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 FederalTrade 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
• 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.