Loan Officer Practice Exam

Who is excluded from the Red Flags Rule under the Fair and Accurate Credit Transactions Act?

1. Lawyers

2. Automobile dealers

3. Healthcare providers

4. Real estate agents

The correct answer is: Lawyers

The correct answer is that lawyers are excluded from the Red Flags Rule under the Fair and Accurate Credit Transactions Act (FACTA). The Red Flags Rule requires financial institutions and creditors to develop a written identity theft prevention program to address the risk of identity theft that could arise from their operations. However, certain professions, including lawyers, are considered to be less likely to be involved in situations that pose the same level of risk regarding identity theft. This exemption recognizes the distinct nature of legal services and the regulatory frameworks that already govern many aspects of legal practice. In contrast, automobile dealers, healthcare providers, and real estate agents do not have the same blanket exclusion. These professions often engage in financial transactions and handle sensitive personal information that could make them more vulnerable to scenarios involving identity theft, thus they are subject to the requirements of the Red Flags Rule.