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RULING: LAWYERS EXEMPT FROM RED FLAGS RULE
On October 29, a federal judge in Washington, D.C., agreed with the American Bar Association (ABA) that the Federal Trade Commission exceeded its authority by applying its "red flags rule" to lawyers.
Congress did not intend lawyers to be considered "creditors" under the Fair and Accurate Credit Transactions Act, held U.S. District Judge Reggie Walton of the District of Columbia, granting a partial summary judgment motion by the ABA in the declaratory judgment action. A written order followed on October 30.
Under Walton's decision, the red flags rule developed by the FTC to impose the statute's identity-fraud-protection provisions on businesses is inapplicable to lawyers outside the financial sector.
The red flags rule is scheduled to take effect November 1 for all other businesses.
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