Red Flags Rule will not go into effect for lawyers

By New Jersey State Bar Association

Judge issues injunction, rule will not go into effect for lawyers
New Jersey State Bar Association played a key role

Earlier this week, we told you about the Federal Trade Commission’s Red Flags Rule that compelled lawyers to detect identity theft. The rule was to take effect Nov. 1.

We also told you the New Jersey State Bar and American Bar Associations, in conjunction with many bar groups, objected to it. The NJSBA passed a resolution opposing the measure, and wrote letters to the FTC and members of New Jersey’s Congressional delegation. The ABA filed a lawsuit.

Late Thursday, a federal judge in Washington, D.C., agreed with the ABA’s position, saying the agency cannot require attorneys follow the rule and issued an injunction against its application. (See a National Law Journal Story about the ruling.)

“We feel strongly the rule should not apply to lawyers because they do not engage in the kind of commercial transactions it seeks to address,” said State Bar President Allen A. Etish. “This rule would place an unwarranted burden that is not likely to stem identity theft; however, it could very well damage the relationship attorneys have with their clients.”

Lawyers for the FTC said they are considering an appeal.

We will be tracking developments in this matter and keep you up-to-date on the latest information.