heard about FACTA. What does it mean?
Employers are starting to hear
about this new law called FACTA, and are starting to be aware that they need to
do something. But what should they do?
What FACTA means is that if you, as an individual,
lose the information on anyone you have ever hired; or, for any business in the
United States of America that collects any personal information on people, if
the information should be lost due to not destroying the information properly,
then two things can happen. First, there are federal fines of up to $2,500.00,
and state fines up to $1,000, per employee, per incident. Second, the business
is liable for any damages the individual suffers as the result of a breach of
Take an example that the company loses information
due to negligent destruction (i.e. you don�t own a shredder and throw the
information into the dumpster). Nothing in FACTA really determines what the
employee has to do to prove �negligent destruction� on the part of the employer,
so an employee could simply state that the employer had lost the information,
and even if the employer had burned the information into ashes, it would be up
to the employer to show that the information had not gotten out due to his or
her company�s negligence.
Business Week says that the average damages for
Identity Theft victims are $92,000.00 and up per person. Using this statistic,
if you have 10 employees lose their identities, then on average, your liability
is $920,000.00. Statistically, you are responsible for an average of 75 bad
checks and 8 credit cards per employee. The average Identity Theft victim also
spends 600 hours getting their credit restored, which means that you will have
600 hours per employee, so potentially 6,000 hours for 10 employees, which you
will be responsible for paying employees who aren�t even at work, because they
have taken time off to deal with the Identity Theft.
According to John Gardner, co-author of Chicken
Soup for the Entrepreneurial Soul, �The damages are devastating to any
There are many problems related to people�s
identities that don�t deal with credit issues. Contrary to popular belief, only
26% of identity theft issues relate to credit issues. The other 74% of the
issues, according to Gardner, are related to the following four areas:
Someone stealing your DMV record. Example: An
identity thief wants to drive under your employee�s name instead of theirs.
This will help the Identity Thief to not get caught in cases of DUI, unpaid
speeding tickets, etc. Your employee is then blamed for their driving record.
Someone stealing your MIB record. This is your
Medical Information Bureau Record. Example: An Identity Thief wants to have
an AIDS test done in your employee�s name, rather than theirs, or have their
prescriptions filled using your employee�s Medicaid or Medicare benefits
Someone stealing your character identity to
commit a crime in your name. Imagine this � your future employee comes to
your child care facility, and everything sounds good about this candidate.
However, you run a criminal background check, and find out that they have
three arrests for child pornography and one for drug trafficking to minors.
You bring the record to their attention, and they insist it�s not them.
Your employment record. Example: An Identity
Thief wants to earn income using your employee�s social security number, but
let your employee pay taxes on the money they earn.
As a result of this, Gardner says that �Businesses
need to offer 24 hour per day, 7 day per week access to attorneys�.I think that
the danger is so large to any business, that they may want to [pay for] some of
the cost of this, to encourage the employees to get the benefit�If a business
does not understand that they need the help, they are living in a dream world.�
Employers should also offer some sort of Identity
Theft protection, and ongoing background monitoring. This can be offered as a
voluntary benefit which has no real cost to the employer, as a fringe benefit
paid by the employer, or can be a combination of both. When an identity thief
uses your employee�s information, (for example an identity thief takes the
employee�s current address, and uses it as their previous address when they
apply for a mortgage,) ongoing background monitoring will notify your employee
when the identity theft happens. Most people don�t find out that they have
become victims until that Identity Thief, who has used your employee�s credit to
finance their mortgage, stops paying bills, is picked up for a crime, or doesn�t
pay taxes. Ongoing monitoring provides an early warning system, so that your
employee will be able to call an expert who can correct the problem when it
takes place. This will save your employee�s time, and limit the losses your
employee will incur as a result of the breach of their information. This will
also save you the costs associated with the frustration and lack of ability to
pay attention as work.
Even if your employees don�t elect to have the
benefits of legal services and identity theft protection, having a mandatory
meeting where employees hear that you have made this coverage available to them
will provide an affirmative defense, should an employee ever accuse you, as the
employer, of having lost their personal information.
Under FACTA, access to an attorney and credit
restoration, are benefits that employers need to offer. Ongoing background
monitoring will mitigate damages that the employee can experience because the
early warning system will be in place to handle the issues. Access to an
attorney and credit restoration will drastically reduce the time the employee
spends away from work dealing with the issues surrounding identity theft and
other personal legal problems.
Failure on the part of an employer to offer this
benefit leaves a company exposed to thousands (and even millions) of dollars in
potential damages, and leaves employees subject to the time, frustration, and
headaches associated with being a victim of Identity Theft.
Jonathan Kraft is a
benefits consultant who specializes in educating people about how they can get
affordable access to the legal system. Because of his work in the field of
electronic Identity Theft, he has come to be known as Colorado�s Foremost Expert
on Computer Related Identity Theft.