Congress grants Red Flags Rule exemption to veterinarians, others

Legislation ready for President’s signature

December 7, 2010 (published)
By Edie Lau

Veterinarians and other professionals will be exempted from a federal regulation meant to thwart identity theft under a bill approved by Congress today.

The measure, dubbed the Red Flag Program Clarification Act of 2010, was approved by the Senate last week.

Today's action by lawmakers came less than four weeks before a Dec. 31 deadline set by the Federal Trade Commission (FTC) to begin enforcing the rule. The FTC has delayed enforcement repeatedly over two years to allow businesses more time to prepare.

Many business and professional groups have criticized the so-called Red Flags Rule for being overly broad and cumbersome. The American Veterinary Medical Association and other industry groups lobbied to have their members excused from its provisions.

The fight has gone to court as well, with organizations including the American Bar Association and the American Medical Association suing the FTC over its decision to define their members as creditors.

The Red Flags Program Clarification Act provides a more limited definition of creditors, excluding those businesses that extend credit for expenses “incidental to” the service they provide to customers.

A spokeswoman for Rep. Paul Broun, M.D., R-Georgia, a co-sponsor of the House bill, noted that the FTC requested clarification from Congress on the Red Flags Rule "multiple times." She did not anticipate any objections by the Obama administration to the legislation, which had bipartisan support.

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