New Federal law Requires Shredding of Documents
Summer 2005

According to the Federal Trade Commission, approximately 10 million Americans have been victims of identity theft. In an effort to stop the widespread growth of this crime, the Fair and Accurate Credit Transactions Act took effect on June 1, 2005.

Designed to protect consumers and employees from identity fraud, this federal law entitles consumers to one free credit report per year and requires businesses to print no more than five digits of a credit card number on a receipt.

Furthermore, the Fair and Accurate Credit Transactions Act requires all employers to shred documents that contain a worker’s personal information. Businesses such as banks, real estate agents and car dealers must also secure and/or destroy consumer information.

Many organizations have already been shredding such personal documents for years. For larger companies, such as car dealerships, the cost of outsourced shredding comes to approximately $300 to $400 every three months. However, many companies, especially those of a smaller size and with fewer employees, choose to shred documents in-house. 

Regardless of whether shredding is outsourced or done in-house, businesses that don’t follow the new law can be charged with penalties up to $2,500 per violation. Consumers may now file lawsuits against companies that do not protect against identity theft.

This new law may mean changes in daily business operations. For more information on the Fair and Accurate Credit Transactions Act, visit: www.privacyrights.org.