Obama Makes Physicians' Exemption From Red Flags Rule Official

President Obama has signed the Red Flag Clarification Act of 2010 into law, which clarifies and narrows the definition of a "creditor" and thereby excludes physicians from the Federal Trade Commission's Red Flags Rule, according to a Healthcare IT News report.

Under the Fair and Accurate Credit Transactions Act, the FTC's Red Flags Rules required "creditors" and "financial institutions" to implement written identity theft detection and monitoring programs, designed to help business and organizations detect and respond to warnings signs of identity theft. The requirement was met with much disdain, particularly from the American Medical Association, which filed a lawsuit in federal court in May to prevent the rule from applying to physicians because it felt the Red Flags Rule was "arbitrary."

The Red Flag Clarification Act, which was drawn up and introduced by Sen. John Thune (R-S.D.) and Mark Begich (D-Alaska) on Nov. 30, sought to clarify the definition of a "creditor" based on the reasoning that small businesses, such as physician's offices, do not offer or maintain accounts that pose any risk of identity theft. The bill narrowed the definition of a "creditor" to include only entities that use consumer reports and furnish information to consumer reporting agencies or to others who extend credit.

The same day the bill was introduced, the Senate unanimously passed the Red Flag Clarification Act, with the House of Representatives following suit soon after in early December. Many societies and organizations, including the AMA, the Medical Society of the District of Columbia and American Osteopathic Association, applauded the passage of the law.

Read the news report about the Red Flag Clarification Act of 2010 becoming law.

Read other coverage about the Red Flags Rule:

- Senate Passes Bill Exempting Physicians From FTC Red Flags Rule

- House Follows Senate in Passing Physician Exemption to Red Flags Rule

- FTC Delays Enforcement of Red Flags Rule

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