Eye On The Hill: NACM Considers Stance On “Red Flags” Rules, Among Other Issues

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Despite the Federal Trade Commission’s (FTC’s) recent decision to delay the implementation of their “Red Flags” rules from May 1, 2009 to August 1, 2009, compliance with these regulations has the potential to present companies with yet another source of unnecessary stress. NACM’s Government Affairs Committee is considering its position on the regulations and whether or not the FTC has overstepped its mandate in making them apply to businesses.

NACM has worked closely with the FTC on educational programs for business creditors required to comply with the “Red Flags” rules, which vaguely state that companies must provide a comprehensive plan for preventing, identifying and correcting any instances of identity theft in their business. Two joint teleconferences have been hosted with officials from the Commission and numerous articles have been written on the subject, appearing in both NACM’s weekly eNews and in Business Credit magazine. While NACM is proud of these high-quality and timely programs, much has been said about whether or not the regulations even apply to business creditors in the first place. A glance at the FTC’s documents and the legislation from which it derived its authority to issue these rules reveals that, in general, the intent was to protect consumers from identity theft and B2B creditors weren’t expressly named as entities that would have to comply with the rules. One passage in the Fair and Accurate Credit Transactions Act (FACTA), however, refers to “commercial” transactions, which, if interpreted broadly, can be taken to apply to transactions among businesses. It’s the only use of the term “commercial” throughout the document though, and the question is whether or not this one passage has been taken by the FTC to apply to all business creditors.

Whether or not the “Red Flags” rules align with Congress’ original intent could be debatable, and so NACM is considering the issue. Member input will be essential in these considerations and discussions of future action, so please, send any comments, experiences or opinions to jakeb@nacm.org.

In other advocacy news, NACM’s proposed changes to the Bankruptcy Code have been embedded into the House Judiciary Committee’s staff and any future bills will have the association’s language to consider. It’s unclear as to whether or not there’s much support for a bankruptcy reform bill in the House of Representatives at this time, but NACM will be keeping an eye on the issue and any developments will be posted on the NACM Advocacy page and in eNews.

A separate privacy bill that could apply to businesses was also recently introduced by Rep. Bobby Rush (D-IL). Dubbed the “Data Accountability and Trust Act,” H.R. 2221 would require persons and businesses possessing electronic personally identifiable data to ensure that said data is safe. It makes specific rules for third-party data security providers and establishes notification procedures for when a data breach actually occurs. As of this writing, the bill had attracted four co-sponsors and action on the bill was pending. Again, NACM will be keeping an eye on this legislation and any updates or actions will appear on the Advocacy page and in eNews.

As with its previous lobbying efforts, NACM relies on its members for information regarding potential actions and legislative risks facing business creditors. Send your thoughts, opinions, suggestions or concerns to jakeb@nacm.org and be a part of NACM’s efforts to ensure the B2B credit industry is rightly well-known on Capitol Hill!

Jacob Barron, NACM staff writer

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