May 13, 2005--New rules go into effect June 1 in the southern states asking businesses to combat identity theft and fraud under the Federal Trade Commission's rules and procedures. Other states have a September deadline.
These new rules applies to companies who obtain customer information from a consumer report and requires them to destroy that information by means of shredding, burning, "smashing or wiping" when discarding it.
The new rules are an amendment to the Fair and Accurate Credit Transactions Act (FACT Act). Senate and House committees recently discussed the burgeoning problem of identity theft and how to enforce bi-partisan drafted legislation like the FACT Act.
Passed in 2003, the FACT Act, an amendment to the FCRA (Fair Credit Reporting Act) entitles consumers to free annual credit reports from three major credit bureaus. It also creates a national fraud alert system to make it easy for consumers to detect and report fraudulent activities on their accounts.
According to a survey conducted by market research firm Harris Interactive in conjunction with Office Depot, 97 percent of employed U.S. adults don't know what businesses need to do to comply with the FACT Act.
The Federal Trade Commission currently holds business owners (who may be ID theft and fraud victims themselves) responsible for the following:
The FACT Act is set up to protect not just customers but also businesses who may find themselves victim to sophisticated criminals.
In February, ChoicePoint, an Atlanta-based data broker, revealed that it had possibly sold information about 145,000 people to criminals posing illegally as businesses; and Lexis-Nexis, another data broker, notified 30,000 U.S. consumers that their personal information was likely accessed by criminals. The Federal Trade Commission has estimated that 10 million Americans fall victim to identity theft every year, costing consumers and businesses more than $55 billion.