New ID theft prevention rule lumps doctors with lenders, AMA objects

The Federal Trade Commission delayed for the fifth time enforcement of a new rule intended to minimize the risk of identity theft across industries which lend money but are not banks, following objections from the American Medical Association and other physicians groups.

The regulation, known as the Red Flags Rule, would require companies that fall under the general definition of "creditors" to develop and enact customized identity theft prevention programs that take into account their risk levels, previous security breaches and the nature of their business.

In the context of the new rule, a "creditor" provides goods and services and bills for them later. The term applies to credit card companies, mortgage and auto loan issuers, wireless carriers and other potential targets for identity thieves.When the legislation was first written in 2007, the FTC included doctors, because they typically bill patients after services are provided and sometimes accept payment plans.

But the AMA, the American Osteopathic Association and the Medical Society of the District of Columbia strongly oppose this definition and pushed to block regulators.

"For two years, the AMA has made the case to the FTC that physicians are not creditors like banks and lenders, and the misguided red flags rule should not apply to them," AMA President-elect Cecil B. Wilson said in a statement.

The direct consequence of delaying enforcement is not only that physicians would be exempt until at least January 1, 2011, but also that consumers would not benefit from beefed-up protections in other industries that fall under its guidance.

The FTC could not immediately be reached for comment.

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