What You Should Know About the FACT Act


The Fair and Accu­rate Credit Trans­ac­tions Act, or the FACT Act, was passed in 2003 as an amend­ment to the Fair Credit Report­ing Act. It’s pass­ing gave con­sumers some pow­er­ful weapons in regards to being proac­tive against iden­tity theft, yet many peo­ple don’t real­ize what ben­e­fits the FACT Act pro­vides. From being able to get free credit reports from the credit bureaus every 12 months to being able to place fraud alerts on your credit reports to elim­i­nat­ing credit card num­bers from receipts, con­sumers are able to get a lot of pro­tec­tions now that they weren’t able to have before.

Here’s what the FACT Act does for you:

1. You Get 1 Free Credit Report from Each Credit Report­ing Agency Every 12 months

Through the FACT Act, the three major credit report­ing agen­cies, which are Equifax, Exper­ian, and Tran­sUnion, set up the web­site AnnualCreditReport.com. This is an easy place for you to be able to request in writ­ing a credit report from any or all of the credit report­ing agen­cies. You are allowed one free credit report every 12 months from each agency, so many con­sumers choose to make a request for one every four months from just one of the agen­cies so that they have a more con­sis­tent review of their credit. Besides the web­site, you can also request your free credit report in writ­ing by send­ing a let­ter directly to the credit report­ing agency of your choice through stan­dard mail.

2. You Are Able to Place a Fraud Alert on Your Credit

If you sus­pect that your iden­tity has been com­pro­mised, you can request a fraud alert to be placed onto your credit report through any of the credit report­ing agen­cies. Once you have placed a fraud alert at one agency, this alert will then update to the other two. An ini­tial fraud alert can last for up to 90 days, and when iden­tity theft has been con­firmed, this fraud alert can last up to 7 years. In addi­tion, any­one who is actively serv­ing in the mil­i­tary can have a fraud alert placed on their credit report for up to 12 months. You can learn more about fraud alerts through this infor­ma­tive blog post as well.

3. No More Credit Card Num­bers on Your Receipts

If you keep your tax records for seven years or more, then chances are you can go dig­ging into that box or file and find some point of sale receipts there. Chances are they con­tain your entire credit card or debit card num­ber on that receipt. Fast for­ward to today where thanks to the FAST Act, all card num­bers must be trun­cated to only dis­play four or five of those num­bers. Often it is dis­played as XXXX-XXXX-XXXX-1234 these days. This was done because a fast major­ity of peo­ple sim­ply crum­ple up their receipts and then throw them away in the near­est trash can… which was a very easy way for iden­tity thieves to get their hands on a valid num­ber. You’ll also notice that there aren’t any expi­ra­tion dates on receipts any more as well, and this is for the exact same rea­son for trun­cat­ing the numbers.

4. Help to Iden­tity Pos­si­ble Iden­tity Theft

Some­times referred to as the “Red Flags” rules, the FACT Act required the for­ma­tion of reg­u­la­tions by the major Fed­eral finance agen­cies involved in con­sumer finance to help peo­ple dis­cover iden­tity thieves as quickly as pos­si­ble. This boiled down to three basic points:

It requires finan­cial insti­tu­tions or cred­i­tors to develop and imple­ment an Iden­tity Theft Pre­ven­tion Pro­gram in con­nec­tion with any account they hold and it must include rea­son­able poli­cies and pro­ce­dures for pre­vent­ing, detect­ing, and resolv­ing iden­tity theft event;

It requires users of con­sumer reports to respond to Notices of Address Dis­crep­an­cies that they receive when there is more than one per­ma­nent address for a con­sumer; and

It places spe­cial require­ments on issuers of debit or credit cards to assess the valid­ity of a change of address if they receive noti­fi­ca­tion of a change of address.

These Red Flag reg­u­la­tions are intended as a mea­sure to help keep you safe from cir­cum­stances that could be out of your direct con­trol. Iden­tity thieves have always held an arse­nal of weapons that they can use to gain access to a victim’s iden­tity – these imple­mented reg­u­la­tions are designed to help give con­sumers weapons to defeat iden­tity thieves before they can strike.5. Block­ing Infor­ma­tion that Occurs Because of Iden­tity Theft

An iden­tity thief can cre­ate a lot of dam­age for their vic­tims. It could just be from spend­ing money on exist­ing accounts, or it could be the open­ing of new accounts, max­ing out those credit lines, and then not pay­ing them. It could be that a false name was given when an iden­tity thief is arrested, thereby putting an arrest on a victim’s record. It could even be pre­tend­ing to be the vic­tim in order to receive med­ical treat­ment and cov­er­age, and then not pay­ing for it.

Thanks to the FACT Act, the false infor­ma­tion that is gen­er­ated thanks to the iden­tity thief’s activ­i­ties is to be blocked from your per­ma­nent record once con­tested. This means that poten­tial lenders will not be able to see any accounts in col­lec­tion thanks to the activ­i­ties of an iden­tity thief, false judge­ments, or any­thing else that could have a neg­a­tive impact on your application.

In addi­tion to these five key points, it was also man­dated that con­sumers have access to spe­cific resources to gain the help they need should they dis­cover that they have become the vic­tim of iden­tity theft. Despite all of these efforts, how­ever, iden­tity theft is still the fastest grow­ing crime right now in the United States. Why? Because peo­ple sim­ply haven’t taken the time to empower them­selves with the knowl­edge they need to com­bat iden­tity theft effec­tively. For some it’s because they feel invul­ner­a­ble. For oth­ers it is because they just don’t care. Then there are those who just don’t real­ize that iden­tity theft is a problem.

Until we all fight back against the iden­tity thieves, there will always be new vic­tims because iden­tity thieves profit to the tune of $40,000,000,000 every sin­gle year. Be sure to request your free credit reports every 12 months, sign up for an effec­tive iden­tity theft pro­tec­tion plan, and take the fight to the iden­tity thieves today.