What Is the Fair and Accurꦜate Crꦺedit Transactions Act (FACTA)?

The Fair and Accurate Credit Transactions Act (FACTA), also known as the FACT Act, is a federal law enacted by the U.S. Congress in 2003 to amend the Fair Credit Reporting Act passed in 1970. Its purpose was to enhance consumer protections, particularly with regard to 澳洲幸运5开奖号码历史查询:identity theft. The best-known feature of the act is that it allows consumers free access to their 澳洲幸运5开奖号码历史查询:credit reports at least once a year.

How the Fair and Accurate Credit Transactions Act (F𒈔ACTA) Wor🍨ks

FACTA was passed under the administration of then-President George W. Bush in response to increasing instances of identity theft. It amended the Fair﷽ Credit Reporting Act, passed in 1970, before identity theft had become a major concern.

For example, FACTA requires financial institutions to take "reasonable" measures to protect their customers' sensitive information. This includes proper disposal of paperwork with identifying information and obscuring or 澳洲幸运5开奖号码历史查询:truncating certain key information such as credit card and Social Security numbers.

FACTA also requires 澳洲幸运5开奖号码历史查询:credit bureaus to place a 澳洲幸运5开奖号码历史查询:fraud alert on the file of a customer who has been affected by identity theft. They must also alert the other credit bureaus.

Though less visible to consumers, FACTA also included many new rules for businesses and financial service providers. In particular, it permitted enforcement agencies to take action on any violations of so-called "red flag rules." Those rules require creditors and financial institutions, such as banks and credit unions, to implement programs to help detect and prevent identity theft. For example, issuers of credit and debit cards must take steps to verify any changes to customers' addresses.

In addition to its provisions to reduce identity theft, FACTA also contained measures designed to bolster consumer pro𒀰tection generally.

For instance, it placed new requirements on 澳洲幸运5开奖号码历史查询:mortgage lenders to disclose the 澳洲幸运5开奖号码历史查询:credit scores and other factors that influenced their decision about whether or not to approve a loan application. This includes releasing to customers the so-called "澳洲幸运5开奖号码历史查询:risk-based-pricing" factors used in the lender's decision, as well as any specific issues noted on the consumer's credit report.

Creditors or financial institutions that violate the FACTA rules are subject to fines.

The Impact of FACTA

Unfortunately, identity theft continues to be a major problem, largely because of the increase in 澳洲幸运5开奖号码历史查询:e-commerce, 澳洲幸运5开奖号码历史查询:social networking, and other online activities. In 2023, the Federal Trade Commission's IdentityTheft.gov website received more than 1.1 million reports of identity theft.

One of the unintended consequences of FACTA is that it may have contributed to the amount of personally identifiable information that businesses are required to obtain from their customers. For example, a business that must confirm a customer's identity or whereabouts more rigorously due to FACTA may need to request multiple forms of identification. While these changes might make consumers less vulnerable to identity theft in some respects, they also create the potential for computer hackers and other thieves to obtain more information that could be used in committing a crime.

The Bottom Line

The Fair and Accurate Credit Transactions Act (FACTA) is intended to help prevent identity theft and credit-related fraud in an increasingly online economy. The law requires creditors and reporting agencies to protect consumers' identifying information and take steps to guard against identity theft. It also allows consumers to access free copies of their credit reports. Identity theft remains a major problem, and consumers need to take their own precautions to keep it from happening to them.