First attorneys got themselves exempted. Physicians then jumped in on sought a similar court order, and now accountants have succeeded in getting a judge to free them from the upcoming implementation of the Red Flags Rule, which requires companies to set up procedures to prevent identity theft.

The Red Flags Rule is part of the Fair and Accurate Credit Transactions Act (FACTA), which Congress passed in 2003. The rule requires financial institutions and creditors, including CPAs who bill clients, to develop and implement a written identity theft prevention program to protect customers’ personal information.

The rule was originally intended to take effect on Nov. 1, 2008, but has been delayed three times by the FTC (Federal Trade Commission) and is now scheduled to take effect on June 1, 2010.

The American Institute of CPAs (AICPA) filed suit in November to piggyback on the success of the attorneys’ American Bar Association (ABA) case.

Voila. The U.S. District Court for the District of Columbia in March granted their wish, but its decision is pending the D.C. Circuit Court’s review of an appeal on the ABA case. 

In short, if that court allows the attorney exemption, the accountants will get theirs as well.

For the rest of American business without deep-pocket associations to fend for them, the Red Flags Rule looms large.

You can simplify your preparation and implement of your own proactive Red Flags Rule, get a copy of Personnel Concepts Workplace Identity Theft Prevention Kit.

To make a long story short, the Federal Trade Commission (FTC) has been trying–with delayed implementation–to get the nation’s businesses that grant credit to protect their clients’ and consumers’ identities by requiring them to adhere to a Red Flags Rule.

The Red Flags refer to steps in the credit process that might indicate an identity-theft threat.

The nation’s financial institutions are already covered by the FTC rule, but for the rest of the nation’s businesses, implementation has been delayed until June 2010–for the third such delay.

The nation’s attorneys, however, launched an initial volley in getting a judge to rule that lawyers, even though they bill clients through the mail for services performed, do not per se grant credit.

This was followed quickly by the nation’s health care providers suing to obtain the same exemption.

Time for the Empire to Strike Back, and it did. This past week the FTC filed an appeal with the D.C. Circuit Court to overturn the decision by the U.S. District Court for the District of Columbia that initially granted the attorneys’ exemption.

Don’t bate your breath waiting for a similar exemption for your business. Get a copy of Personnel Concepts’ Workplace Identity Theft Prevention Kit and set up your Red Flags compliance program today. Be prepared for the June 1 start date of the Red Flags Rule.

Don’t let the fox guard the hen house. According to "identity theft expert" Robert Siciliano:

"As much as 70 percent of all identity theft is committed by someone with inside access to organizations such as corporations, banks, or government agencies, or by someone who has an existing relationship with the victim. People with access to sensitive personal data are most likely to commit identity theft. For many, it’s just too easy not to."

As an example, Siciliano cites the case of a 27-year-old computer technician at the Bank of New York Mellon, who has been charged with stealing the identities of more than 150 of his coworkers and charging up to $1 million in their names. His tactic was to get new credit cards issued in their names and sent to his own address, according to authorities.

With the Red Flags Rule taking effect, any business that extends credit will need to set up a program to monitor, detect and deter identity theft. To help you do this, Personnel Concepts offers its Workplace Identity Theft Program, which will enable you to stay in compliance with the Red Flags Rule.