New Law Exempts Healthcare Professionals as Creditors Under the Red Flags Rule

On December 18, 2010, President Obama signed into law the Red Flag Program Clarification Act of 2010, Senate Bill 3987, to amend the Fair Credit Reporting Act by limiting the type of “creditor” that must comply with the Federal Trade Commission’s (FTC) Red Flags Rule. Specifically, the new law provides for an exemption to the definition of creditor for entities that “advance[ ] funds on behalf of a person for expenses incidental to a service provided by the creditor to that person,” effectively excluding healthcare professionals, among other entities, from the Rule’s requirement to implement a written identity theft prevention program by January 1, 2011.

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