Red Flags Rule Delayed Again
Earlier today the FTC announced it would delay enforcement of its Red Flags Rule until November 1, 2009. Enforcement had been scheduled to begin August 1, 2009. As previously discussed here, the Red Flags Rule is an FTC regulation that requires “creditors” and “financial institutions” with “covered accounts” to have a program in place to detect identity theft. The term “creditor” is defined broadly to include any entity that regularly extends credit. A “covered account” is essentially the extension of credit as part of a continuing relationship to purchase a product or service for personal, household, or business purposes.
The rule has garnered significant attention lately from lawyers following the FTC’s announcement in April that the FTC interprets the Red Flags Rule to apply to law firms because law firms bill for services already rendered. The ABA disagrees and has threatened to sue should the FTC continue to assert that the Rule applies to lawyers.
