FACTA
The new FACTA Law Makes Shredding More Important Than Ever
By now, almost everyone in America is familiar with the term "identity theft."
Most businesses and a growing number of individuals are taking steps to protect
themselves from becoming the next victim of America's fastest growing crime.
Shredding documents for disposal has always been a vital step in preventing ID
theft, but in June of 2005, the Disposal Rule section of the FACTA security law
was enacted which makes shredding a necessity for businesses of any size, as
well as individuals who employ even one person.
FACTA Disposal Rule Defined
Developed by the Federal Trade Commission, FACTA stands for Fair and Accurate
Credit Transactions Act. Designed to minimize the risk of identity theft and
consumer fraud, the Disposal Rule section of FACTA became law on June 1, 2005.
The Disposal Rule states that any person who maintains or otherwise possesses
consumer or employee information for a business purpose is required to properly
dispose of the information. This includes information used, or expected to be
used, to establish eligibility for credit, insurance, or employment. In
addition, all information contained in or derived from consumer reports and
records must be properly disposed to protect against unauthorized access to or
use of the information. This part of FACTA was developed to cut down on the
incidences of identity theft by, among other methods, restricting the ability of
thieves to "dumpster dive" for valuable consumer information contained in
discarded business records. The Disposal Rule goes on to say that all employers
must take "reasonable measures" to protect against unauthorized access to or use
of the information in connection with its disposal. These measures include:
- burning, pulverizing, or shredding of physical documents
- erasure or destruction of all electronic media
The main difference between the FACTA Disposal Rule and previously existing
security laws such as HIPAA, Sarbanes-Oxley, and Gramm-Leach-Bliley is that it
does not affect a single industry - it affects every business and many
households in America.
With FACTA, Congress is attempting to curb the financial losses and emotional
distress associated with identity theft. The new provision also sends a message
to business owners nationwide that if someone's identity is stolen and the
company is found liable, the company can be sued by an individual, embroiled in
a class action law suit or fined up to $1,000 by the state, and up to $2,500 per
infraction by the federal government. Those may not sound like excessive fines,
but most identity thieves don't steal just one name, they steal as many as they
can.
Are You Affected by FACTA?
If you employ someone, then the FACTA Disposal Rule affects you. Every employer
in the US is required to properly and effectively destroy all documents and
material that contain sensitive employee or consumer information. Specifically,
this applies, but is not limited to:
- businesses that use consumer information in their everyday operations,
such as banks, lenders, insurers, auto dealers, realtors, and medical
facilities
- service providers that store consumer reports and information, such as
record and information management companies
- service providers that destroy information, such as recyclers, waste
management or technology disposal companies
Importantly, the FACTA Disposal Rule is not limited to only companies or
small businesses. It affects you as the homeowner as well. If you hire a nanny,
tutor, yardman—anybody whose employment requires the exchange of sensitive
information—you are responsible for the handling and disposal of that
information. If you don't shred and information leaks out, you could be subject
to civil or class-action lawsuits, as well as state and federal fines.
Shredding is Your First Line of Defense
Often, the first thing people think about when it comes to data security is
their computers. Viruses, hacking - they're all over the news and on people's
minds. It's true that hackers pose a threat, but so does your trash can.
Firewalls and security programs will not protect you from "dumpster diving,"
which remains the most common means of collecting information used in identity
theft. A quality shredder is always your first line of defense.
For more information about FACTA, visit the Federal Trade Commission (FTC)
website at www.ftc.gov
(search for FACTA)
|
|
|
