In the News

New Law to Affect All Who Deal With Consumer Credit Information

South Windsor, CT, March 1, 2005 – By June, 2005 every company that deals with consumer credit information will have to change the way it does business. That’s the day that the Fair and Accurate Credit Transaction Act (FACTA) goes into effect. This new federal law was designed to reduce the risk of consumer fraud and identity theft that is created by the improper disposal of consumer information. Its impact will be felt by any business that has access to consumer’s credit information.

The rule requires that these companies destroy all consumer information before it is discarded. Businesses that don’t properly destroy this information will face severe penalties, which could include civil liabilities; the threat of class action suits and state and federal enforcement actions.

Although all businesses will feel the impact of the new rule, it especially singles out consumer reporting agencies, lenders, insurers, employers, landlords, government agencies, mortgage brokers, auto dealers and other users of consumer reports. “FACTA applies to anybody who maintains consumer information and any business that’s regulated by the Federal Trade Commission,” points out Stacey DiPiazza, owner of Infoshred, a document destruction company in South Windsor, CT.

She points out that FACTA covers more than paper. “The rule covers any medium that contains personal information, whether it’s paper, CDs, discs or even hard drives.” Infoshred has been asked by many companies to destroy hard drives, even though these companies have already removed the information from the drives. “Companies want to be absolutely sure that no information can be retrieved from these hard drives, so we physically destroy and dispose of them,” she says.

What does FACTA mean to your business? Ms. DiPiazza summarizes it this way: “You as a business need to really monitor and implement policies and procedures for the destruction of information. For example, in the past, an auto dealer might have thrown old credit reports into the trash, or recycling bin. Now this information has to be destroyed. Throwing it away or placing into a recycling bin will not satisfy the new FACTA rules. The information must be disposed of in a confidential waste program, where it is securely destroyed. “

In the past, such businesses would recycle office paper, but that won’t satisfy the new requirements. “Most companies recycle their paper through an outside vendor that picks up the paper and transports it to their facility in an unsecured vehicle. Employees who handle it usually aren’t background-checked and they often bring the paper to an unsecured recycling facility. There it is often dumped on the floor and pushed with pay-loaders into a baler which compacts it into bales. The bales are then picked up by the mills and recycled. The problem is that throughout the process, the paper is intact. It can be read by anyone who finds it.”

Shredding sensitive documents will satisfy the FACTA requirements. “When you use a professional shredding service like ours, discarded paper goes into what we call a ‘closed system’ that safeguards the documents from the time they are discarded to the time they are destroyed and disposed of,” she says.

“Security is the key to making sure your business satisfies FACTA’s requirements,” she points out. Professional shredding services supply their clients with locked containers. Their employees who handle the containers are background-checked for security purposes. Such companies often offer a business the option of either shredding the documents on-site or transporting them in an alarmed, locked truck to their facility for destruction. Infoshred even tracks their trucks by satellite along its route to their secured facility as an extra precaution. “When the documents reach our facility, they are shredded within 24 hours,” Ms. DiPiazza points out. “Once the material is shredded it is baled, re-pulped and reprocessed into recycled goods.”

Some businesses that are faced with new FACTA requirements are considering buying their own shredders. Ms. DiPiazza urges those companies to weigh that decision carefully. “Do you really want your employees to take the time to shred every document as well as maintain the shredders?” she asks. “We’ve been called in by panicky customers who are facing a deadline and are overwhelmed by the amount of material they are trying to feed into a small office shredder. Last week, we had a business owner call us because their shredder was actually smoking. We had to come right over and get the materials to destroy them before a deadline that they simply couldn’t meet on their own.” She also reminds businesses that if they load up their dumpsters with fluffy shredded paper, chances are their disposal costs will increase

What should businesses affected by FACTA do before the June 1 deadline? Here are some tips:

Establish internal policies and procedures that dictate how you are going to handle confidential information. These guidelines should include such things as: defining confidential information; explaining how it will be handled and setting deadlines for destruction. “The idea is to clearly establish how sensitive information will be handled and to develop a logistical flow for the paper that contains it,” says Ms. DiPiazza.
Decide how you are going to handle material other than paper. “A lot of times, people forget that things like CDs, diskettes and even hard drives contain personal data and must be destroyed under the new laws. So when you’re upgrading your computers, you must decide what you’re going to do with the old ones to protect the consumer information that they contain,” she says.
Bring in a qualified destruction vendor. If you’ve never worked with this kind of outside resource, Ms. DiPiazza offers these suggestions: “Look at a firm’s security, policies and procedures, insurance coverages, references and certifications. Make sure that the vendor is certified by the National Association for Information Destruction (NAID), which dictates the standards of our industry,” she says. “Also, look into their methods of employee screening and security. Both the trucks and the company’s facilities need to be secure. Trucks should be tracked from your business to the processing facility. The facility should be monitored 24 hours a day. We have cameras monitoring our processing facility and we keep a six-month digital video history of all that goes on at our facility. You should also feel welcome to visit the facility at any time and the company should be more than agreeable if you want to witness the destruction of your material. Lastly, I urge you to pick a company that is experienced in document destruction, not just waste management. There is a difference.”

There is no doubt that companies will need to adapt new ways of doing business to meet the needs of FACTA. Both businesses and their employees will need to change the way they handle consumer credit information. “Most companies will need to re-examine how they do business to protect that information. FACTA will take effect on June 1, 2005 and those subject to the rule will have the next six months to bring their operations into compliance”, she points out.

Infoshred, LLC has been providing secure document destruction and records storage services in Connecticut, Rhode Island and Massachusetts since 1993. Located in South Windsor, CT, the company is a charter member of NAID, the National Association of Information Destruction, and is rated “AAA” certified, the highest possible rating for security, compliance and customer service. Infoshred is certified by the State of Connecticut as a Minority/Woman-Owned business and complies with all local, state and federal requirements including the Fair and Accurate Credit Transaction Act (FACTA), the Gramm-Leach-Bliley Act and the Health Insurance Portability and Accountability Act (HIPAA).

Contact: Andrea Obston
P: (860) 243-1447 or
C: (860) 803-1155
E: aobston@aomc.com

<< Back to In The News page