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Red Flags Rule Update

In a previous newsletter distributed in October 2009, an article entitled “Federal Red Flags Rule: Does it affect your business?” indicated that all covered businesses would be required to comply with the Red Flags Rule as of August 1, 2009. However, Congress urged the Federal Trade Commission (FTC) to delay the enforcement of the Red Flags Rule (RFR) until June 1, 2010. The Federal Trade Commission works for consumers to prevent fraudulent, deceptive, and unfair business practices and to provide information to help spot, stop, and avoid them.

The updates on the rules also noted that timelines related to appeals and proceedings will not be affected due to the delay in enforcement of the Red Flags Rule. In addition, any other federal entity conducting an investigation will not be affecting by the delays in the FTC Red Flags Rule.

The FTC is working with trade professionals and other entities in order to establish specific, model policies regarding program outlines. Some trade-specific guidelines have been established, as well as conferences to educate covered institutions.

On October 20, 2009, the House of Representatives voted to extend the effective enforcement date of the Federal Red Flags rule to June 1, 2010. Due to a variation in the rules, specifically exempting legal, accounting and health care practices with fewer than 20 employees, Congressional members decided that enforcing the Red Flags Rule against entities that would not be covered effective June 1, 2010, would be unfounded and expensive.

For more information about the Federal Red Flags Rule, and any changes that your organization may need to know, please visit FTC’s website: http://ftc.gov/redflagsrule

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