Fresh off the American Bar Association's success fending off the application of new anti-identity theft regulations to lawyers, a trade group representing certified public accountants has filed its own lawsuit over the rules.
The American Institute of Certified Public Accountants, represented by Fried, Frank, Harris, Shriver & Jacobson partners Daniel Loeb and Bernard Nigro Jr., filed suit yesterday against the Federal Trade Commission at the U.S. District Court for the District of Columbia. It claims the so-called "Red Flags Rule," which would require businesses that extend credit to clients to take extra precautions against possible identity theft, should not have been applied to CPAs.
“The FTC failed to explain how the manner in which public accountants bill their clients in the normal course of business constitutes an extension of credit,” the organization said in a statement released this afternoon. “The FTC further failed to identify any legally supportable basis for applying the rule to accountants.”
On Oct. 29, Judge Reggie Walton of the D.C. District Court ruled that the FTC could not apply the new rules to lawyers. The FTC had argued that lawyers qualified as “creditors” because they billed clients on a monthly basis, rather than up front. The judge found their definition was overbroad. Afterward the FTC announced it was delaying enforcement of the rules until June 1, 2010.
“We feel that we should be treated the same as the lawyers, and we had hoped that the FTC would agree to that,” said AICPA General Counsel Richard Miller in an interview. “But in view of the fact that they did not, we felt the need to file the lawsuit.”
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