After nearly two years of enforcement delays, the FTC’s Red Flag Rules finally became effective as of December 31, 2010. However, due to the Red Flag Program Clarification Act, signed into law on December 18, 2010 (“Clarification Act”), most health care providers will not be subject to the Red Flag Rules.
The Clarification Act limits the scope of who must comply with the Red Flag Rules. By its terms, the Red Flag Rules apply only to “creditors.” Under the original Red Flag Rules, most health care providers were considered “creditors” because they do not receive payment in full from patients at the time they provide the health care services. The Clarification Act amends the definition of who is a “creditor” in an effort to exclude from compliance the entities considered to be subject to the Red Flag Rules simply because they do not receive payment in full at the time they provide their services.
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