The US Senate unanimously agreed in early December that lawyers should not be covered by the FTC's new Red Flags Rule. The rule, originally passed by congress in 2003, broadly used the term "creditors" to include anyone who sells a product or service for which the consumer can defer payment, writes co-chair of Moses & Singer's Legal Ethics & Law Firm Practice division Devika Kewalramani.

The ABA took up a suit, along with several state and local bar associations, against the FTC for attempting to unlawfully regulate their profession. The suit argued that the FTC's position too broadly applied the "creditor" status by stating that professionals were creditors when they allow customers to pay for services after they were performed. The rule then required any business or individual that was a creditor to implement programs to prevent identity theft.

The ABA is still awaiting a ruling from the D.C. Circuit to affirm the district court's ruling. 

Devika Kewalramani is a partner at Moses & Singer and is also a Lawline.com faculty member who specializes in lectures on ethics and professional conduct for law firms. To learn more about recent ethics changes in New York you can watch Kewalramani's top-rated course "New York Ethics- The Amendments of 2009."  To read Devika Kewalramani's full article on the current status on the FTC Red Flags Rule, click here.