FACTA, the Fair and Accurate Credit Transactions Act of 2003 was enacted to:
- To prevent identity theft
- Improve resolution of consumer disputes
- Improve the accuracy of consumer records
- Make improvements in the use of, and consumer access to, credit information
FACTA is an amendment of the Fair Credit Reporting Act (FCRA). Effective June 1, 2005, a new federal rule will require businesses and individuals to take appropriate measures to dispose of sensitive information derived from consumer reports. The Rule requires disposal practices that are reasonable and appropriate to prevent the unauthorized access to – or use of – information in a consumer report. For example:
- Reasonable measures for disposing of consumer report information could include establishing and complying with policies to: burn, pulverize, or shred papers containing consumer report information so that the information cannot be read or reconstructed
- Destroy or erase electronic files or media containing consumer report information so that the information cannot be read or reconstructed
- Or conduct due diligence and hire a document destruction contractor to dispose of material specifically identified as consumer report information consistent with the rule
Violations of FACTA If you are found non-compliant, you could be vulnerable to severe fines and even subject to class-action lawsuits, including:
- Civil Liability — A) Actual damages sustained if identity is stolen as a result of corporate inaction; B) Statutory damages up to $1,000 per employee.
- Class-Action Lawsuits — If large numbers of employees are affected, they may be able to bring class-action suits and get punitive damages from employers.
- Federal Fines — Up to $2,500 for each violation.
- State Fines — Up to $1,000 for each violation.