S. 3987: Red Flag Program Clarification Act of 2010

S. 3987

Red Flag Program Clarification Act of 2010

Sen. John Thune

December 7, 2010 (111th Congress, 2nd Session)

Staff Contact

Floor Situation

S. 3987 is expected to be considered on the floor of the House on Tuesday, December 7, 2010, under a motion to suspend the rules, requiring a two-thirds majority vote for passage.  S. 3987 was introduced on Nov 30, 2010, by Sen. John Thune (R-SD) and passed by unanimous consent.

Bill Summary

S. 3987 would amend the Fair Credit Reporting Act (FCRA) with respect to the applicability of identity theft protection programs required of creditors.  Solely for the purposes of implementing the "red flag" rules under FCRA, the bill would narrow the definition of the term “creditor” to include only entities that that use consumer reports, furnish information to consumer reporting agencies, or to others who extend credit.


Many businesses such as doctor’s offices, law firms, and veterinary clinics were inadvertently subjected to a rule (the “Red Flag” rule) promulgated by the Federal Trade Commission (FTC) under the Fair and Accurate Credit Transactions Act of 2003.  This rule, if enforced, would have required a small business that extends credit incidental to the delivery of its service, such as a doctor providing medical care in exchange for future payment, to comply with identity theft prevention guidelines, resulting in a potentially unnecessary cost burden.  The FTC has delayed the final rule until the end of 2010 so as to allow Congress to legislatively clarify which entities should be should be covered as “creditors.”  Similar legislation, H.R. 3763, passed the House on October 20, 2009, by a vote of 400-0.


There is no CBO cost estimate for this legislation as of press time.