If you have been following the updates on the “Red Flags” Rule, you are probably aware of the fact that the American Bar Associations had filed a lawsuit, because the lawyers wanted to be exempted from this rule.  They won that lawsuit, of course.   No surprise here-the judges are lawyers too and they are looking out for their colleagues.By the way, the “Red Flags” rule got postponed, once again, for the forth time.  Read more about it here…

This rule would require covered entities to implement policies, manuals and staff training.  The “Red Flags” rule would protect the consumer.  Please read my article “The “Red Flags” Rule And Its Third Delay. Why And How It Affects You.”

Now, The American Institute of Certified Public Accountants is crying foul.  It just filed a lawsuit on 11/10/09 against FTC. The American Institute of Certified Public Accountants is claiming that the “Red Flags” Rule should not apply to them.  It stated:

“The FTC failed to explain how the manner in which public accountants bill their clients in the normal course of business constitutes an extension of credit,” the organization said in a statement released this afternoon. “The FTC further failed to identify any legally supportable basis for applying the rule to accountants.”

The law states:

(ii) Any other account that the financial institution or creditor offers or maintains for which there is a reasonably foreseeable risk to customers or to the safety and soundness or the financial institution or creditor from identity theft, including financial, operational, compliance, reputation, or litigation risks.

Call me stupid, call me blonde, call me ignorant, but CPAs maintain accounts with a lot of personal information.  There is a huge risk to customers!

As for lawyers, I do not see a reason why every law firm should implement these rules, but the ones that maintain customers’ personal information, should.  For example, one of my clients, a law office I am recruiting for, offers a debt settlement program.  They set up automatic monthly payments; hence, they have their clients’ banking information.  In addition, my client is in possession of other personal identifying information, such as SS#, copies of Driver’s License, credit card account numbers, birth days, etc.  How is it that they should be an exempt from the “Red Flags” Rule?

In my personal opinion, the FTC needs to amend the rules and make it clear who is required to implement these policies.  I also think that it is about time that the lawyers and the CPAs got off their high horse and faced the reality.  I want my personal information to be safe!