FACTA & Compliance Tips
As an amendment to the Fair Credit Reporting Act (FCRA), established in October of 1970, the Fair and Accurate Credit Transactions Act (FACTA) further protects consumers with several measures designed to reduce or significantly lessen the impact and danger of identity theft.
According to the Bureau of Justice Statistics, nearly 18 million U.S. residents experienced some form of identity theft in 2014 and numbers continue to rise. Read on to learn everything you need to know about what FACTA means for you or your business, along with some valuable tips on how to comply.
What Is FACTA?
In 2003, the FCRA was amended to address the changes in growth of e-commerce and economic trends, with consumers relying more heavily on their cards than on cash. With identity theft on the rise, FACTA was enacted to protect and empower consumers with a number of provisions, including:
- Access to free credit reports on an annual basis, from each of the three major credit reporting agencies
- Active duty and fraud alerts
- Changes to receipts where card numbers must be truncated to reveal a maximum of the last five digits
- Consumers may place an alert message on their own credit file if they suspect they may be a victim of identity theft
- Obligatory victim notifications
- Rules regarding which type of red flags can trigger an alert
- Rules surrounding collection agency procedures—once they have been informed charges are a result of identity theft, they are legally bound to inform creditors
- Rules surrounding the proper disposal of consumer data and reports
FACTA Compliance Information & Tips
The FACTA Disposal Rule was added by the Federal Trade Commission (FTC) and became effective in June 2005. The rule states that: “any person who maintains, or otherwise possesses consumer information for a business purpose” is required to take “reasonable measures” to properly destroy sensitive consumer information, prior to disposal, which may include:
- Hiring a third party document destruction contractor
While the FTC has centered their focus on automotive dealerships, employers, government agencies, insurers, lenders, and the like, the rule applies to virtually any individual or business within the United States and failure to comply can result in a number of serious consequences:
- Civil Liability: FACTA makes provisions for large scale civil liability, where consumers may be able to recover actual damages resulting from rule violations or statutory damages of up to one thousand dollars per violation, regardless of whether or not the consumer was affected as a result.
- Class Action: A successful class action suit against an offending entity may result in a number of financial awards, including statutory damages, punitive damages, and/or attorney’s fees.
- Federal Penalty: Governmental agencies may choose to pursue enforcement in federal courts for disposal violations to a maximum of twenty five hundred dollars per violation.
- State Penalty: Enforcement at the state level may include compensatory amounts of up to one thousand dollars per violation, as well as attorney’s fees.
There are a number of steps you can take to ensure compliance with the FACTA Disposal Rule, starting with the development and implementation of a written policy within your organization. Additional tips include:
- Ongoing training for employees to ensure they understand and comply with current regulations.
- Partnering with a certified document destruction vendor for the secure destruction of consumer reports and data.
Complying with FACTA
Regularly scheduled document destruction should be part of any secure FACTA compliance system. TrueShred provides secure shredding services for title companies, real estate agencies, and financial and accounting firms throughout DC, Maryland, and Virginia.
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