Ever heard of FACTA? Most of us would say “No”. Have you heard that you can get a free credit report? To that we would say, “Yes”. So you have heard of FACTA. But how does that affect me?
FACTA stands for Fair and Accurate Credit Transaction Act. The law went into effect Jan. 1, 2005. FACTA is law which allows all Americans access to their credit report once per year. So what does that have to do with you?
On June 1, 2005, a new provision of FACTA went into effect. It says that any employer (even if you only employ one person) whose action or inaction results in loss of employee information, can be fined by federal and state government, and sued in civil court. Bet you didn't know that. But you need to know, and need to know what you can do to protect yourself.
Small Businesses will be affected most.
‘"A small businessman who makes a mistake could bear brunt of a regulation like this," says James Plummer, policy analyst at Consumer Alert, a non-profit group that focuses on a free-market approach to consumer regulations.’
If you don't shred and information gets out, there are penalties. But what if you do shred all potential employee information, and take all necessary precautions to protect your past, current, and future employees’ identities, and information still gets out somehow? Under FACTA, you could still be held responsible.
You may not think information theft could happen to you, but neither did a lot of companies, universities, government institutions, and businesses that have had employee or customer information stolen from them that have been in news lately:
Lexis Nexis University of Northern Colorado California State University (Chico) University of California – Berkeley University of Maryland Las Vegas Department of Motor Vehicles Bank of America Choice Point Weld County (CO) Employees (information stolen by an inmate while in jail)
How can you, as an employer, minimize your liability?
There are hundreds of things you can do to minimize liability, which are probably things you already do. Document shredding, careful screening of employees who will be coming into contact with personal information of customers and employees, physically locking file drawers with sensitive information, and setting up firewalls on computer equipment connected to Internet, among hundreds of other solutions, are all good ideas.
As Ben Franklin said, “An ounce of prevention is worth a pound of cure”, is definitely case when it comes to securing personal information. However, no matter what prevention steps you take, there is no 100% effective way to be sure that employee’s information won’t be compromised. Even if information doesn’t get out from your company, an employee can claim that it did.