BREAKING NEWS: FTC Extends Compliance Deadline for Red Flags Rule AGAIN to December 31, 2010
In the last hour, the news broke that the FTC has again extended the compliance deadline for the FACTA Red Flags Rule, this time to December 31, 2010, "[a]t the request of several Members of Congress." The FTC's press release of this morning is here. This is the fifth time the FTC has extended the enforcement deadline. As usual, the FTC's extension does not affect "other federal agencies’ enforcement of the original November 1, 2008 deadline for institutions subject to their oversight." For more on the Red Flags Rule, see our posts here.
Physicians Seek Relief On Eve of FTC's Red Flags Enforcement Deadline
As previously reported here, the Federal Trade Commission (FTC) is currently scheduled to commence enforcement of the FACTA Red Flags Rule (72 Fed. Reg. 63,718) on June 1, 2010. On Friday, only 10 days before the deadline, the American Medical Association, the American Osteopathic Association, and the Medical Society for the District of Columbia filed suit against the FTC in the United States District Court for the District of Columbia (AMA v. FTC, D.D.C., No. 1:10-cv-00843), following in the footsteps of similar lawsuits filed in the past year by the American Bar Association (ABA) and the American Institute of Certified Public Accountants (AICPA). The ABA, in a lawsuit filed last August (ABA v. FTC, No. 1:09-cv-01636-RBW), succeeded in obtaining an order (now on appeal) barring the FTC from enforcing the Red Flags Rule against lawyers. (There has been no ruling on the AICPA complaint filed last November.)
Following is a discussion of the definitions ("creditor" and "credit") at the heart of the dispute, a summary of the positions taken by the FTC and the AMA with respect to application of the Red Flags Rule to physicians, and a brief review of the court's decision in ABA v. FTC.
Continue Reading...Live from the IAPP Global Privacy Summit in Washington, DC, It's Monday Afternoon
This week, I will be providing short updates from the IAPP Global Privacy Summit in Washington, DC. The conference will be in full swing tomorrow, and I will report on various panels and topics of interest. In the meantime, as I prepare to see old and new friends at the Welcome Reception this evening, a few thoughts on what I expect to see and hear a lot over the next few days:
- How can we harmonize the EU Data Protection Directive and EU member country privacy laws with the flow of data in today's global economy? It is unfortunate that a number of IAPP participants from the EU will not make it to DC for the Summit this year due to the Icelandic volcano. Nonetheless, I expect active dialogue regarding cross-border data transfers, safe harbor v. standard contractual clauses v. binding corporate rules, and, in particular, the impact of the growth of cloud computing and other outsourcing arrangements (or, at least, the growth of the hype around cloud computing). It would also be nice to hear more about the EU Cookie Consent law - there is a panel scheduled to take place, but unknown if that will happen in light of the volcano debacle.
- HIPAA/HITECH and Medical Identity Theft: Health care privacy topics are hotter than ever, especially with the growing number of reported security breaches affecting more than 500 individuals under the new HHS breach notification rules promulgated pursuant to the HITECH Act.
- "Reasonable Security": What does Massachusetts think? What does the FTC think? What in the world is it and how in the world can organizations comply?
- On a related note, FTC Enforcement, with a focus on behavioral marketing issues and evolving notions of notice and consent. What trends will we see over the next several years, particularly with the growth of social media and online behavioral advertising?
- Social media: how it affects the workplace, corporate policies and procedures, and "reasonable expectations" of privacy.
- The forecast for federal legislation - not just on breach notification, but security requirements, online behavioral marketing and, getting lots of media attention these days, potential revisions to ECPA (being driven, once again, by the cloud computing explosion).
- Breaches, breaches, and more breaches. Of course.
A few things that appear to be missing from this year's agenda - the FTC's current review of the rules under the Children's Online Privacy Protection Act (COPPA), enforcement of the Red Flags Rule (the FTC will start enforcing the Rule June 1), and the growing number of state laws (Washington, Nevada, Minnesota) requiring compliance with the PCI Standard.
Stay tuned, I will endeavor to post developments on a daily basis.
Is Your Organization's Red Flags Rule Identity Theft Prevention Program Ready for Primetime?
As our readers know, the FTC, after four extensions of the deadline, currently intends to begin enforcing the Red Flags Rule with respect to organizations subject to its jurisdiction on June 1, 2010. In the meantime, the Red Flags Rule remains in effect as to all financial institutions and creditors (and has been subject to enforcement by the banking regulators since November 1, 2008). Although a recent decision of the United States District Court for the District of Columbia, ABA v. FTC, brought lawyers outside the scope of the Rule, the Rule remains broad and covers a wide range of entities as "creditors." Creditors subject to the FTC's jurisdiction need to have their written Red Flags Rule Identity Theft Prevention Programs prepared, approved by the Board, and implemented by June 1. For more on the history and the requirements of the Rule, see my recent article, "The FACTA Red Flags Rule: A Primer," published in Bloomberg Law Reports – Risk & Compliance, reproduced here with the permission of Bloomberg. Read on . . .
BREAKING: FTC Extends Red Flags Rule Enforcement Deadline to June 1, 2010
Who Must Comply with FACTA's Red Flags Identity Theft Rule?
According to the FTC, any company that "regularly defer(s) payment for goods or services". . .
On October 31, 2007, the FTC released the Red Flags Identity Theft Rule (the "Red Flags Rule" or the "Rule"). The Red Flags Rule requires "covered entities" to conduct a risk assessment to determine if they have "covered accounts," which are consumer-type accounts that pose a reasonable risk of identity theft. If a covered entity does have covered accounts the Red Flags Rule requires the entity to develop and implement a written Identity Theft Program to identify, detect and respond to possible risks of identity theft. The deadline to comply with the Red Flags Rule was November 1, 2008. The FTC, however, announced that it would suspend enforcement of the Rule until May 1, 2009 (note that the enforcement date suspension DID NOT impact the compliance deadline -- all covered entities should have been in compliance by November 1, 2008).
Recently a controversy has arisen as to what constitutes a "covered entity" that must comply with the Rule. The FTC has taken the position, based on various definitions in the Rule and other relevant statutes, that the Rule applies to any company that "regularly defers payment for goods or services." This can include any company that does not require payment at the time goods or services are provided, including for example doctors, hospitals, lawyers, merchants and repairmen. As such the potential scope of the Rule is enormous and all companies should investigate whether they are subject to it.
Continue Reading...
