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FTC Delays Red Flags Enforcement to July 10; Legislation Moves through House

By Gina Luke, Assistant Director of the GRD

With the red flags enforcement date looming, members of Congress convinced the Federal Trade Commission (FTC) to delay enforcement from November 1 to June 1, 2010. The announcement was posted at www.ftc.gov

On October 20, the U.S. House of Representatives approved by a 400-0 vote legislation (HR 3763) that will exempt veterinary offices and other health care practices, as well as certain law and accounting firms with fewer than 20 employees, from the red flags identity theft guidelines. The legislation would also allow the FTC some flexibility to waive implementation of the regulations for other industries.

In a news release, the bill's sponsor Rep. John Adler (D-NJ), a member of the House Financial Services Committee said, "Small businesses are the backbone of New Jersey's economy. During these tough economic times, the federal government should not be placing new burdensome regulations on these hard-working entrepreneurs. I am committed to helping small businesses thrive."

Rep. Christopher Lee (R-NY), a cosponsor of HR 3763 said, "By passing this fix today, Congress can provide the FTC a clear definition of how Congress intended the policy to be enacted and protect small businesses and their customers from unnecessary government intervention." Adler and Rep. Paul Broun (R-GA) made oral remarks on the floor of the House chamber about the bipartisan commonsense bill that have been posted to YouTube.

The AVMA, along with the American Dental Association, the American Medical Association and the American Bar Association, is seeking companion legislation in the U.S. Senate to assure passage and enactment of a law providing an exclusion from these red flags guidelines. Without a new law signed by President Obama or a fifth postponement of enforcement by the FTC, veterinarians will be expected to comply with the Red Flags Rule beginning on June 1, 2010.

Now we await action by the Senate Banking Committee which was unable to act before Nov. 1 on similar legislation exempting certain businesses including, as in the House bill, "a health care practice with 20 or fewer employees," which includes thousands of veterinary offices. A legislative aide to a House sponsor said Oct. 29, "Currently the legislation is pending in the Senate, and we expect the bill will be signed into law shortly."

The FTC says health-care practices may be "creditors" as defined under the Fair and Accurate Credit Transactions Act of 2003. The agency says the term includes "any entity that extends or renews credit – or arranges for others to do so – and includes all entities that regularly permit deferred payments for goods or services" In AVMA's view, the FTC's interpretation goes beyond the intent of Congress by considering non-financial services-related industries to be "creditors".

Once HR 3763, which is a more inclusive version and supersedes Rep. Adler's previously introduced bill dealing with Red Flags, HR 2345, was introduced in the House it moved rapidly to a vote. View the list of members who missed the vote.

For more information visit the AVMA website or contact Gina Luke.

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