The FACTA Disposal Rule: Ensuring Safe Disposal of Consumer Data

Overview: The secure disposal of sensitive information is an important aspect within our data-driven global society we live in today. They tackles this by setting certain guidelines on how to protect consumer data from identity theft and online frauds. So, this guide will briefly discuss FACTA Disposal Rule, its importance and as well as its requirements for an organization to follow them rightly.

What is The FACTA Disposal Rule?

It was established in 2003 as the FACTA disposal rule which comes under the Fair and Accurate Credit Transactions Act. This rule is required to be followed by the organizations to completely destroy the consumers data and their records to prevent inappropriate actions. In order to avoid identity thefts and frauds, you need to destroy confidential information of the user. So that it cannot be read or understood or come across the wrong hands.

Enforcement of FACTA

The Federal Trade Commission (FTC) enforces FACTA which performs audits of credit bureaus and certain financial institutions. If these creditors don’t comply with the FACTA disposal rule, they  could receive warnings or have severe penalties from the FTC. The CFPB also helps to create rules for the law with the FTC.

The Importance of FACTA Disposal Rule For Businesses

Businesses that collect your personal data like your credit card, Bank details must follow this compliance rule. It is to ensure that the client’s important information is disposed of to prevent it from any unauthorized access, illegal frauds or through online scams. In order to securely delete the electronic data to make it unreadable, you require methods like shredding, to safeguard data security.

According to FACTA, the data provided below constitutes ‘Personal Information’ that require protection:

1. Bank Account numbers
2. Credit Card numbers
3. Social Security numbers
4. Driver’s License numbers
5. Medical Data
6. Employment Data
7. Personal Identifications numbers (PINs)
8. Passwords
9. Phone numbers and personal addresses

Penalties of Non-Compliance with FACTA Disposal Rule

Organizations that don’t follow this compliance rule can come across severe penalties. This rule is the top most priority which should be adhered to by the companies as it requires the safe destruction of consumer data from credit records to avoid identity theft or online scams.

• Hefty Penalties: If any organization or company doesn’t handle the consumer sensitive data properly, then they can be fined $3,500 by the federal government for not following the FACTA disposal rule. Even states can impose fines of $1,000 per violation and they have their own civil penalties. These fines can increase faster, especially the companies which handle large amounts of consumer data.
• Reputation Damage: If you fail to follow the data protection rules, then it damages the business reputation which further tends to lose clients and their trust. It makes it more important to make sure you are having due to the rising number of data breaches and fraud cases. If companies don’t handle the consumer data properly, then you can remember the incidents of Morgan Stanley’s hacking and public backlash.
• Costly Lawsuits: Having out of compliance can result in legal action, financial penalties and also challenge the company’s reputation. If you do not securely destroy the consumer data under this rule, then it can lead to costly and time-consuming lawsuits from affected consumers.

Best Practices to Comply with FACTA Disposal Rule?

In the United States, many states have approved data privacy laws which are focused on data destruction. Further, these laws become stricter, by which companies are adopting data storage and destruction policies in order to comply with state regulation, including the FACTA disposal rule.

• Develop a Data Disposal Policy: Companies should have a written policy on securely disposing of consumer sensitive information. These policies should be accessible to all the employees working in the company or any organization who handle sensitive data.
• Train Employees: Companies have to train the employees which handle sensitive data at regular intervals with having proper disposal written in the policy.
• Use a Trusted Media Destruction Vendor: Always try to use the reputable companies which are known for their safe information management. Also, ensure that they follow legal requirements when outsourcing waste disposal.

• Monitor Regular Audits: Keep regular check and audit disposal methods in order to  ensure that they are being followed properly.
• Maintain Document Data Destruction Records: Keep records whenever you are destroying data to show as the proof of compliance for audits or investigations.

Advantages of Complying with FACTA Disposal Rule

If you comply with this rule, it offers various benefits for businesses. Also, ensures the secure destruction of consumer personal data from credit reports, preventing identity thefts and online frauds. Below are the key advantages for the organization who follow this rule.

• Avoid Penalties: In 2020, the FTC penalized a mortgage broker $120,000 for mishandling client’s data and also not revealing the personal information of its client to other parties and not securely storing the consumer data. Complying with the FACTA disposal rules could avoid such penalties for businesses.
• Protecting Customer Data: If you are not properly handling customer sensitive data, then it can lead to identity thefts and illegal frauds. By doing proper disposal of consumer sensitive information protects consumer’s privacy and can enhance the trust in business reputation.
• Enhance Operational Efficiency: Having proper disposal of consumer private data helps businesses streamline operations and reduces the risk of data breaches.
•  Employee Knowledge: It also enhances employee training on data security and disposal methods within the organization.

Simplify FACTA Disposal Rule Compliance By Choosing Right Software

To follow with the FACTA disposal rule for managing consumer credit data, organizations often struggle with finding the right tools. So, you can go with the best option which is  SysTools Data Wipe Software which is an ultimate solution that helps the businesses to securely dispose of sensitive information. It ensures that the data is erased permanently and there is no chance of recovery to render users data security.

Last Words

The FACTA Disposal Rule tends to protect consumer data from thefts and online scams when the organizations comply with strict data destruction rules. So, by understanding and implementing these requirements can safeguard the consumer’s personal information. Having the complete disposal plan, regularly keeping a check on data practices and choosing the right tool can help you follow the laws to protect sensitive information without any worries.