Free credit and personal financial information reports aren't the only provisions provided by one of the most sweeping regulatory reforms in consumer protection in decades.

The Fair and Accurate Credit Transactions Act (FACTA), enacted Dec. 4, 2003 to amend the Fair Credit Reporting Act (FCRA) is loaded with provisions that help consumers keep closer tabs on their credit reports while forcing credit information stockpilers and corporate and individual professionals who use that information to better protect it from fraud and identity theft.

The best known provision allows consumers free annul access to credit reports held by the big three credit reporting agencies -- Equifax, Experian and TransUnion. The same access is available to reports held by lesser known, so-called "nationwide specialty consumer reporting agencies."

Provisions for Disposing of Consumer Credit Information

This month, the Federal Trade Commission, which administers consumer credit law, issued the final rule on how companies and others must dispose of sensitive consumer information derived from credit reports and other documents.

• Such information is broadly defined by FACTA as "any record about an individual, whether in paper, electronic, or other form that is a consumer report (also known as a credit report) or is derived from a consumer report."

• The law requires any person or company that possesses or maintains such information "take reasonable measures to protect against unauthorized access to or use of the information in connection with its disposal."

While it may sound inconceivable to federally mandate corporate and professional responsibility, in some cases, corporations and professionals were not taking steps necessary to properly discard credit and financial records which wound up intact in easily accessible dumpsters and other disposal containers.

"ID theft is typically done through a piece of paper. Paper is where the crime is being committed. If you follow the paper trail, so to speak, it leads you back to a piece of paper," said James Van Dyke, founder and principal analyst of Pleasanton, CA-based Javelin Strategy and Research which recently released "Online Banking and Bill Paying: New Protection from Identity Theft," a study conducted to pinpoint the sources of ID theft.

According to a study released by the FTC in September 2003, nearly 10 million Americans were the victims of identity theft in the previous year alone. The study also found that U.S. businesses lost $47 billion and consumers lost approximately $5 billion as a result of identity theft during the same period.

The final federal rule provides examples of how to comply with the new requirements, including:

• Implementing and monitoring compliance with policies and procedures that require shredding or other forms of destruction of documents and electronic media containing consumer information.

• Contracting with a third party to properly dispose of consumer information and monitoring their performance.

"This new Rule is an important step forward in the fight against consumer fraud and identity theft. Shredding documents and properly destroying computer files and hard drives will help ensure that records containing sensitive personal and financial information don't fall into the wrong hands," said Robert Johnson, executive director of the National Association for Information Destruction (NAID).

"It's important for the business community to understand that this law applies to nearly every business and private employer in the U.S," he added.

Disposal rules compliance is necessary by July 1, 2005.

Anti-Fraud, ID Theft Provision

In a related provision, FACTA already allows a single phone call to one of the three credit reporting agencies -- Equifax (1-888-766-0008), Experian (1-888-397-3742) or TransUnion (1-800-680-7289) -- to alert all three that your identity has or may have been stolen or tampered with.

Within 24 hours of the call to any one agency

• That credit agency will electronically notify the other two and a "fraud alert" will be placed on your account at each agency.

• You will be opted out of all preapproved credit offers and insurance for two years.

• Your request for a copy of your credit report will be handled in no more than three business days.

• All three credit agencies will begin to work with you to verify information and delete any fraudulent data, a process that is hastened if you file a police report.

With a documented "fraud alert" placed on your credit reports, creditors are less likely to advance credit to existing accounts or to open new ones.

The "fraud alert" also makes Consumer Data Industry Association (CDIA) members aware there's a problem, but the service isn't foolproof. Founded in 1906, the CDIA is the international trade association that represents more than 400 consumer data companies, including the nation's leading institutions in credit reporting, mortgage reporting, check verification, fraud prevention, risk management, employment reporting, tenant screening and collection services.

CDIA members and creditors are not mandated to check your credit report or to even refuse credit to someone masquerading as you if the creditor doesn't bother to look at your report during a transaction and isn't aware of the alert.

A related resource includes the FTC's ID Theft Affidavit, a single form used to alert companies where a new account was opened in your name to allow them to investigate the fraud and decide the outcome of your claim.

Also, ID theft insurance is free with some credit cards and it pays for some, but not all, financial losses associated with ID fraud and theft.

Published: December 23, 2004

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Broderick Perkins parlayed a career in old-school journalism into a contemporary digital news service that really hits home. The award-winning consumer journalist, originally from Wilmington, DE, is founder, publisher and executive editor of the bootstrap DeadlineNews Group, a Silicon Valley-based editorial content and consulting service specializing in residential real estate, consumer news and related editorial consulting services. The DeadlineNews Group includes the website, DeadlineNews.com, offering real estate editorial content and consulting services, and its back shop, the Deadline Newsroom, an open house on news that really hits home. Perkins obtained his formal journalism education from University of Delaware and a journalism boot camp, the Institute of Journalism Education at the University of California-Berkeley. He went on to 20 years of service as a daily newspaper journalist at the Wilmington, DE News Journal and San Jose, CA Mercury News. Perkins covered housing on the San Jose Mercury News reporting team which earned a General News Reporting Pulitzer Prize in 1989 for coverage of the Loma Prieta earthquake. He has also produced real estate, consumer and small business content for the Wall Street Journal, Los Angeles Times, RealtyTimes.com, Nolo.com, Better Homes and Gardens, the National Association of Realtors, Homestore/Move and Intuit/Quicken among more than three dozen publications. In addition to managing the DeadlineNews Group, Perkins most recently served as chief editorial consultant for Nolo's Essential Guide To Buying Your First Home, Nolo, and writes real estate television scripts for RealtyTimes.com.