FTC: 'Red Flags' rule needs legislative fix

June 18, 2010

The Federal Trade Commission called on Congress to alter the "Red Flags" rule legislation to exempt groups, such as physician offices, from the identity theft protection guidelines.

The Federal Trade Commission called on Congress to alter the "Red Flags" rule legislation to exempt groups, such as physician offices, from the identity theft protection guidelines.

"Congress needs to fix the unintended consequences" of the Red Flags rule, says FTC Chairman Jon Leibowitz, announcing the rule's fifth enforcement delay since it became effective in 2008.

The Red Flags rule requires creditors-including physician practices-to develop and implement written identity theft prevention programs to help identify, detect, and respond to activities-known as red flags-that could indicate identity theft. A week before the most recent delay, the American Medical Association and the American Osteopathic Association filed a lawsuit against the FTC to exempt physicians from the rule.