The Fair and Accurate Credit Transactions Act (FACTA) was signed into federal law in December 2003, and the majority of the requirements became effective in December 2004. The guidance in FACTA builds on provisions for credit reporting that are found in the Fair Credit Reporting Act (FCRA), and it implements guidance for identity theft prevention.
The FACTA includes these major provisions:
Identity Theft Prevention and Credit History Protection – FACTA is intended to deter fraudulent use of consumers’ credit histories. The law provides for alerts to protect consumers’ credit records; limits how credit card account information is used on receipts; and requires new regulations to compel financial institutions and creditors to implement procedures to detect identity theft. FACTA mandates proper destruction and disposal of certain information that is collected about consumers.
Fraud Alerts – FACTA allows individuals who suspect they may be subject to identity theft or who are deployed overseas with the military to implement alert notifications on their credit records. Such alerts deter many fraudulent uses of credit records.
Credit and Debit Card Numbers – FACTA requires that businesses print no more than five digits of a customer’s card number or card expiration date receipts for point-of-sale or purchase transactions. All types of receipts are covered by the requirements, including those that are imprinted or handwritten. The credit and debit card number truncation rules became effective in 2005.
Red Flags Rule – The FACTA Red Flags Rule required federal agencies to create joint regulations about identity theft prevention that was applicable to financial institutions and creditors. The coverage of the FACTA Red Flags Rule extends to covered accounts at “financial institutions and creditors” which have been defined by the Federal Trade Commission (FTC) to include “lenders such as banks, finance companies, automobile dealers, mortgage brokers, utilities companies and telecommunications companies”. The FTC has also defined “covered accounts” to mean any account for which there is a foreseeable risk of identity theft. For example, credit cards, monthly billed accounts like utility bills or cell phone bills, social security numbers, driver’s license numbers, medical insurance accounts, and many others.
Consumer Credit Report Access – Consumers may obtain a free credit report once every 12 months. Consumers must request the reports, and they may be obtained from three national consumer credit reporting agencies – TransUnion, Experian, and Equifax. The three agencies worked with the Federal Trade Commission to implement a website for consumers to more easily access credit reports (www.AnnualCreditReport.com).
Rights and Protection of Identity Theft Victims – FACTA required federal agencies to establish a summary of rights for identity theft victims. It also requires credit reporting agencies to block information in a consumer’s file that the consumer indicates is a result of identity theft. The consumer must confirm that the information is not a result of his/her own transactions. FACTA required all consumer credit reporting agencies to develop a method to communicate with each other about complaints of fraud or identity theft from consumers and about requests for fraud alerts and blocking on records.