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Identity Theft: FTC's "Red Flags Rule" Summary
The FTC has again extended the deadline for enforcement of the "Red Flags" rule. On October 30, the FTC announced that it will delay enforcement until June 1, 2010. Read the FTC's press release.
Update October 29, 2009: The U.S. House of Representatives passed H.R. 3763 on October 20, proposing to exempt certain businesses (including veterinarians) with less than 20 employees from having to comply with the "Red Flags Rule." This bill replaces H.R. 2345 and now goes to the U.S. Senate. At this time, this bill has not been passed into law, and veterinarians are still expected to comply with the Red Flags Rule before the current enforcement date.
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Background: Veterinarians and the "Red Flags Rule"
On November 9, 2007, the Federal Trade Commission (FTC) issued a rule that may affect your veterinary practice. The "Red Flags" Rule, 16 C.F.R. § 681.2, requires "creditors" and "financial institutions" to develop written plans to prevent and detect identity theft. The rule is a section of the Fair and Accurate Credit Transaction Act ("FACT Act") of 2003, a federal law which requires the establishment of guidelines for financial institutions and creditors regarding identity theft.
 Full text of the "Red Flags" Rule
Health care professionals, including veterinarians, fall into the category of "creditors" because they do not always receive payment in full from their clients at the time of treatment. On January 30, 2009, the AVMA Governmental Relations Division (GRD) sent a letter to the FTC requesting that veterinarians be excluded from the Rule. On March 19, 2009, the FTC responded to the AVMA, stating that veterinarians and other health care providers will be subject to the "Red Flags" Rule. However, the FTC indicated willingness to continue dialog to ensure that compliance with the Rule will not place undue burdens on the veterinary profession.
The FTC initially suspended enforcing the "Red Flags" Rule until May 1, 2009. The AVMA Government Relations Divisions held meetings on Capitol Hill to raise awareness about FTC's plans to apply Red Flags to veterinarians. As a result of these meetings, Rep. Nadia M. Velazquez (D-NY-12), Chair of the House Small Business Committee, wrote a letter to the FTC expressing her concern about the impact of Red Flags on health professionals. She urged the FTC to, at the very least, delay implementation of the rule. Very importantly, she encouraged the FTC to issue a revised proposed rule and provide veterinarians as well as other health care providers an opportunity to formally comment on any economic burdens the rule would impose on their businesses.
In response to Rep. Velazquez's entreaty, the FTC voted on April 30 to delay enforcement to August 1, 2009 to allow creditors additional time to develop and implement written identity theft prevention programs. On July 29, 2009, the FTC once again delayed enforcement of the Rule until November 1, 2009. Keep in mind, however, that the Rule is in effect now and veterinarians are expected to comply.
Read the FTC's statement, "The 'Red Flags' Rule: What Health Care Providers Need to Know About Complying with New Requirements for Fighting Identity Theft"
On May 12, 2009, Representative John Adler (D-NJ) introduced H.R. 2345, an act "to amend the Fair Credit Reporting Act to provide for an exclusion from Red Flags Guidance for healthcare practices with 20 or fewer employees." To date, 29 healthcare organizations, including the AVMA, have signed a letter of support for this legislation.
Free informational webinars
The AVMA has arranged for a "Red Flags" expert to conduct a series of informational webinars about the FTC "Red Flags" Rule. Each webinar will give background on the "Red Flags" Rule, talk about the risks of identify theft, and describe a fee-based online program offered by a certified risk management specialist to help train and bring practices into compliance, including needed documents.
You do not need to attend more than one webinar, as they will cover similar information. Please note that attending this webinar will not, in itself, make your practice compliant with the "Red Flags" Rule, nor will it teach compliance. It is solely an informational webinar that will highlight the growing problem of identity theft.
This page will be updated with information on future identity theft prevention webinars.
For assistance with technical problems with the webinars, please contact Accurate Data Partners at 877-572-0055 or help@accuratedatapartners.com.
Online training and consultants
Click on the links below to access fee-based online training programs offered by certified risk management specialists to help bring practices into compliance with the "Red Flags" Rule.
Accurate Data Partners
For assistance with technical problems with the Accurate Data Partners online training program, please contact 877-572-0055 or help@accuratedatapartners.com.
PrivacyEdge
For assistance with technical problems with the PrivacyEdge online training program, please call 724-816-7630, or use the form found here.
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Many privacy consultants have expressed willingness to provide assistance for veterinarians to comply with the "Red Flags Rule". Click here to view the list of consultants. The AVMA has not evaluated any of the firms or individuals on this list, nor endorses or guarantees the quality of the services they provide.
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Additional resources for identity theft prevention
Frequently asked questions
FAQs about the FTC's "Red Flags" Rule and veterinary practices
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