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June/July
2005
 New
Rule Takes Effect Regarding Records Disposal
A final rule from
the Federal Trade Commission concerning records disposal took effect
June 1, 2005. Are you ready?
Reacting to growing
concerns about consumer fraud and identity theft, the Federal Trade
Commission issued a final rule requiring anyone who maintains “consumer
information for a business purpose” to take “reasonable
measures to protect against unauthorized access to or use of information
in connection with its disposal.” The rule, which became effective
June 1, 2005, was issued under the Fair and Accurate Credit Transactions
Act (also known as the FACT Act), and it encompasses any document or
record about any individual that comes from or is part of a consumer
report. “Consumer report” is a term of art under the Act,
but in the employment setting, it typically encompasses information
such as background checks and credit checks obtained from third party
vendors.
The rule does not
list specific disposal requirements. Instead, it adopts a flexible scale
that permits businesses to reach their own conclusions as to the best
means for disposing of consumer information so that the information
is unreadable and cannot be reconstructed. But the rule does emphasize
that businesses should conduct appropriate employee training and establish
policies and procedures concerning consumer information disposal.
To comply with the
rule, employers should audit their current records retention and disposal
policies and practices and modify them as necessary to ensure that appropriate
steps are taken for proper disposal of consumer information. Employers
should also adopt auditing and monitoring procedures to ensure compliance
with their disposal policies, and employees who maintain or have access
to background and credit checks should also be trained on their policies’
requirements.
Submitted by Rob
Edmund, Porter, Wright, Morris & Arthur LLP, Columbus,
Ohio. Email: redmund@porterwright.com.
Phone: (614) 227-2024. Mr. Edmund is a litigator in Porter, Wright,
Morris & Arthur’s labor and employment department.
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