What Is FACTA?

What Is FACTA?

Identity theft is not a new problem in the United States but, unfortunately, it is a growing problem. FACTA is one tool designed to help safeguard consumers’ information from being vulnerable to identity theft.

So, what is FACTA? This blog post will answer that question, explain some of the provisions available to individual consumers, and provide information about how businesses can ensure they are complying with the law.

What Is the Fair and Accurate Credit Transactions Act?

The Fair and Accurate Credit Transactions Act, or “FACTA”, is a federal law designed to help combat identity theft, among other things. Enacted in 2003, FACTA added to the protections already in place for U.S. consumers under the Fair Credit Reporting Act (FCRA).

In addition to identity theft protections, FACTA also includes measures designed to improve the public’s financial literacy and education related to financial matters.

What Are Some of the Key Provisions of FACTA?

FACTA includes several requirements for businesses and provides consumers with certain tools to help them better manage their credit records. Some of the key provisions of FACTA include the following:

  • Consumers have the right to obtain one free credit report each year from each of the three major credit reporting agencies (Equifax, Experian and Transunion).
  • Individuals may place fraud alerts on their credit records. This can help limit or stop ongoing fraud.
  • When an application for credit is denied (or approved under less favorable terms), lenders must provide the applicant with their credit score and a risk-based pricing notice.
  • Businesses that accept credit or debit cards for payment must adhere to specific restrictions regarding the information printed on credit card receipts.
  • Lenders, payment processors and regulators must adhere to the “Red Flags Rules” to proactively identify suspicious activity.

What Is the FACTA Disposal Rule?

In addition to the consumer protection provisions identified above, FACTA also includes a rule stating that any business that uses consumer reports for any purpose must dispose of the information in such a way that it cannot be reconstructed. The so-called “Disposal Rule” applies not only to credit reports and related information, but also to any type of personally identifiable information such as:

  • Name
  • Birthdate
  • Social Security Number
  • Credit or Debit Card Number
  • Email Address
  • Mailing Address
  • Telephone Number
  • Driver’s License or Passport Number

Businesses that violate any provision of FACTA, including the Disposal Rule, can face severe penalties.

Does FACTA Apply to My Business?

Certain provisions of FACTA — such as the Disposal Rule and the credit card receipt requirements — apply to businesses across industry lines. Other provisions apply only to businesses that meet the definitions of “Creditors” or “Financial Institutions.”

Generally, “Financial Institutions” are banks, credit unions, savings and loan associations, and mutual savings banks, whether charted under federal or state laws. “Creditors” are entities that regularly permit purchasers to defer payments or those that regularly arrange, extend or renew credit.

How Can Companies Remain in Compliance With FACTA?

Most companies regardless of industry have some compliance obligations under FACTA. If you are a business owner, this checklist can help ensure you have taken reasonable steps to comply with the law’s provisions.

  • Do you have policies and procedures in place to address how personally identifiable information is captured, used, maintained and destroyed?
  • Do you regularly provide training on FACTA requirements for new and existing employees and contractors?
  • Does your document disposal plan also address digital/electronic media?
  • If your business is a creditor, do you have procedures in place to comply with the risk-based pricing notice requirement?
  • If you accept credit cards, do your transaction receipts comply with the truncation requirements in FACTA?

What Is the Role of a Consumer Protection Attorney With FACTA?

As a consumer protection law firm, Stein Saks, PLLC has plenty of experience with FACTA. We assist victims of FACTA violations, helping them obtain compensation and holding businesses responsible for their errors or oversights. With significant litigation experience, the attorneys at Stein Saks, PLLC also understand the nuances of FACTA legislation and are committed to protecting consumers’ rights.

To learn more and to schedule a consultation with a knowledgeable FACTA attorney, contact us today.

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