State Bar of Texas Blog

Red Flags Rule does not apply to lawyers

UPDATE 2: On Dec. 20, 2010, President Obama signed this provision into law.

UPDATE: On Dec. 7, 2010, the U.S. House of Representatives also approved this legislation.

On Nov. 30, the U.S. Senate unanimously passed the Red Flag Program Clarification Act of 2010, which clarifies that the Federal Trade Commission's Red Flags Rule does not apply to lawyers, doctors, accountants, and certain other service providers. The bill has been referred to the House Committee on Financial Services.

The Red Flags Rule requires financial organizations and "creditors" to develop programs to prevent identity theft.

The Senate action comes after efforts by bar associations and other organizations to exempt professionals who maintain accounts for clients that generally do not carry risks of identity theft.

For background on this issue, see the American Bar Association website.

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