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The FACTA Disposal Rule and Its Impact on Your Business

The Fair and Accurate Credit Transaction Act (FACTA) was enacted in 2003. Besides enabling consumers to request and obtain a free, annual credit report, the law contains provisions for preventing identity theft. FACTA’s Disposal Rule requires all companies who collect sensitive consumer information to destroy it when it’s no longer needed. Here’s what you need to know about complying with the FACTA Disposal Rule:

What the Law Says

The FACTA Disposal Rule mandates that organizations should use “reasonable measures” to protect against “unauthorized access to information in consumer reports and records.” In this legal context, “consumer reports” may include:

  • Credit reports and scores
  • Check-writing histories
  • Insurance claims
  • Medical histories
  • Tenant records
  • Employee background reports

The law states that “any employer whose action or inaction results in the loss of employee information can be fined by federal and state government, and sued in civil court.” Any business that fails to comply with the FACTA Disposal Rule can face federal fines of up to $2,500 per violation, state fines of up to $1,500 per violation and possible civil liability or class action lawsuits.

Who It Affects

Insurers, lenders and mortgage brokers are most directly affected by the FACTA Disposal Rule, but because of the breadth of information it’s intended to protect, the FACTA Disposal Rule applies to any business who maintains information in consumer reports as part of their role as a service provider. If in doubt whether the law applies to your company, consult with your attorney.

How to Comply

The FACTA Disposal Rule does not mandate specific disposal methods. However, according to the Federal Trade Commission (FTC), “appropriate measures” may include:

  • Burning, pulverizing or shredding of physical documents
  • Erasing or physically destroying all electronic media
  • Engaging a third party for information destruction

An information destruction partner with a full range shredding and destruction solutions can help you meet these recommended security standards. Look for one that offers both on-site and off-site paper shredding and mobile hard drive destruction. Choose a local provider who offers flexible scheduling and the security and dependability your business needs to stay compliant with the FACTA Disposal Rule.

Patriot Shredding provides shredding solutions for businesses in DC, Maryland and Virginia. For more information, please call us at 240-206-6030 or complete the form on this page.

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