Fair and Accurate Credit Transactions (FACTA) Act - Explained
What is FACTA?
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Table of ContentsWhat is the Fair and Accurate Credit Transactions Act of 2003?How Does FACTA Work?
What is the Fair and Accurate Credit Transactions Act of 2003?
The Fair and Accurate Credit Transaction Act (FACTA) was a US law passed in 2003 that aims to escalate the protective measures against identity theft by introducing industry standards for managing personal credit information. Notably, the FACTA gives users free access to their credit reports. It has been the impetus for developing alert mechanisms.
How Does FACTA Work?
FACTA allows people to have their credit reports free of cost, once in a year. They can request their credit reports from Equifax, TransUnion and Experian. Also, it requires mortgage lenders to disclose the consumer credit score information used when determining mortgage loan prices or denials. Both lenders and regulators must alert consumers of identity theft, unusual purchasing patterns, an any related information to be place din the consumer credit files, as per the standards imposed. FACTA empowers enforcement agencies to enforce Red Flag Rules. These rules make anti-identity theft provisions mandatory for banks and credit unions, especially at the time of opening of new accounts or accessing their existing accounts. For instance, credit and debit cards issuer must validate customer address changes. The red flags might include requesting personally identifying info while using accounts, opening doubtful accounts related to covered accounts. The policies launched later under the Dodd-Frank Act, shifted various rulemaking responsibilities to the Federal Trade Commission and the Consumer Financial Protection Bureau. The Federal Trade Commission has the authority to evaluate credit reports accuracy, issues for Fair Credit Reporting Act, oversees data security red flag rules and disposals.