05/16/2005
In an effort to combat identity theft, the Federal Trade Commission will start asking business owners to work overtime when it comes to disposing of private customer and employee information.
Starting June 1, under an amendment to the Fair and Accurate Credit Transactions Act, all employers – everyone from large corporations to a family that hires a nanny – who obtain information from a consumer report, and use it in any form, must destroy it before it goes in the garbage. Paper documents can be burned, shredded or pulverized; whereas the rule suggests that hard drives, disks and CDs that contain sensitive information can be wiped, smashed or broken.
According to an FTC study, there were about 10 million identity theft victims nationwide in 2003, and the FACT Act seeks to assuage this problem.
If you don’t comply, there’s a price to pay. For those who don’t follow the rules, states can fine up to $1,000 per violation, and the federal government can fine up to $2,500 per violation. There are also civil penalties, which allow victims to get actual damages, or up to $1,000 per violation, if the violation was "willful." There is also the possibility of punitive damages and class-action lawsuits.
