The rule affects not only large corporations such as lenders, insurers and debt collectors, but also car dealers, landlords and those individuals who decide to check out prospective home employees, such as nannies or cleaners.
Anyone, in fact, who uses a consumer report for a business purpose will now have to comply with the Disposal Rule, part of the Fair and Accurate Credit Transactions Act (FACTA) of 2003.
FACTA directed a number of federal agencies, including the Federal Trade Commission, the Federal Reserve Board and the Securities and Exchange Commission, to set up consistent rules regarding the disposal of sensitive consumer report information, in an attempt to tackle the growing problem of identity theft.
The FTC published its Disposal Rule in November last year, and it came into force on 1st June.
The disposal standard set by the Rule is flexible, and requires disposal practices that are reasonable and appropriate to prevent the unauthorised access to – or use of – information in a consumer report.
According to the FTC this could include: burning, pulverising, or shredding papers; destroying or erasing electronic files or media; or conducting due diligence and hiring a document destruction contractor to dispose of the material.
Although the Disposal Rule applies only to consumer reports and the information derived from consumer reports, the FTC encourages those who dispose of any records containing a consumer's personal or financial information to take similar protective measures.
