days before billing the customer would be considered a creditor.
“I have a real problem with concluding that Congress intended to regulate lawyers when these statutes were enacted,” Walton said.
Whether or not the FTC will appeal the decision is anyone’s guess. When asked, FTC General Counsel Willard Tom replied, “It’s safe to assume the commission is going to consider its options very seriously. We think there is no reason lawyers should be exempt.”
This is only the most recent dust-up surrounding the Red Flag Rules. The American Medical Association also took umbrage at the notion that its members are creditors, and enforcement has been delayed several times.
Red Flag compliance requires that creditors
• Know the warning signs of ID theft.
• Have a plan in place to react to any ID theft red flags.
• Designate an employee to oversee the plan.
• Train all employees.
• Document the plan.
Nearly 10 million Americans become identity theft victims every year.
Tags: ABA, American Bar Association, Federal Trade Commission, FTC, ID theft, identity theft, Judge Reggie Walton, Red Flag Rules, Willard Tom