News from the AOA's Blog

With a June 1 enforcement date fast approaching, AOA continues to push for a permanent exemption for optometry practices from the overly burdensome Red Flags identity theft rule.

Under legislation passed in 2003, businesses determined to be “creditors” would be required to implement appropriate programs to prevent and detect identity theft.

The regulation is targeted primarily at banks and other financial institutions. However, the Federal Trade Commission (FTC) has indicated that optometry and other health care practices fit within the legislative definition of “creditors” and would be required to comply.

The AOA has posted detailed background materials as well as a compliance guide for members at: http://www.aoa.org/x12701.xml.

Originally, the Red Flags rule was scheduled to take effect Oct., 2008. However, objections raised by AOA and leaders in Congress – including Rep. Nydia Velazquez (D-NY) chair of the U.S. House Small Business Committee – resulted in the FTC announcing four separate delays in their plan to begin enforcement of the rule.

The AOA has also been successful in winning inclusion of favorable report language within the FY 2010 Financial Services and General Government appropriations bill requesting the FTC to further delay implementation as it continues to work with the small business community to minimize the resulting burdens.

On Oct. 18, 2009, the U.S. House approved an AOA-backed measure (HR 3763) sponsored by Rep. John Adler (D-NJ) that would exempt small business optometry and other health care practices with 20 employees or fewer from having to comply with the Red Flags rule.

However, Rep. Adler’s bill has stalled before the U.S. Senate Banking Committee and, as of press time, the AOA Advocacy Group indicated that it appeared unlikely that the full measure could gain the needed traction to clear the Senate before the June 1 deadline.

Without a clear path to passage for HR 3763, the AOA is now mounting a push for the inclusion of language within the financial regulatory reform bill now being considered in Congress that would permanently exempt ODs from having to comply with Red Flags requirements.

Financial Reform Bill Could Ensnare ODs Once Again:

An issue with a striking resemblance to the Red Flags rule, the AOA has identified language within the Restoring American Financial Stability Act (S. 3217) -the financial regulatory reform bill – that could again ensnare ODs and force practices to comply with requirements aimed at curbing the overreach of financial institutions.

Overall, S. 3217 creates a new Bureau of Consumer Financial Protection and outlines those entities it would seek to regulate, including certain creditors. However, the legislation applies a definition of “creditor” in a similar manner as the 2003 bill creating the Red Flags rule, which the FTC later determined applied to optometry and other health care practices.

The AOA is especially apprehensive about this language because of the FTC’s continuing insistence that the Red Flags rule applies to optometrists even though there is absolutely no indication that Congress contemplated or intended such a strained interpretation of the law.

The legislation does provide exemptions, though it is not clear that they would apply to all optometrists. One section says that creditors would not be regulated under the new law unless they are “engaged significantly” in offering consumer financial products and services. However, the definition of “engaged significantly” is not clearly defined.

The AOA continues to work with leaders on Capitol Hill to make clear that the legislation does not clearly exempt optometrists and opens the door to yet another regulatory burden intended for true financial services institutions, much like the current situation with FTC implementation of the Red Flags rule.

Last month, the U.S. House Small Business Committee, at the urging of AOA and others, delivered a letter to Chairman Sen. Chris Dodd and members of his Banking Committee raising the Red Flags issue once again and warning of unintended consequences of a similar “creditor” definition within financial regulatory legislation.

AOA continues to work with Senate Banking Chairman Dodd and Ranking Member Shelby to correct and/or clarify any language which would apply these new regulations to optometry practices and also seeks to provide a permanent exemption from the burdensome Red Flags rule.

AOA will share the latest developments as soon as new information becomes available. In the meantime, members with questions or concerns are urged to contact the AOA Washington Office directly at 800-365-2219 or ImpactWashingtonDC@aoa.org.