Compliance Update: Document Disposal


Compliance Update: Document Disposal

On June 1st, 2005, the FTC will begin enforcement of the FACT ACT provision requiring all businesses and organizations maintaining or possessing consumer report information to properly dispose of consumer report information. The rule’s purpose is to mitigate the risk of identity theft when information is improperly stored and destroyed.

The Fair and Accurate Credit Transactions Act of 2003 (FACT ACT) was created “To amend the FCRA, to prevent identity theft, improve resolution of consumer disputes, improve the accuracy of consumer records, make improvements in the use of, and consumer access to, credit information, and for other purposes.”

Beginning June 1st, 2005 the requirement to properly dispose of employee and applicant personal information will be enforced. [15 U.S.C. 1681 § 1681w] (a).


All businesses and organizations that use consumer reports are impacted by this rule. The FTC now requires you to perform an independent review of your internal policies and procedures regarding the disposal of consumer report information. This rule does not require disposal, it only addresses what businesses should do if they choose to dispose of the information.

Businesses and organizations must use reasonable measures to protect against unauthorized access to or use of consumer information. This measure should be followed both during and after the disposal process. Reasonable measures are determined by the sensitivity of the consumer information, the nature and size of the entity’s operations, the costs and benefits of different disposal methods and relevant technological changes.

Disposal is not required; if you do choose to dispose of consumer report information you simply must do so properly.

Some examples of proper disposal:

*Burning * Shredding  *Certified Third Party Disposal Company (Shred-it, etc) *Permanent Destruction of electronic files *Implement a formal “Disposal Policy”

If you have any questions regarding this new rule, please visit the FTC web site at, or contact the FTC Division of Financial Practices, Bureau of Consumer Protection at 202.326.3224.