Businesses, banks must protect consumer records, U.S. says.
FACTA, which was enacted on December 4, 2003, amends the FCRA and directs the FTC, the Federal Reserve Board, the Office of the Comptroller of the Currency, the Federal Deposit Insurance Corp., the Office of Thrift Supervision, the National Credit Union Administration, and the Securities and Exchange Commission (SEC) to cooperate to adopt comparable and consistent rules regarding the disposal of sensitive consumer report information. The purpose of these rules is to reduce the risk of identity theft and other consumer harm resulting from improper disposal of consumer reports or any records derived from them. The FTC's Disposal Rule applies to people or entities under FTC jurisdiction that maintain or otherwise possess consumer report information for business purposes.
The rule requires that covered entities "take reasonable measures to protect against unauthorized access to or use of the information in connection with its disposal." The standard for disposal is flexible to allow entities to determine what measures are reasonable based on the sensitivity of the information, the costs and benefits of different disposal methods, and relevant changes in technology over time. The rule's flexibility should also facilitate compliance for smaller entities. Additionally, the rule includes specific examples of appropriate measures that would satisfy its disposal standard. The final rule makes minor modifications to the proposed rule, including clarification of the definitions of "consumer information" and "disposal." The final rule will become effective June 1, 2005.
The Office of the Comptroller of the Currency, the Federal Reserve Board, Federal Deposit Insurance Corp., and the Office of Thrift Supervision are adopting a final rule to implement Section 216 by amending the Interagency Guidelines Establishing Standards for Safe-guarding Customer Information.
The SEC approved amendments to the rule requiring financial institutions to adopt policies and procedures to safeguard customer information. The amended rule, which went into effect January 11, implements the provision in Section 216 of the Fair and Accurate Credit Transactions Act of 2003 requiring proper disposal of consumer report information and records. The amendments also require the policies and procedures adopted under the safeguard rule to be in writing.
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|Title Annotation:||News, Trends & Analysis|
|Publication:||Information Management Journal|
|Date:||Mar 1, 2005|
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