The Federal Trade Commission on Friday announced that it has again delayed enforcement of the Red Flags Rule at the request of members of Congress.
The deadline to comply with the law, which is intended to prevent identity theft, is now Dec. 31, 2010 for the financial institutions and creditors governed by the FTC. The extension doesn't affect other financial regulatory agencies' ongoing enforcement of the Red Flags Rule.
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In its announcement, the FTC urged Congress to act quickly to resolve questions about what organizations are covered by the Red Flags Rule and prevent the need for additional enforcement delays.
"Congress needs to fix the unintended consequences of the legislation establishing the Red Flags Rule -- and to fix this problem quickly. We appreciate the efforts of Congressmen Barney Frank and John Adler for getting a clarifying measure passed in the House, and hope action in the Senate will be swift," FTC Chairman Jon Leibowitz said in a prepared statement. "As an agency we're charged with enforcing the law, and endless extensions delay enforcement."
The American Medical Association last week filed a lawsuit in federal court to prevent the FTC from extended the Red Flags Rule to physicians. The American Bar Association filed suit last August to bar the FTC from applying the rule to practicing lawyers.
The Red Flags Rule, developed under the Fair and Accurate Credit Transactions Act, was issued by the FTC and federal banking regulators in October 2007. It requires financial institutions and creditors to implement a written program designed to spot patterns and practices - red flags - that indicate possible identity theft.