It’s impossible to write about the Red Flag Rules without an apologetic “stop me if you’ve heard this one before” preface. So don’t shoot the messenger, but the deadline for the Feds’ identity-protecting Red Flag Rules has been delayed. The newest deadline—the fifth—replaces the January 1 deadline with one of June 1, 2010.

Congress created the program in 2003 in an attempt to stem the tide of identity theft by forcing creditors to use a common sense approach to identity theft prevention. It was originally slated to take effect in November 2008.

From its inception the rules have met with formidable pushback from the American Medical Association, the American Bar Association and the nation’s bankers, each group taking exception to the FTC’s interpretation of “creditor.”

According to the FTC, anyone who provides goods or services but allows for later payment is a creditor, but the FTC website explains the delays are because of an “ongoing debate about whether Congress wrote this provision too broadly.”

Ironically, the Red Flag Rules aren’t particularly onerous; they require only that businesses have written policies for recognizing signs of identity theft, training programs for their employees and response plans. In most cases, the entire process can be contained in a one-inch binder at the front desk or presented to employees within five minutes.

Perhaps the real contention is that powerful lobbies represent the doctors, attorneys and bankers that refuse to be regulated. Perhaps they don’t particularly care that the identity theft of millions of Americans could have been prevented since 2003 if only creditors were willing to take common sense steps to protect them.

Anybody want to place money on whether the Red Flag Rules take effect June 1?

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Only one more week until the Federal Trade Commission begins enforcing Red Flag Rules that require creditors—including doctors, hospitals –take steps to minimize their patients’ identity theft risks.

The American Medical Association raised a fuss about their constituents being considered creditors, and successfully delayed enforcement. But as of August 1, your doctors’ office will probably require that you present identification at every visit.

The FTC developed the Red Flag Rules in response to increasing medical ID theft complaints from consumers and insurance companies. Though there are no exact statistics on annual occurrence, the FTC estimates about 250,000 cases every year. The World Privacy Forum estimates 500,000 victims in America.

Medical identity theft encompasses financial identity theft, insurance fraud, benefits fraud and can result in mixed medical records, according to Linda Foley, co-founder of the Identity Theft Resource Center.

As well, medical ID theft causes millions of dollars in losses to health insurance providers, including federal programs Medicaid and Medicare.

In order to meet Red Flag Rule standards, creditors must:
1. Know the warning signs of medical identity theft
2. Have a response plan if they identify a possible red flag
3. Designate a go-to person to enact the response plan
4. Train employees on your plan
5. Document all of the above

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After a long delay, health-care providers are scrambling to establish Red Flag Rules in their practices by the May 1 deadline.

The rules–intended to prevent identity theft–were created as part of the 2003 Fair and Accurate Credit Transaction Act (FACT Act), but creditors were given until November 1 2008 to comply. It was just about then that medical practitioners learned that they are included in the Federal Trade Commission’s definition of creditors, considered to be an entity that “regularly extends, renews, continues credit or arranges for the extension of credit.” The FTC allowed health-care professionals another six months to bring their practices into compliance.

To be in compliance, practices have to have established procedures for spotting identity theft and trained all their employees accordingly to recognize the following red flags:

• Identification documents that appear altered or forged
• Photographs or a physical description that isn’t consistent with the patient’s appearance
• Inconsistent signatures on file
• Patient forms or applications that appear forged, altered or destroyed and re-assembled
• Statements sent to the patient or guarantor returned as un-deliverable despite ongoing transactions on active records.

Identity theft is a fast-growing crime, described by the U.S. Department of Justice as the number one crime concern in the nation. Medical identity theft isn’t tracked as a separate type of identity theft, but some estimate that as much as a 400% increase in 2008.

LifeLock is the identity theft service chosen by nearly 1.5 million Americans. Their eRecon™ and TrueAddress™ services can help you protect yourself from medical identity theft. Visit LifeLock.com to learn more. Enroll using the LifeLock promo code DEFENSE and pay only $9 a month and receive 30 days of free protection.

At the end of the 30-day free period, your card will be automatically billed $9 monthly unless you cancel within that first 30-day period. You can cancel anytime without penalty by calling 1-800-LIFELOCK. This offer is for new LifeLock members only.

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