Red flags rule enforcement delayed until June 1, 2010
The Federal Trade Commission (FTC) delayed enforcement of the “red flags” rule until June 1, 2010, for financial institutions and creditors subject to enforcement, which includes many CPA firms.
The FTC previously delayed enforcement of the red flag rules until Nov. 1, 2009. The current delay follows an Oct. 30, 2009, ruling from the U.S. District Court for the District of Columbia that the FTC may not apply the red flags rule to attorneys.
The AICPA led efforts on a letter-writing campaign to urge the FTC to delay enforcement and to reiterate the request to exempt CPAs and CPA firms from enforcement of the rule. While the FTC did issue an extended deadline for enforcement, CPAs and CPA firms haven’t received an exemption. The Ohio Society contacted the FTC and members of the Ohio Congressional delegation expressing concern about the potential inclusion of Ohio CPAs in the scope of the red flags rule.
The Fair and Accurate Credit Transactions Act of 2003 (FACTA) defined a “creditor” as any entity that regularly extends or renews credit – or arranges for others to do so – and includes all entities – potentially including CPA firms – that regularly permit deferred payments for goods or services. Accepting credit cards as a form of payment does not, by itself, make an entity a creditor.
CPAs could become subject to the FTC’s red flags rule, since interpretations from the FTC to other professional organizations (lawyers, physicians) indicate that a “creditor” includes “any entity that defers payments, even in the normal course of a traditional billing process.” Therefore, if a CPA bills clients monthly, this could be considered an extension of credit that would require the CPA to have an internal program, subject to inspection and review, designed to detect, prevent and mitigate client identity theft.
OSCPA will continue to monitor this issue and provide updates to the membership.
Red Flags Rule Resources
More Federal legislation news
- Senate fails to reach compromise on proposed consumer protection agency
- Members of the Senate Committee on Banking, Housing and Urban Affairs were unable to reach a compromise on the highly controversial Consumer Financial Protection Agency (CFPA) during recent deliberations. OSCPA worked with AICPA in past months...
- Should the Comptroller General be a CPA?
- AICPA has contacted members of the House of Representatives supporting new legislation requiring the Comptroller General of the United States to be a CPA. AICPA President and CEO Barry C. Melancon, CPA and AICPA Chairman of the Board Robert R....
- Senators seek compromise on financial regulation reform legislation
- A bipartisan effort is under way to break the impasse in the U.S. Senate on financial regulation reform legislation. Sen. Christopher Dodd, D-Conn., and Sen. Bob Corker, R-Tenn., are crossing party lines to work together on a compromise to the...
Ohio legislation
Back to Advocacy home pageLAST UPDATED 8/24/2009