The Federal Trade Commission (FTC) Postpones the Red Flags Rule Again

The Federal Trade Commission has announced that physicians will be granted yet another temporary reprieve from having to comply with the Red Flags Rule, delaying implementation until December 21, 2010. The controversy over the rule, which requires all "creditors," including physicians, to implement policies to protect consumers from identity fraud, recently led the American Medical Association to sue the FTC for an exemption to the requirement they call "arbitrary and capricious" when applied to doctors. 

At the end of May 2010, Sens. John Thune (R-S.D.) and Mark Begich (D-Alaska) introduced a bill (S 3416) that would exempt certain small businesses -- including physician and dentist offices -- from the Federal Trade Commission's so-called "Red Flags Rule," which aims to minimize identity theft. The FTC rule classifies physicians and other small businesses as "creditors," thus requiring them to adopt certain measures to prevent identity theft. Thune said FTC's regulations "are too broad and ensnare businesses that pose little risk to consumers." The bill was referred to the Senate Banking, Housing and Urban Affairs Committee, but a hearing has yet to be scheduled.