The House of Representatives recently passed a bill that exempts certain firms from the Federal Trade Commission's "Red Flags" Rules.
Passing unanimously in a 400-0 vote, H.R. 3763 amends the Fair Credit Reporting Act (FCRA) to exclude certain businesses from the "Red Flags" guidelines. Specifically the legislation exempts any health care, accounting or legal practice with 20 or fewer employees from the meaning of creditor used in the FCRA and thus the "Red Flags" guidelines. Additionally, the act excludes any other business that the FTC determines "(1) knows all of its customers or clients individually; (2) only performs services in or around the residences of its customers; or (3) has not experienced incidents of identity theft, and identity theft is rare for businesses of that type."
The bill now awaits approval from the Senate and has been referred to the Senate Committee on Banking, Housing and Urban Affairs. It was originally introduced by Rep. John Adler (D-NJ) and was cosponsored by four other congressmen, Rep. Paul Broun (R-GA), Rep. Christopher Lee (R-NY), Rep. Ron Paul (R-TX) and Rep. Michael Simpson (R-ID).
"Today's vote was an important recognition that the Federal Trade Commission's interpretation of the ‘Red Flags' Rule over-reaches and its application to lawyers is unnecessary," said Carolyn Lamm, president of the American Bar Association (ABA), which has lobbied heavily against the rules' application to lawyers. "More work remains. Today's legislative solution is incomplete and would burden large segments of the public and the FTC with unwarranted bureaucratic procedures. We look forward to working with the Senate to fine tune this legislation and further remove confusion and over-regulation."
NACM has repeatedly covered the "Red Flags" Rule and worked with the FTC on clarifying the rule's application to business-to-business creditors. In addition to having hosted two separate joint teleconferences on the subject with FTC staff, several articles have been published in NACM's eNews and the March and May 2009 issues of Business Credit magazine. NACM will host another "Red Flags"-centric teleconference this Monday, October 26th, entitled "'Red Flags' Rules and Guidelines Simplified" and led by Bruce Nathan, Esq. and Wanda Borges, Esq. Click here for more details, or to register.
Jacob Barron, NACM staff writer. Follow us on Twitter at http://twitter.com/NACM_National.