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Federal Trade Commission Bureau of Consumer
Protection Office of Consumer & Business Education
Disposing of Consumer Report Information?
New Rule Tells How
In an effort to protect the privacy of consumer
information and reduce the risk of fraud and identity theft, a
new federal rule is requiring businesses to take appropriate
measures to dispose of sensitive information derived from
consumer reports.
Any business or individual who uses a consumer
report for a business purpose is subject to the requirements of
the Disposal Rule. The Rule requires the proper disposal of
information in consumer reports and records to protect against
“unauthorized access to or use of the information.” The Federal
Trade Commission, the nation’s consumer protection agency,
enforces the Disposal Rule.
According to the FTC, the standard for the
proper disposal of information derived from a consumer report is
flexible, and allows the organizations and individuals covered
by the Rule to determine what measures are reasonable based on
the sensitivity of the information, the costs and benefits of
different disposal methods, and changes in technology.
Although the Disposal Rule applies to consumer
reports and the information derived from consumer reports, the
FTC encourages those who dispose of any records
containing a consumer’s personal or financial information to
take similar protective measures.
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
• Lenders
• Insurers
• Employers
• Landlords
• 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 information does the
Disposal Rule cover?
The Disposal Rule applies to consumer reports or
information derived from consumer reports. The Fair Credit
Reporting Act defines the term consumer report to include
information obtained from a consumer reporting company that is
used – or expected to be used – in establishing a consumer’s
eligibility
Published June 2005
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