President to Sign Into Law Legislation Narrowing Scope of Red Flags Rule
Last week, Congress delivered to President Obama for his signature the “Red Flag Program Clarification Act of 2010,” which is intended to narrow the types of entities that are subject to the Federal Trade Commission’s Red Flags rule. The Red Flags rule requires “financial institutions” and “creditors” to establish programs to detect, prevent, and mitigate identity theft in connection with consumer accounts. The Act, which President Obama is expected to sign into law before the end of this year, is designed to exclude from Red Flags rule compliance certain classes of entities that the FTC previously determined could be creditors, such as doctors, lawyers, accountants, pharmacists and others who deliver services before receiving payment.
We've prepared a client alert that includes a more detailed summary of the new legislation.