The Federal Trade Commission has delayed enforcement of the Red Flags Rule for a fifth time, extending the deadline to Dec. 31, 2010. According to the FTC’s Website, the extension was made at the request of Congress, which is considering legislation that could affect the scope of entities covered by the rule.

“Congress needs to fix the unintended consequences of the legislation establishing the Red Flags Rule — and to fix this problem quickly. We appreciate the efforts of Congressmen Barney Frank and John Adler for getting a clarifying measure passed in the House, and hope action in the Senate will be swift,” FTC Chairman Jon Leibowitz said. “As an agency we’re charged with enforcing the law, and endless extensions delay enforcement.”

The Red Flags Rule was developed under the Fair and Accurate Credit Transactions Act, in which Congress directed the FTC and other agencies to develop regulations requiring “creditors” and “financial institutions” to address the risk of identity theft. The resulting Red Flags Rule requires all such entities that have “covered accounts” to develop and implement written identity theft prevention programs to help identify, detect, and respond to patterns, practices, or specific activities — known as “red flags” — that could indicate identity theft.

The Rule became effective on Jan. 1, 2008. Full compliance for all covered entities was originally required by Nov. 1, 2008. Most recently, the FTC announced in October 2009 that at the request of certain members of Congress, it was delaying enforcement of the Rule until June 1, 2010, to allow Congress time to finalize legislation that would limit the scope of business covered by the Rule. Since then, the Commission has received another request from Members of Congress for another delay in enforcement of the Rule beyond June 1, 2010.

The commission has urged Congress to act quickly to pass legislation that will resolve any questions as to which entities are covered by the rule and obviate the need for further enforcement delays. If Congress passes legislation limiting the scope of the Red Flags Rule with an effective date earlier than Dec. 31, 2010, the Commission will begin enforcement as of that effective date.

For information on the Red Flags Rule, go to www.ftc.gov/redflagsrule or visit the magazine’s Red Flags Rule channel at www.fi-magazine.com/Channel/Red-Flags.aspx.