The Federal Trade Commission (FTC) recently issued new rules governing the proper disposal of consumer report information and records. The Fair and Accurate Credit Transactions Act (FACT Act), which was signed into law by President George W. Bush on December 4, 2003, amended the Fair Credit Reporting Act by imposing a new requirement on companies that possess or maintain consumer information. Under authority granted by the FACT Act, the FTC adopted the new regulations with the intended purpose of reducing the risk of consumer fraud and related harms, including identity theft. The new rule, which will impact many employers, goes into effect today (June 1, 2005).

The regulations apply to “any person over which the [FTC] has jurisdiction, that, for a business purpose, maintains or otherwise possesses consumer information.” Any business that obtains a consumer report, or information derived from a consumer report, is also subject to the rule. This includes employers that obtain consumer reports on applicants for employment screening purposes or on current employees for employment based decisions such as promotion, discipline or discharge.

Under the regulations, employers must take “reasonable measures” to protect against unauthorized access to or use of consumer information in connection with its disposal. According to the FTC, what is considered “reasonable” will vary depending on the entity’s nature and size, the costs and benefits of available disposal methods, and the sensitivity of the information involved.  The FTC provides an illustrative list of “reasonable measures” that may be used to protect against unauthorized access to or use of consumer information in connection with its disposal, which include such efforts as policy formulation, dissemination and training, and due diligence in investigating the competence and integrity of the disposal company.

Additional Information

More on these new regulations will be included in the next issue of the firm’s newsletter, The Employment Law Authority (which all clients will receive in the next few days).

Should you have any questions about the impact of the new disposal rule or other employment law related issues, please contact the Ogletree Deakins attorney with whom you normally work or the Client Services Department at 404-881-1300 or via e-mail at

Note: This article was published in the June 1, 2005 issue of the National eAuthority.

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