Ladies and gentlemen: Start your paper shredders.

On June 1, 2005, the FTC's rule on the proper storage and disposal of certain "consumer information" went into effect. This rule was issued by the FTC as part of its jurisdiction under the Fair And Accurate Credit Transactions Act or FACTA.

The FTC's latest FACTA rule requires any business "that maintains or otherwise possesses consumer information, or any compilation of consumer information, derived from consumer reports for a business purpose" to "properly dispose of such information or compilation." Both FACTA and the new rule are supposed to cut down on the incidences of identity theft by, among other methods, restricting the ability of thieves to go "dumpster diving" for valuable consumer information contained in discarded business records.

Now we get to the important part. Why should your business care about complying with the
FACTA disposal rules?

FACTA disposal rules apply to any business that directly or indirectly has or uses "consumer information" regardless of the business' size or number of employees. Because FACTA can apply to every business, every business should want to keep its records safe and dispose of them properly. Just to add an extra incentive to insure compliance, FACTA provides for a range of civil liabilities and penalties for noncompliance.

For example, a business that fails to comply with the FACTA rules can be liable for actual damages in a civil lawsuit brought by anyone whose identity is stolen as a result. And, for those businesses that love the thought of being a defendant in a class action lawsuit, FACTA allows class action lawsuits to be filed.

In order to be sure you'll comply with FACTA, every business owner should ask themselves the following questions:

1. Is my business subject to the FACTA disposal rules? (Hint: The answer is either yes or, to be prudent, "I don't know, so to be on the safe side, I'll pretend I am.")

2. What are my current record storage and disposal policies and practices?

3. What do I need to change in my business's policies and practices to start complying with FACTA?

4. If I outsource the disposal function, how do I know the disposal contract and contractor are FACTA compliant?

To help you answer these and other questions, the FTC has the final version of its FACTA disposal rule posted online.

http://www.ftc.gov/os/2004/11/041118disposalfrn.pdf