Becoming a victim of identity theft or other financial fraud is an experience most people would probably like to avoid. Thankfully, there are laws that can help protect consumers’ personally identifiable information and support those who’ve been affected.
The Fair and Accurate Credit Transactions Act of 2003 (FACTA), for example, strengthens consumer protections against identity theft, inaccurate credit reporting and fraudulent credit activities. FACTA, sometimes also referred to as the FACT Act, is a federal law that was written to be an amendment to the Fair Credit Reporting Act (FCRA), which helps protect consumer credit information.
Key takeaways
FACTA contains several provisions to protect access to consumer information and prevent identity theft. It’s not to be confused with FATCA, the Foreign Account Tax Compliance Act.
FACTA contains several measures to help consumers get information about their credit, including:
Identity theft provisions in FACTA include:
FACTA established the Financial Literacy and Education Commission in 2003. Led by the U.S. secretary of the Treasury, the commission sets best practices for teaching financial literacy at higher education institutions and reviews federal programs to support the financial well-being of Americans.
FACTA also developed a financial literacy website called MyMoney.gov. The site includes resources for educators, researchers and people who are new to money management.
The Federal Trade Commission (FTC) created the Red Flags Rule in 2008 to add to FACTA’s efforts. The rule helps detect red flags—suspicious patterns or actions—and reduce the damage caused by identity theft to covered accounts like credit card or savings accounts.
FACTA is an amendment to the FCRA. Anyone who uses credit reports to evaluate an individual, for example to determine creditworthiness or eligibility for government benefits, should comply with FACTA. This covers government entities, financial institutions and individuals, as well as:
This includes Equifax, Experian and TransUnion as well as other smaller groups that report consumer credit information. It might also include companies that use credit information to help landlords screen potential tenants or employers screen job candidates.
A furnisher is any company, like a lender, that reports people’s credit information to credit bureaus. Under the FCRA’s furnisher rule, they must make sure the information they provide is accurate.
FACTA is enforced by the FTC. Penalties for noncompliance with FACTA typically include a federal penalty of up to $2,500 and a state penalty of up to $1,000 for each violation.
FACTA protects consumers by providing things like preventive measures against identity theft and free access to annual credit reports. There are also things that you as a consumer can do to help safeguard your credit and personal information. For example, monitoring your credit could give you a chance to check for errors and help detect fraudulent activity.
Using CreditWise from Capital One is one way you can monitor your scores and report for free anytime, without hurting your credit scores. Plus, it’s free for everyone—even if you don’t have a Capital One credit card.
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