Shred it or else:New laws require info destruction |

Shred it or else:New laws require info destruction

Jim Porter

All companies that do business with customers or clients generally handle confidential consumer information. Well, effective June 1, 2005, there are new requirements concerning the disposal of consumer information. Maybe I am the last person to find out about the Federal Trade Commission’s new Fair and Accurate Credit Transactions Act (FACTA), but if your business, no matter what size, handles confidential customer information, you are required to properly dispose of that information by burning, pulverizing, shredding or otherwise altering documents so that information cannot practicably be read or reconstructed.The information FACTA encompasses includes a Social Security number, driver’s license number, phone number, physical address, and e-mail address. Credit information provided to landlords is covered as are credit reports, no matter how acquired.The FTC rule implementing FACTA encompasses consumer reporting agencies, resellers of consumer reports, lenders, insurers, employers, landlords, government agencies, mortgage brokers, automobile dealers, waste disposal companies, human resource departments, and any other business that possesses or maintains consumer information. Finance and insurance businesses are covered as are utility companies and telecommunications companies according to the FTC summary of FACTA.”Burning, pulverizing, or shredding of papers” are enumerated examples of means of complying with the FTC Rule. Putting consumer information in the garbage is unacceptable. No more dumping in the Dumpster.In some cases, appropriate disposal of electronic media may be accomplished by overwriting or “wiping” the data prior to disposal. Under FACTA, documents include discs, CD’s, and DVD’s containing personal information. Contracting with a certified disposal company that disposes of business records is an acceptable means of complying with the rule. The sale, donation or transfer of consumer information, by itself, is not “disposal” under the rule.Credit card receipts are not covered under the act, but under other federal laws, credit card numbers must be truncated. Only the last five digits may be printed, although the law is being phased in as older cash and point of sale registers are being phased out.Noncompliance with FACTA may result in FTC or state fines, and an intentional violation could result in a suit for damages by identity theft victims. The goal of the law is to keep personal information out of the hands of identity thieves. The legislative history of FACTA naively notes that shredders cost only about $25 and “the compliance cost to small businesses will be low.” Right. For information concerning FACTA contact the FTC’s Bureau of Consumer Protection at 202-326-3058. And they will actually call you back. Or go to their web page at:, then Fair Credit Reporting Act Home Page.Jim Porter is an attorney with Porter Simon, with offices in Truckee, South Lake Tahoe and Reno. He is a mediator and was the Governor’s appointee to the Bipartisan McPherson Commission and the California Fair Political Practices Commission. He may be reached at or at the firm’s web site© 2005