Wednesday, December 22, 2010

Raise the White Flag: FTC Red Flag Rules Officially Eliminated for Law Firms

Eliminating what some, including the ABA, felt were onerous and inappropriate information risk management and client intake requirements for law firms, President Obama just signed the Red Flag Program Clarification Act.
  • "The revised definition of “creditor” excludes creditors “that advance funds on behalf of a person for expenses incidental to a service provided by the creditor to that person.”  This exclusion addresses a widespread concern among stakeholders that the original FCRA definition improperly extended the Red Flags Rule’s scope to implicate entities not typically thought of as creditors, including law firms and health care providers."
These rules were developed to protect personal information held by creditors and would have put new confidentiality enforcement, tracking and compliance requirements on law firms, given the originally-broad definition of "creditor" and the FTC's interest in seeing them applied to organizations including law firms. With that, the court fight between the FTC and the ABA is concluded.

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