FTC Disposal Rule – It’s been around for almost 11 years, are you following it?
In an effort to protect the privacy of consumer information and reduce the risk of fraud and identity theft, the FTC Disposal Rule (6/1/2005) requires businesses to take appropriate measures to dispose of sensitive information derived from consumer reports.
Who must comply?
The Disposal Rule applies to people and both large and small organizations that use consumer reports. Among those who must comply with the Rule are:
• Consumer reporting companies
• Government agencies
• Mortgage brokers
• Automobile dealers
• Attorneys or private investigators
• Debt collectors
• Individuals who obtain a credit report on prospective nannies, contractors, or tenants
• Entities that maintain information in consumer reports as part of their role as service providers to other organizations covered by the Rule
What is “proper” disposal?
The Disposal Rule requires disposal practices that are reasonable and appropriate to prevent the unauthorized access to – or use of – information in a consumer report.
For example, reasonable measures for disposing of consumer report information could include establishing and complying with policies to:
• burn, pulverize, or shred papers containing consumer report information so that the information cannot be read or reconstructed;
• destroy or erase electronic files or media containing consumer report information so that the information cannot be read or reconstructed;
• conduct due diligence and hire a document destruction contractor to dispose of material specifically identified as consumer report information consistent with the Rule. Due diligence could include:
o reviewing an independent audit of a disposal company’s operations and/or its compliance with the Rule;
o obtaining information about the disposal company from several references;
o requiring that the disposal company be certified by a recognized trade association;
o reviewing and evaluating the disposal company’s information security policies or procedures.
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