Thursday, Dec. 9, 2010
House passes a Red Flags Rule bill
Following last week's action by the United States Senate,
earlier this week the U.S. House of Representatives passed
legislation that would exempt lawyers and other entities from the
so-called "Red Flags Rule."
The Massachusetts Bar Association was actively opposed to the
application of the Red Flags Rule to attorneys and voiced its
concerns to the FTC.
The MBA, working with the American Bar Association, also
communicated its concerns to members of Congress. Ultimately, the
ABA filed suit in August following months of work seeking
clarification of the rule and its application to lawyers. The
District Court for the District of Columbia ruled that the Federal
Trade Commission's so-called "Red Flags Rule" cannot be applied to
The Red Flags Rule was promulgated by the FTC under the Fair and
Accurate Credit Transaction Act (FACTA Act) of 2003. The Red Flags
Rule requires certain creditors to develop and implement programs
to identify, detect and respond to warning signs of identity theft.
The FTC had indicated plans to apply the rule to lawyers, despite
the fact that they are not creditors.