FTC issues final rule on consumer information and records disposalmortgagepress.comconsumer report information, FACT Act of 2003, Fair Credit Reporting Act, fraud prevention
Following a public comment period, the Federal Trade Commission
has issued its final rule regarding the proper disposal of consumer
report information and records under the Fair and Accurate Credit
Transactions Act of 2003 (FACTA) and Fair Credit Reporting Act
(FCRA). The final rule, which will be published in the Federal
Register shortly, is similar to the proposed rule issued in April
and will become effective on June 1, 2005. The commission received
more than 50 comments from industry trade organizations,
businesses, consumer advocacy groups, members of Congress and
consumers.
FACTA, which was enacted on Dec. 4, 2003, amends FCRA and
directs the FTC, Federal Reserve Board, Office of the Comptroller
of the Currency, Federal Deposit Insurance Corporation, Office of
Thrift Supervision, National Credit Union Administration, and
Securities and Exchange Commission to coordinate with one another
to adopt comparable and consistent rules regarding the disposal of
sensitive consumer report information. The purpose of these rules
is to reduce the risk of identity theft and other consumer harms
resulting from improper disposal of a consumer report or any record
derived from one. The FTC's disposal rule applies to any person
over which the FTC has jurisdiction that, for a business purpose,
maintains or otherwise possesses such consumer report
information.
The rule requires that covered entities "take reasonable
measures to protect against unauthorized access to or use of the
information in connection with its disposal." The standard for
disposal is flexible to allow entities covered by the rule to
determine what measures are reasonable based on the sensitivity of
the information, the costs and benefits of different disposal
methods, and relevant changes in technology over time. The rule's
flexibility should also facilitate compliance for smaller entities.
Additionally, the rule includes specific examples of appropriate
measures that would satisfy its disposal standard.
The final rule makes minor modifications to the proposed rule,
including clarification of the definitions of "consumer
information" and "disposal." The commission vote approving the
final rule and the publication of the Federal Register notice was
5-0.
For more information, visit www.ftc.gov.
