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.