Recently adopted legislation narrows the applicability of the FTC’s Red Flags Rule so that service providers, including health care service providers, are not subject to the rule merely because they are not paid in full at the time of service.

On December 18, 2010, President Obama signed into law the Red Flag Program Clarification Act of 2010 (Clarification Act). The Clarification Act narrows the categories of individuals and entities that are “creditors” subject to the U.S. Federal Trade Commission’s (FTC) Red Flags Rule, which requires identity theft detection and prevention programs. As a result, certain service providers, including physicians, other health care service providers, lawyers, accountants and other professionals will not be required to implement identity theft prevention programs merely because they accept insurance payments, or otherwise do not collect payment in full at the time of service.