What Is the Fair & Accurate Credit Transactions Act (FACTA)?


Back in the early 2000s, identity theft was just becoming an issue. By no means was it rampant, but those who knew how to read the signs could foresee what was coming.

They were right.

US flag gavel

In 2018, 14.4 million U.S. citizens had $14.7 billion stolen from them. The numbers are so staggering it’s hard to even wrap your head around them.

What is FACTA?

Attempts were made in 2003 by President Bush to battle the wave of credit theft. An amendment to the Fair Credit Reporting Act (FCRA), entitled the Fair and Accurate Credit Transactions Act (FACTA), hit the ground running on December 4th, 2003.

The few people who know about it likely only do because it’s what enables them to view their credit reports for free. Because of this amendment, all three credit bureaus are required to submit a free credit report to any individual who requests one once every twelve months.

To comply, Equifax, Experian, and TransUnion created the website www.annualcreditreport.com. Anyone can go to this website, submit a request, and receive a credit report from any of the three credit reporting agencies once every 12 months.

That’s what most people associate with FACTA, but, as is often the case, there’s more to it. The law also has major provisions to protect consumers from identity theft.

There’s a lot to talk about, so instead of listing the provisions put forth in FACTA, let’s just jump right in.

How to Use Fraud Alerts

Anyone who believes they may be at risk of identity theft can have a fraud alert placed on their credit for 90 days. The credit reporting agencies will then notify them if anyone attempts to open an account in their name in that time frame.

However, a person can also put the hold into place if they believe they are already a victim of identity theft. From then on, each credit reporting agency is required to disclose the fraud alert and/or request on consumer reports. This alert must be reflected on the credit report for at least seven years after the request or incident.

Consumers can also request that companies remove their names from lists sold to credit companies looking for business. Military personnel also have this option while on active duty and can have their names removed for an entire year to protect themselves financially.

How FACTA Protects Your Credit and Debit Card Numbers

Under FACTA, it is illegal to print more than five of your debit or credit card numbers on a receipt. Any company or business that does otherwise must pay a fine per violation, ranging from $100 to $1000. Many companies have had massive fines because of this oversight, which leads to that business closing more often than not.

Of course, there’s an exception:

This rule does not include any receipt where the business has to handwrite or imprint the number at the point of sale if other electronic means are not available. Say, for example, if a company’s power or internet service were to go out.

What is the Red Flag Rule?

This aspect of FACTA requires all federal banking agencies, the Federal Trade Commission, and the National Credit Union Administration to work together. They’re required to create rules and regulations to prevent possible identity theft stemming from address changes. As one might expect, notice of address changes are the first clues that identity theft is in motion.

Here are the red flag rules:

  1. All users of consumer reports must respond to address discrepancies.
  2. All debit and credit card issuers must assess whether a change of address is legitimate or not, and must do so within a set period of time.
  3. Each financial institution must create and implement an identity theft prevention program.

How do you know your rights when it comes to identity theft?

The Federal Trade Commission requires that all three credit bureaus print and distribute the rights of consumers who believe they are victims of identity theft upon request. The literature, which you can also find online at www.identitytheft.gov, is a comprehensive resource for victims.

What information can you find?

It lists the amount of time you have to dispute identity theft purchases and what you can expect to lose. It also outlines your state and federal rights as they pertain to other acts, such as the Justice for All Act.

If you believe you are a victim, or if you don’t want to become another statistic, this is a great site to get started protecting yourself.

How can you get information blocked from your credit report?

FACTA requires credit reporting agencies to stop reporting any consumer information that an individual believes to stem from identity theft. They must do so within hours of receiving the following:

  • Copy of identity theft report.
  • Consumer’s identification of the information.
  • Consumer’s statement that the purchase is not something they had any part of.

However, just because the request was made does not mean that the agencies will follow through.

Here’s how they can remove the blocks:

If they find that the individual lied (meaning they did, in fact, make those purchases or payments), if there are errors or inconsistencies, or if the block was put on simply by mistake.

How to Coordinate Investigations Among Credit Bureaus

All credit reporting agencies are required to communicate with one another regarding any identity theft complaint investigations, blocks, or requests for fraud alerts an individual has. They are also expected to report all requests or incidents to the Federal Trade Commission.

Furthermore, FACTA requires the FTC to establish mechanisms for individuals to contact major credit reporting agencies, creditors, and other financial institutions if they suspect they are victims of identity theft.

Lauren Ward
Meet the author

Lauren is a personal finance writer who strives to equip readers with the knowledge to achieve their financial objectives. She has over a decade of experience and a Bachelor's degree in Japanese from Georgetown University.