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Fair and Accurate Credit Transactions Act (FACTA)


The Fair and Accurate Credit Transactions Act (FACTA) helps reduce identity theft and consumer fraud by enforcing the proper destruction of consumer information.  Businesses are required to properly dispose of consumer information compiled for business purposes, by taking reasonable measures to protect against unauthorized access to or use of the information

The Disposal Rule, effective June 1, 2005 is a federal law designed to minimize the risk of identity theft and consumer fraud by enforcing the proper destruction of consumer information. The Rule states for “covered accounts”:

  • “Any person who maintains or otherwise possesses consumer information for a business purpose must properly dispose of such information by taking reasonable measures to protect against unauthorized access to or use of the information in connection with its disposal.”
  • Covered account is any account that there may be a foreseeable risk of identity theft – credit cards, monthly billed accounts like utility bills or cell phone bills, social security numbers, drivers’ license numbers etc.
  • Act covers a broad list of businesses including financial institutions, and “creditors” such as banks, finance companies, automobile dealers, mortgage brokers, utility companies, telecoms companies, landlords, general employers and so on (anyone who operates “covered accounts).
    The Rule cites specific examples of accepted methods of destruction, including:
    • Burning, pulverizing, or shredding of physical documents
    • Erasure or destruction of electronic media
    • Entering into a contract with a third party engaged in the business of information destruction

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