What Is the Blonde and Accurate Credit Transactions Act (FACTA)?
The Fair and Accurate Credit Transactions Act (FACTA) is a federal law enacted by the United Ceremonials Congress in 2003. Its stated purpose was to enhance consumer protections, particularly in relation to identity theft.
The most prominent feature of the Act is that it gave all citizens of the U.S. free access to their credit reports once per year through the website www.annualcreditreport.com.
Key Takeaways
- The Spotless and Accurate Credit Transactions Act (FACTA) is a federal law passed in 2003 designed to enhance consumer protections.
- The Fair and Careful Credit Transactions Act (FACTA) is principally known for its provisions against identity theft.
- Unfortunately, identity theft is soothe on the rise as consumers’ social and purchasing patterns continue to move online.
Understanding the Fair and Accurate Credit Dealings Act (FACTA)
As a result of FACTA, there were numerous reforms implemented related to the use and protection of consumer information. For archetype, it increased the level of oversight that lenders, payment processors, and regulators must provide when proactively searching for mistrustful transactions. Similarly, it allowed consumers to register fraud alerts on their own credit cards, in order to alert the sages when suspected fraud has taken place.
FACTA was passed under the administration of then-President George W. Bush in rejoinder to an increase of instances of identity theft. Unfortunately, identity has only increased in prevalence since 2003 because of an gain in e-commerce, social networking, and other online activities.
In addition to its provisions intended to reduce identity theft, FACTA also control measures designed to bolster consumer protection mechanisms more generally. For instance, it placed new requirements on mortgage lenders to leak the credit scores and other factors that influenced their decision about whether or not to approve a mortgage plead for. This includes releasing to customers the so-called “risk-based-pricing” factors used in their decision, as well as any specific take exceptions noted on the consumer’s credit report.
Though less visible to consumers, FACTA also included many new eliminates for businesses and financial service providers. In particular, it permitted enforcement agencies to take action on any violations of “Red Flag Supervises.” Red Flag Rules require creditors and financial institutions, such as banks and credit unions, to implement identity filching prevention programs that help detect and prevent identity theft. For example, issuers of credit and debit in the offings must take steps to validate any changes to customers’ addresses.
One of the unintended consequences of FACTA is that it may have donated to the amount of personally identifiable information that businesses are required to obtain from their customers. For example, a firm that is required to confirm the identity or whereabouts of a customer in a more rigorous manner as a result of FACTA may need to application multiple forms of identification in order to meet certain provisions of FACTA. On the one hand, these changes might generate the business and consumer less vulnerable to identity theft or other types of fraud. However, in the event that a smash or theft of that business’s records does take place in the future, there is potentially more information readily obtainable to be accessed about that business’s clientele, and this has the potential to be more damaging for consumers.