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January 14, 2005
Identity Theft Law has Impact on Small Business
The Fair and Accurate Transactions Act (FACTA) was passed to help protect all of us against identity theft. But, a single provision in this new law opens up small employers, even those with a single employee, to lawsuits if they do not properly destroy (i.e., shred) any documents or papers containing personal information about their employees before throwing it away.
USA Today reports that small and medium employers may face significant risk due to this new law.
"While the effect on individuals who employ one or more people could be bad enough, the real impact is more likely to be on small to midsize businesses.
"'A small businessman who makes a mistake could bear the brunt of a regulation like this,' says James Plummer, policy analyst at Consumer Alert, a non-profit group that focuses on a free-market approach to consumer regulations."
What are the consequences if you do not comply?
"An employee could be entitled to recover actual damages sustained if his or her identity is stolen as a result of your inaction. Or you could have to pay statutory damages of up to $1,000 per employee....The federal government could fine you up to $2,500 for each violation. States can fine up to $1,000 for each violation."
While well intentioned, FACTA seems to be another example of an emotionally charged issue that Washington uses to overreach into areas that are not really at the heart of the problem.
Posted January 14, 2005 08:28 AM
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at Belmont University in Nashville, Tennessee. He consults with a variety of businesses on start-up and growth related issues, and with larger corporations on re-establishing entrepreneurial cultures within their organizations. Dr. Cornwall's current research interests include entrepreneurial finance and entrepreneurial ethics. He has authored or co-authored four books.
