What is FACTA?

FACTA (or FACT Act) is the Fair and Accurate Credit Transaction Act, a brand new federal law designed to reduce the risk of consumer fraud and identity theft created by improper disposal of consumer information.

What you should know about the FACTA Disposal Rule:

• It applies to virtually every person and business in the United States

• It requires the destruction of all consumer information before it is discarded

• Potentially severe penalties await violators

The Federal Trade Commission (FTC) has issued their FACTA Disposal Rule. And, while the FTC has singled out lenders, insurers, employers, landlords, government agencies, mortgage brokers and automobile dealers; it applies to every individual business subject to their jurisdiction, which includes virtually every person and every business in the United States.

According to the FTC's FACTA Disposal Rule "any person who maintains or otherwise possesses consumer information for a business purpose" must properly destroy discarded consumer information.

The FTC's FACTA Disposal Rule further states that eveyr person and/or business "must properly dipose of such information by taking reasonable measures to protect against unauthorized access to or use of the inforamtion in connection with its disposal."

Reasonable measures are defined in FACTA as "burning, pulverizing, or shredding of papers containing consumer information" or entering into "a contract with another party in the business of record destruction to dispose of material, specifically identified as consumer information, in a manner consistent with this rule.

Civil Liability: FACTA provides for substantial civil liability. In some cases, consumers may be entitled to recover their actual damages sustained as a result of a violation of the rule which, in the case of identity theft, could be very large. In other cases, consumers may be able to recover statutory damages of up to $1,000 for each consumer affected by a violation of the rule.

Class Action: Where large numbers of consumers are affected, they may be able to bring class actions seeking potentially massive statutory damages. If 1,000 consumers were affected, for example, a class action might seek up to $1,000,000.00 in statutory damages. Courts are also authorized to award punitive damages in either an individual suit or a class action. Finally, a successful plaintiff, or class of plaintiffs, may recover reasonable attorneys' fees.

Federal Enforcement: The federal government is also authorized to bring enforcement actions in federal court for violations of the disposal rule. In some cases, the government may bring an action in federal district court for up to $2,500 in penalties for each independent violation of the rule.

State Enforcement: The states are also authorized to bring actions on behalf of their residents and, in appropriate cases, may recover up to $1,000 for each willful or negligent violation of the rule. In cases involving multiple violations, such statutory penalties might quickly add up to very large sums. As with private lawsuits, moreover, the state may recover its attorneys' fees if successful in such an action.

Complying with FACTA

Contracting a NAID (National Association for Information Destruction) Member to shred all discarded consumer information is the best way to comply with FACTA. Service can be arranged on a schedule that suits any office. It is the most economical alternative no matter how small or large the need.

NAID is a non-profit trade group of document destruction firms dedicated to upholding the highest professional and ethical standards in the shredding industry. By choosing a NAID Member, you are selecting a company bound by those high ethical standards.

For more information on NAID you can visit their website www.naidonline.org.