Fair and Accurate Credit Transactions Act (FACTA)
What it is:
How it works/Example:
FACTA does many things to protect consumers from fraud and identity theft. Under FACTA, if any consumer is suspicious that their identity may have been stolen, a consumer agency is required to place a fraud alert on the consumer's file for a least 90 days. In addition, in order to further protect consumers from fraud and identity theft, the act prohibits businesses from printing more than five digits of a customer’s credit card number on the receipt. To further prevent possible identity theft, federal banking organizations are made aware of sudden reported changes in a consumer's address.
FACTA also grants consumers free annual credit reports from the top credit reporting agencies. FACTA also requires some banks and other financial institutions to disclose credit report information to their customers.
Finally, FACTA helps recover the credit history of someone who has been a recent victim of identity theft by requiring lending institutions to provide consumers rights documents for victims of fraud or identity theft. The consumers then do not have to disclose their lower than normal credit scores.
[InvestingAnswers Feature: 5 Financial Products That Are Absolutely Worthless]
Why it matters:
FACTA is an important step in protecting consumers and giving them more confidence that their money and identity are safe when they use credit cards. The guaranteed free credit reports also enable consumers to monitor their credit status. Knowing their credit scores hopefully encourages people to be more responsible about charging purchases that they cannot pay off.
[InvestingAnswers Feature: 7 Steps to Perfect Credit]