Proper Disposal of Consumer Information
The FACT Act — Fair and Accurate Credit Transactions Act of 2003 — amended the Fair Credit Reporting Act to add a requirement for proper disposal of information by persons or companies that for business purposes possess or maintain consumer information. The provision is designed to protect consumers from unauthorized access to information about them and thus to prevent fraud or identity theft.
Companies maintaining consumer information will have to adopt measures to insure that such information is not available to those who might misuse the information. For example, any consumer information will have to be erased from hard drives on obsolete computers to be donated to schools or charities.
Section 216 of the FACT Act, 15 U.S.C.S. ¤ 1681w(a)(1), requires that “any person that maintains or otherwise possesses consumer information, or any compilation of consumer information, derived from consumer reports for a business purpose” must “properly dispose of any such information or compilation.” The Act requires implementation of appropriate regulations and coordination of such regulations by the following federal agencies:
These agencies have adopted consumer information disposal rules to be followed by businesses within the jurisdiction of the agencies. For example, the Securities and Exchange Commission has adopted a rule, effective January 2005 and with a compliance date of July 1, 2005, that states:
Every broker and dealer other than notice-registered broker-dealers, every investment company, and every investment adviser and transfer agent registered with the Commission, that maintains or otherwise possesses consumer report information for a business purpose must properly dispose of the information by taking reasonable measures to protect against unauthorized access to or use of the information in connection with its disposal.
“Disposal” under the rule means discarding or abandoning consumer information and includes the “sale, donation, or transfer of any medium, including computer equipment, on which consumer report information is stored.”
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