Lawyers e-Journal

Thursday, Dec. 9, 2010
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Legislative News

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 lawyers.

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.

 

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