What is FACTA?

FACTA is a federal law designed to minimize the risk of identity theft and consumer fraud by enforcing the proper destruction of consumer information. The Federal Trade Commission of the United States (FTC) developed the Disposal Rule in November 2004 to further implement the policies set forth in FACTA. The Disposal Rule applies to businesses that utilize consumer information; however, it affects every person and business in the United States.

The FACTA Disposal Rule, effective June 1, 2005, states that "any person who maintains or otherwise possesses consumer information for a business purpose" is required to dispose of discarded consumer information, whether in electronic or paper form. The Disposal Rule further clarifies the definition of compliance as "taking reasonable measures to protect against unauthorized access to or use of the information in connection with its disposal." These "reasonable measures" include:

• Burning, pulverizing, or shredding of physical documents

• Erasure or destruction of all electronic media

• Entering into a contract with a third party engaged in the business of information destruction

Who is affected by FACTA?

Virtually every company operating in the United States is required, as of June 2005, to securely destroy all documents and material that contain sensitive consumer information. Specifically, this applies to:

• Businesses that use consumer information in their everyday operations, such as banks, lenders, insurers, auto dealers, realtors and employers.

• Service providers who store consumer reports and information, such as record management and information management companies.

• Service providers who destroy information, such as shredders, recyclers, waste management or technology disposal companies.