Wednesday, June 01, 2005

What in the World is FACTA and Why Should I Care?

Starting last December major changes were made in the federal Fair Credit Reporting Act by the passage of FACTA. Since this law has taken effect it hasn’t gotten the attention that it deserves. That’s why I felt that I should discuss it here.

The Fair and Accurate Credit Transactions Act

FACTA for short strengthened the federal Fair Credit Reporting Act which has been in effect for several years. Now numerous rules and provisions are in effect that are going to mean lots of changes for Americans and how their personal data is protected by businesses, professionals, and others. These changes are going to be far reaching and for the most part positive.

While most of the bill and it changes are good for consumers (for a change) there are some parts that aren’t all they could have been. I think that the worst part is where the states are bared from passing any laws that are more restrictive than FACTA. That is another nail in the coffin of states rights on consumer issues. While I think that Federal laws in this area are going to be the best total solution to bring both protection and consistency that doesn’t mean that if the states want to address some of these areas with stronger legislation that a weaker Federal version should take precedence.

Any way the following changes have either take effect or will shortly take effect.

Federal rules and regulations either now or soon will require that credit card receipts and such data not be printed in full to prevent data theft. (Exceptions for hand written embossed receipts are allowed which is unfortunate.)

Businesses that handle medical, financial and other important data in printed form are required to shred documents before they throw them away.

Electronic data must be deleted by a secure method that makes recovery difficult to impossible.

A new alert called the “fraud alert” allows consumers to have credit agencies flag their accounts to alert potential creditors of possible fraud. Once a fraud alert is placed on an account a potential credit provider must call a phone number listed by the consumer to verify the transaction.

Military now have the “active duty” alert to flag their accounts while they are out of the country on active duty. Military personal have been prime targets for identity theft artists since they aren’t going to find out for sometime that their account had been compromised and they are out of the country and unable to actively pursue the matter.

Consumers will in many cases be able to obtain free credit reports after filing a fraud alert and or an active duty alert.

Victims of identity theft will now be able to obtain the records of the transactions or have them sent to any police or federal agency necessary. This goes a long way in helping them to recover from identity theft and restore their credit.

And the list goes on and on covering such things as your rights as a credit consumer, how to dispute inaccurate information, when a notice of negative information is required, how medical information is handled, your right to a free consumer credit report, and it even addresses regulation of agencies besides credit reporting agencies with the section dealing with what are called nationwide specialty consumer reporting agencies.

It is hard to believe that the same Congress and Senate passed both the new Bankruptcy bill with all of its negative impact and the FACTA with it positive protections against identity theft. Go figure sometimes even the Government can do something right!!

You may remember the story about how an unlimited number of monkeys typing away on an unlimited number of typewriters would finally be able to create a great work of literature. Well this bill proves that story has some element of truth. ;-)

Anyway this bill much too long to cover in its entirety here but to see a great review and study of the whole bill and its importance check out this site. It is definitely a bill that you should read and understand.

I will also be writing a short article about how this bill will affect you if you have a small business. These new requirements are going to require everything from shredding a lot more paper to having in place better electronic records management.


These new rules require a careful study of your day to day business practices and should be the signal to study all aspects of customer privacy as practiced by your business. Wither your an accountant or an Avon lady you will come under these previsions and you need to be prepared or face strong fines and consequences.

(This site carries a lot of great information on many issues that deal with consumer rights and legislation. Bookmark it and check it out once in a while for lots of good reading.)

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