What is FACTA

What is FACTA

FACTA is the Fair and Accurate Credit Transactions Act. This act was enacted by Congress to lower the risk of identity theft and consumer fraud. The Disposal Rule of FACTA enforces businesses of all sizes, even those employing one person, to shred all personnel documents before throwing them away. This makes it more difficult for identity thieves to “dumpster dive” for personal information. This rule further states that is the responsibility of businesses and employers to ensure that personal business documents are disposed of in a way that maximizes security and minimizes the risk of this personal information being stolen. Unlike HIPAA or the Gramm-Leach-Bliley Act, FACTA does not focus on only one type of industry, its mandates affect every single business in America from the threats of identity theft.


By definition, you would think that “financial institutions” means banks, but it doesn’t. Your business is considered a financial institution if you have access to consumer credit data, such as accounts that allow automatic drafts or the ability to check credit scores. Because of this, many businesses in various industries must comply with FACTA regulations.

This even applies to individuals. If you pull a credit report on somebody to fill a position such as house cleaner or nanny, looking for a tenant, or for any other reason, the disposal regulations apply to you as well.

Disposal means both documents and electronic records. The regulations call for the complete destruction of paper products as well as electronic devices such as hard drives, USB drives, and CD/DVDs. You must provide extra care when destroying records from electronic storage devices.


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