Knock, knock. Who's there? Is it your lawyer?

On June 1, 2005, the FTC’s rule on the proper storage and disposal of certain “consumer information” went into effect. The rule was issued by the FTC, under the Fair And Accurate Credit Transactions Act or FACTA.

It’s been a year since the ruling went in to effect. How well is your company doing?

The big question is “how is consumer information defined” by the FTC? According to Chris Kelleher, small-business advisor and attorney, it means that if your business has or obtains any consumer credit reports, employee background reports or similar reports that have been derived from or prepared by an outside agency or company, then the FACTA disposal rules apply to those records.

The ruling is intended to protect the privacy rights of individuals by minimizing the risk of identity theft from dumpster divers and others have access to the records. The FTC acknowledges that business, who may receive information from a variety of sources, may not always know whether the information they receive was derived from a consumer report. Even though the FTC admits that, it won’t stop them from holding you responsible for properly storing and disposing of your records. Ignorance of the law is not a valid excuse, folks.

Larger companies may opt to hire outside firms to destroy their documentation. If your company is one of them, the FACTA rules require you to “take reasonable steps to select and retain a service provider that is capable of properly disposing of the consumer information at issue; notify the service provider such information is consumer information; and enter into a contract that requires the service provider to dispose of such information in accordance with the Rule.”

Smaller companies, you’re not off the hook either. FACTA disposal rules apply to any business that directly or indirectly has or uses “consumer information” regardless of the business’ size or number of employees.

• FACTA disposal rules apply to any business that directly or indirectly has or uses “consumer information” regardless of the business’ size or number of employees.
  

• FACTA applies to every business so make it a policy to keep your records safe and dispose of them properly. If you are found to be in violating of the ruling, FACTA offers a range of civil liabilities and penalties for noncompliance.
  

• If a person’s identity is stolen as a result of your negligence, you are “open game” and could become involved in a civil lawsuit. Class action lawsuits are also welcomed by the FACTA ruling.
  

See more information about what is considered to be the proper storage and disposal of consumer information.

Dawn Turner
Blog Development & Management
The SearchLogix Group