We covered in a previous post ongoing litigation in the D.C. Circuit between the American Bar Association and Federal Trade Commission over the scope of the FTC’s Red Flags rule.  On January 20, 2011, the FTC filed a supplemental brief analyzing the impact of the recently-enacted Red Flag Program Clarification Act of 2010 on the permissible scope of the rule.  The ABA filed a response brief on February 3, 2011, and the FTC filed a reply brief on February 10, 2011. 

The ABA’s response brief emphasized the view that Congress never intended for the Red Flags requirements to apply to lawyers and used the Clarification Act and its deliberations in Congress as further evidence of that congressional intent.  The Clarification Act does not contain an express authorization for the FTC to apply the Red Flags rule to attorneys and, in fact, narrows the definition of “creditor.”  It points to legislative history that suggests Congress intended to prevent the FTC from applying the rule to professionals such as attorneys. 

The FTC’s reply brief argued that the Clarification Act provided no categorical exemption from the definition of “creditor” for attorneys and that the definition, as amended, continues to encompass certain attorney billing or credit arrangements.  Moreover, Congress considered but ultimately did not pass bills that explicitly exempted attorneys from the scope of the rule.

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Photo of Mike Nonaka Mike Nonaka

Michael Nonaka is co-chair of the Financial Services Group and advises banks, financial services providers, fintech companies, and commercial companies on a broad range of compliance, enforcement, transactional, and legislative matters.

He specializes in providing advice relating to federal and state licensing and…

Michael Nonaka is co-chair of the Financial Services Group and advises banks, financial services providers, fintech companies, and commercial companies on a broad range of compliance, enforcement, transactional, and legislative matters.

He specializes in providing advice relating to federal and state licensing and applications matters for banks and other financial institutions, the development of partnerships and platforms to provide innovative financial products and services, and a broad range of compliance areas such as anti-money laundering, financial privacy, cybersecurity, and consumer protection. He also works closely with banks and their directors and senior leadership teams on sensitive supervisory and strategic matters.

Mike plays an active role in the firm’s Fintech Initiative and works with a number of banks, lending companies, money transmitters, payments firms, technology companies, and service providers on innovative technologies such as bitcoin and other cryptocurrencies, blockchain, big data, cloud computing, same day payments, and online lending. He has assisted numerous banks and fintech companies with the launch of innovative deposit and loan products, technology services, and cryptocurrency-related products and services.

Mike has advised a number of clients on compliance with TILA, ECOA, TISA, HMDA, FCRA, EFTA, GLBA, FDCPA, CRA, BSA, USA PATRIOT Act, FTC Act, Reg. K, Reg. O, Reg. W, Reg. Y, state money transmitter laws, state licensed lender laws, state unclaimed property laws, state prepaid access laws, and other federal and state laws and regulations.