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Byline: Caroline Lynch
clynch@courier-journal.com
The Courier-Journal,
May 9, 2005, Business Section,
page 1D.
Small- business owners will
soon have to clean up their
trash.
Merely tossing out certain
types of confidential information
about employees and clients
could bring state and federal
fines as well as lawsuits
from individuals.
Any material from a consumer
report - such as personal
information in credit reports
and background checks - must
be destroyed before it hits
the garbage, according to
a federal law that takes
effect June 1.
Many small businesses aren't
aware of the law. In fact,
of about a dozen small- business
owners contacted in the Louisville
area, none of them knew of
it.
"
Ack! I won't sleep tonight!" said Maggie Payette Harlow, owner of Sign-A-Rama downtown, when she heard about
it.
The Fair and Accurate Credit
Transactions Act, or the
FACT Act, is designed to
reduce identity theft, a
massive criminal enterprise.
A study by the Federal Trade
Commission estimated that
there were about 10 million
identity theft victims nationwide
in 2003.
Identity theft occurs in
various ways but often happens
when thieves collect personal
information from garbage.
The new law affects all companies
but may be more difficult
for small businesses. M any
of them haven't been covered
by other privacy
legislation and may not have
the same legal or financial
resources as larger companies.
Though the FACT Act's disposal
rule, issued by the FTC,
covers a broad range of people
and businesses - anyone who
possesses consumer information
for a business purpose -
the information that must
be destroyed is limited.
According to Susan McDonald,
an attorney with the Consumer
Protection Division of the
FTC, it applies "only to that information that is a consumer report or is derived from a consumer
report."
Charlene Brownlee, an attorney
in the document retention
practice group of Fulbright & Jaworski in Austin, Texas, said small- business owners are likely to have this
kind of information if they
run credit reports or do
background checks on potential
employees.
Also, if owners take information
from those reports and use
them in other forms - a memo
to a co-worker about the
best job candidates, for
instance - those must also
be destroyed when discarded.
The law is flexible on exactly
how the information is destroyed,
saying only that it must
be disposed of through "reasonable measures." The rule offers burning, shredding or pulverizing as acceptable methods. Electronic
documents are affected as
well.
"
Shredding is pretty easy
for paper, but the hard part
is for electronic files," Brownlee said. "Delete doesn't necessarily mean delete."
Owners getting rid of floppy
disks or other computer files
could break or smash them.
In the case of entire computer
hard drives, experts offered
different ideas: Ask a computer
professional for help, take
the computer to a company
that destroys documents or
buy software that completely
wipes out information. One
software program, Evidence
Eliminator, retails for $149.95,
but similar programs can
be found for about $40.
The FTC has left the law
broad, allowing businesses
to choose their own methods
and policies for destroying
documents, based on what's
easiest and most efficient
for them.
Businesses with few resources
might get some slack if the
FTC suspects a destruction
violation, McDonald said.
"
We do take into account the
size and complexity of the
company."
However, anyone who clearly
breaks the rules could face
administrative enforcement
on the state level of up
to $1,000 per violation and,
at the federal level, fines
of up to $2,500 per violation.
The law also allows for civil
penalties where victims can
recover actual damages.
For "willful" violations, victims can recover actual damages or up to $1,000, plus costs of
the action and attorneys'
fees. Punitive damages are
possible, along with class-action
lawsuits. For negligence
violations, victims can only
recover actual damages.
Charlie Mattingly, president
of the Louisville Better
Business Bureau, believes
most business owners can
follow the rules pretty easily.
"
I think, in reality, it's
not going to have a huge
impact on small- business
owners or be extremely expensive
for them to comply."
Brent Beanblossom, co-owner
of Home Instead Senior Care
near Stonybrook, agreed.
His company already shreds
sensitive information. Employees
put the data into a locked
box that Beanblossom takes
to a disposal company, Shred-It,
when it's full.
"
I give them a check for $15
and they shred it on the
spot," Beanblossom said. He gets a certificate to show he's destroyed the box's contents.
Beanblossom said the cost
of compliance is "minimal," given the benefits. His clients are more comfortable knowing their information
is protected and his company
is better protected legally.
Shred-It, in Bluegrass Industrial
Park, also offers pick-up
services in Louisville and
Southern Indiana. President
Laurence McCabe said small-
business owners often get
service for $50 to $75 per
month. The price depends
on the number of boxes and
frequency of pick-ups.
Small- business owners can
also buy shredders. Some
retailers carry versions
for under $20; faster high-volume
shredders can reach $250.
Experts say the new law does
not mean businesses need
to get rid of documents that
contain personal information,
only that if they get rid
of them, they do it properly.
Though the scope of the law
is limited, some suggested
that shredding all private
information is a good policy.
Brownlee said businesses
that don't take effective
measures to protect private
information could invite
lawsuits or lose business.
"
It comes down to: What do
you owe your customer?"
Beanblossom felt that he
should offer customers and
employees the same privacy
he would want with his own
information.
"
I don't even think it needs
to be a law," he said. "I think this is common sense."
PROTECT YOURSELF AND YOUR
BUSINESS
Need a system for keeping
information confidential?
Not sure where to start?
Here are a few Better Business
Bureau tips on avoiding identity
theft.
Collection
Ask only for information
you must have from employees
and customers.
Storage
If you're keeping personal
information - yours or others'
- make sure it's under lock
and key or hidden behind
a computer password.
Access
Do background checks on employees
who will handle personal
information. Also, only employees
who need the information
for their jobs should be
allowed access to sensitive
data on employees and customers.
Disposal
Personal information on employees
or customers should be unreadable
before it's thrown away.
Buy a paper shredder or hire
a shredding company. If you're
getting rid of disks, break
or smash them. Use software
to erase data permanently
from computer systems.
Employee
training
They need to know what material
is personal and to make sure
it's destroyed.
Data distribution
Be sure who is asking for
the information. Don't give
data to anyone if you can't
verify their identity, and
don't share it with other
businesses that don't have
safety procedures.
For more information
www.bbbonline.org/idtheft
FACTS ON THE FACT ACT
What is the law?
The Fair and Accurate Credit
Transaction Act.
When does it take effect?
June 1.
What does it require?
Anyone who collects consumer
credit information for a
business purpose must destroy
it before throwing it away
and follow additional rules.
Who is affected?
Many small-business owners
are likely to be affected,
in addition to large companies.
Even a person who hires a
nanny or a gardener must
comply.
What information is affected?
Any consumer report or information
derived from consumer reports,
which are often supplied
by credit reporting agencies.
The three largest are Equifax,
TransUnion and Experian.
What should I do to comply?
One method is to get a shredder
or hire a shredding company.
Make sure all personal consumer
report information is destroyed
before it is thrown out.
Also, if you're getting rid
of this information and it's
in electronic form, make
sure it's completely deleted.
Several software programs
offer this option.
What happens if I don't comply?
States can fine up to $1,000
per violation and federal
fines can go up to $2,500
per violation. Civil penalties
allow victims to get actual
damages, or up to $1,000
per violation, if the violation
was "willful." Punitive damages and class- action lawsuits are also possible.
Byline: Bob Hill
bhill@courier-journal.com
The Courier-Journal,
April 16, 2005, Metro Section,
page 1B
While I myself hold financial
deadbeats in low regard,
the recent federal bankruptcy
legislation blaming credit-card
users for their debts
is a little like charging
a drowning man with
irresponsible
use of water.
At some point, somebody
should tell the credit-card
companies
that if they would
stop flooding the nation
with
50 billion
cards a week - many
sent to reasonably warm
bodies
with firm signatures
- it just might help
the
situation.
We all know that card
users who max out
on one card
have absolutely no
problem getting
another; just go
stand by the mailbox.
And
why not?
Banks pay very low
interest rates on
your money and
will charge anywhere
from 14 percent
to 21 percent - and
way up - on their
money.
It's in their financial
interest to keep
the flood of cards
coming, and if
they just happen to mail
a few
billion cards to
people
at risk,
well let's just
toughen
those bankruptcy
laws on those
turnips.
Here's the larger
problem: Congress
somehow feels
it has the right
to lecture the
American people
on
debt.
Yes, ladies and
gentlemen, that
exact same Congress
that has gotten
itself
about $400 billion
in the hole
each of the past
two
years and decided
to solve the
problem by cutting
taxes and kissing
the mistletoes
of lobbyists.
Address identity
theft
Here's the
real question:
When
is Congress
going to get
serious about
legislation
that will help
prevent
credit-card
identity theft?
It's a growing,
multi
billion-dollar
problem
that is potentially
much more serious
than bankruptcy.
People caught
up in identity
theft
can
spend years
trying to
get their good
credit restored.
They
wake up one
morning to
learn nobody
trusts
them any
more; their credit
is shot;
they may actually
have to pay
cash -
the
green stuff
with dead
presidents on it.
Here's the
kicker:
The new legislation
doesn't
cut any
slack for
innocent
people
whose bankruptcy
is
the
result
of financial
identity
theft.
It's like
something
Scrooge
would have passed
before
all those ghosts
and Tiny
Tim showed
up.
The truth
is, I
have no illusions
this
identity
theft
problem
can be
fully
solved.
It's
already hopeless.
Like
complacent
idiots,
we freely
and
routinely
give
our credit-card
numbers
to
some
bored voice on
a phone
in Idaho.
Every
one
of us is
already
in
some mail-order
company's
computer
bank
along
with
all
pertinent demographics
- name,
rank,
serial
number,
income,
family
unit's
buying
habits,
favorite
color,
pants
size
and
SUV
proclivities.
No
secrets
left
We
have
no
secrets
left
-
and
all
that
information
is
for
sale
to
other
mail-order
people
that
we're
not,
by
law,
allowed
to
know
about.
Hackers
can
steal
millions
of
IDs
-
but Congress is going
after the
deadbeats.
It's
another emotional
issue that
plays well
while the
real problems
mount up
like Monopoly
money.
Yes,
there are
some people
out there
who never
intend to
pay their
bills. But
there are
people who
will max
out card
after card
buying medicine
for a
terminally ill
relative. I
believe means
testing -
and credit
counseling -
are good
tools and
that responsible
people pay
their bills.
But
I've been
deep in
that credit-card
hole -
and the
cards kept
coming. When
our son
was a
sophomore in
college -
and in
debt -
his cards
kept coming.
Our whole
country lives
off massive
personal debt
- and
the cards
keep coming.
Here's
my solution:
What Congress needs to
do next
is authorize
free booze
to alcoholics
and free
cigarettes to
lung-cancer patients.
If nothing
else, that
could cut
down on
the number
of credit-card
users.
You
can reach
Bob Hill
at (502)
582-4646 or
e-mail him
at bhill@courier-journal.com.
You
can also
read his
columns at www.courier-journal.com.
