NAID Briefing

The Federal Trade Commission (FTC) had the foresight to invite NAID to provide input on proper information destruction before the proposed FACTA (Fair and Accurate Credit Transactions Act of 2003) Disposal Rule was first drafted.

We were all impressed by the FTC’s desire to draft a good rule and its openness to our input. And so, when the proposed rule was published, we were not surprised that it was well done (in light of the limited directive the FTC was given by Congress).

However, one provision stood out as somewhat unreasonable to us. First of all, remember that the FTC has jurisdiction over all commerce that is not specifically granted to another agency. That’s about 99.9 percent of all businesses, including, of course, records destruction companies, records storage companies and recycling companies.

When we read in the proposed FTC Disposal Rule that any business that takes custody of consumer information is responsible for its proper destruction, we recognized a bit of a problem. What we interpreted from this language was that if a recycling company or a records storage company did not properly destroy consumer information, even if the original owner of the information did not require them to destroy it, they would be in violation of the Disposal Rule. The FTC in a second face-to-face meeting with NAID confirmed that this was, in fact, the intent of that provision.

While this language was great for the secure destruction industry, in NAID’s official comment to the FTC on its proposed Disposal Rule, we stated that it was not reasonable to hold a recycling company or records storage company in violation for improper disposal if their clients did not specifically require or request destruction. We reminded the FTC that in many cases these firms may not even know the type of information they are discarding.

Nevertheless, despite our comments, when the final FTC Disposal Rule emerged last December, the language remained. And so, as of June 1, 2005, any recycling company or records storage company that takes possession of consumer information is required by law to properly destroy it whether or not the client has requested destruction or even told them what it is.

Without a doubt, the FACTA Disposal Rule is sure to benefit secure destruction services, but firms involved in basic recycling and storage services should take heed and be very careful about what assurances they receive from clients about the contents of materials they process.