FTC expands campaign on Red Flags Rules.

The Federal Trade Commission is beefing up its efforts to get businesses to comply with the Red Flags Rules. The AICPA asks for an exemption from the rules for the accounting profession, and the American Bar Association seeks an injunction to block practicing lawyers from being included under the rules.

On July 29, 2009, the Federal Trade Commission (FTC) announced that its staff will redouble its efforts to educate small businesses and other entities about compliance with the Red Flags Rules. The Red Flags Rules comprise an antifraud regulation that requires creditors and financial institutions with covered accounts to implement programs to identify, detect, and respond to warning signs, or "red flags," that could indicate identity theft.

The FTC also would ease compliance with the rules by providing additional resources and guidance to clarify whether businesses are covered by the rules and what they must do to comply. To give creditors and financial institutions more time to review this guidance and develop and implement written identity theft prevention programs, the FTC will delay enforcement of the rules until November 1, 2009.

AICPA requests CPA exemption from rules

On August 4, 2009, in a letter to the FTC, AICPA President Barry Melancon requested that CPAs be exempt from certain provisions of the rules. Melancon wrote the following:

We are concerned with the potentially broad application of the Red Flags Rules to the accounting profession, and do not believe that there is any reasonably foreseeable risk of identity theft when CPA clients are billed for services rendered. As trusted advisors, CPAs are personally acquainted with their clients and adhere to strict privacy requirements related to identifying information. We suggest that the likelihood of misrepresentation or theft of one's identity is so low that the burdens associated with the Rules' requirements outweigh the benefits. (To see Melaneon's entire letter to the FTC go online to http://media.jotirnalofaccountancy.com/JOA/Issues/2009/08/AICPA_Letter.pdf.)

ABA files suit against FTC over applying rules to lawyers

On August 27, Jeff Jeffrey in a post to The BLT: The Blog of Legal Times reported that the American Bar Association (ABA) filed suit in the U.S. District Court for the District of Columbia against the FTC. The ABA seeks an injunction to block the application of the Red Flags Rules to practicing lawyers. The ABA disagrees with the FTC's inclusion of lawyers and many...