FACTA or FACT Act is the Fair and Accurate Credit Transaction Act, a new federal law designed to reduce the risk of consumer fraud and identity theft created by improper disposal of consumer information. FACTA applies to virtually every person and business in the United States. It requires the destruction of all consumer information before it is discarded.
The practice known as "dumpster diving" provides identity thieves with a treasure trove of personal data. Irresponsible information disposal by businesses has been cited in numerous instances of fraud. Now under new FACTA provisions consumer reporting agencies and any business that uses a consumer report must adopt procedures for proper document disposal.
The FTC, the federal banking agencies, and the National Credit Union Administration (NCUA) have published final regulations to implement the new FACTA Disposal Rule. The FTC's disposal rule applies to consumer reporting agencies as well as individuals and any sized business that uses consumer reports. The FTC lists the following as among those that must comply with the rule:
- Lenders
- Insurers
- Employers
- Landlords
- Government agencies
- Mortgage brokers
- Automobile dealers
- Attorneys and private investigators
- Debt collectors
- Individuals who obtain a credit report on prospective nannies, contractors, or tenants
Penalties for not complying with FACTA include civil liability, class action suits and federal and state enforcement. To comply with FACTA, all discarded consumer information should be shredded on a regular basis.
Click here to visit the FTC's FACTA site