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ABA to Take On the FTC Over Red Flag Regulations

With the Aug. 1 effective date for the Federal Trade Commission's "Red Flags Rule" on identity theft fast approaching, the ABA is girding for battle, reports the Blog of the Legal Times. That's because the FTC continues to refuse to exempt lawyers from the new regulations, which are designed to ensure that all entities that act as "creditors" implement certain procedures to safeguard customer and client data. Under the rules, most law firms meet the technical definition of "creditor," because they extend credit to clients by rendering services first and issuing fees after the work is completed.

The ABA argues that the regulations were never intended to apply to law firms. In addition, the ABA views the FTC's efforts to regulate lawyers as an intrusion on the tradition of self-regulation that the profession has always enjoyed. There's precedent for keeping the FTC out of the business of lawyer regulations; back in 2005, the D.C. Circuit held that lawyers were exempt from a privacy notice requirement implemented by the FTC in American Bar Association v. Federal Trade Commission.

The Bars are readying for legal challenges, but they are also hoping that Congress will intervene. In the meantime, there's not much time left until these rules take effect. Are you ready if they do?

Posted by Carolyn Elefant on July 22, 2009 at 05:24 PM | Permalink | Comments (1)


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