Red Flags Rule Update

A bill to exclude some lawyers from the Federal Trade Commission’s Red Flags Rule has passed the U.S. House of Representatives and awaits action in the Senate.

On October 20, the House of Representatives voted in favor of H.R. 3763 to exclude from the meaning of “creditor” any health care practice, accounting practice, or legal practice with 20 or fewer employees. The bill would also excludes any other business which the FTC determines: (1) knows all its customers or clients individually; (2) only performs services in or around the residences of its customers; or (3) has not experienced incidents of identity theft, and identity theft is rare for businesses of that type.

With only three days left before November 1 -- the date the FTC will begin enforcement -- whether or not your firm will be affected is still an open question.