If you own a business of any type and you bill for services rendered or products sold, you are considered a “creditor” and must comply with the Federal Trade Commission’s Red Flag Rule.

If you maintain the Social Security Numbers, medical insurance or banking information, you or a service provider working on your behalf run credit or background checks or handle debt collection for your business, you are required to comply with this Federal Law or be subject to penalties of up to $2,500 fines for each knowing violation.

Individual states are authorized to bring actions on behalf of their residents and may recover up to $1,000 for each violation.

Individuals or classes of people who are damaged as a result of a violation on your part may be entitled to recover damages and attorney’s fees.

What Health Care Providers Need to know
Steven Toporoff, attorney with the FTC's Division of Privacy & Identity Protection.

Organizations may be subject to the Rule if they are “creditors.” Although you may not think of your business as a “creditor” in the traditional sense of a bank or mortgage company, the law defines “creditor” to include any entity that regularly defers payments for goods or services or arranges for the extension of credit. For example, you are a creditor if you regularly bill patients, clients, or customers after the completion of services, including for the remainder of fees not reimbursed by insurance.

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