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Senate Approves Changes to “Red Flag” Rule
Despite Republican promises to block any legislation in the Senate until the Bush tax cuts are extended, the Senate moved quickly yesterday to approve a bill co-sponsored by John Thune (R-SD) and Mark Begich (D-Alaska) that would redefine the term “creditor” for purposes of the controversial “red flag” rule used by the FTC. Under the current broad definition, lawyers, doctors, and other people or businesses that provide services upfront in the expectation of future payment are considered creditors. This bill redefines it to a more common sense definition of someone that advances funds based on credit reports in the expectation that the money will be repaid later. The House of Representatives must take up the bill before it will become law, but the ABA is anticipating quick passage by the House.