The following information was sent to me from my HR department, being the Records Admin.  Any comments?
 
Respectfully submitted, 


Tracey Ann Black 
Records Administrator, MMWEC 
www.mmwec.org 
mailto:[log in to unmask] 
1-413-589-0141 x272 
  

 
 Subject: Information on FACTA 



We'd like to add some clarity to FACTA and the proper disposal of employee records.  There is a lot of misleading information being distributed that could be creating needless confusion and panic.

 

Here is what you need to know to be compliant with FACTA:

1.      Only employers who obtain Consumer Reports on prospective or current employees are subject to these rules - i.e. an employer who does background or reference checks through a third party. 

2.      The rule deals with the disposal of the information from the Consumer Report - not the maintenance or accessibility of employee files. 

3.      While there are substantial penalties as long as employers utilize reasonable methods (shredding) for destroying the material they should not be subject to those penalties.

 

We strongly encourage all employers to protect the confidentiality of their employees' records and information by limiting access and destroying them appropriately.  

 

For those of you who need to comply, or are curious about FACTA, the following summarizes its parameters.  Please give us a call if you have any further questions.  Our HR/Legal staff - Karen, Mark, Dave and Patti - is ready to provide you with sample policies, discuss generally accepted procedures and/or answer your concerns.

 

The requirements pertaining to proper disposal of employee and consumer information as set forth in the Fair and Accurate Credit Transactions Act of 2003 (FACTA) becomes EFFECTIVE JUNE 1, 2005.  On December 4, 2003, President Bush signed into law the Fair and Accurate Credit Transactions Act of 2003 ensuring that all citizens are treated fairly and to combat identity theft. As a result of that legislation the Federal Trade Commission (FTC) in November of 2004 issued a final rule requiring businesses to properly dispose of consumer information in order to help in the fight against identity theft. The new rule is intended to protect privacy and prevent fraud by requiring businesses to take reasonable measures in the disposal of consumer information in order to prevent the unauthorized use or access to consumer information. Entities that must meet this new obligation are consumer reporting agencies, EMPLOYERS, landlords, mortgage brokers, auto dealers, and other businesses that use consumer reports. This new "Disposal Rule" applies to any business that maintains or possesses consumer information. 

 

A consumer report is defined as any written, oral, or other communication of any information by a consumer reporting agency that pertains to a person's credit worthiness, credit standing, credit capacity, character, general reputation, personal characteristics, or mode of living which is used or collected as a factor in establishing the individual's eligibility for any of the following:

 

a.)  credit or insurance to be used primarily for personal, family, or household purposes;

b.)  EMPLOYMENT purposes;

c.)  any other permissible purpose authorized under the Fair Credit Reporting Act.

 

"Disposal" includes discarding or abandoning consumer information and selling, donating, or transferring any medium, including computer equipment, on which consumer information is stored. The rule does not define a "reasonable "method of disposal. As a result entities bound by this obligation will be required to establish disposal procedures that are reasonable based on their particular situation. The following are disposal methods which the rule provides as guidance in establishing a reasonable disposal method:

 

a.)  burning, pulverizing, or shredding of papers containing consumer information.

b.)  destruction or erasure of electronic media containing consumer information so that the information cannot practicably be read or reconstructed.

c.)  Using due diligence in finding and contracting with a disposal company that uses disposal methods that comply with the Disposal Rule.

 

Thus, by JUNE 1, 2005, all businesses that maintain consumer report information must develop and implement procedures that provide for the proper disposal of this information. PENALTIES for failure to comply with this rule include actual damages, statutory damages up to $1,000 for each violation (with no cap on class action damages), attorney's fees, and civil penalties up to $2,500. 

 

Call our hotline at EANE - 877-662-6444, 413-789-6400 or 203-234-2246 for more information!

 

Meredith Wise
[log in to unmask]
413-789-6400
Employers Association of the NorthEast

List archives at http://lists.ufl.edu/archives/recmgmt-l.html
Contact [log in to unmask] for assistance