Reports indicate that identity theft is the fastest growing crime in the United States. In fact, the FTC lists identity theft as the most reported crime for 2008. Identity thieves use personally identifying information of unsuspecting individuals to open new accounts and misuse existing accounts, creating havoc for individuals and business and costing millions of dollars. To help slow the frequency of these offenses, the federal government passed the Fair and Accurate Credit Transactions Act of 2003 (PDF).

Under the FACT Act, a number of federal agencies, including the FTC, the federal bank regulatory agencies, and the National Credit Union Administration, issued regulations (“Red Flags Rules”) requiring financial institutions and creditors to develop and implement written identity theft prevention programs to detect, prevent, and mitigate instances of identity theft. These programs must be designed to provide for the identification, detection, and response to patterns, practices, or specific activities – known as “red flags” – that could indicate identity theft.

The Red Flag Rules apply to “financial institutions” and “creditors” with “covered accounts.” The FTC has broadly interpreted the term “creditors” to include professionals such a lawyers and doctors. However, the U.S. House of representatives passed H.R. 3763 which would exclude from the meaning of “creditor” any health care practice, accounting practice, or legal practice with 20 or fewer employees. Currently, this Bill awaits action by the Senate.  Similarly, a federal judge in the U.S. District Court for the District of Columbia recently ruled that the FTC cannot force practicing lawyers to comply with the red flags, holding that she had a problem concluding that Congress intended to regulate lawyers when these statutes were enacted. 

Given the November 1, 2009 enforcement date, and the unresolved definition of "creditor," businesses of all sizes and industries will need to take immediate steps to develop a comprehensive strategy for compliance with the Red Flag Rules. Here is helpful information for the Red Flag Rules and small businesses.

Update:  Since the publishing of this post, the FTC has again extended the enforcement date to June 1, 2010.  Additionally, the U.S. District Court for the District of Columbia upheld the American Bar Association’s challenge to the Rule and the opinion enjoins the FTC from enforcing the Rule against lawyers. 

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Photo of Jason C. Gavejian Jason C. Gavejian

Jason C. Gavejian is a principal in the Berkeley Heights, New Jersey, office of Jackson Lewis P.C. and co-leader of the firm’s Privacy, Data and Cybersecurity practice group. Jason is also a Certified Information Privacy Professional (CIPP/US) with the International Association of Privacy…

Jason C. Gavejian is a principal in the Berkeley Heights, New Jersey, office of Jackson Lewis P.C. and co-leader of the firm’s Privacy, Data and Cybersecurity practice group. Jason is also a Certified Information Privacy Professional (CIPP/US) with the International Association of Privacy Professionals.

As a Certified Information Privacy Professional (CIPP/US), Jason focuses on the matrix of laws governing privacy, security, and management of data. Jason is co-editor of, and a regular contributor to, the firm’s Workplace Privacy, Data Management & Security Report blog.

Jason’s work in the area of privacy and data security includes counseling international, national, and regional companies on the vast array of privacy and security mandates, preventive measures, policies, procedures, and best practices. This includes, but is not limited to, the privacy and security requirements under state, federal, and international law (e.g., HIPAA/HITECH, GDPR, California Consumer Privacy Act (CCPA), FTC Act, ECPA, SCA, GLBA etc.). Jason helps companies in all industries to assess information risk and security as part of the development and implementation of comprehensive data security safeguards including written information security programs (WISP). Additionally, Jason assists companies in analyzing issues related to: electronic communications, social media, electronic signatures (ESIGN/UETA), monitoring and recording (GPS, video, audio, etc.), biometrics, and bring your own device (BYOD) and company owned personally enabled device (COPE) programs, including policies and procedures to address same. He regularly advises clients on compliance issues under the Telephone Consumer Protection Act (TCPA) and has represented clients in suits, including class actions, brought in various jurisdictions throughout the country under the TCPA.

Jason represents companies with respect to inquiries from the HHS/OCR, state attorneys general, and other agencies alleging wrongful disclosure of personal/protected information. He negotiates vendor agreements and other data privacy and security agreements, including business associate agreements. His work in the area of privacy and data security includes counseling and coaching clients through the process of investigating and responding to breaches of the personally identifiable information (PII) or protected health information (PHI) they maintain about consumers, customers, employees, patients, and others, while also assisting clients in implementing policies, practices, and procedures to prevent future data incidents.

Jason represents management exclusively in all aspects of employment litigation, including restrictive covenants, class-actions, harassment, retaliation, discrimination, and wage and hour claims in both federal and state courts. He regularly appears before administrative agencies, including the Equal Employment Opportunity Commission (EEOC), the Office for Civil Rights (OCR), the New Jersey Division of Civil Rights, and the New Jersey Department of Labor. Jason’s practice also focuses on advising/counseling employers regarding daily workplace issues.

Jason’s litigation experience, coupled with his privacy practice, provides him with a unique view of many workplace issues and the impact privacy, data security, and social media may play in actual or threatened lawsuits.

Jason regularly provides training to both executives and employees and regularly speaks on current privacy, data security, monitoring, recording, BYOD/COPE, biometrics (BIPA), social media, TCPA, and information management issues. His views on these topics have been discussed in multiple publications, including the Washington Post, Chicago Tribune, San Francisco Chronicle (SFGATE), National Law Review, Bloomberg BNA,, @Law Magazine, Risk and Insurance Magazine, LXBN TV, Business Insurance Magazine, and

Jason is the co-leader of Jackson Lewis’ Hispanic Attorney resource group, a group committed to increasing the firm’s visibility among Hispanic-American and other minority attorneys, as well as mentoring the firm’s attorneys to assist in their training and development. He also previously served on the National Leadership Committee of the Hispanic National Bar Association (HNBA) and regularly volunteers his time for pro bono matters.

Prior to joining Jackson Lewis, Jason served as a judicial law clerk for the Honorable Richard J. Donohue on the Superior Court of New Jersey, Bergen County.