Red Flag rules go into effect January 1, 2011 but physical therapist in small practices are exempt due to a new ruling this week.
Legislation passed this week exempts physical therapists in small practices and other health care providers from the Red Flags Rule requirements that will go into effect January 1. The Red Flag Program Act of 2010 (S 3987), signed into law Wednesday after passing the House of Representatives, narrows the scope of Section 114 of the Fair and Accurate Credit Transactions Act (PL 108-159). This section of the law directed the Federal Trade Commission (FTC) and other regulatory agencies, to promulgate rules requiring "creditors" and "financial institutions" to implement programs to detect and respond to red flags (patterns, practices, or specific activities) that could identity theft. The FTC's Red Flags Rule, implementing section 114 of PL 108-159, became effective January 1, 2008. The rule defined "creditors" as any entities who sell a product or service for which the consumer can pay later. The 2008 rule expanded previous definitions of "creditors" to include certain health care providers and created concern for APTA and other health care organizations. APTA immediately expressed its concerns to the FTC. The FTC delayed enforcement of the rule several times over the past 2 years to allow all covered entities time to come into compliance with the regulation, but there was minimal movement on establishing an equitable definition of "creditors." S 3987 will clarify the definition of "creditors."