Red Flags Raised on Red Flag Rules

In the ongoing debate regarding "Red Flag Rules," which are designed to prevent identity theft, several industries seem to be concerned about the undue burden these rules might inflict — including CPAs.

By the nature of their profession, CPAs adhere to strict privacy requirements regarding client confidentiality. That's just one of the many reasons the VSCPA, AICPA and several state CPA societies around the country have requested that the U.S. Federal Trade Commission (FTC) exempt CPAs and CPA firms from its Final Rule Relating to Identity Theft Red Flags and Address Discrepancies Under the Fair and Accurate Credit Transactions Act of 2003.

On August 5, 2009, the VSCPA sent a letter to Sen. Jonathan D. Leibowitz detailing several reasons CPAs should be exempt from the red flags rules.

CPAs are not the only ones who are concerned.

This past Thursday, the American Bar Association announced it has filed suit against the FTC. In its complaint, the ABA says the Rule "imposes significant burdens upon lawyers, particularly sole practitioners and those practicing in small firms, who comprise the majority of the lawyers in the United States."