What is FACTA and how does it apply to me?

Most Americans have heard about HIPPA, and they understand this legislation serves to protect the public. They also understand the effects on both businesses and individuals. But how many Americans have heard of FACTA?
Effective June 1, 2005, a new FTC Rule was enacted pertaining to the disposal of consumer report information and records. The Rule, 16 CFR Part 682, implements Section 216 of the Fair & Accurate Credit Transaction Act of 2006 which is designed to reduce the risk of consumer fraud, including identify theft, created by improper disposal of consumer information.
The FACTA Disposal Rule applies to every U.S. Business or employer that uses consumer information, from Fortune 500 corporations to the mom-and-pop corner store to the soccer mom who employs a nanny. It’s clearly a major step forward in the fight to give consumers greater control over their personal information and how it’s used – or abused.
FACTA represents a big change in the way many small and medium-sized companies do business. Some may be in for a serious shock. FACTA could be the most financially damaging act to businesses signed into law in recent years. With identify theft reaching epidemic levels, the new FACTA law has taken aim at “any person who maintains or otherwise possesses consumer information for business.”

The facts on FACTA (disposal rules)

1. Designed to reduce the risk of consumer fraud and identity theft, it applies to every business in the U.S..
2. Requires businesses to destroy all personal information on consumers (customer, employees, vendors, etc.) before discarding it. Access to this information is strictly limited by other Federal Laws (HIPPA, etc.)
3. States that every person and/or business MUST protect against unauthorized access to or use of the information in connection with its disposal.
4. Allows for Civil Liability should an employee’s identify be stolen due to an employers failure to act.
5. Consumers may be entitled to recover actual damages sustained as a result of a FACTA violation (Financial losses and work hours lost).
6. Courts are authorized to award punitive damages and attorney’s fees, in an individual or a class action suit.
7. State and federal fines may be imposed on the business or employer per breach of personal information.

What can you do as an employer to minimize your liability? Document shredding, careful screening of employees who will be coming into contact with personal information, physically locking files and drawers that contain sensitive information, and reduction of electronically stored information are a few of the many things you can do .

However, no matter what steps you take there is no guarantee to be sure your employee’s information won’t be compromised. As an employer, it is important to conduct mandatory attendance employee meetings, explaining FACTA, the importance of proper disposal of consumer information and the dangers of identity theft.

For more information or to arrange for a benefits consultant to meet with your employees, please contact Benefit Specialists of NY at 470-1930.

This article is provided as part of the Benefit Specialists of NY continuing education series.