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The FTC has again extended enforcement of the Red Flag Rules, this time until June 1, 2010.

This extension comes just one day after the ABA won a victory with its request that practicing attorneys be exempted from compliance with the Red Flag Rules.

The extension of the enforcement deadline also comes shortly after certain other exemptions, namely, health care practices, accounting practices, legal practices (each with 20 or fewer employees) and certain other businesses approved by the FTC that are engaged in domestic services, engage in services where identity theft is rare and have no incidence of identity theft, were passed in the House of Representatives.

Originally, the Red Flag Rules would have taken effect on November 1, 2008, which was then extended to May 1, 2009, and then further extended to November 1, 2009.

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The United States District Court for the District of Columbia ruled that the Red Flag Rules are not applicable to attorneys engaged in the practice of law.

The complaint, filed in late August 2009, argues that the FTC overstepped its statutory authority by imposing the Red Flag Rules on attorneys engaged in the practice of law.

The ruling is another victory by the American Bar Association when it comes to exempting attorneys from rules regarding the handling of financial and/or sensitive information. It would seem that the FTC would have made adjustments to its definitions of “creditor” to make it clear that attorneys should be included in its regulations, but that clarification may need to be addressed at the Congressional level to avoid future ambiguity.

If Congress does present future legislation, or an amendment to existing legislation, that specifically includes attorneys, it will be interesting to see how the ABA argues that attorneys should be exempted from these these types of federal consumer protection statutes.

The BLT: The Blog of LegalTimes reports that it is expected that the FTC will appeal the ruling.

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Representative John Adler’s (D-NJ) amendment to the FTC Red Flag Rules, an act titled “To amend the Fair Credit Reporting Act to provide for an exclusion from Red Flag Guidelines for certain businesses,” passed the House of Representatives on October 20, 2009.

Currently, the Red Flag Rules go into effect on November 1, 2009.

Set forth in full below, the bill exempts health care practices, accounting practices, legal practices (each with 20 or fewer employees) and certain other businesses approved by the FTC that are engaged in domestic services, engage in services where identity theft is rare and have no incidence of identity theft, from complying with the Red Flag Rules.

The Adler amendment will have little effect on the litigation brought in August by the American Bar Association because of its limited scope.

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