Enforcement deadline approaches for Red Flags Rule

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The Federal Trade Commission currently plans to begin enforcement June 1 of a rule that requires companies, including veterinary practices, to develop programs to prevent identity theft.

The FTC published the Red Flags Rule in 2007 to implement provisions of the Fair and Accurate Credit Transactions Act that require financial institutions and creditors to create programs to detect warning signs of identity theft—red flags—and respond appropriately. The agency has delayed enforcement of the rule multiple times, however, at the request of businesses and legislators.

According to an FTC press release, creditors "include professionals, such as lawyers or health care providers, who bill their clients after services are rendered." A court ruled in late 2009 that the Red Flags Rule does not apply to attorneys, but the FTC is appealing that decision.

Earlier this year, the AVMA and several other medical associations wrote to the chairman of the FTC requesting that the agency not apply the Red Flags Rule to health care professionals if the rule does not apply to lawyers. On March 25, the FTC responded negatively to the request.

Also in late 2009, the U.S. House of Representatives passed a bill (H.R. 3763) to exempt health care practices, including veterinary practices, with 20 or fewer employees from the Red Flags Rule. The bill went to the Senate Committee on Banking, Housing, and Urban Affairs. The AVMA is lobbying for passage of the legislation.

The AVMA has compiled resources regarding the Red Flags Rule, including a guide to compliance for veterinary practices, here.