As an employer, what you don’t know about FACTA can definitely hurt you. FACTA stands for Fair and Accurate Credit Transaction Act. FACTA is
law which allows any American access to their credit report once per year. The law went into effect Jan. 1, 2005. So what does that mean for you as an employer? On June 1, 2005, a new provision of FACTA goes into effect. It says that any employer (even if you only employ one person, and you have their personal information so that you can pay social security taxes,) whose action or inaction results in
loss of employee information, can be fined by federal and state government, and sued in civil court.
A USA Today article on FACTA from Jan. 14. 2005, stated “Bet you didn't know that.” But you need to know, and need to know what you can do to protect yourself.
Small Businesses 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.’
The USA Today article goes on to say that “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 this short list of companies, universities, government institutions, and businesses that have had employee or customer information stolen from them:
DSW Shoe Warehouse
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, redaction of electronically stored information, 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. The old saying that 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.
That's a scary thought! What if an employee claims that their information was stolen through
actions of your company, but there’s no real proof to back it up? You will end up hiring (or using) an attorney to represent and defend your company in court. At $150 - $200/hour for most attorneys across
United States, how long can you afford to defend your company?