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FACTA disposal rule takes effect

National Mortgage Professional
Mar 24, 2014

FACTA disposal rule takes effectMortgagePress.comDue Diligence, Consumer Reports, Document Disposal, Disposal Rule, Fair and Accurate Credit Transactions Act

On June 1, the rule for disposing of consumer reports, issued under the Fair and Accurate Credit Transactions Act, took effect. The final rule was published on Nov. 24, 2004. The rule, commonly know as the "Disposal Rule," applies to organizations that use consumer reports, including, but not limited to, consumer reporting companies, lenders, insurers, employers, landlords, government agencies, mortgage brokers, automobile dealers, attorneys, private investigators and debt collectors.

The Disposal Rule requires organizations to take reasonable and appropriate measures in disposing of consumer reports to prevent the unauthorized access to or use of information in a consumer report. The Federal Trade Commission has indicated that examples of reasonable measures could include establishing and complying with policies to: burn, pulverize or shred papers containing consumer report information so that the information cannot be read or reconstructed, destroy or erase electronic files or media containing consumer report information so that the information cannot be read or reconstructed and/or conduct due diligence and hire a document destruction contractor.

Development of policies and procedures in response to the Disposal Rule should be incorporated with an organization's information security program, as required by the Information Safeguards Rule issued under the Gramm-Leach-Bliley Act.

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Mar 24, 2014