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You don’t yet face enforcement of the Red Flags Rules
e-Reports, December 27, 2010
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The U.S. House and Senate recently passed the Red Flags Program Clarification Act of 2010, intended to limit the type of “creditor” required to comply with the Red Flags Rules. The new legislation explicitly excludes those who advance funds on behalf of an individual for expenses incidental to a service provided.

The bill’s sponsors have taken the position that dentists, physicians and other professionals would NOT generally meet their clarified definition of a creditor. It is not yet known if the Federal Trade Commission (FTC) will agree.

Set to be enforced Jan. 1, the Red Flags Rules require creditors to develop identity theft prevention and detection programs. The FTC and other federal agencies promulgated the rules under the Consumer Credit Protection Act, with FTC officials determining physicians should be considered “creditors,” subject to the regulations.

Fortunately, the AMA and state medical societies – including the ISMA – have waged a long, successful fight against the Red Flags Rules. The AMA filed a lawsuit over the issue, claiming physicians, like lawyers, should be exempt. So far, efforts have won continued delays of the initial November 2008 implementation date.

At present, the FTC has agreed not to enforce the regulations against members of the AMA, the American Osteopathic Association or any state medical societies until a similar lawsuit by the American Bar Association is resolved on appeal.

Continue reading ISMA Reports for further updates. Learn more and access guidelines for your practice on the FTC website.

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