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Senate move could leave lawyers out of ‘Red Flags’ rules

Officials with the American Bar Association are hailing U.S. Senate action to exempt lawyers from the so-called “Red Flags” rules designed to combat credit fraud.

According to a statement by Sen. Chris Dodd, D-Conn., a bill approved by the Senate makes it clear that the law will not apply to lawyers, doctors, dentists, accountants and other heath care and service providers merely because they wait for full payment in many cases. There is no opposition to the clarification measure in the House of Representatives, according to an ABA lobbyist.

“Last night’s Senate vote to clarify the rule so that lawyers are clearly not included was a critical step in ending a bureaucratic effort to solve a non-existent problem with paper-pushing regulations that would have increased legal costs,” said ABA president Stephen N. Zack in a statement.

The “red flags” rules require businesses that accept deferred payments from clients to create written policies to prevent, detect and address identity fraud.

The rule originally became effective on Jan. 1, 2008, but the Commission has delayed enforcement several times amid challenges to the rule’s applicability and related legislation.

By Peter Vieth

2 comments

  1. This revision is a much needed relief. However it still does not exempt anyone from FACTA. You still need a Security Officer appointed in writing, a written privacy policy and training of all employees in order to create a culture of privacy. It would not hurt to do a risk assessment even though they were required under the Red Flags Rule. Have a data breach of either your employees or customers PII and see how immune you are! You still need to do something – take reasonable and responsible steps, and use a professional to do it for you.

  2. This revision is a much needed relief. However it still does not exempt anyone from FACTA. You still need a Security Officer appointed in writing, a written privacy policy and training of all employees in order to create a culture of privacy. It would not hurt to do a risk assessment even though they were required under the Red Flags Rule. Have a data breach of either your employees or customers PII and see how immune you are! You still need to do something – take reasonable and responsible steps, and use a professional to do it for you.

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