The Fair and Accurate Credit Transactions Act is a federal law designed to minimize the risk of identity theft and consumer fraud by enforcing the proper destruction of consumer information.   The Disposal Rule, under FACTA, is targeted towards businesses that utilize consumer information.  It states, "any person who maintains or otherwise possesses consumer information for a business purpose is required to dispose of discarded consumer information, whether in electronic or paper form. 

Penalties can vary and include:  civil liability, class action lawsuits, Federal enforcement with penalties up to $2,500 for each violation, and state enforcement allowing consumers to recover up to $1,000 for each negligent action.

The FACTA Disposal Rule mandates that companies properly dispose of their confidential information in the following ways: burning, pulverizing or shredding items that contain consumer information and erasure of electronic media.  Entering into a contract with a third party whose core competency is information destruction has been the most common, cost effective alternative.