FACTA

FACTA requires proper disposal of consumer credit information The disposal rule of the Fair and Accurate Credit Transactions Act of 2003, or FACTA, goes into effect June 1. It mandates that anyone (this includes real estate agents) who has personal information from consumer credit reports must properly dispose of such material to protect against unauthorized access to the material. The Act stems from the rampant identity theft problems. Thieves have been known to climb into dumpsters to retrieve credit card slips and personal credit information. Real estate brokerages have been identified as a prime target for such activity. If the information comes from a credit report, it is covered by the rule.

Additional References FACT Act rules for disposing of consumer report information effective this summer - from Ohio REALTOR®, April 2005 FACT Act Q&A (pdf) - from NAR

Ohio license law requires brokers to retain client records for a minimum of three years. However, some brokerages may have their own office policies requiring a longer retention period.

In most instances, properly disposing of consumer information means shredding paper records containing information from credit reports or the credit reports themselves, and wiping computers clean of such data.

If it's paper - shred it. The best way for a large-scale operation to shred paper is by hiring an outside company to do it. A sole proprietor or small company can just use a shredder from an office supply store.

With electronic data, sole proprietors and small companies can buy a software utility to clean the computer's hard drive. Put consumer-identifying information in specific places (i.e. a special folder on your hard drive) and use software to eliminate that data. In larger companies, the IT department should handle this responsibility.

Generally, willful violation of the requirements can result in actual damages, or damages of not less than $100 nor more than $1,000, plus costs of the action, including attorneys' fees.

Liability for negligent violation is limited to actual damages and the costs of the action, including attorneys' fees.

Although the fines are not too stiff, brokers/agents should consider the bad publicity associated with a breach.