FACTA -- not a derogatory slur!

One of the things I observe is least understood by both American consumers and businesses is legislation enacted in 2005 called FACTA (Fair and Accurate Credit Transactions Act).

These so-called "Red Flag" rules, enforced by the FTC, have been overhauled too many times -- first scheduled to go into effect in 2008, then 2009, and now June 2010. I predict that the first company prosecuted under FACTA will be the "canary" that wakes society up...

Until then, I thought you might want to know what is coming. The Act requires companies to take safeguards around personal information, principally to reduce the widespread growth of identity theft. (For example, you may remember the laptop stolen from a Starbucks Coffee exec which contained a couple million records of customer data including credit card numbers. Not picking on Starbucks alone, I'm sure someone from Peet's or Au Bon Pain has lost customer info as well!)

Readers take note -- the penalties are tough. Some have called it a "ticking timebomb".

$2,500 penalty per lost customer record, per incident. With potential Billion-dollar penalties for the lost laptop, this will affect business processes! (And no doubt inspire the already-profitable insurance industry to create new business offerings...)

If your business doesn't have "tight" controls in place, it is not alone -- according to this recent study.

While my practice does not center around these concerns, FACTA affects the way I help my clients acquire and retain customers. For those who haven't been able to work with me, you can find articles like this, to start looking at your internal practices -- and liability therefor.

Here's to staying on the right side of the law!