Client Alert

On July 29, 2009, the Federal Trade Commission announced that it will delay enforcement of its "Red Flags" Rule, for a third time, until November 1, 2009. Under the Red Flags Rule, "creditors" and "financial institutions", as those terms are defined in the Rule, with certain accounts must create procedures to identify, detect, and address warning signs that could indicate identity theft. This delay applies only to enforcement of the Identity Theft Red Flags Rule and does not extend to the rule regarding discrepancies in addresses discrepancies applicable to users of consumer information, or to the rule regarding changes of address applicable to card issuers.

The FTC again delayed its rules in an effort to assist, in particular, small businesses and other entities that may not be clear as to whether the rules apply to them and amidst criticism from the American Bar Association, the American Medical Association, among others, regarding the expansive application of the Rule. The FTC also has stated that it is providing additional guidance to entities so that they may determine the extent of their obligations under the Rule. See http://www.ftc.gov/opa/2009/07/redflag.shtm.

Womble Carlyle attorneys have been actively involved in working with the American Bar Association regarding the scope of the Red Flags Rule and in advising companies of their compliance obligations under the Rule.

Please contact one of the attorneys in our privacy group if you have any questions regarding the Red Flags Rule or if you would like any assistance drafting an applicable Red Flags compliance plan.