Troutman Sanders LLP » FTC News

Senate Legislation Resolving FERC/CFTC Jurisdiction Issues Passes Voice Vote

Troutman Sanders LLP — Fri, 21 May 2010 09:57:57 +0000

On May 18, 2010, the U.S. Senate approved by voice vote an amendment to the financial reform bill (S. 3217, the “Restoring America’s Financial Stability Act”), which would attempt to resolve the ongoing jurisdictional debate between FERC and the Commodity Futures Trading Commission (“CFTC”).

Senator Jeff Bingaman’s (D-NM) amendment would clearly delineate the roles of the agencies and grant CFTC exclusive jurisdiction over swaps and contracts for the sale of a commodity for future delivery (see May 14, 2010 edition of the WER). However, the legislation would preserve the authority of FERC and state regulators over financial transmission rights and other futures-oriented electricity contracts that may fall under the jurisdiction of the CFTC as the sole federal regulator of derivatives. The bill would allow the CFTC to waive authority over futures-oriented contracts now regulated by FERC if it finds that would be in the public interest.

With Bingaman’s amendment, the Senate approved the financial reform bill by a vote of 59-39. The bill now moves to a House-Senate conference where it may face opposition from House leaders.

The bill is available at: http://thomas.loc.gov/cgi-bin/bdquery/z?d111:s.03217:.

FTC to Delay Enforcement of Red Flags Rule until November 1, 2009

Troutman Sanders LLP — Thu, 30 Jul 2009 21:30:29 +0000

Just announced, the Federal Trade Commission (“FTC”) has suspended enforcement of the Red Flags Rule for a third time, resulting in a new compliance date of November 1, 2009, which is an additional three month delay from the most recent compliance date of August 1, 2009 (see May 1, 2009 edition of the WER). According to the FTC, this suspension will provide creditors, particularly small businesses and entities with a low risk of identity theft, with more time to understand their obligations under the Red Flags Rule and to develop and implement identity theft prevention programs. During this additional three month delay, the FTC has stated that it will redouble its efforts to educate small businesses regarding compliance with the Red Flags Rule and provide additional resources and guidance to clarify which businesses are covered by the Rule and what they must do to comply. The FTC intends to make available additional compliance guidance, including the creation of a special link for small and low-risk entities on the FTC Red Flags Rule web site, www.ftc.gov/redflagsrule, with compliance materials and further direction regarding the Rule. The FTC recently posted FAQs that address how the FTC intends to enforce the Rule.

The FTC will forebear from bringing any enforcement action for violation of the Rule during this additional three-month extension period. The FTC’s announcement, however, makes clear that the extension applies only to entities subject to the FTC’s jurisdiction and does not affect the other agencies charged with overseeing enforcement of this Rule: the Office of the Comptroller of the Currency, Federal Reserve Board, Federal Deposit Insurance Corporation, Office of Thrift Supervision, and the National Credit Union Administration.

The Red Flags Rule resulted from the Fair and Accurate Credit Transactions Act of 2003, which amended the Fair Credit Reporting Act, and requires covered entities to develop and implement a written Identity Theft Prevention Program designed to detect, prevent, and mitigate identity theft. The FTC explained that many entities subject to the Rule were uncertain about their coverage under the Red Flags Rule. During the previous two extension periods, the FTC conducted outreach efforts and developed and published materials on its Red Flags Rule web site to assist companies in complying with the Rule.

This is one in a series of advisories regarding “Red Flags Rules”. If you have questions or would like copies of previous advisories related to this topic, please contact David Anthony. Troutman Sanders LLP offers a full array of services to help bring companies into compliance with the Red Flags Rule.

FTC Issues “Fighting Fraud with the Red Flags Rule: A How-To Guide for Business”

Troutman Sanders LLP — Fri, 15 May 2009 16:55:19 +0000

We continue in our efforts to help bring companies into compliance with the Red Flags Rule. By August 1, 2009, creditors will be required to have an identity theft prevention program in place. To address the compliance concerns of businesses, the FTC issued a practical guide entitled, Fighting Fraud with the Red Flags Rule: A How-To Guide for Business. This Guide provides useful and practical information for businesses such as:

Guidance regarding whether the Red Flags Rule applies to particular businesses or organizations;
Tips on spotting the red flags of identity theft, taking steps to prevent the crime, and mitigating the damage inflicted by identity theft; and
Implementation steps for a compliant written Identity Theft Prevention Program.

The Guide also explains how the Red Flags Rule fits with other data security measures being taken by businesses. While data security practices make it more difficult for identity thieves to access personal information they might use to open or access accounts, the Red Flags Rule requires businesses to direct their attention to certain red flags that suggests the occurrence of identity fraud. The Guide concludes that this two-front approach is necessary to combat the growing costs and problems associated with identity theft.

A copy of the guide can be found at: http://www.ftc.gov/bcp/edu/pubs/business/idtheft/bus23.pdf

FTC to Delay Enforcement of Red Flags Rule Until August 1, 2009

Troutman Sanders LLP — Fri, 01 May 2009 17:21:30 +0000

Just announced, the FTC will suspend enforcement of the Red Flags Rule again – this time until August 1, 2009 (resulting in an additional three month delay from its current compliance date of May 1, 2009). This suspension will give creditors more time to development and implement identity theft prevention programs. The FTC explained that this action results from the ongoing debate regarding whether the Red Flags Rule is too broad. This additional three month delay will allow industries and associations to share guidance with their members and provide Congress time to consider the issue further. During this time period, the FTC also has stated it will release a template to help entities that have a low risk of identity theft to comply with the law. The FTC will forebear from bringing any enforcement action for violation of the Rule during this additional three-month compliance period. The FTC’s announcement, however, makes clear that it applies only to entities subject to its jurisdiction and does not affect the other agencies charged with overseeing enforcement of this Rule, the Office of the Comptroller of the Currency, Federal Reserve Board, Federal Deposit Insurance Corporation, Office of Thrift Supervision, and the National Credit Union Administration.

The Red Flags Rule resulted from the Fair and Accurate Credit Transactions Act of 2003, which amended the Fair Credit Reporting Act, and requires covered entities to develop and implement a written Identity Theft Prevention Program designed to detect, prevent, and mitigate identity theft. The FTC explained that many entities subject to the Rule were uncertain about their coverage under the Red Flags Rule. During the first extension period, the FTC conducted outreach efforts and developed and published materials to help explain what types of entities are covered.

If you have questions or would like copies of previous advisories related to this topic, please contact David Anthony. Troutman Sanders LLP offers a full array of services to help bring companies into compliance with the Red Flags Rule.