FTC Released a Guide Disposing of Consumer Report Information? Rule Tells How (June 2005)

Disposing of Consumer Report Information? Rule Tells How

June 2005

The Federal Trade Commission (“FTC”) released a guide Disposing of Consumer Report Information? Rule Tells How, which outlines the requirements for businesses regarding the disposal of sensitive consumer information to prevent identity theft and unauthorized access. Here’s a summary of the key points:

Overview of the Disposal Rule

• Purpose. The Disposal Rule mandates that businesses take appropriate measures to dispose of consumer report information securely, protecting consumer privacy and reducing the risk of fraud.

• Enforcement. The FTC enforces this rule, which applies to any business or individual using consumer reports for business purposes.

Who Must Comply

The Disposal Rule applies to a wide range of entities, including:

• Consumer reporting companies

• Lenders

• Insurers

• Employers

• Landlords

• Government agencies

• Mortgage brokers

• Attorneys and private investigators

• Debt collectors

• Individuals obtaining credit reports for background checks

What Information Is Covered

• The rule applies specifically to consumer reports and information derived from them, as defined by the Fair Credit Reporting Act. This includes credit reports, employment background checks, insurance claims, and medical histories.

Proper Disposal Practices

The rule allows flexibility in disposal methods but requires practices that are reasonable to prevent unauthorized access. Suggested measures include:

• Physical Documents. Shredding, burning, or pulverizing paper records so the information cannot be reconstructed.

• Electronic Files. Erasing or destroying electronic records so they cannot be read or reconstructed.

• Due Diligence. Hiring professional document destruction services, ensuring they comply with the Disposal Rule through audits, certifications, and references.

Additional Considerations

• Financial institutions subject to both the Disposal Rule and the Gramm-Leach-Bliley (GLB) Safeguards Rule should integrate disposal practices into their broader information security programs.

• The Disposal Rule became effective on June 1, 2005, following the directives of the Fair and Accurate Credit Transactions Act, aimed at consistent regulations across different agencies.

In summary, the Disposal Rule emphasizes the importance of secure disposal practices for consumer report information to safeguard against identity theft and maintain consumer privacy.

 

For more information, see here:  https://www.ftc.gov/tips-advice/business-center/guidance/disposing-consumer-report-information-rule-tells-how

 

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