ABA "Red Flags Rule" Litigation

There've been a couple Law.com articles this week about the American Bar Association's considering a suit against the Federal Trade Commission to prevent that agency from enforcing new identity-theft regulations scheduled to go into effect on August 1st. if they don't exempt lawyers.

The FTC, Treasury Department's Offices of Currency Comptroller and Thrift Supervision, Federal Reserve System, Federal Deposit Insurance Corporation and National Credit Union Administration jointly issued "final rules & guidelines implementing Sections 114 and 315 of the Fair & Accurate Credit Transactions Act" in November 2007, with the Federal Register then citing January 1, 2008 as their effective date and November 1 of that year as the mandatory compliance date.

Enforcement of those regulations is now set to begin on August 1, 2009. [ See "Fighting Fraud with Red Flags Rule" and "FTC Enforcement Policy: Identity Theft Red Flags Rule" ]

"FTC officials have already delayed enforcement of the regulations twice, most recently three months ago at the request of the bar association," a National Law Journal article yesterday morning said. "'The commission has received a request from a House Appropriations subcommittee for an additional delay, which will be considered,'" said Betsy Broder, assistant director of the FTC's Division of Planning and Information. Broder also said in an interview Wednesday afternoon, however, that she could not say when it would do so.

The FTC, which is charged with protecting consumers, has included lawyers, doctors, and many other professionals in its definition of "creditors" because they bill customers only after providing services, the article said. The ABA disagrees with that interpretation, and says bar associations from Arkansas, Colorado, Illinois, Ohio, and Virginia have also expressed their opposition. (See New York Law Journal article )

The New York Law Journal article, above, also relates that "this isn’t the first time lawyers have battled the FTC over its attempt to regulate them under a federal statute. In 2005, the ABA and the New York State Bar Association won a lawsuit that barred the FTC from imposing broad requirements to protect customer privacy under the Graham-Leach-Bliley Act, of 1999, in American Bar Association v. Federal Trade Commission, (2005). "