By June 2005, every company that deals with consumer credit information will have to change the way it does business. That's the day the Fair and Accurate Credit Transaction Act (FACTA) goes into effect. This new federal law was designed to reduce the risk of consumer fraud and identity theft that is created by the improper disposal of consumer information. Its impact will be felt by any business that has access to consumer's credit information, including Realtors.

The rule requires that Realtors, and others affected, destroy all consumer information before it is discarded. Businesses that don't properly destroy this information will face severe penalties, which could include civil liabilities, the threat of class action suits, and state and federal enforcement actions.

The new rule targets consumer reporting agencies, lenders, insurers, employers, landlords, government agencies, mortgage brokers, auto dealers and other users of consumer reports.

"FACTA applies to anybody who maintains consumer information and any business that's regulated by the Federal Trade Commission," points out Stacey DiPiazza, owner of Infoshred, a document destruction company in South Windsor, CT.

According to Ms. DiPiazza, Realtors have access to documents that could include:

• Pre-approvals from Lenders

• Information on Deposits

• Contact Information

• Seller Disclosures

• Photocopies of Deposit Checks and Credit Checks

• Other Sensitive Documents

In addition, the rule covers more than paper.

"FACTA covers any medium that contains personal information, whether it's paper, CDs, discs, or even hard drives," she says.

Infoshred has been asked by many companies to destroy hard drives, even though these companies have already removed the information from the drives. "Companies want to be absolutely sure that no information can be retrieved from these hard drives, so we physically destroy and dispose of them," she says.

What does FACTA mean to your business? Brokers and agents need to implement, and monitor, policies and procedures for the destruction of information.

For example, in the past, a Realtor might have thrown old mortgage approvals from lenders into the trash, or recycling bin. Now, this information has to be destroyed. Throwing it away, or placing into a recycling bin, will not satisfy the new FACTA rules. The information must be disposed of in a confidential waste program, where it is securely destroyed, suggests Ms. DiPiazza.

In the past, such businesses would recycle office paper, but that won't satisfy the new requirements. "Most companies recycle their paper through an outside vendor that picks up the paper, and transports it to their facility, in an unsecured vehicle," she explains. "Employees who handle it usually aren't background-checked and they often bring the paper to an unsecured recycling facility. There, it is often dumped on the floor and pushed with pay-loaders into a baler which compacts it into bales. The bales are then picked up by the mills and recycled. The problem is that throughout the process, the paper is intact. It can be read by anyone who finds it."

Shredding sensitive documents will satisfy the FACTA requirements, for paper. But shredders must be used and maintained carefully, or brokers could find themselves with unshredded documents or overloaded machines.

Brokers can also take advantage of using a professional shredding service, in which discarded paper goes into a 'closed system' that safeguards the documents from the time they are discarded to the time they are destroyed and disposed of. Professional shredding services supply their clients with locked containers. Employees who handle the containers are background-checked for security purposes. Such companies often offer a business the option of either shredding the documents on-site or transporting them in an alarmed, locked truck to their facility for destruction.

Infoshred even tracks their trucks by satellite along its route to their secured facility as an extra precaution. "When the documents reach our facility, they are shredded within 24 hours," Ms. DiPiazza points out. "Once the material is shredded it is baled, re-pulped, and reprocessed into recycled goods."

With her business inundated with requests, Ms. DiPiazza suggests that, before the June 1 deadline, brokers should:

1. Establish internal policies and procedures that dictate how you are going to handle confidential information. These guidelines should include such things as: defining confidential information; explaining how it will be handled, and setting deadlines for destruction. "The idea is to clearly establish how sensitive information will be handled, and to develop a logistical flow for the paper that contains it," says Ms. DiPiazza.

2. Decide how you are going to handle material other than paper. "A lot of times, people forget that CDs, diskettes, and even hard drives contain personal data and must be destroyed under the new laws. So when you're upgrading your computers, you must decide what you're going to do with the old ones, to protect the consumer information that they contain," she says.

3. Bring in a qualified destruction vendor. If you've never worked with this kind of outside resource, Ms. DiPiazza offers these suggestions: "Look at a firm's security policies and procedures, insurance coverages, references and certifications. Make sure that the vendor is certified by the National Association for Information Destruction (NAID), which dictates the standards of our industry," she says. "Also, look into their methods of employee screening and security. Both the trucks and the company's facilities need to be secure. Trucks should be tracked from your business to the processing facility. The facility should be monitored 24 hours a day. We have cameras monitoring our processing facility and we keep a six-month digital video history of all that goes on at our facility. You should also feel welcome to visit the facility at any time, and the company should be more than agreeable if you want to witness the destruction of your material. Lastly, I urge you to pick a company that is experienced in document destruction, not just waste management. There is a difference."

"Security is the key to making sure your business satisfies FACTA's requirements," she says.

Published: April 5, 2005

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