The Federal Trade Commission's Red Flag Rules are in compliance news again, if only because the American Institute of Certified Public Accountants has asked to be exempt from them. Designed to prevent identity theft, the rules require financial institutions to develop and implement processes for detecting and reporting warning signs of the fraud before it happens.
According to Compliance Week, AICPA President Barry Melancon is asking the FTC to exempt CPAs and accounting firms from the requirements because they already implement privacy practices that help prevent identity theft. Therefore, they are already at low risk for that particular crime. AICPA senior technical manager, Nancy Cohen explained, "We know our clients. CPAs know who comes to their office." Banks and insurance companies, on the other hand, often do not.
Other professional organizations whose members bill for services rather than requiring payment at the time of service have made similar arguments, writer Tammy Whitehouse says. The FTC has promised additional guidance in the future regarding how the rules should be applied..