On December 4, 2003, President George W. Bush signed into law as an amendment to the Fair Credit Reporting Act; the Fair and Accurate Credit Transactions Act (FACTA). This law is specifically designed to prevent fraud and identity theft which is the fastest growing financial crime today. The law sets new guidelines on how merchants print receipts, on how lending institutions process and protect your personal and financial information. It provides means and remedies for fraud and identity theft victims to repair and regain their good credit standings.
Chapter 1. Provisions of FACTA
Section 1. Identity Theft Prevention and Credit History Restoration
This section of the act deals mainly with preventing identity theft. It allows a consumer to place “fraud alerts” or “active duty alerts” on their credit reports, making it so that potential creditors should be more thorough in verifying the applicant’s identity, such as calling the applicant to ask certain questions that only he or she should know about their credit file, ensuring that the applicant is really who they say they are.
This section of the act also limits what information can be printed on a receipt, such as only printing no more than the last 5 digits of the credit card number on the receipt.
Section 2. Identification of Possible Instances of Identity Theft (Red Flags Rule)
This rule sets guidelines for business that issue credit to their customers so that the early signs of fraud and potential identity theft can be noticed and caught. This rule mandates that these types of business must have a written plan in place outlining how they will detect and discourage any identity theft. The following are some of the points the Red Flags Rule encourages.
- Requires financial institutions or creditors to develop and implement an Identity Theft Prevention Program in connection with both new and existing accounts. The Program must include reasonable policies and procedures for detecting, preventing, and mitigating identity theft.
- Requires users of consumer reports to respond to Notices of Address Discrepancies that they receive.
- Places special requirements on issuers of debit or credit cards to assess the validity of a change of address if they receive notification of a change of address for a consumer’s debit or credit card account and, within a short period of time afterward they receive a request for an additional or replacement card for the same account.
Chapter 2. Protection and Restoration of Identity Theft Victim Credit History
The Act also requires any credit reporting agency block the reporting of any information in a consumer’s file that the consumer identifies as information that originated from an alleged identity theft. The agency must block the information within four days of receiving proof, a copy of an identity theft police report, the identification of the information by the consumer, and a statement from the consumer that the information is not a result of any transaction he or she participated in.
Credit reporting agencies are not required to block any information (and may rescind any existing blocks) in the case that the block was found to be made in error or based on erroneous information provided by the consumer, or that the consumer obtained possession of goods, services, or money as a result of the blocked transaction or transactions.
Chapter 3. Finally
Because of the technology and abilities available to almost everyone now, identity theft and fraud are becoming an enormous concern for all of us. Because of these new laws such as the Fair and Accurate Credit Transactions Act, it provides the tools and means necessary to mitigate these instances that we all hope will never arise in our lives. Vigilance and knowledge are always going to be your ally in protecting yourself and your financial interests.