FACTA

FACTA - Federal law on destruction of consumer information
What you should know about the FACTA Disposal Rule:
  • It applies to virtually every person and business in the United States
  • It requires the destruction of all consumer information before it is discarded
  • Potentially severe penalties await violators

What is FACTA?

FACTA (or FACT Act) is the Fair and Accurate Credit Transaction Act, a brand new federal law designed to reduce the risk of consumer fraud and identity theft created by improper disposal of consumer information.

Civil Liability:

FACTA provides for substantial civil liability. In some cases, consumers may be entitled to recover their actual damages sustained as a result of a violation to rule, which, in the case of identity theft, could be very large. In other cases, consumers may be able to recover statutory damages of up to $1,000 for each consumer affected by a violation of the rule.

Class Action:

Where large numbers of consumers are affected, they may be able to bring class actions seeking potentially massive statutory damages. If 1,000 consumers were affected, for example, a class action might seek up to $1,000,000.00 in statutory damages. Courts are also authorized to award punitive damages in either an individual suit or a class action. Finally, a successful plaintiff, or class of plaintiffs, may recover reasonable attorney's fees.

Federal Enforcement:

The federal government is also authorized to bring enforcement actions in federal court for violations of the disposal rule. In some cases, the government may bring an action in federal district court for up to $2,500 in penalties for each independent violation of the rule.

State Enforcement:

The states are also authorized to bring action on behalf of their residents and, in appropriate cases, may recover up to $1,000 for each willful negligent violation of the rule. In cases involving multiple violations, such statutory penalties might quickly add up to very large sums. As with private lawsuits, moreover, the state may recover its attorney's fees if successful in such an action.