The Facts on FACTA (FACT Act)
What is FACTA?
FACTA (or FACT Act) is the Fair and Accurate Credit Transaction Act, a federal law enacted in 2005 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
FACTA applies to virtually every person in the United States.
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 Auto Dealers, the FACTA Disposal Rule in fact applies to every individual and business who is subject to their jurisdiction, which includes virtually every person and business in the United States.
FACTA requires the destruction of consumer information before it is discarded.
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 by taking reasonable measures to protect against unauthorized access to or use of the information in connection with the 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 engaged in the business of record destruction to dispose of material specifically identified as consumer information, in a manner consistent with this rule.”
Potentially severe penalties await violators.
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 $1,000 for each consumer affected by 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 1000 consumers were affected for example a class action might seek up to $1,000,000 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 be able to recover attorney’s fees as well.
Federal Enforcement: The federal government is 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. Moreover, as with private lawsuits, the state may recover their attorney’s fees if successful in such an action.
Complying with FACTA
Thinking of using an office shredder? Office shredders often must be replaced and are messy. Most office shredders cannot take paper clips and staples or handle disks and film. Valuable office time is wasted on shredding material and takes away from the real office work to be done. Also, office shredding is not consistently performed by employees, which creates risk.
Retrievex (Shred Sense) provides convenient security collection containers which make it easy for employees to use. We destroy the material fast whether it is 10 lbs. or 1,000 boxes and the service is cost effective. The smaller the office the more economical the service (the less you have the less it costs).
Contacting Retrievex (Shred Sense) 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 large or small the need.