New FTC Data Destruction Requirement

• Posted by Geoffrey G. Gussis on June 5th, 2005


• Filed in Risk Management & Compliance

The FTC has promulgated a new "Disposal Rule" requiring businesses to take appropriate measures to dispose of sensitive information derived from consumer reports.  The new rule took effect on June 1, 2005.  A brief summary of the coverage of the rule is as follows:

"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 for credit, employment, or insurance, among other purposes. Credit reports and credit scores are consumer reports. So are reports businesses or individuals receive with information relating to employment background, check writing history, insurance claims, residential or tenant history, or medical history."

The rule applies to large and small businesses that use consumer reports - from mortgage brokers to attorneys to landlords.  Read more from the FTC’s release on the rule.  The FTC makes clear that burning, pulverizing and shredding documents are acceptable disposal mechanisms under the rule - who knew compliance could be such fun?